SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida, on January 19, 1996.
WATSCO, INC.
By: /s/ RONALD P. NEWMAN
-------------------------------------------------
Ronald P. Newman, Chief Financial Officer, Secretary
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ALBERT H. NAHMAD Chairman of the Board January 22, 1996
- ---------------------------- (principal executive officer)
Albert H. Nahmad
/s/ RONALD P. NEWMAN Chief Financial Officer, Secretary and January 22, 1996
- ---------------------------- Treasurer
Ronald P. Newman (principal financial and accounting
officer)
/s/ D. A. COAPE-ARNOLD Director January 22, 1996
- ----------------------------
D. A. Coape-Arnold
/s/ DAVID B. FLEEMAN Director January 22, 1996
- ----------------------------
David B. Fleeman
/s/ JAMES S. GRIEN Director January 22, 1996
- ----------------------------
James S. Grien
/s/ PAUL F. MANLEY Director January 22, 1996
- ----------------------------
Paul F. Manley
/s/ BOB L. MOSS Director January 22, 1996
- ----------------------------
Bob L. Moss
/s/ ROBERTO MOTTA Director January 22, 1996
- ----------------------------
Roberto Motta
/s/ ALAN H. POTAMKIN Director January 22, 1996
- ----------------------------
Alan H. Potamkin
WATSCO, INC.
1,400,000 Shares*
Common Stock
UNDERWRITING AGREEMENT
____________, 1996
PRUDENTIAL SECURITIES INCORPORATED
As Representative of the several Underwriters
One New York Plaza
New York, New York 10292
Dear Sirs:
Each of Watsco, Inc., a Florida corporation (the "Company"), and the
shareholders of the Company named in Schedule 2 hereto (the "Selling
Securityholders") hereby confirms its agreement with the several underwriters
named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representative (in such capacity, the "Representative"), as
set forth below. If you are the only Underwriter, all references herein to the
Representative shall be deemed to be to the Underwriter.
1. SECURITIES. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters an aggregate
of 1,000,000 shares (the "Company Firm Securities") of the Company's Common
Stock, par value $0.50 per share (the "Common Stock"). The Company also proposes
to issue and sell to the several Underwriters not more than 210,000 additional
shares of Common Stock if requested by the Representative as provided in Section
3 of this Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities". Subject to the terms and conditions herein contained, the Selling
Securityholders propose to sell to the several Underwriters an aggregate of
400,000 shares of Common Stock (the "Selling Securityholder Firm Securities" and
together with the Company Firm Securities, the "Firm Securities"). The Firm
Securities and any Option Securities are collectively referred to herein as the
"Securities".
- ------------------
* Plus an option to purchase from Watsco, Inc. up to 210,000 additional
shares to cover over-allotments.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) The Company and each Selling Securityholder identified in
Schedule 2 hereto as a Group 1 Selling Securityholder (collectively,
the "Group 1 Selling Securityholders"), to the best of such Group 1
Selling Securityholder's knowledge, jointly and severally, represent
and warrant to, and agree with, each of the several Underwriters that:
(i) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"). A
registration statement on such form (File No. 33-________)
with respect to the Securities, including a prospectus subject
to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under
the Act, and one or more amendments to such registration
statement may have been so filed. After the execution of this
Agreement, the Company will file with the Commission either
(A) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective
under the Act either (1) if the Company relies on Rule 434
under the Act, a Term Sheet (as hereinafter defined) relating
to the Securities, that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements, and,
if required to be filed pursuant to Rules 434(c)(2) and
424(b), an Integrated Prospectus (as hereinafter defined), in
either case, containing such information as is required or
permitted by Rules 434, 430A and 424(b) under the Act or (2)
if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment
to such registration statement (or, if no such amendment shall
have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the
Act or permitted by Rule 424(b) under the Act, and in the case
of either clause (A)(1) or (A)(2) of this sentence as have
been provided to and approved by the Representative prior to
the execution of this Agreement, or (B) if such registration
statement, as it may have been amended, has not been declared
by the Commission to be effective under the Act, an amendment
to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to
and approved by the Representative prior to the execution of
this Agreement. The Company may also file a related
registration statement
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with the Commission pursuant to Rule 462(b) under the Act for
the purpose of registering certain additional Securities,
which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original
Registration Statement" means the registration statement
initially filed relating to the Securities, as amended at the
time when it was or is declared effective, including (A) all
financial schedules and exhibits thereto, (B) all documents
incorporated by reference therein filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and (C)
any information omitted therefrom pursuant to Rule 430A under
the Act and included in the Prospectus (as hereinafter
defined) or, if required to be filed pursuant to Rules
434(c)(2) and 424(b), in the Integrated Prospectus; the term
"Rule 462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b)
under the Act (including the Original Registration Statement
and any Preliminary Prospectus or Prospectus incorporated
therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both
the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus"
means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto at the time it
was or is declared effective), including all documents
incorporated by referenced therein filed under the Exchange
Act; the term "Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first
filed pursuant to Rule 424(b)(7) under the Act,
together with the Preliminary Prospectus identified
therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act,
the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act
and if no prospectus is required to be
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filed pursuant to Rule 424(b) under the Act, the
prospectus included in the Registration Statement,
including, in the case of the immediately foregoing clause
(A), (B) or (C) of this sentence, all documents incorporated
by referenced therein filed under the Exchange Act. The term
"Integrated Prospectus" means a prospectus first filed with
the Commission pursuant to Rules 434(c)(2) and 424(b) under
the Act; and the term "Term Sheet" means any abbreviated Term
Sheet that satisfies the requirements of Rule 434 under the
Act. Any reference in this Agreement to an "amendment or
supplement" to any Preliminary Prospectus, the Prospectus or
any Integrated Prospectus or an "amendment" to any
registration statement (including the Registration Statement)
shall be deemed to include any document incorporated by
reference therein that is filed with the Commission under the
Exchange Act after the date of such Preliminary Prospectus,
Prospectus, any Integrated Prospectus, or registration
statement, as the case may be; any reference herein to the
"date" of a Prospectus that includes a Term Sheet shall mean
the date of such Term Sheet. For purposes of the preceding
sentence, any reference to the "effective date" of an
amendment to a registration statement shall, if such amendment
is effected by means of the filing with the Commission under
the Exchange Act of a document incorporated by reference in
such registration statement, be deemed to refer to the date on
which such document was filed with the Commission.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus and any amendment or supplement thereto
was filed with the Commission, it (A) contained all statements
required to be stated therein in accordance with, and complied
in all material respects with the requirements of, the Act,
the Exchange Act and the respective rules and regulations of
the Commission thereunder, and (B) did not include any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment
thereto was or is declared effective, it (A) contained or will
contain all statements required to be stated therein in
accordance with, and complied or will comply
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in all material respects with the requirements of the Act, the
Exchange Act and the respective rules and regulations of the
Commission thereunder and (B) did not or will not include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading. When the Prospectus or any Term Sheet that is a
part thereof or any Integrated Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or part thereof
or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the
Prospectus was or is declared effective), on the date when the
Prospectus is otherwise amended or supplemented and on the
Firm Closing Date and any Option Closing Date (both as
hereinafter defined), each of the Prospectus and, if required
to be filed pursuant to Rules 434(c)(2) and 424(b) under the
Act, the Integrated Prospectus as amended or supplemented at
any such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements
of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (B) did not or
will not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing provisions
of this paragraph (ii) do not apply to statements or omissions
made in any Preliminary Prospectus or any amendment or
supplement thereto, the Registration Statement or any
amendment thereto, the Prospectus or, if required to be filed
pursuant to Rules 434(c)(2) and 424(b) under the Act, the
Integrated Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the
Representative specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b) and the
Rule 462(b) Registration Statement has not been declared
effective (i) the Company has filed a Rule 462(b) Registration
Statement in compliance with and that is effective upon filing
pursuant to Rule 462(b) and has received confirmation of its
receipt and (ii) the Company has given irrevocable
instructions for transmission of the applicable filing fee in
connection with
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the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 promulgated under the Act or the
Commission has received payment of such filing fee.
(iv) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation and are duly qualified to transact business as
foreign corporations and are in good standing under the laws
of all other jurisdictions where the ownership or leasing of
their respective properties or the conduct of their respective
businesses requires such qualification, except where the
failure to be so qualified does not amount to a material
liability or disability to the Company and its subsidiaries,
taken as a whole.
(v) The Company and each of its subsidiaries have full power
(corporate or other) to own or lease their respective
properties and conduct their respective businesses as
described in the Registration Statement, each of the
Prospectus and any Integrated Prospectus or, if the Prospectus
and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus; and the Company has
full power (corporate or other) to enter into this Agreement
and to carry out all the terms and provisions hereof to be
carried out by it.
(vi) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and, except as otherwise set
forth in each of the Prospectus and any Integrated Prospectus
or, if the Prospectus and any required Integrated Prospectus
are not in existence, the most recent Preliminary Prospectus,
are owned beneficially by the Company free and clear of any
security interests, liens, encumbrances, equities or claims.
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any
Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus. All of the issued shares of capital
stock of the Company, including the Securities to be sold by
the Selling Securityholders hereunder, have been duly
authorized and validly issued and are fully paid and
nonassessable. The Company Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing
Date or the related
- 6 -
Option Closing Date (as the case may be), after payment
therefor in accordance herewith, will be validly issued, fully
paid and nonassessable. No holders of outstanding shares of
capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the
Securities, and no holder of securities of the Company has any
right which has not been fully exercised or waived to require
the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering
contemplated by this Agreement.
(viii) The capital stock of the Company conforms to the description
thereof contained in each of the Prospectus and any Integrated
Prospectus or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus.
(ix) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the
Registration Statement, each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus) fairly present the financial position
of the Company and its consolidated subsidiaries and the
results of changes in operation and financial condition as of
the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted
therein). The unaudited pro forma financial data, together
with the related notes thereto, included in the Registration
Statement and the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus
are not in existence, the most recent Preliminary Prospectus)
include all adjustments necessary to present fairly the pro
forma financial data at the dates and for the periods
indicated, and all assumptions used in preparing such pro
forma financial data are reasonable. The selected financial
data set forth under the caption "Selected Financial Data"
in the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus and in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 fairly present, on the basis stated in the
each of the Prospectus and
- 7 -
any Integrated Prospectus (or such Preliminary Prospectus) and
such Annual Report, the information included therein.
(x) Arthur Andersen LLP and Rhea & Ivy, PLC, who have certified
certain financial statements of the Company and its
consolidated subsidiaries and Three States Supply Company,
Inc. ("Three States") and its consolidated subsidiaries,
respectively, and delivered their respective reports with
respect to the audited consolidated financial statements and
schedules included in the Registration Statement, each of the
Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus) for each of
the Company and its consolidated subsidiaries and Three States
and its consolidated subsidiaries, are independent public
accountants with respect to such entities as required by the
Act, the Exchange Act and the related published rules and
regulations thereunder.
(xi) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly
executed and delivered by the Company.
(xii) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the
property of the Company or any of its subsidiaries is subject
that are required to be described in the Registration
Statement, the Prospectus or any Integrated Prospectus and are
not described therein (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus), and no such proceedings have been
threatened against the Company or any of its subsidiaries or
with respect to any of their respective properties; and no
contract or other document is required to be described in the
Registration Statement, the Prospectus or any Integrated
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein (or, if the Prospectus
and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus) or filed as required.
(xiii) The issuance, offering and sale of the Firm Securities and
the Option Securities to the Underwriters by the Company
pursuant to this Agreement, the compliance by the Company with
the other provisions of this Agreement and the consummation of
the other transactions herein contemplated do not (A) require
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the consent, approval, authorization, registration or
qualification of or with any governmental authority, except
such as have been obtained, such as may be required under
state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is
not effective under the Act as of the time of execution
hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (B) conflict
with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries
or any of their respective properties are bound, or the
charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any
of its subsidiaries, except for such judgments, decrees,
orders, rules or regulations of any local court or local
governmental authority or any local arbitrator applicable to
the Company or any of its subsidiaries, the violation, breach
or default of which would not have a material adverse effect
on the Company and its subsidiaries as a whole.
(xiv) The Company has not, directly or indirectly, (A) taken any
action designed to cause or to result in, or that has
constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale
of the Securities or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Common Stock
(including the Securities), the Class B Common Stock, par
value $0.50 per share, of the Company (the "Class B Common
Stock"), any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock or Class B Common
Stock or (2) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company (except for the sale of Securities
by the Selling Securityholders under this Agreement).
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement, the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
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Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus), (A) the Company and its subsidiaries
have not incurred any liability or obligation, direct or
contingent, nor entered into any transaction not in the
ordinary course of business, which would have a material
adverse effect on the Company and its subsidiaries as a whole;
(B) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; and
(C) there has not been any change in the capital stock,
short-term debt or long-term debt of the Company and its
consolidated subsidiaries, except in each case as described in
or contemplated by each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus), which would have a material adverse effect on the
Company and its subsidiaries as a whole.
(xvi) The Company and each of its subsidiaries have good and
indefeasible title in fee simple to all items of real property
and indefeasible title to all personal property owned by each
of them, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect
the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company or
such subsidiary, and any real property and buildings held
under lease by the Company or any such subsidiary are held
under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings
by the Company or such subsidiary, in each case except as
described in or contemplated by each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xvii) No labor disruption with the employees of the Company or any
of its subsidiaries exists or is overtly threatened that could
result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries
taken as a whole, except as described in or contemplated by
each of the Prospectus and any Integrated Prospectus (or, if
the Prospectus
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and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus).
(xviii) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in
the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is
bound, which would have material adverse effect on the Company
and its subsidiaries as a whole.
(xix) The Company and each of its subsidiaries own or possess, or
can acquire on reasonable terms, all material patents, patent
applications, trademarks, service marks, trade names,
licenses, copyrights and proprietary or other confidential
information currently employed by them in connection with
their respective businesses, and neither the Company nor any
such subsidiary has received any notice of or conflict with
asserted rights of any third party with respect to any of the
foregoing which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, except as
described in or contemplated by each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xx) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and
customary in the businesses in which they are engaged; neither
the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the
Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely
affect the Company and its subsidiaries as a whole, except as
described in or contemplated by each of the Prospectus and any
Integrated
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Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus).
(xxi) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to
the Company or any other subsidiary of the Company, except as
described in or contemplated by each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xxii) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any
such subsidiary has received any notice of proceedings
relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling
or finding, would result in a material adverse change in the
Company and its subsidiaries as a whole, except as described
or contemplated by each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus).
(xxiii) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so
to file would not have a material adverse effect on the
Company and its subsidiaries as a whole) and has paid all
taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the
foregoing is due and payable, except to the extent that any
such assessment, fine or penalty would not have a material
adverse effect on the Company and its subsidiaries as a whole
or as described in or contemplated by each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
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(xxiv) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating
to occupational safety and health or to the storage, handling
or transportation of hazardous or toxic material and the
Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable
federal and state occupational safety and health and
environmental laws and regulations to conduct their respective
businesses, and the Company and each such subsidiary is in
compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would
not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries as a whole, except
as described in or contemplated by each of the Prospectus and
any Integrated Prospectus (or, if the Prospectus and any
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(xxv) Each certificate signed by any officer of the Company and
delivered to the Representative or counsel for the
Underwriters shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters
covered thereby.
(xxvi) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries,
neither the Company nor any such subsidiary owns any shares of
stock or any other equity securities of any corporation or has
any equity interest in any firm, partnership, association or
other entity, except as described in or contemplated by each
of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus).
(xxvii) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida) to
the extent such provisions are applicable to the Company.
(xxviii) The Company has not distributed and, prior to the later of
(A) the Firm Closing Date and (B) the completion of the
distribution of the Securities, will not distribute any
offering
- 13 -
material in connection with the offering and sale of the
Securities other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus or any supplement or amendment
thereto, or any materials, if any permitted by the Act.
(xxix) Except as disclosed in each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not existence, the most recent
Preliminary Prospectus), there are no outstanding (A)
securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital
stock of the Company or any such subsidiary, (B) warrants,
rights or options to subscribe for or purchase from the
Company or any such subsidiary any such capital stock or any
such convertible or exchangeable securities or obligations, or
(C) obligations of the Company or any such subsidiary to issue
any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants,
rights or options.
(b) The Group 2 Selling Securityholder represents and warrants
to, and agrees with, each of the several Underwriters that, to the
extent that any statements or omissions are made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, any Integrated
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by the
Group 2 Selling Securityholder specifically for use therein, such
information in the Preliminary Prospectus, the Registration Statement,
the Prospectus, any Integrated Prospectus and any amendments or
supplements thereto, when they become effective or are filed with the
Commission, as the case may be, did and will conform in all material
respects to the requirements of the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder and will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they are made, not misleading. The Group 2 Selling Securityholder has
reviewed the Prospectus and any Integrated Prospectus or if the
Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus, and the Registration Statement,
and the information regarding the Group 2 Selling Securityholder set
forth therein under the caption "Selling Shareholders" is complete and
accurate.
(c) Each Selling Securityholder represents and warrants to,
and agrees with, each of the several Underwriters that:
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(i) Such Selling Securityholder has full power to enter into this
Agreement and to sell, assign, transfer and deliver to the
Underwriters the Securities to be sold by such Selling
Securityholder hereunder in accordance with the terms of this
Agreement; and this Agreement has been duly executed and
delivered by such Selling Securityholder.
(ii) Such Selling Securityholder has duly executed and delivered a
power of attorney and custody agreement (with respect to such
Selling Securityholder, the "Power-of-Attorney" and the
"Custody Agreement", respectively), each in the form
heretofore delivered to the Representative, appointing Albert
H. Nahmad and Ronald P. Newman as such Selling
Securityholder's attorney-in-fact (the "Attorney-in-Fact")
with authority to execute, deliver and perform this Agreement
on behalf of such Selling Securityholder and appointing First
Union Bank, as custodian thereunder (the "Custodian").
Certificates in negotiable form, endorsed in blank or
accompanied by blank stock powers duly executed, with
signatures appropriately guaranteed, representing the
Securities to be sold by such Selling Securityholder hereunder
have been deposited with the Custodian pursuant to the Custody
Agreement for the purpose of delivery pursuant to this
Agreement. Such Selling Securityholder has full power to enter
into the Custody Agreement and the Power-of-Attorney and to
perform its obligations under the Custody Agreement. The
Custody Agreement and the Power-of-Attorney have been duly
executed and delivered by such Selling Securityholder and,
assuming due authorization, execution and delivery by the
Custodian, are the legal, valid, binding and enforceable
instruments of such Selling Securityholder. Such Selling
Securityholder agrees that each of the Securities represented
by the certificates on deposit with the Custodian is subject
to the interests of the Underwriters hereunder, that the
arrangements made for such custody, the appointment of the
Attorney-in-Fact and the right, power and authority of the
Attorney-in-Fact to execute and deliver this Agreement, to
agree on the price at which the Securities (including such
Selling Securityholder's Securities) are to be sold to the
Underwriters, and to carry out the terms of this Agreement,
are to that extent irrevocable and that the obligations of
such Selling Securityholder hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement,
by any act of such Selling Securityholder, by operation of law
or otherwise, whether in the case of any
- 15 -
individual Selling Securityholder by the death or incapacity
of such Selling Securityholder, in the case of a trust or
estate by the death of the trustee or trustees or the executor
or executors or the termination of such trust or estate, or in
the case of a corporate or partnership Selling Securityholder
by its liquidation or dissolution or by the occurrence of any
other event. If any individual Selling Securityholder, trustee
or executor should die or become incapacitated or any such
trust should be terminated, or if any corporate or partnership
Selling Securityholder shall liquidate or dissolve, or if any
other event should occur, before the delivery of such
Securities hereunder, the certificates for such Securities
deposited with the Custodian shall be delivered by the
Custodian in accordance with the respective terms and
conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not
occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(iii) Such Selling Securityholder is the lawful owner of the
Securities to be sold by such Selling Securityholder hereunder
and upon sale and delivery of, and payment for, such
Securities, as provided herein, such Selling Securityholder
will convey good and valid title to such Securities, free and
clear of any security interests, liens, encumbrances,
equities, claims or other defects.
(iv) Such Selling Securityholder has not, directly or indirectly,
(A) taken any action designed to cause or result in, or that
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale
of the Common Stock.
(v) Such Selling Securityholder has not, since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the
Common Stock (including the Securities), or the Class B Common
Stock, or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock or the Class B Common
Stock or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company (except for the sale of Securities
by the Selling Securityholders under this Agreement).
- 16 -
(vi) The Selling Securityholder is not aware of any adverse
information concerning the Company that is not set forth in
the Registration Statement, each of the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(vii) The sale of the Securities to the Underwriters by such
Selling Securityholder pursuant to this Agreement, the
compliance by such Selling Securityholder with the other
provisions of this Agreement, the Custody Agreement and the
consummation of the other transactions herein contemplated do
not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the
registration statement filed with respect to the Securities
(as amended) is not effective under the Act as of the time of
execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act and the
Exchange Act or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute
a default under any indenture, mortgage, deed of trust, lease
or other agreement or instrument to which such Selling
Securityholder is a party or by which such Selling
Securityholder or any of such Selling Securityholder's
properties are bound, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to such Selling
Securityholder which would constitute a material judgment,
decree, order, rule or regulation or which would prevent the
consummation of any transaction contemplated hereby.
(viii) The Selling Stockholders have not distributed and, prior to
the later of (A) the Firm Closing Date and (B) the completion
of the distribution of the shares, will not distribute any
offering material in connection with the offering and sale of
the shares other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus or any amendment or supplement
thereto, or other materials, if any, permitted by the Act.
(ix) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue
Code of 1986, as amended, with respect to the transactions
- 17 -
herein contemplated, the Selling Stockholders agree to deliver
to you prior to or on the Firm Closing Date, as hereinafter
defined, a properly completed and executed United States
Treasury Department Form W-8 or W-9 (or other applicable form
of statement specified by Treasury Department regulations in
lieu thereof).
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell, and each of the Selling
Securityholders, severally and not jointly, agrees to sell, to each of
the Underwriters, and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and each of the Selling
Securityholders, at a purchase price of $___ per share, the number of
Firm Securities (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Firm Securities
to be sold by the Company and each of the Selling Securityholders as set
forth opposite their respective names in Schedule 2 hereto by a fraction,
the numerator of which is the aggregate number of Firm Securities to be
purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule 1 hereto and the denominator of which is the
aggregate number of Firm Securities to be purchased by all the
Underwriters from the Company and each of the Selling Securityholders.
One or more certificates in definitive form for the Firm Securities that
the several Underwriters have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Representative requests upon notice to the Company and each of the
Selling Securityholders at least 48 hours prior to the Firm Closing Date,
shall be delivered by or on behalf of the Company and each of the Selling
Securityholders to the Representative for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
purchase price therefor by certified or official bank check or checks
drawn upon or by a New York Clearing House bank and payable in next-day
funds to the order of the Company or the Custodian as their interests may
appear. Such delivery of and payment for the Firm Securities shall be
made at the offices of King & Spalding, 120 W. 45th Street, New York, New
York at 9:30 A.M., New York time, on ________, 1996, or at such other
place, time or date as the Representative, the Company and each of the
Selling Securityholders may agree upon or as the Representative may
determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date". The
Company will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representative at
the offices in New York, New York of the Company's transfer agent or
registrar or of Prudential Securities Incorporated at least 24 hours
prior to the Firm Closing Date.
- 18 -
(b) For the purpose of covering any over allotments in connection
with the distribution and sale of the Firm Securities as contemplated by
each of the Prospectus and any Integrated Prospectus, the Company hereby
grants to the several Underwriters an option to purchase, severally and
not jointly, the Option Securities. The purchase price to be paid for any
Option Securities shall be the same price per share as the price per
share for the Firm Securities set forth above in paragraph (a) of this
Section 3. The option granted hereby may be exercised as to all or any
part of the Option Securities from time to time within thirty days after
the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter when the New
York Stock Exchange is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities prior to
the exercise of such option. The Representative may from time to time
exercise the option granted hereby by giving notice in writing or by
telephone (confirmed in writing) to the Company setting forth the
aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for
delivery of and payment for such Option Securities. Any such date of
delivery shall be determined by the Representative but shall not be
earlier than two business days or later than three business days after
such exercise of the option and, in any event, shall not be earlier than
the Firm Closing Date. The time and date set forth in such notice, or
such other time on such other date as the Representative and the Company
may agree upon or as the Representative may determine pursuant to Section
9 hereof, is herein called the "Option Closing Date" with respect to such
Option Securities. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several
Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters (severally and not jointly) shall become
obligated to purchase from the Company, the same percentage of the total
number of Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representative in
such manner as it deems advisable to avoid fractional shares. If the
option is exercised as to all or any portion of the Option Securities,
one or more securities in definitive form for such Option Securities, and
payment therefor, shall be delivered on the related Option Closing Date
in the manner, and upon the terms and conditions, set forth in paragraph
(a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of
this paragraph (b), to refer to such Option Securities and Option Closing
Date, respectively.
(c) It is understood that you, individually and not as the
Representative, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
- 19 -
4. OFFERING BY THE UNDERWRITERS. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. COVENANTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS.
(a) The Company covenants and agrees with each of the
Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto
to become effective as promptly as possible. If
required, the Company will file the Prospectus or any
Term Sheet that constitutes a part thereof, any
Integrated Prospectus and any amendment or supplement
thereto with the Commission in the manner and within
the time period required by Rules 434 and 424(b) under
the Act. During the time when a prospectus relating to
the Securities is required to be delivered under the
Act, the Company (A) will comply with all requirements
imposed upon it by the Act, the Exchange Act and the
respective rules and regulations of the Commission
thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities
in accordance with the provisions hereof and of each of
the Prospectus and any Integrated Prospectus, as then
amended or supplemented, and (B) will not file with the
Commission, the Prospectus, Term Sheet or any
Integrated Prospectus or the amendment referred to in
the third sentence of Section 2(a)(i) hereof, any
amendment or supplement to such Prospectus, Term Sheet
or any Integrated Prospectus or any amendment to the
Registration Statement (including amendments of the
documents incorporated by reference therein) or any
Rule 462(b) Registration Statement of which the
Representative shall not previously have been advised
and furnished with a copy for a reasonable period of
time prior to the proposed filing and as to which
filing the Representative shall not have given its
consent. The Company will prepare and file with the
Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by
the Representative or counsel for the Underwriters, any
amendments to the Registration Statement (including
amendments of the documents incorporated by reference
therein) or any Rule 462(b) Registration Statement or
amendments or supplements to the Prospectus and any
Integrated Prospectus that may be necessary or
advisable in connection with the distribution of the
- 20 -
Securities by the several Underwriters, and will use
its best efforts to cause any such amendment to the
Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will
advise the Representative, promptly after receiving
notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to
the Representative of each such filing or
effectiveness.
(ii) The Company will advise the Representative, promptly
after receiving notice or obtaining knowledge thereof,
of (A) the issuance by the Commission of any stop order
suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration
Statement or any post-effective amendment thereto or
any order directed at any document incorporated by
reference in the Registration Statement, the Prospectus
or any Integrated Prospectus or any amendment or
supplement thereto or any order preventing or
suspending the use of any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any
amendment or supplement thereto, (B) the suspension of
the qualification of the Securities for offering or
sale in any jurisdiction, (C) the institution,
threatening or contemplation of any proceeding for any
such purpose or (D) any request made by the Commission
for amending the Original Registration Statement or any
Rule 462(b) Registration Statement, for amending or
supplementing any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or for
additional information. The Company will use its best
efforts to prevent the issuance of any such stop order
and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities
or blue sky laws of such jurisdictions as the
Representative may designate and will continue such
qualifications in effect for as long as may be
necessary to complete the distribution of the
Securities, PROVIDED, HOWEVER, that in connection
therewith the Company shall not be required to qualify
as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
- 21 -
(iv) If, at any time prior to the later of (A) the final
date when a prospectus relating to the Securities is
required to be delivered under the Act or (B) the
Option Closing Date, any event occurs as a result of
which the Prospectus or any Integrated Prospectus, as
then amended or supplemented, would include any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading, or if for any other
reason it is necessary at any time to amend or
supplement the Prospectus or any Integrated Prospectus
to comply with the Act, the Exchange Act or the
respective rules or regulations of the Commission
thereunder, the Company will promptly notify the
Representative thereof and, subject to Section 5(a)(i)
hereof, will prepare and file with the Commission, at
the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to each of the
Prospectus and any required Integrated Prospectus that
corrects such statement or omission or effects such
compliance.
(v) The Company will, without charge, provide (A) to the
Representative and to counsel for the Underwriters a
conformed copy of the registration statement originally
filed with respect to the Securities and each amendment
thereto (in each case including exhibits thereto) or
any Rule 462(b) Registration Statement, certified by
the Secretary or an Assistant Secretary of the Company
to be true and complete copies thereof as filed with
the Commission by electronic transmission, (B) to each
other Underwriter, a conformed copy of such
registration statement and any Rule 462(b) Registration
Statement and each amendment thereto (in each case
without exhibits thereto) and (C) so long as a
prospectus relating to the Securities is required to be
delivered under the Act, as many copies of each
Preliminary Prospectus, the Prospectus or any
Integrated Prospectus or any amendment or supplement
thereto as the Representative may reasonably request;
without limiting the application of clause (iii) of
this sentence, the Company, not later than (A) 6:00 PM,
New York City time, on the date of determination of the
public offering price, if such determination occurred
at or prior to 12:00 Noon, New York City time, on such
date or (B) 6:00 PM, New York City time, on the
business day following the date of determination of the
public offering price, if such determination occurred
after 12:00 Noon, New York City time, on such date,
will deliver to the Representative,
- 22 -
without charge, as many copies of the Prospectus and
any amendment or supplement thereto as the
Representative may reasonably request for purposes of
confirming orders that are expected to settle on the
Firm Closing Date.
(vi) The Company, as soon as practicable, will make
generally available to its securityholders and to the
Representative a consolidated earnings statement of the
Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158
thereunder.
(vii) The Company will apply the net proceeds from the
sale of the Securities as set forth under "Use of
Proceeds" in each of the Prospectus and any Integrated
Prospectus.
(viii) The Company will not, directly or indirectly, without
the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, offer,
sell, offer to sell, contract to sell, grant any option
to purchase or otherwise sell or dispose (or announce
any offer, sale, offer of sale, contract of sale, grant
of any option to purchase or other sale or disposition)
of any shares of Common Stock or Class B Common Stock
or any securities convertible into, or exchange or
exercisable for, shares of Common Stock or Class B
Common Stock for a period of 120 days after the date
hereof, except pursuant to this Agreement and except
for issuances pursuant to the exercise of employee
stock options outstanding on the date hereof or
pursuant to the terms of convertible securities of the
Company outstanding on the date hereof.
(ix) The Company will not, directly or indirectly, (A)
take any action designed to cause or to result in, or
that has constituted or which might reasonably be
expected to constitute, the stabilization or
manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Securities of (B) (1) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of,
the Securities or (2) pay or agree to pay to any person
any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of
Securities by the Selling Securityholders pursuant to
this Agreement).
(x) During a period of five years from the date of the
Prospectus, the Company will deliver to you and, upon
request, to each of
- 23 -
the other Underwriters, without charge, promptly upon
their becoming available, copies of any current,
regular and periodic reports filed with the Commission
or any national securities exchange.
(xi) If at any time during the 25-day period after the
Registration Statement becomes effective or the period
prior to the Option Closing Date, any rumor,
publication or event relating to or affecting the
Company shall occur as a result of which in your
opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus or any
Integrated Prospectus), the Company will, after written
notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you
concerning the substance of, and disseminate a press
release or other public statement, reasonably
satisfactory to you responding to or commenting on such
rumor, publication or event.
(xii) If the Company elects to rely on Rule 462(b), the
Company shall both file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule
462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Act by the earlier of
(i) 10:00 P.M. Eastern time on the date of this
Agreement and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(xiii) The Company will obtain the agreements described
in Section 7(j) hereof prior to the Firm Closing Date.
(xiv) The Company will cause the Securities to be duly
authorized for listing by the New York Stock Exchange.
(b) Each of the Selling Securityholders covenants and agrees
with each of the Underwriters that:
(i) Such Selling Securityholder will not, directly or
indirectly, without the prior written consent of
Prudential Securities Incorporated, offer, sell, offer
to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any
offer, sale, offer of sale, contract of sale, pledge,
grant of any option to purchase or other sale or
disposition) of
- 24 -
any shares of Common Stock or Class B Common Stock
legally or beneficially owned by such Selling
Securityholder or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock
or Class B Common Stock for a period of 120 days after
the date hereof, other than any such securities
disposed of as bona fide gifts to persons who agree in
writing with you to be bound by the provisions of this
clause.
(ii) Such Selling Securityholder will not, directly or
indirectly, (A) take any action designed to cause or
result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Securities or (B) (1) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of,
the Securities or (2) pay or agree to pay to any person
any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of
Securities by the Selling Securityholders under this
Agreement).
6. EXPENSES. Except as provided in the immediately succeeding sentence,
the Company and each of the Selling Securityholders will pay all costs and
expenses incident to the performance of their respective obligations under this
Agreement (on such basis as shall be agreed between them as described in Part II
of the Registration Statement), whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing or other
production of documents with respect to the transactions, including any costs of
printing the registration statement originally filed with respect to the
Securities and any amendment thereto, any Rule 462(b) Registration Statement,
any Preliminary Prospectus, the Prospectus and any Integrated Prospectus and any
amendment or supplement thereto, this Agreement and any blue sky memoranda, (ii)
all arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel,
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and disbursements of counsel for the Underwriters relating
thereto, (vi) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Securities, (vii) the listing of the
Securities on the New York Stock Exchange, (viii) meetings with prospective
investors in the Securities (other than shall have been specifically approved by
the Representative to be paid for by the Underwriters), (ix) any fees and
expenses of counsel for such Selling Securityholder and (x) the fees and
expenses of the Attorney-in-Fact and the Custodian. Each of the Selling
Securityholders will pay or cause to be paid all costs and expenses incident to
the performance of such Selling Securityholder's obligations under this
- 25 -
Agreement which are not otherwise specifically provided for in this Section,
including all expenses and taxes incident to the sale and delivery of the
Securities to be sold by such Selling Securityholder to the Underwriters
hereunder. If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 11 hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder other than by reason of a default by any
of the Underwriters, the Company and the Selling Securityholders pro rata (based
on the number of Firm Securities to be sold by the Company and such Selling
Securityholder) will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities. Neither the Company nor any of the Selling Securityholders shall
in any event be liable to any of the Underwriters for the loss of anticipated
profits from the transactions covered by this Agreement.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representative's sole discretion, to the accuracy of the
representations and warranties of the Company and the Selling Securityholders
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's officers and the Selling Securityholders made pursuant to the
provisions hereof, to the performance by the Company and each of the Selling
Securityholders of their respective covenants and agreements hereunder and to
the following additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared
effective as of the time of execution hereof, the Original Registration
Statement or such amendment and, if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
been declared effective not later than earlier of (i) 11 A.M., New York
time, on the date on which the amendment to the registration statement
originally filed with respect to the Securities or to the Registration
Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission, and (ii) the time confirmations are sent or given as
specified by Rule 462(b)(2) or, with respect to the Original
Registration Statement, such later time and date as shall have been
consented to by the Representative; if required, the Prospectus or any
Term Sheet that constitutes a part thereof and any Integrated
Prospectus and any amendment or supplement thereto shall have been
filed with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement, the Prospectus
or any Integrated Prospectus or any
- 26 -
amendment or supplement thereto shall have been issued and no
proceedings for that purpose shall have been instituted or threatened
or, to the knowledge of the Company or the Representative, shall be
contemplated by the commission; and the Company shall have complied
with any request of the Commission for additional information (to be
included in the Registration Statement, the Prospectus or any
Integrated Prospectus or otherwise).
(b) The Representative shall have received an opinion, dated
the Firm Closing Date, of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A., counsel for the Company, to the effect that:
(i) the Company and each of its subsidiaries listed in
Schedule 3 hereto (the "Subsidiaries") have been duly
incorporated and are validly existing as corporations
in good standing under the laws of their respective
jurisdictions of incorporation and are duly qualified
to transact business as foreign corporations and are in
good standing under the laws of all other jurisdictions
where the ownership or leasing of their respective
properties or the conduct of their respective
businesses requires such qualification, except where
the failure to be so qualified does not amount to a
material liability or disability to the Company and its
subsidiaries, taken as a whole;
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective
properties and conduct their respective businesses as
described in the Registration Statement, the Prospectus
and any Integrated Prospectus, and the Company has
corporate power to enter into this Agreement and to
carry out all the terms and provisions hereof to be
carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and, except as
otherwise set forth in each of the Prospectus and any
Integrated Prospectus, are owned beneficially by the
Company free and clear of any perfected security
interests or, to the best knowledge of such counsel,
any other security interests, liens, encumbrances,
equities or claims;
(iv) the Company has an authorized capitalization as
set forth in each of the Prospectus and any Integrated
Prospectus; all of the issued shares of capital stock
of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have
either been issued in compliance with the
- 27 -
registration requirements of all applicable federal and
state securities laws or the applicable statute of
limitation periods have expired without any claim
having been made in respect thereof, and were not
issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase
securities; the Firm Securities have been duly
authorized by all necessary corporate action of the
Company and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be
validly issued, fully paid and nonassessable; the Firm
Securities have been duly authorized for listing on The
New York Stock Exchange; no holders of outstanding
shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for
any of the Securities; and no holders of securities of
the Company are entitled to have such securities
registered under the Registration Statement;
(v) the statements set forth under the heading
"Description of Common Stock" in each of the Prospectus
and any Integrated Prospectus, insofar as such
statements purport to summarize certain provisions of
the capital stock of the Company, provide a fair
summary of such provisions;
(vi) the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action
of the Company and this Agreement has been duly
executed and delivered by the Company;
(vii) to the best knowledge of such counsel, no legal
or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to
which the property of its Company or any of its
subsidiaries is subject that are required to be
described in the Registration Statement, the Prospectus
or any Integrated Prospectus and are not described
therein, and no such proceedings have been threatened
against the Company or any of its subsidiaries or with
respect to any of their respective properties; and no
contract or other document is required to be described
in the Registration Statement, the Prospectus or any
Integrated Prospectus or to be filed as an exhibit to
the Registration Statement that is not described
therein or filed as required;
(viii) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this
Agreement, the
- 28 -
compliance by the Company with the other provisions of
this Agreement and the consummation of the other
transactions herein contemplated do not (A) require the
consent, approval, authorization, registration or
qualification of or with any governmental authority,
except such as have been obtained and such as may be
required under state securities or blue sky laws, or
(B) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a
default under, any material indenture, mortgage, deed
of trust, lease or other agreement or instrument known
to such counsel, to which the Company or any of its
subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective
properties are bound, or the charter documents or the
by-laws of the Company or any of the Subsidiaries, or
any statute or any material judgment, decree, order,
rule or regulation of any court or other governmental
authority or any arbitrator known to such counsel and
applicable to the Company or any of its subsidiaries;
(ix) the Registration Statement is effective under the
Act; any required filing of the Prospectus or any Term
Sheet that constitutes a part thereof pursuant to Rules
434 and 424(b) has been made in the manner and within
the time period required by Rules 434 and 424(b); and
no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment
thereto and no order directed at any document
incorporated by reference in the Registration
Statement, the Prospectus or any Integrated Prospectus
or any amendment of supplement thereto has been issued,
and no proceedings for that purpose have been
instituted or threatened or, to the best knowledge of
such counsel, are contemplated by the Commission;
(x) the registration statement originally filed with
respect to the Securities and each amendment thereto,
any Rule 462(b) Registration Statement, the Prospectus
and any Integrated Prospectus (in each case, including
the documents incorporated by reference therein but not
including the financial statements and other financial
information contained therein, as to which such counsel
need express no opinion) comply as to form in all
material respects with the applicable requirements of
the Act, the Exchange Act, and the respective rules and
regulations of the Commission thereunder;
- 29 -
Such counsel shall also state that they have no reason to
believe that the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
Integrated Prospectus, as of its date or the date of such opinion,
included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public
officials and, as to matters involving the application of laws of any
jurisdiction other than the State of Florida or the United States, to
the extent satisfactory in form and scope to counsel for the
Underwriters, upon the opinion of [insert name of local counsel]
satisfactory to counsel for the Underwriters. Insofar as the opinion in
clause (viii)(B) above relates to the Company's subsidiaries other than
Gemaire Distributors, Inc., Heating & Cooling Supply, Inc., Comfort
Supply, Inc., Central Air Conditioning Distributors, Inc., Dunhill
Personnel System, Inc., Watsco Components, Inc., Rho Sigma, Inc.,
Cam-Stat, Inc. and P.E./Del Mar, Inc., such opinion may be limited to
actual awareness of such counsel without any inquiry other than
inquiries of officers of the Company. The foregoing opinion shall also
state that the Underwriters are justified in relying upon such opinion
of [insert name of local counsel], and copies of such opinion shall be
delivered to the Representative and counsel for the Underwriters.
References to the Registration Statement, the Prospectus or
any Integrated Prospectus in this paragraph (b) shall include any
amendment or supplement thereto at the date of such opinion.
(c) The Selling Securityholders shall have furnished to the
Representative the opinion of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., counsel for the Selling Securityholders, dated
the Firm Closing Date, to the effect that:
(i) Such Selling Securityholder has full power to enter
into this Agreement, the Custody Agreement and the
Power-of-Attorney and to sell, transfer and deliver the
Securities being sold by such Selling Securityholder
hereunder in the manner provided in this Agreement and
to perform its obligations under the Custody Agreement;
this Agreement, the Custody Agreement and the
Power-of-Attorney have been duly executed and delivered
by each Selling Securityholder; assuming due
authorization, execution and delivery by the Custodian,
the Custody Agreement and the Power-of-Attorney are the
legal, valid, binding and enforceable instruments of
such Selling
- 30 -
Securityholder, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law);
(ii) the delivery by each Selling Securityholder to the
several Underwriters of certificates for the Securities
being sold hereunder by such Selling Securityholder
against payment therefor as provided herein, will
convey good and valid title to such Securities to the
several Underwriters, free and clear of all security
interests, liens, encumbrances, equities, claims or
other defects;
(iii) the sale of the Securities to the Underwriters by
such Selling Securityholder pursuant to this Agreement,
the compliance by such Selling Securityholder with the
other provisions of this Agreement, the Custody
Agreement and the consummation of the other
transactions herein contemplated do not (A) require the
consent, approval, authorization, registration or
qualification of or with any governmental authority,
except such as have been obtained and such as may be
required under state securities or blue sky laws, or
(B) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a
default under any material indenture, mortgage, deed of
trust, lease or other agreement or instrument to which
such Selling Securityholder is a party or by which such
Selling Securityholder or any of such Selling
Securityholder's properties are bound, or any statute
or any judgment, decree, order, rule or regulation of
any court or other governmental authority or any
arbitrator applicable to such Selling Securityholder.
In rendering such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public
officials and, as to matters involving the application of laws of any
jurisdiction other than the State of Florida or the United States, to
the extent satisfactory in form and scope to counsel for the
Underwriters, upon the opinion of [insert name of local counsel]. The
foregoing opinion shall also state that the Underwriters are justified
in relying upon such opinion of [insert name of local counsel], and
copies of such opinion shall be delivered to the Representative and
counsel for the Underwriters.
- 31 -
References to the Registration Statement, the Prospectus or
any Integrated Prospectus in this paragraph (c) shall include any
amendment or supplement thereto at the date of such opinion.
(d) The Representative shall have received an opinion, dated
the Firm Closing Date, of King & Spalding counsel for the Underwriters,
with respect to the issuance and sale of the Firm Securities, the
Registration Statement, the Prospectus or any Integrated Prospectus,
and such other related matters as the Representative may reasonably
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters. In rendering such opinion, such counsel
may rely as to all matters of Florida law upon the opinion of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., referred to
in paragraph (b) above.
(e) The Representative shall have received from Arthur
Anderson LLP a letter or letters dated, respectively, the date hereof
and the Firm Closing Date, in form and substance satisfactory to the
Representative to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the
meaning of the Act, the Exchange Act and the applicable
rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial
statements of the Company examined by them and included
in the Registration Statement, the Prospectus and any
Integrated Prospectus comply in form in all material
respects with the applicable accounting requirements of
the Act, the Exchange Act and the related published
rules and regulations thereunder;
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of
Certified Public Accountants of the interim unaudited
consolidated condensed financial statements of the
Company and its consolidated subsidiaries as of and for
the nine months ended September 30, 1995 included in
the Registration Statement, the Prospectus and any
Integrated Prospectus, and carrying out certain
specified procedures (which do not constitute an
examination made in accordance with generally accepted
auditing standards) that would not necessarily reveal
matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the
minute books of the shareholders, the board of
directors and any committees thereof
- 32 -
of the Company and each of its consolidated
subsidiaries, and inquiries of certain officials of the
Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters,
nothing came to their attention that caused them to
believe that:
(A) the unaudited consolidated condensed financial
statements of the Company and its consolidated
subsidiaries included in the Registration
Statement, the Prospectus and any Integrated
Prospectus do not comply in form in all material
respects with the applicable accounting
requirements of the Act, the Exchange Act and the
related published rules and regulations
thereunder, or are not in conformity with
generally accepted accounting principles applied
on a basis substantially consistent with that of
the audited consolidated financial statements
included in the Registration Statement, the
Prospectus and any Integrated Prospectus; and
(B) at a specific date not more than five business
days prior to the date of such letter, there were
any changes in the capital stock or long-term debt
of the Company and its consolidated subsidiaries
or any decreases in net current assets or
shareholders' equity of the Company and its
consolidated subsidiaries, in each case compared
with amounts shown on the September 30, 1995
unaudited consolidated condensed balance sheet
included in the Registration Statement, the
Prospectus and any Integrated Prospectus, or for
the period from October 1, 1995 to such specified
date there were any decreases, as compared with
the corresponding period in the preceding year, in
total revenues, income before income taxes and
minority interests or total or per share amounts
of net income of the Company and its consolidated
subsidiaries, except in all instances for changes,
decreases or increases set forth in such letter;
(iv) they have carried out certain specified
procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information
that are derived from the general accounting records of
the Company and its consolidated subsidiaries and are
included in the Registration Statement, the Prospectus
and any Integrated Prospectus and have compared
- 33 -
such amounts, percentages and financial information
with such records of the Company and its consolidated
subsidiaries and with information derived from such
records and have found them to be in agreement,
excluding any questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro
forma consolidated condensed financial statements
included in the Registration Statement, the Prospectus
and any Integrated Prospectus, carrying out certain
specified procedures that would not necessarily reveal
matters of significance with respect to the comments
set forth in this paragraph (v), inquiries of certain
officials of the Company and its consolidated
subsidiaries and Three States who have responsibility
for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the unaudited
pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to
believe that the unaudited pro forma consolidated
condensed financial statements do not comply in form in
all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of
such statements.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases, increases do not, in the sole judgment of the Representative, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (e) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(f) The Representative shall have received from Rhea & Ivy,
PLC a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the
Representative to the effect that:
(i) they are independent accountants with respect to
Three States and its consolidated subsidiaries within
the meaning of the Act,
- 34 -
the Exchange Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited consolidated
financial statements of Three States examined by them
and included in the Registration Statement, the
Prospectus and any Integrated Prospectus comply in form
in all material respects with the applicable accounting
requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder; and
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of
Certified Public Accountants of the interim unaudited
consolidated condensed financial statements of Three
States and its consolidated subsidiaries as of and for
the nine months ended September 30, 1995 included in
the Registration Statement, the Prospectus and any
Integrated Prospectus, and carrying out certain
specified procedures (which do not constitute an
examination made in accordance with generally accepted
auditing standards) that would not necessarily reveal
matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the
minute books of the shareholders, the board of
directors and any committees thereof of Three States
and each of its consolidated subsidiaries, and
inquiries of certain officials of Three States and its
consolidated subsidiaries who have responsibility for
financial and accounting matters, nothing came to their
attention that caused them to believe that the
unaudited consolidated condensed financial statements
of Three States and its consolidated subsidiaries
included in the Registration Statement, the Prospectus
and any Integrated Prospectus do not comply in form in
all material respects with the applicable accounting
requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder, or
are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited consolidated
financial statements included in the Registration
Statement, the Prospectus and any Integrated
Prospectus.
(g) The Representative shall have received a certificate,
dated the Firm Closing Date, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect
that:
- 35 -
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and
as of the Firm Closing Date; the Registration
Statement, as amended as of the Firm Closing Date, does
not include any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus
and any Integrated Prospectus, as amended or
supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit
to state any material fact necessary in order to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading; and the Company has performed all covenants
and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Firm
Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment
thereto and no order directed at any document
incorporated by reference in the Registration
Statement, the Prospectus or any Integrated Prospectus
or any amendment or supplement thereto has been issued,
and no proceedings for that purpose have been
instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and
each of the Prospectus and any Integrated Prospectus,
neither the Company nor any of its subsidiaries have
sustained any material loss or interference with their
respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and there has not
been any material adverse change, or any development
involving a prospective material adverse change, in the
condition (financial or otherwise), management,
business prospects, net worth or results of operations
of the Company or any of its subsidiaries, except in
each case as described in or contemplated by the
Prospectus and any Integrated Prospectus.
(h) The Representative shall have received a certificate from
each Group 1 Selling Securityholder, signed by such Selling
Securityholder, dated the Firm Closing Date, to the effect that:
- 36 -
(i) the representations and warranties of such Group 1
Selling Securityholder in this Agreement are true and
correct as if made on and as of the Firm Closing Date;
(ii) the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of
a material fact or omit to state any material fact
necessary to make the statements therein not
misleading, and each of the Prospectus and any
Integrated Prospectus, as amended or supplemented as of
the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; and
(iii) such Group 1 Selling Securityholder has performed all
covenants and agreements on its part to be performed or
satisfied at or prior to the Firm Closing Date.
(i) The Representative shall have received a certificate from
each Group 2 Selling Securityholder, signed by such Group 2 Selling
Securityholder, dated the Firm Closing Date, to the effect that:
(i) the representations and warranties of such Group 2
Selling Securityholder in this Agreement are true and
correct as if made on and as of the Firm Closing Date;
(ii) to the extent that any statements or omissions are
made in the Registration Statement, the Prospectus and
any Integrated Prospectus in reliance upon and in
conformity with written information furnished to the
Company by the Group 2 Selling Securityholder
specifically for use therein, the Registration
Statement, as amended as of the Firm Closing Date, does
not include any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein not misleading, and each of the
Prospectus and any Integrated Prospectus, as amended or
supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit
to state any material fact necessary in order to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading; and
- 37 -
(iii) such Group 2 Selling Securityholder has performed all
covenants and agreements on its part to be performed or
satisfied at or prior to the Firm Closing Date.
(j) The Representative shall have received from each person
who is a director or executive officer of the Company an agreement to
the effect that such person will not, directly or indirectly, without
the prior written consent of Prudential Securities Incorporated, on
behalf of the Underwriters, offer, sell, offer to sell, pledge,
contract to sell, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, pledge, contract
of sale grant of an option to purchase or other sale or disposition) of
any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of
120 days after the date of this Agreement.
(k) On or before the Firm Closing Date, the Representative and
counsel for the Underwriters shall have received such further
certificates, documents or other information as they may have
reasonably requested from the Company.
(l) Prior to the commencement of the offering of the
Securities, the Securities shall have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative and
counsel for the Underwriters. The Company shall furnish to the Representative
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representative and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
8. INDEMNIFICATION AND CONTRIBUTION
(a) The Company and each Group 1 Selling Securityholder
jointly and severally agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter or such controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
- 38 -
(i) any untrue statement or alleged untrue statement made
by the Company or such Group 1 Selling Securityholder
in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus
or any amendment or supplement thereto or (B) any
application or other document, or any amendment or
supplement thereto, executed by the Company or such
Group 1 Selling Securityholder or based upon written
information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities
association or securities exchange (each an
"Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any
Integrated Prospectus or any amendment or supplement
thereto, or any Application a material fact required to
be stated therein or necessary to make the statements
therein not misleading, or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual
materials used in connection with the marketing of the
Securities, including without limitation, slides,
videos, films, tape recordings,
and will reimburse, as incurred, each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred
by such Underwriter or such controlling person in connection with
investigating, defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Company and such Group 1 Selling
Securityholder will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus, any Integrated
Prospectus or any amendment or supplement thereto, or any Application
in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representative
specifically for use therein; and PROVIDED, FURTHER, that the Company
and such Group 1 Selling Securityholder will not be liable to any
Underwriter or any person controlling such Underwriter with respect to
any such untrue statement or omission made in any
- 39 -
Preliminary Prospectus that is corrected in the Prospectus or any
Integrated Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased
Securities from such Underwriter but was not sent or given a copy of
the Prospectus or any Integrated Prospectus (as amended or
supplemented), other than the documents incorporated by reference
therein, at or prior to the written confirmation of the sale of such
Securities to such person in any case where such delivery of the
Prospectus or any Integrated Prospectus (as amended or supplemented) is
required by the Act, unless such failure to deliver the Prospectus (as
amended or supplemented) was a result of noncompliance by the Company
with Section 5(a)(iv) or 5(a)(v) of this Agreement. This indemnity
agreement will be in addition to any liability which the Company and
such Group 1 Selling Securityholder may otherwise have. Neither the
Company nor any Group 1 Selling Securityholder will, without the prior
written consent of the Underwriter or Underwriters purchasing, in the
aggregate, more than fifty percent (50%) of the Securities, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such
Underwriter or any person who controls any such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of
all of the Underwriters and such controlling persons from all liability
arising out of such claim, action, suit or proceeding.
(b) The Group 2 Selling Securityholder agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, each Underwriter and each person
who controls the Company or any Underwriter within the meaning of
Section 15 of the Act against any such losses, claims, damages or
liabilities to which the Company, any such director, officer, such
Underwriter or any such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application
or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or
any Integrated Prospectus or any amendment or supplement thereto, or
any Application or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Group 2 Selling
Securityholder for use therein; PROVIDED, HOWEVER, that the Group 2
Selling Securityholder will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue
statement or omission
- 40 -
made in any Preliminary Prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any
such loss, claim, damage or liability purchased Securities from such
Underwriter but was not sent or given a copy of the Prospectus or any
Integrated Prospectus (as amended or supplemented) at or prior to the
written confirmation of the sale of such Securities to such person in
any case where such delivery of the Prospectus (as amended or
supplemented) is required by the Act, unless such failure to deliver
the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5(a)(iv) or 5 (a)(v) of this
Agreement; and subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any legal or other
expenses reasonably incurred by the Company, any such director,
officer, such Underwriter or any such controlling person in connection
with investigating or defending any such loss, claim, damage, liability
or any action in respect thereof. This indemnity agreement will be in
addition to any liability which the Group 2 Selling Securityholder may
otherwise have. The Group 2 Selling Securityholder will not, without
the prior written consent of the Underwriters purchasing greater than
fifty percent of the Securities, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought
hereunder (whether or not such Underwriter or any person who controls
such Underwriter within the meaning of Section 15 of the Act is a party
to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of the
Underwriters and each such controlling person from all liability
arising out of such claim, action, suit or proceeding.
(c) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors, each of
its officers who signed the Registration Statement, each Selling
Securityholder and each person, if any, who controls the Company or
such Selling Securityholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act against any losses, claims, damages
or liabilities to which the Company, any such director, officer of the
Company, any Selling Securityholder or any such controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus, or the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto, or any Application or (ii) the
omission or the alleged omission to state therein a material fact
required to be stated in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application
or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written
- 41 -
information furnished to the Company by such Underwriter through the
Representative specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse,
as incurred, any legal or other expenses reasonably incurred by the
Company, any such director, officer or controlling person or such
Selling Securityholder in connection with investigating or defending
any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnifying party
shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the
defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that in connection with such
action the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or
circumstances, designated by the Representative in the case of
paragraph (a) or (b) of this Section 8, representing the indemnified
parties under such paragraph (a) or (b) who are parties to such action
or actions) or (ii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for
the costs and expenses
- 42 -
of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified
party waived its rights under this Section 8 in which case the
indemnified party may effect such a settlement without such consent. It
is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 8(a), 8(b) and
8(c) hereof, including the amounts of any requested reimbursement
payments and the method of determining such amounts, shall be settled
by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event that the party
demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said
demand or notice is authorized to do so. Such an arbitration would be
limited to the operation of the interim reimbursement provisions
contained in Sections 8(a), 8(b) and 8(c) hereof and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Sections 8(a), 8(b)
and 8(c) hereof.
(e) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in
respect thereof), each indemnifying party, in order to provide for just
and equitable contribution, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the
one hand and the indemnified party or parties on the other in
connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand, such Selling Securityholder on another hand and the
Underwriters on the other hand shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting
expenses) received by the Company and such Selling Securityholder bear
to the total underwriting discounts and commissions received by the
Underwriters. The relative fault of the parties shall be determined by
referenced to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company,
such Selling Securityholder or the Underwriters, the parties' relative
intents, knowledge, access to information and opportunity to correct or
prevent such
- 43 -
statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company, each Selling
Securityholder and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose) of by any other method of allocation that
does not take into account the equitable considerations referred to
above in this paragraph (e). Notwithstanding any other provision of
this paragraph (e), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under
this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same
or any substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective
underwriting obligations and not joint, and contributions among
Underwriters shall be governed by the provisions of the Prudential
Securities Incorporated Master Agreement Among Underwriters. For
purposes of this paragraph (e), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as such
Underwriter, each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who
controls the Company or such Selling Securityholder within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as the Company and such Selling
Securityholder.
(f) The liability of each Selling Securityholder under this
Section 8 shall not exceed an amount equal to the net proceeds of the
Securities sold by such Selling Securityholder to the Underwriters.
9. DEFAULT OF UNDERWRITERS. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder and
the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate of Firm
Securities or Option Securities, as the case may be, to
- 44 -
be purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representative are not made within 36 hours
after such default for the purchase by other persons (who may include on or more
of the non-defaulting Underwriters, including the Representative) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company other than as provided in Section 10 hereof. In the event of any default
by one or more Underwriters as described in this Section 9, the Representative
shall have the right to postpone the Firm Closing Date or the Option Closing
Date, as the case may be, established as provided in Section 3 hereof for not
more than seven business days in order that any necessary changes may be made in
the arrangements or documents for the purchase and delivery of the Firm
Securities or Option Securities, as the case may be. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. SURVIVAL. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company,
its officers, the Selling Securityholders and the several Underwriters
set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, any Selling Securityholder,
any Underwriter or any controlling person referred to in Section 8
hereof and (ii) delivery of any payment for the Securities. The
respective agreements, covenants, indemnities and other statements set
forth in Sections 6 and 8 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representative by notice to the Company and the Selling Securityholders
given prior to the Firm Closing Date or the related Option Closing
Date, respectively, in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or
prior thereto or, if at or prior to the Firm Closing Date or such
Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have,
in the sole judgment of the Representative, sustained
any material loss or interference with their respective
businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any
material adverse change, or any development involving a
prospective material adverse change (including without
limitation a change
- 45 -
in management or control of the Company), in the
condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and
its subsidiaries, except in each case as described in
or contemplated by the Prospectus and any Integrated
Prospectus (exclusive of any amendment or supplement
thereto);
(ii) trading in the Common Stock or the Class B Common
Stock shall have been suspended by the Commission or
the New York Stock Exchange or American Stock Exchange,
as the case may be, or trading in securities generally
on the New York or American Stock Exchanges shall have
been suspended or minimum or maximum prices shall have
been established on either such exchange;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign
power, (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United
States or (C) any other calamity or crisis or material
adverse change in general economic, political or
financial conditions having an effect on the U.S.
financial markets that, in the sole judgment of the
Representative, makes it impractical or inadvisable to
proceed with the public offering or the delivery of the
Securities as contemplated by the Registration
Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as
provided in Section 10 hereof.
12. INFORMATION SUPPLIED BY UNDERWRITERS. The statements set forth in
the last paragraph on the front cover page and in the first and third paragraphs
under the heading "Underwriting" in any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by any Underwriter
through the Representative to the Company for the purposes of Sections 2(a)(ii)
and 8 hereof. The Underwriters confirm that such statements (to such extent) are
correct.
13. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and
- 46 -
confirmed in writing to Prudential Securities Incorporated, One New York Plaza,
New York, New York 10292, telecopy number (212) 778-7621, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company at
2665 South Bayshore Drive, Coconut Grove, Florida 33133, telecopy number (305)
858-4492, Attention: President.
14. SUCCESSORS. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company, each Selling
Securityholder and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the Selling
Securityholders contained in Section 8 of this Agreement shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Underwriters contained in Section 8 of this Agreement shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company or such Selling Securityholder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act. No purchaser of Securities from
any Underwriter shall be deemed a successor because of such purchase.
15. APPLICABLE LAW. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
- 47 -
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company, each of
the Selling Securityholders and each of the several Underwriters.
Very truly yours,
WATSCO, INC.
By:________________________________
Name:
Title:
THE SELLING SECURITYHOLDERS
[IDENTIFY]
By:________________________________
Name:
Title: Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
By:_____________________________
Name: Jean-Claude Canfin
Title: Director
- 48 -
SCHEDULE 1
UNDERWRITERS
NUMBER OF FIRM
SECURITIES TO
UNDERWRITER BE PURCHASED
----------- ------------
Prudential Securities Incorporated...........................
[Insert names of other Underwriters]
Total........................................................ 1,400,000
=========
- 49 -
SCHEDULE 2
NUMBER OF FIRM
SECURITIES TO
BE SOLD
-------
The Company...................................... 1,000,000
Group 1 Selling Securityholders:................. 105,720
Alna Capital Associates..................... 25,720
Albert H. Nahmad............................ 50,000
Ronald P. Newman............................ 30,000
-------
............................................ 105,720
Group 2 Selling Securityholders:................. 294,280
Oliver M. Butler and
Marjorie E. Butler Declaration of Trust.. 286,405
O.M. Butler................................. 7,875
-------
............................................ 294,280
Total............................................ 1,400,000
=========
- 50 -
SCHEDULE 3
SUBSIDIARIES
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
- 51 -
GREENBERG
ATTORNEYS AT LAW
TRAURIG
January 22, 1996
Watsco, Inc.
2665 South Bayshore Drive
Suite 901
Miami, Florida 33133
Re: OFFERING OF COMMON STOCK OF WATSCO, INC.
Gentlemen:
On the date hereof, Watsco, Inc., a Florida corporation (the
"Company"), filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"). Such Registration Statement relates to the sale by
the Company and certain selling shareholders of up to 1,610,000 shares of the
Company's Common Stock, par value $.50 per share (the "Shares"). We have acted
as counsel to the Company in connection with the preparation and filing of the
Registration Statement.
In connection therewith, we have examined and relied upon the original
or a copy, certified to our satisfaction, of (i) the Amended and Restated
Articles of Incorporation and the By-laws of the Company; (ii) resolutions of
the Board of Directors of the Company authorizing the offering and the issuance
of the shares and related matters; (iii) the
GREENBERG TRAURIG HOFFMAN LIPOFF ROSEN & QUENTEL, P.A.
1221 BRICKELL AVENUE MIAMI, FLORIDA 33131 305-579-0500 FAX 305-579-0717
MIAMI FORT LAUDERDALE WEST PALM BEACH TALLAHASSEE
NEW YORK WASHINGTON, D.C.
Watsco, Inc.
January 22, 1996
Page 2
- ----------------
Registration Statement and the exhibits thereto; and (iv) such other documents
and instruments as we have deemed necessary for the expression of the opinions
herein contained. In making the foregoing examinations, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, and the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to various questions of
fact material to this opinion, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independently checking or verifying the accuracy of such
documents, records, and instruments.
Based upon the foregoing examination, we are of the opinion that the
Shares have been duly and validly authorized and, when issued and delivered in
accordance with the Underwriting Agreement filed as Exhibit 1.1 to the
Registration Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category or persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.
Sincerely,
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
By:__________________________
REVOLVING CREDIT AGREEMENT
________________________________________________________________________________
BY AND BETWEEN
CAC ACQUISITION, INC.
- AND -
NATIONSBANK OF FLORIDA, N.A.
________________________________________________________________________________
DATED AS OF OCTOBER 26, 1995
TABLE OF CONTENTS
PAGE
----
SECTION 1
DEFINITIONS........................ 1
1.1 DEFINED TERMS ............................................ 1
1.2 OTHER DEFINITIONAL PROVISIONS ............................ 4
SECTION 2
AMOUNT AND TERMS OF REVOLVING CREDIT ............ 5
2.1 REVOLVING CREDIT ......................................... 5
2.2 ADVANCES UNDER REVOLVING CREDIT .......................... 5
2.3 LIBOR OPTION ............................................. 6
2.4 NOTE ..................................................... 9
2.5 INTEREST ON THE NOTE ..................................... 9
2.6 MATURITY OF REVOLVING CREDIT ............................. 9
2.7 ACCESS TO REVOLVING CREDIT ............................... 9
2.8 INTEREST ................................................. 9
2.9 PAYMENTS ................................................. 10
2.10 STANDBY L/C AGREEMENT .................................... 10
SECTION 3
ADDITIONAL COSTS AND FEES ................ 10
3.1 ADDITIONAL COSTS ......................................... 10
3.2 FACILITY FEE ............................................. 11
SECTION 4
COLLATERAL ........................ 12
SECTION 5
GUARANTY ......................... 12
SECTION 6
REPRESENTATIONS AND WARRANTIES ............. 12
6.1 ORGANIZATION, STANDING, CORPORATE POWER, ETC ............. 12
6.2 AUTHORIZATION ............................................ 13
6.3 LITIGATION ............................................... 13
6.4 FINANCIAL STATEMENTS ..................................... 13
6.5 TAXES .................................................... 14
6.6 BURDENSOME RESTRICTIONS .................................. 14
6.7 CENTRAL OWNERSHIP ........................................ 14
6.8 PROPERTY AND ASSETS ...................................... 14
(i)
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
6.9 PERMITS, LICENSES AND APPROVALS .......................... 14
6.10 ENFORCEABILITY ........................................... 14
6.11 DEFAULT .................................................. 15
6.12 REGULATION U ............................................. 15
6.13 ERISA .................................................... 15
6.14 INVESTMENT COMPANY ACT ................................... 15
6.15 USE OF PROCEEDS .......................................... 15
6.16 OTHER ASSETS ............................................. 15
SECTION 7
CONDITIONS PRECEDENT .................. 15
7.1 OPINION OF COUNSEL ....................................... 16
7.2 SUPPORTING DOCUMENTS ..................................... 16
7.3 CONDITIONS TO ALL ADVANCES AND STANDBY L/C'S ............. 17
SECTION 8
AFFIRMATIVE COVENANTS .................. 18
8.1 CORPORATE EXISTENCE ...................................... 18
8.2 INSURANCE ................................................ 19
8.3 OBLIGATIONS AND TAXES .................................... 19
8.4 NOTICE ................................................... 19
8.5 BOOKS AND RECORDS/AUDITS ................................. 19
8.6 COMPLIANCE WITH LAW ...................................... 19
8.7 TRANSACTIONS WITH AFFILIATES ............................. 20
8.8 CONTINGENT LIABILITIES ................................... 20
8.9 EXECUTION OF OTHER DOCUMENTS ............................. 20
8.10 REPORTING REQUIREMENTS - BORROWER ........................ 20
8.11 NET WORTH - BORROWER ..................................... 21
8.12 FUNDED DEBT/EARNINGS RATIO - BORROWER .................... 22
8.13 FIXED CHARGE COVERAGE RATIO - BORROWER ................... 22
8.14 DISTRIBUTORSHIP AGREEMENT - BORROWER ..................... 22
8.15 REPORTING REQUIREMENTS - GUARANTOR ....................... 22
8.16 TANGIBLE NET WORTH - GUARANTOR ........................... 24
8.17 LEVERAGE RATIO - GUARANTOR ............................... 24
8.18 MANAGEMENT - GUARANTOR ................................... 24
SECTION 9
NEGATIVE COVENANTS .................... 24
9.1 DEFAULT UNDER OTHER AGREEMENTS OR CONTRACTS .............. 24
9.2 ACCOUNTING PRACTICES ..................................... 25
9.3 GUARANTIES/DEBT ASSUMPTIONS - BORROWER ................... 25
9.4 SALE/LEASEBACK AND CAPITALIZED LEASE
TRANSACTIONS - BORROWER ................................. 25
9.5 DISPOSAL OF PROPERTY - BORROWER .......................... 25
(ii)
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
9.6 OWNERSHIP - BORROWER ..................................... 25
9.7 ADDITIONAL INDEBTEDNESS - BORROWER ....................... 25
9.8 DIVIDENDS - BORROWER ..................................... 25
9.9 ADDITIONAL LIENS - BORROWER .............................. 26
9.10 CAPITAL EXPENDITURES - BORROWER .......................... 26
9.11 ADVANCES TO AFFILIATES ................................... 26
9.12 LIMITATION ON MERGERS AND SALE OF ASSETS ................. 26
9.13 CONTROL/NAME ............................................. 26
9.14 NOTES, ACCOUNTS RECEIVABLE ............................... 26
SECTION 10
(iii)
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
DEFAULTS AND REMEDIES ................... 26
10.1 EVENTS OF DEFAULT AND REMEDIES ........................... 26
SECTION 11
MISCELLANEOUS ....................... 29
11.1 NOTICES .................................................. 29
11.2 SURVIVAL OF REPRESENTATIONS .............................. 30
11.3 EFFECT OF DELAY .......................................... 30
11.4 EXPENSES ................................................. 30
11.5 MODIFICATIONS AND WAIVERS ................................ 30
11.6 DISCLAIMER ............................................... 30
11.7 REMEDIES CUMULATIVE ...................................... 31
11.8 APPLICATION OF PAYMENTS .................................. 31
11.9 CONSTRUCTION ............................................. 31
11.10 SEVERABILITY OF PROVISIONS ............................... 31
11.11 HEADINGS ................................................. 31
11.12 SUCCESSORS AND ASSIGNS ................................... 31
11.13 INDEMNIFICATION .......................................... 32
11.14 TIME OF PAYMENTS ......................................... 32
11.15 MANDATORY ARBITRATION .................................... 32
(iv)
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") is made and entered
into as of the 26th day of October, 1995, by and between:
CAC ACQUISITION, INC.,
a North Carolina corporation, which corporation shall
immediately change its name to CENTRAL AIR CONDITIONING
DISTRIBUTORS, INC. upon the acquisition described in
Section 5.15 herein
-and-
NATIONSBANK OF FLORIDA, N.A.,
(hereinafter the "Lender")
R E C I T A L S
A. The Borrower has requested Lender to provide a Revolving
Credit (as said term is defined herein) to the Borrower, as set forth herein.
B. The Lender is willing to provide the Revolving Credit to the
Borrower for the purposes, upon the terms, and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and for other good and valuable consideration, it is agreed as
follows:
SECTION 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"ADVANCE": an Advance to the Borrower pursuant to Section 2.2
herein.
"AFFILIATES": any Person that directly or indirectly through
one or more intermediaries controls or are controlled by or are under common
control with Borrower.
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"AGREEMENT": this Revolving Credit Agreement, as the same may
be amended, supplemented, modified or extended from time to time.
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in the States of Florida and North Carolina are
authorized or required by law to close.
"CLOSING DATE": as of October 26, 1995.
"CODE": the Internal Revenue Code of 1986, as amended,
supplemented or modified from time to time.
"DEFAULT": any of the events specified in Section 10 herein,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied, provided such Default has not been waived in writing
by the Lender.
"DEFAULT RATE": an interest rate per annum equal to the lesser
of (i) two (2.0%) percent in excess of the Prime Rate; or (ii) the maximum rate
of interest permitted by law.
"ERISA": the Employee Retirement Income Security Act of 1974
and all related provisions of the Code, as the same may be amended, supplemented
or modified from time to time, together with all applicable rulings and
regulations issued under the provisions of either of them.
"EVENT OF DEFAULT": any of the events specified in Section 10
herein, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other conditions, has been satisfied.
"FUNDED DEBT": Indebtedness of Borrower other than trade
payables, accrued expenses incurred in the ordinary course of business, deferred
tax obligations and the Subordinated Indebtedness.
"GUARANTOR": Watsco, Inc., a Florida corporation.
"INDEBTEDNESS": at any date, any obligation for money borrowed
or other monetary obligations incurred, whether or not evidenced by notes,
bonds, debentures or other similar instruments, or any obligation under
conditional sale or other title retention agreements or capitalized leases or
any obligation issued or assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any guaranty of any of the
foregoing.
"LIABILITIES": at any date, all liabilities, direct and
indirect, contingent and absolute, computed in accordance
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with generally accepted accounting principles applied on a consistent basis.
"LIBOR RATE": the rate at which United States Dollar deposits
are offered in the London Interbank Market, fully adjusted for any reserve
requirements established from time to time by the Board of Governors of the
Federal Reserve System.
"LIEN": any mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, and
the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction).
"LINE AGREEMENT": that certain Amendment to Line of Credit
Agreement by and between the Lender and Guarantor dated as of April 30, 1994;
and that certain Second Amendment to Line of Credit Agreement by and
between the Lender and Guarantor dated as of June 23, 1995.
"LOAN DOCUMENTS": this Agreement, the Note, the Stock Pledge
Agreement, the Financing Statements, the Guaranty, the Solvency Certificate and
all documents, instruments and agreements executed in connection herewith or
therewith.
"MATURITY DATE": December 31, 1998.
"NET WORTH": (A) the aggregate amount of assets shown on the
balance sheet of Borrower at any particular date less (B) all Liabilities of
Borrower at such date; all as determined in accordance with generally accepted
accounting principals consistently applied.
"NOTE": as said term is defined in Section 2.4 herein.
"PERSON": an individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity or a governmental or any agency or
political subdivision thereof.
"PLAN": any plan of a type described in Section 4021(a) of
ERISA which may be established (or maintained by the Borrower in respect of
which the Borrower is an "employer" as defined in Section 3(5) of ERISA.
"PRIME RATE": the index rate of interest (but not necessarily
the best or lowest rate charged borrowing customers of the Lender) announced by
the Lender from time to time as its
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prime rate. Said rate is a reference rate for the information and use of the
Lender in establishing the actual rates to be charged to its borrowers.
"REPORTABLE EVENT": any of the events set forth in Section
4034(b) of ERISA or the regulations thereunder.
"REVOLVING CREDIT": as said term is defined in Section 2.1
herein.
"RHEEM": Rheem Manufacturing Company, a Delaware corporation.
"RHEEM AGREEMENT": the distributorship agreement by and
between Rheem and Borrower, together with all amendments thereto, which
agreement shall be in form and content acceptable to Lender.
"STANDBY L/C AGREEMENT": the Lender's current form of
Application and Agreement for Standby Letter of Credit attached hereto and made
a part hereof as Exhibit "A".
"SUBORDINATED INDEBTEDNESS": the subordinated indebtedness of
Borrower to Guarantor in the principal amount of ONE MILLION TWO HUNDRED
THOUSAND DOLLARS ($1,200,000.00) under that certain Subordination Agreement by
and among Lender, Borrower and Guarantor of even date herewith (the
"Subordination Agreement).
"TANGIBLE NET WORTH": the aggregate amount of assets shown on
the balance sheet of Guarantor on any particular date (but excluding from such
assets, capitalized organizational and development costs, capitalized interest,
debt discount and expense, goodwill, patents and trademarks, copyrights,
franchises, licenses, amounts due from officers, employees, directors,
stockholders and affiliates, and other assets as are properly classified as
intangible assets under generally accepted accounting principles), less
Liabilities of Guarantor at such date with the exception of those certain ten
percent (10%) Convertible Subordinated Debentures due 1996 under that certain
Indenture dated September 12, 1986, all computed in accordance with generally
accepted accounting principles applied on a consistent basis.
"TERMINATION DATE": the earlier of the Maturity Date or any
other date beyond which the Lender shall have no obligation hereunder to make
Advances, whether as a result of maturity, Default or otherwise.
1.2 OTHER DEFINITIONAL PROVISIONSOTHER DEFINITIONAL PROVISIONS.
(a) all terms defined in or incorporated into this Agreement shall have the
defined
4
meanings when used herein or in the Loan Documents or any certificate or other
instrument made or delivered pursuant hereto unless the context otherwise
requires; (b) each accounting term used but not defined herein shall have the
meaning given to it under generally accepted accounting principles.
SECTION 2
AMOUNT AND TERMS OF REVOLVING CREDIT
2.1 REVOLVING CREDIT.
(a) The Lender agrees, upon the terms and subject to the
conditions hereof, to extend a revolving credit facility to the Borrower (the
"Revolving Credit"), in an aggregate principal amount at any one time
outstanding not to exceed EIGHT MILLION DOLLARS ($8,000,000.00), to be used by
the Borrower in order to obtain loans and advances from the Lender ("Advances")
pursuant to the terms and provisions set forth in Section 2.2 herein and for the
issuance of two (2) standby letters of credit in the maximum aggregate face
amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($4,250,000.00) (the
"Standby L/C's"). The aggregate principal amount of all Advances and the face
amount of the Standby L/C's outstanding at any one time under the Revolving
Credit shall not at any time exceed EIGHT MILLION DOLLARS ($8,000,000.00). The
Advances to the Borrower and issuance of the Standby L/C's on behalf of Borrower
shall at all times be conditioned upon there existing no Default or Event of
Default hereunder, and the Lender shall have no obligation to make Advances or
issue the Standby L/C's at any time that a Default or Event of Default exists
hereunder. Until the Termination Date, the Borrower may use the Revolving Credit
by borrowing, repaying in whole or in part, and reborrowing under the Revolving
Credit, all in accordance with this Agreement; provided, however, at the time of
each Advance or issuance of the Standby L/C's under the Revolving Credit, the
Borrower shall not be in Default hereunder, or in default under any other
agreement with or obligation to the Lender.
2.2 ADVANCES UNDER REVOLVING CREDIT.
(a) Subject to the terms and conditions hereof, from time to
time the Borrower may obtain Advances under the Revolving Credit in an aggregate
principal amount at any one time outstanding not to exceed EIGHT MILLION DOLLARS
($8,000,000.00). The Borrower may use Advances to pay or prepay any Advances
outstanding under such facility in whole or in part, subject to the terms and
conditions of this Agreement; provided that at the time of each such Advance,
the Borrower shall not be in Default hereunder, or in default under any other
agreement with or obligation to the Lender.
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(b) Interest on the Advances outstanding from time to time
under the Revolving Credit shall accrue at an annual rate to be selected by
Borrower equal to either: (i) a fixed rate equal to seventy-five (75) basis
points in excess of the LIBOR Rate for periods of thirty (30) days, sixty (60)
days, ninety (90) days, one hundred twenty (120) days, one hundred fifty (150)
days, one hundred eighty (180) days or one (1) year, but in any event not to
exceed the Maturity Date (the "LIBOR Option"); or (ii) a fluctuating rate equal
to the Prime Rate minus one and five-eighths of one percent (1 5/8%) (the "Prime
Option"). All interest shall be computed on a daily basis based on a 360-day
year. All interest accrued on Advances under the Revolving Credit shall be due
and payable quarterly on the fifth (5th) day of each month. If such day is not a
Business Day, the Business Day next succeeding such date shall be the date on
which interest shall be due and payable.
(c) The Borrower may request Advances on any Business Day,
provided that the Borrower shall give the Lender irrevocable telephonic notice
confirmed in writing (via facsimile or hand delivery) on Lender's usual and
customary form, substantially in the form attached hereto as Exhibit "B",
received by the Lender prior to 12:00 noon (Miami, Florida time) two (2)
Business Days prior to the borrowing date in the event an Advance subject to the
LIBOR Option is selected, specifying the amount to be borrowed and the borrowing
date. Upon fulfillment of the applicable conditions set forth herein, the Lender
shall make such funds available to the Borrower on the borrowing date by
crediting same to the Borrower's demand deposit account with Lender. Upon each
crediting of a sum to the account of the Borrower, the Borrower shall have
effected an Advance from the Lender under the Revolving Credit and shall be
indebted to the Lender for the amount thereof, plus interest thereon, in
accordance with the terms and conditions hereof. Lender shall incur no liability
to Borrower in acting upon any advice referred to above, whether oral or
written, which Lender believes in good faith to have been given by an officer or
other person authorized to borrow on behalf of Borrower. Further, all documents
required to be executed in conjunction with Advances under this Agreement may be
signed by any of the officers or other persons duly authorized by the general
borrowing resolution of Borrower, as such resolution may be amended from time to
time.
2.3 LIBOR OPTION. On the Closing Date, or at the expiration of any
Interest Period (as hereinafter defined), if Borrower selects the LIBOR Option,
it shall simultaneously advise Lender whether such selection is for a thirty
(30) day, sixty (60) day, ninety (90) day, one hundred twenty (120) day, one
hundred fifty (150) day, one hundred eighty (180) day or a one (1) year period
and the applicable interest rate shall remain
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effective for the period selected (an "Interest Period"). If Borrower elects to
renew a LIBOR Option Advance, two (2) Business Days prior to the expiration of
any Interest Period, Borrower shall give telephone instructions to Lender
(confirmed in writing), of its election to renew the LIBOR Option Advance for a
subsequent Interest Period and failure to give such instructions shall
conclusively be presumed to be a selection by Borrower of the Prime Option. If
Borrower has selected the Prime Option with respect to any Advance, it may
elect, at any time, to change the interest rate to the LIBOR Option, by
telephonic notice (confirmed in writing) no later than two (2) Business Days
prior to the date the LIBOR Option selection is to become effective. Borrower
may select the LIBOR Option to be in effect with respect to all or specified
portions of the Revolving Credit, provided, however, Advances subject to the
LIBOR Option shall be in minimum increments of FIVE HUNDRED THOUSAND DOLLARS
($500,000.00) and no more than three (3) Advances shall be subject to the LIBOR
Option at any one time.
In the event Borrower has selected the LIBOR Option with
respect to the initial funding or any Interest Period, such selection shall be
subject to the following terms and conditions:
(1) If, at any time, Lender shall have
determined (which determination shall be final and
conclusive and binding on the parties hereto provided
Lender has made such determination in good faith)
that, as a result of any change in any applicable law
or governmental (federal, state or local, domestic or
foreign) rule, regulation or order or any
interpretation thereof (including without limitation,
the introduction of any new or revised law or
governmental rule, regulation or order) or its
compliance with any directive or request of any
central bank or other governmental authority (whether
or not having the force of law), the cost to Lender
of making, funding or maintaining the portion of the
Revolving Credit which then is subject to one or more
LIBOR Options (the "LIBOR Loan") has increased from
its cost at the time of the commencement of the
relevant Interest Period, then Lender shall promptly
so notify Borrower thereof by telephone (confirmed in
writing) and Borrower shall pay to Lender within
thirty (30) days an amount sufficient to indemnify
Lender against such increased cost.
(2) In the event that, at any time, Lender
shall have reasonably determined (which determination
shall be final and conclusive and binding upon the
parties hereto) that it has become unlawful for
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Lender to obtain funds in the relevant offshore
interbank markets in order to make or maintain its
LIBOR Loan, Lender shall promptly give notice to
Borrower by telephone (confirmed in writing) of that
determination, whereupon the Prime Rate Option, or a
certificate of deposit based pricing option (the "CD
Option") to be made available to Borrower by Lender
upon such determination, shall be in effect for the
duration of the pending Interest Periods with respect
to the LIBOR Loan.
(3) If, on or before the date of commencement
of any Interest Period, Lender shall have determined
(which determination shall be final, conclusive and
binding on all the parties hereto) that (i) deposits
in United States dollars in amounts equal to the
portion of the Revolving Credit to be subject to the
LIBOR Option for that Interest Period are not being
offered to Lender in the relevant markets, or (ii) by
reason of changes affecting the relevant markets, the
LIBOR Option to be in effect for that period will not
adequately and fairly reflect the cost to Lender of
maintaining the LIBOR Loan for that period, Lender
shall promptly so notify Borrower by telephone
(confirmed in writing) whereupon the Prime Option, or
CD Option to be made available to Borrower by Lender
upon such determination, shall be in effect for that
period with respect to the LIBOR Loan;
(4) Borrower shall compensate Lender within
thirty (30) days of the written request of Lender
(which shall set forth in reasonable detail the basis
for requesting such compensation) for all reasonable
losses, expenses and liabilities (including without
limitation, any interest paid by Lender to lenders of
funds borrowed by it to carry its LIBOR Loan during
any Interest Period and for any loss sustained by
Lender in connection with the re-employment of such
funds) which Lender may sustain: (i) as a result of
Borrower's failure to borrow funds which had been
committed by Lender in advance, at Borrower's
request; or (ii) as a result of Borrower's prepayment
of any outstanding LIBOR Loan.
In the event Lender shall have determined (which determination shall be
binding and conclusive on Borrower) that, by reason of circumstances affecting
the relevant markets for the LIBOR Option, adequate and reasonable means do not
exist for
8
ascertaining the LIBOR Option with respect to (a) the continuation of the LIBOR
Option then in existence pursuant to a prior request of Borrower, or (b) any
request by Borrower to change the Prime Option then in existence, to the LIBOR
Option, Lender shall promptly notify Borrower by telephone (confirmed in
writing) of such determination. Upon receipt of such notice, the Prime Option,
or CD Option to be made available to Borrower by Lender upon such determination,
shall be in effect until Lender notifies Borrower that it may resume selection
of the LIBOR Option.
In any case where Borrower may select an interest rate option
and fails or neglects to do so, then the Prime Option shall apply.
2.4 NOTE.
(a) All obligations of the Borrower to the Lender under the
Revolving Credit shall be evidenced by a master revolving promissory note in
form and content acceptable to Lender, executed by Borrower payable to the order
of Lender dated of even date with this Agreement in the principal amount of
EIGHT MILLION DOLLARS ($8,000,000.00) (the "Note").
(b) The Note shall be deemed to reflect the aggregate unpaid
principal amount of all obligations created under the Revolving Credit,
including the aggregate outstanding principal balance of all Advances made
pursuant to Section 2.2 hereof, whether or not the face amount of the Note is in
excess of the amount actually outstanding from time to time, and whether or not
the indebtedness outstanding thereunder or any portion thereof is from time to
time repaid and reborrowed.
2.5 INTEREST ON THE NOTE.
(a) Except as otherwise provided in this Section 2.5, the
aggregate principal balance of the Advances outstanding from time to time shall
bear interest and shall be payable as set forth in Section 2.2 hereof.
(b) If the Borrower shall Default in the payment of the
principal of, or interest on, any Advances made pursuant to Section 2.2 hereof,
then in any such event the Borrower shall, on demand, pay interest on the amount
in Default from the date of such Default up to the date of actual payment, at
the Default Rate.
(c) Interest hereunder shall be charged only on the sums
outstanding and shall be computed from the date such indebtedness is incurred to
the date of repayment.
9
2.6 MATURITY OF REVOLVING CREDIT. The outstanding principal
balance on the Revolving Credit, together with all accrued and unpaid interest
thereon, shall be due and payable on the earlier of the Revolving Credit
Maturity Date or the Termination Date.
2.7 ACCESS TO REVOLVING CREDIT. Until the Lender receives further
written notice from the Borrower, only W. Stokes Huff, Jr., Mike Huff and Ronald
P. Newman shall be the authorized signatories of the Borrower, authorized to
request Advances.
2.8 INTEREST. All interest hereunder shall be computed on a daily
basis, based on a 360-day year. In no event shall interest be due at a rate in
excess of the highest lawful rate in effect from time to time. It is not the
intention of the parties hereto to make any agreement which shall be violative
of the laws of the State of Florida or the United States of America relating to
usury. In no event shall Borrower pay or Lender accept or charge any interest
which, together with any other charges upon the principal or any portion
thereof, howsoever computed, after taking into account any requirement for
commitment and facility fees, shall exceed the maximum lawful rate of interest
allowable under the laws of the State of Florida or the United States of America
from time to time. Should any provision of this Agreement or any existing or
further notes, loan agreements or any other agreements between the parties be
construed to require the payment of interest which, together with any other
charges upon the principal or any portion thereof, after taking into account any
requirement for commitment and facility fees, shall exceed such maximum lawful
rate of interest, then any such excess shall not be charged to the Borrower and
shall be applied against the remaining principal balance.
2.9 PAYMENTS. All payments of principal and interest under the
Note shall be made to Lender at 150 S.E. Third Avenue, Miami, Florida 33131, in
immediately available funds.
2.10 STANDBY L/C AGREEMENT. (a) Lender will, upon Borrower's
application on the Standby L/C Agreement issue two (2) Standby L/C's on behalf
of Borrower in connection with purchase by Borrower of the assets of Central Air
Conditioning Distributors, Inc., a North Carolina corporation (the "Asset
Purchase") in the maximum aggregate face amount of FOUR MILLION TWO HUNDRED
FIFTY THOUSAND DOLLARS ($4,250,000.00). Lender will not issue any Standby L/C
unless such instrument shall have an expiration date of not later than September
30, 1996. The issuance of the Standby L/C's shall, immediately upon the issuance
thereof, reduce the amount of borrowing availability under the Revolving Credit
by an amount equal to the face amount of the Standby L/C's.
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(a) Upon a draw under any Standby L/C the Borrower shall
reimburse Lender in accordance with the terms and conditions of the Standby L/C
Agreement.
(b) In connection with each Standby L/C, Borrower shall pay to
Lender a fee equal to one percent (1.0%) per annum on the face amount of each
Standby L/C issued, together with all other costs and expenses incurred by
Lender in connection with the issuance of a Standby L/C (the "Standby L/C Fee").
The Standby L/C Fee shall be due and payable on the date of issuance of each
Standby L/C, and on the date of any subsequent renewal and/or extension thereof.
SECTION 3
ADDITIONAL COSTS AND FEES
3.1 ADDITIONAL COSTS. If at any time after the date hereof, and
from time to time, the Lender determines that the adoption or modification of
any applicable law, rule or regulation regarding taxation, the Lender's required
levels of reserves, deposits, deposit insurance or capital (including any
allocations of capital requirements or conditions), or similar requirements, or
any interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation,
administration or compliance of the Lender with any of such requirements, has or
would have the effect of (i) increasing the Lender's costs relating to the
Revolving Credit hereunder and (ii) reducing the yield or rate of return of the
Lender on the Revolving Credit, to a level below that which the Lender could
have achieved but for the adoption or modification of any such requirements,
then, the Borrower shall, upon ninety (90) days prior written notice from the
Lender, pay to the Lender such additional amounts as (in the Lender's sole
judgment, after good faith and reasonable computation, the written explanation
of which shall be presented to the Borrower) will compensate the Lender for such
increase in costs which results in reduction in yield or rate of return of the
Lender, said compensation to be calculated prospectively from the date of notice
from the Lender. No failure of the Lender to immediately demand payment of any
additional amounts payable hereunder shall constitute a waiver of the Lender's
right to demand payment of such amounts at any subsequent time. Nothing herein
contained shall be construed or so operate as to require the Borrower to pay any
interest, fees, costs or charges greater than is permitted by applicable law.
3.2 FACILITY FEE. In connection with the Revolving Credit, the
Borrower shall pay to the Lender an annual facility fee (the "Facility Fee")
equal to the amount of the Revolving Credit multiplied by sixteen and
sixty-seven one hundredths (16.67)
11
basis points per annum. The first annual payment of the Facility Fee shall be
made to the Lender upon the Closing Date of the Revolving Credit and each
subsequent payment of the Facility Fee shall be made on each anniversary of the
Closing Date; provided, however, the Facility Fee payable in the final year of
the Revolving Credit shall be reduced pro-rata based upon the number of months
remaining from the last anniversary date through the Maturity Date.
In the event the Revolving Credit is terminated by Borrower
prior to the Maturity Date, the Facility Fee shall be due and payable in full
upon said termination, calculated based upon the term of the Revolving Credit
minus any amounts previously paid. A restructure or renegotiation of the
Revolving Credit by and between Borrower and Lender shall not be considered a
termination by Borrower and any portion of the most recent installment of the
Facility Fee which has been paid in advance of the restructuring or
renegotiation of the Revolving Credit shall be credited to any new facility fee
due and payable in connection with said restructuring or renegotiation.
SECTION 4
COLLATERAL
In order to secure the full and timely payment of all Indebtedness
under the Revolving Credit, as well as any renewals, extensions or modifications
thereof, and to secure performance of all obligations of Borrower to Lender,
however and whenever created, and to protect the Lender's rights hereunder and
under the Revolving Credit, on or before the Closing Date, all of the holders of
the common stock of the Borrower shall execute a pledge agreement (the "Pledge
Agreement") wherein Guarantor, as one hundred percent (100%) shareholder of
Borrower, shall pledge in favor of the Lender its shares of common stock of the
Borrower. The Borrower shall cause to be delivered to the Lender all of the
stock certificates evidencing the Guarantor's ownership interest in the Borrower
(the "Stock Certificates"), together with undated executed stock powers related
thereto (the "Stock Powers") and a requisite UCC-1 financing statement (the
"UCC"), in order to perfect the Lender's first priority security interest in the
common stock of the Borrower, together with all proceeds thereof, said Pledge
Agreement and UCC-1 to be in form and content satisfactory to the Lender and its
counsel (all the foregoing hereinafter referred to as the "Collateral").
SECTION 5
GUARANTY
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All of the Borrower's obligations under the Revolving Credit, as well
as any renewals, modifications, amendments and extensions thereof, and all
obligations of the Borrower to the Lender, howsoever and whenever incurred shall
be unconditionally guaranteed by Watsco, Inc., a Florida corporation
(hereinafter the "Guarantor"), pursuant to a written guaranty (hereinafter the
"Guaranty") in form and content acceptable to Lender in its sole discretion.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Advances and issue the Standby L/C's contemplated hereby, Borrower and Guarantor
each represent and warrant to the Lender that:
6.1 ORGANIZATION, STANDING, CORPORATE POWER, ETC. It is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has corporate power and authority to own
its properties and to carry on its business as now being conducted, in every
jurisdiction where it is conducting its business, and has corporate power and
authority to execute and perform this Agreement and to execute and deliver all
other documents, instruments and agreements provided for herein.
6.2 AUTHORIZATION. The execution and performance of this
Agreement, the borrowings hereunder and the execution and delivery of each of
the Loan Documents, and all other documents and instruments provided for herein:
(a) have been duly authorized by all requisite corporate
action, and do not require any consent or approval of any other Person,
including without limitation, any of its stockholders or creditors;
(b) will not violate any provision of law relating to it, or
its Articles of Incorporation or Bylaws, as amended to the date hereof; and
(c) will not violate or be in conflict with, result in a
breach of, or constitute a default under, any indenture, agreement and other
instrument to which it is a party or by which it or any of its properties is
bound, or any order, writ, injunction or decree of any court or governmental
institution, the result of which could have a material adverse effect on its
financial or business condition.
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6.3 LITIGATION. There are no actions, suits or proceedings
pending, or, to its knowledge, threatened against or adversely affecting it, at
law or in equity or before or by any federal agency or instrumentality, domestic
or foreign, which involve any of the transactions herein contemplated, or the
possibility of any judgment or liability which may result in any material
adverse change in the business, operations, prospects, properties or assets, or
in the condition, financial or otherwise, of Borrower or Guarantor or the
possible loss or forfeiture of any material license or permit. It is not in
default with respect to any judgment, order, writ, injunction, decree, or with
respect to any rule or regulation of any court, or federal, state, municipal or
other governmental department, the result of which could have a material adverse
effect on the financial or business condition of Borrower or Guarantor.
6.4 FINANCIAL STATEMENTS. It heretofore has furnished to the
Lender balance sheets, annual statements, and other financial information which,
to the best of its knowledge, fairly and accurately present in all material
respects the financial condition and the results of its operations as of the
dates and for the periods indicated, and said financial statements show all
known liabilities, direct or contingent material liabilities as of the dates
thereof, and have been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of the furnishing of the most
recent financial statements, there has been no material adverse change in its
financial or other condition.
6.5 TAXES. It has filed, or caused to be filed, all federal and
state tax returns which, to the knowledge of the officers thereof, are required
to be filed and has paid or caused to be paid all taxes as shown on said returns
or on any assessment received by it and not being contested in good faith, to
the extent that such taxes have become due.
6.6 BURDENSOME RESTRICTIONS. Except as are reflected on the most
recent financial statements, it is not a party to any material agreement or
instrument or subject to any charter or other corporate restrictions materially
and adversely affecting its business, properties or assets, operations or
condition, financial or otherwise.
6.7 CENTRAL OWNERSHIP. All of the issued and outstanding capital
stock of Borrower is owned one hundred percent (100%) by Guarantor.
6.8 PROPERTY AND ASSETS. It has good and indefeasible title to all
the property and assets reflected on the most recent financial statements
furnished by it to the Lender, except such as has been disposed of in the
ordinary course of business since
14
the date of said financial statements, and all such property and assets are free
and clear of any liens, except liens for taxes not yet due, liens being
contested in good faith, liens permitted elsewhere in this Agreement, liens on
personal or real property as reflected in the most recent financial statements,
and also except for liens, if any, on properties acquired subsequent to said
statements and prior to the date of this Agreement.
6.9 PERMITS, LICENSES AND APPROVALS. It possesses all material
permits, licenses or other governmental approvals required by any federal, state
or local governmental authority for the conduct of its business as now
conducted. Each such permit, license or other governmental approval is
unencumbered, in good standing and there are no proceedings pending or, to the
knowledge of it, threatened against it or any other party, which seek to
suspend, revoke or terminate, or otherwise question the right of it to the
benefits of any such permit, license or other governmental approval.
6.10 ENFORCEABILITY. This Agreement and each of the Loan Documents,
when delivered hereunder, will constitute legal, valid and binding obligations
of it, as applicable, enforceable against it in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, equitable principles or other laws affecting the rights of creditors
generally.
6.11 DEFAULT. It is not in default in any respect under, or with
respect to, any contract, agreement or other instrument to which it is a party
or by which it or its assets may be bound, the result of which default could
have a material adverse effect on its financial or business condition and no
Default or Event of Default under this Agreement has occurred and is continuing.
6.12 REGULATION U. It is not engaged nor will it principally engage, or
engage as one of its important activities, in the business of extending credit
for the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any loans hereunder will be used
for "purchasing" or "carrying" "margin stock" as so defined or for any purpose
which violates, or would be inconsistent with, the provisions or Regulations G,
T, U or X of said Board or of any Regulations of such Board. Upon request, the
Borrower will furnish the Lender with a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation U to the
foregoing effect.
15
6.13 ERISA. The Plan, if any, maintained by it complies with all
applicable requirements of ERISA and of the Code, and with all applicable
rulings and regulations issued under the provisions of ERISA and the Code. No
Reportable Event has occurred and is outstanding with respect to any Plan.
6.14 INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
6.15 USE OF PROCEEDS. The proceeds of the Revolving Credit shall be
used to finance the Asset Purchase, and for Borrower's general working capital
requirements and Borrower will not use any portion of such proceeds for the
benefit of any other Person unless permission is granted by the Lender in
writing.
6.16 OTHER ASSETS. Except as reflected in the financial information
previously furnished to the Lender, it did not, as of the date of said financial
information, own all or any portion of the stock, property, or assets of any
Person.
SECTION 7
CONDITIONS PRECEDENT
The obligations of the Lender under this Agreement are subject to the
following conditions precedent:
7.1 OPINION OF COUNSEL. The Lender shall have received, on or
prior to the Closing Date, the opinion of counsel (the "Opinion of Counsel") to
Borrower and Guarantor dated the Closing Date, addressed to the Lender,
confirming:
(a) Borrower and Guarantor are duly organized, validly
existing and in good standing in their respective states of incorporation and
otherwise qualified to conduct business in the states such business is
conducted; that the party or parties signing all documents and instruments
required in connection with this Agreement are each duly authorized to do so;
that this Agreement and all agreements, documents and instruments related
hereto, when executed and delivered to the Lender, will be valid and binding
obligations of Borrower and Guarantor, as applicable, enforceable according to
their respective terms;
(b) that there is no Charter or By-Law provision nor any
agreement, contract, indenture, document or instrument to which Borrower or
Guarantor is a party, nor any law or regulation or any decree of any court,
governmental, authority, bureau or agency binding on Borrower or Guarantor which
would be contravened by the execution or delivery of this Agreement or any
16
of the Loan Documents or by the performance of any term, provision, covenant,
condition, agreement or obligation of Borrower or Guarantor contained herein or
therein;
(c) that no order, consent, permit, authorization or approval
is required by or from any governmental body, agency or authority, to validate
this Agreement or any of the Loan Documents or any action taken, or to be taken
by Borrower or Guarantor, hereunder or thereunder; and
(d) such other matters relating to Borrower and Guarantor
and/or this Agreement as the Lender or its counsel may reasonably require.
7.2 SUPPORTING DOCUMENTS. The Lender shall have received from
Borrower and Guarantor, as applicable, on or prior to the Closing Date or within
such other time period indicated:
(a) a certificate of the Secretary of Borrower and Guarantor
dated as of the Closing Date, certifying as to: (i) resolutions of its Board of
Directors authorizing the execution, delivery and performance of this Agreement,
the borrowings hereunder, and the execution and delivery to the Lender of each
of the Loan Documents, and the full force and effect of such resolutions on the
Closing Date; (ii) the incumbency and signature of each of the officers of
Borrower and Guarantor signing any of the Loan Documents;
(b) The executed Note;
(c) The executed Pledge Agreement;
(d) The executed Financing Statements;
(e) The executed Guaranty;
(f) The executed Solvency Certificate;
(g) The executed Subordination Agreement;
(h) The Opinion(s) of Counsel;
(i) Certified copies of the Articles of Incorporation and
Bylaws of Borrower and Guarantor and all amendments thereto, together with a
Certificate of Good Standing of Borrower and Guarantor and proof of
qualification to do business in each jurisdiction in which Borrower's and
Guarantor's business is conducted;
(j) Evidence or certification that, from the date of the
latest financial information furnished to Lender by Borrower
17
and Guarantor there has been no adverse change in the business or financial
condition of Borrower or Guarantor;
(k) Evidence or certification that there exists no pending or
threatened litigation, the result of which could have a material adverse effect
on the business or financial condition of Borrower or Guarantor;
(l) Evidence that the Collateral is owned free and clear of
all liens and encumbrances except those in favor of Lender;
(m) Evidence of the Rheem Agreement;
(n) All agreements, documents, instruments or certificates
required to be reviewed by Lender in connection with the Asset Purchase;
(o) On or before October 26, 1995, proof satisfactory to
Lender that the Asset Purchase has been closed;
(o) such additional supporting documents as the Lender or its
counsel may reasonably request.
7.3 CONDITIONS TO ALL ADVANCES AND STANDBY L/C'S. On the date of
each Advance and issuance of each Standby L/C hereunder:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 6 hereof shall be true and correct in all
material respects on and as of such date with the same force and effect as
though such representations and warranties had been made on and as of such date;
(b) NO DEFAULT. Borrower and Guarantor shall have observed and
performed in all material respects all of the terms, conditions and agreements
set forth herein on their part to be observed or performed and no Default or
Event of Default shall have occurred and be continuing;
(c) FINANCIAL STATEMENTS. All financial statements,
information and other data furnished by Borrower and Guarantor to the Lender
shall be, in all material respects, accurate and correct; the financial
statements shall have been prepared in accordance with generally accepted
accounting principles consistently applied, and shall accurately represent the
financial condition of Borrower and Guarantor, as applicable; no material
adverse changes in the financial or other condition of Borrower or Guarantor
shall have occurred since the date of said statements; and no material
liabilities, contingent or otherwise, not shown on said financial statements,
shall exist;
18
(d) LITIGATION. There shall be no actions, suits, proceedings
or claims pending or threatened against or affecting Borrower or Guarantor, the
result of which are likely to substantially and adversely affect Borrower's or
Guarantor's financial condition, business or operations.
Each request for an Advance or issuance of a Standby L/C by
the Borrower hereunder shall constitute a representation and warranty by
Borrower as of the date of request for each such Advance that the conditions of
paragraphs (a) through (d) above have been satisfied and that no Default or
Event of Default has occurred as of such date.
SECTION 8
AFFIRMATIVE COVENANTS
Borrower and Guarantor, as applicable, covenant and agree with the
Lender, that from the date hereof and so long as this Agreement remains in
effect, or any obligations under the Loan Documents remain outstanding and
unpaid, unless the Lender shall otherwise consent in writing, Borrower and
Guarantor will:
WITH RESPECT TO BORROWER AND GUARANTOR:
8.1 CORPORATE EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, and all rights, licenses, permits and franchises required at the date
hereof, or which may be required in the future conduct of its business, and
comply with all applicable laws and regulations that affect it, and conduct and
operate its business in the same lines and in substantially the same manner in
which presently conducted and operated (subject to changes in the ordinary
course of business), and at all times, maintain, preserve and protect, in the
ordinary course of its business, all franchises, trade names and all property
used or required in the conduct of its business, and maintain all such property
in good working order and condition.
8.2 INSURANCE. Maintain its insurable properties adequately
insured at all times by financially sound and reputable insurers, to such extent
and against such risks, including liability, comprehensive, and property damage
insurance, flood, earthquake and other risks in amounts as is customary with
companies in the same or similar location and business, and the Borrower shall
deliver certificates evidencing such insurance to Lender on or before the
Closing Date. The Borrower shall provide at least ten (10) days prior written
cancellation notice of intended policy cancellation, non-renewal or material
modification.
19
8.3 OBLIGATIONS AND TAXES. Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it in respect of any
of its properties, before the same shall become in default, as well as all
lawful claims of labor, materials and supplies or otherwise which, if unpaid,
might become a lien or charge upon such properties or any part thereof;
provided, however, that it shall not be required to pay and discharge, or to
cause to be paid and discharged, any such tax, assessment, charge, levy or claim
so long as the validity thereof shall be contested in good faith by appropriate
proceedings and adequate reserves shall have been set aside and reflected on its
financial statements furnished to the Lender with respect to any such tax,
assessment, charge, levy or claim so contested.
8.4 NOTICE. Give prompt written notice to the Lender of all
Defaults or Events of Default of which it becomes aware, under any of the terms
and provisions of this Agreement or any of the Loan Documents, or of any default
or event of default under any other agreement, contract, indenture, document or
instrument entered, or to be entered into by it, or any changes in its current
management, and of any other matter which has resulted in, or might result in, a
materially adverse change in its financial condition or operations.
8.5 BOOKS AND RECORDS/AUDITS. Keep and maintain full and accurate
accounts, books and records of its operations according to generally accepted
accounting principles consistently applied. Borrower and Guarantor shall permit
the Lender or any of the Lender's designated officers, employees, agents and
representatives, to audit, examine and inspect, at all reasonable times,
Borrower's and Guarantor's operational procedures, systems, accounts receivable,
accounts payable, inventory, general ledger, books and records.
8.6 COMPLIANCE WITH LAW. Comply in all material respects with the
requirements of all applicable laws, rules, regulations, and orders of
governmental authorities relating to the conduct of its business.
8.7 TRANSACTIONS WITH AFFILIATES. Enter into all transactions with
Affiliates on an arms length basis, on substantially the same terms and
conditions as are customarily employed in transactions with non-affiliated
parties.
8.8 CONTINGENT LIABILITIES. Inform Lender of any material actual
or potential contingent liabilities.
8.9 EXECUTION OF OTHER DOCUMENTS. Promptly upon demand by the
Lender, execute all such additional agreements, contracts,
20
indentures, documents and instruments in connection with this Agreement as the
Lender may reasonably deem necessary.
WITH RESPECT TO BORROWER:
8.10 REPORTING REQUIREMENTS - BORROWER. Cause to be furnished to
the Lender:
(a) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of fiscal year ending December 31,
1995, a management prepared financial statement of Borrower for such fiscal
year, including a balance sheet, related statements of income and retained
earnings and the related statements of changes in financial position and cash
flows, and all schedules thereto, all in reasonable detail, prepared in
accordance with generally accepted accounting principles consistently applied.
(b) as soon as available, an audited balance sheet dated as of
the Closing Date, and all schedules thereto, all in reasonable detail, prepared
in accordance with generally accepted accounting principles consistently
applied.
(c) commencing December 31, 1996, as soon as available, but in
any event no later than one hundred twenty (120) days after the close of each
fiscal year, with a copy of the unqualified audited (consolidated and/or
consolidating, if appropriate) financial statements of the Borrower for such
fiscal year, including a balance sheet for such fiscal year as at the end of
such fiscal year, and related statements of income and retained earnings and
changes in financial position and cash flows, and all schedules thereto, for
such fiscal year, setting forth in each case in comparative form, the
corresponding figures for the preceding fiscal year, all in reasonable detail,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, such financial statements to be audited by independent
certified public accountants of recognized standing selected by the Borrower and
acceptable to the Lender in its reasonable discretion (such certification not to
be qualified or limited because of any restricted or limited examination made by
such accountants);
(d) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three (3) quarterly
periods of each fiscal year of the Borrower, with company prepared unaudited
financial statements of the Borrower, including a balance sheet as at the end of
such fiscal quarter, and related statements of income and retained earnings and
all schedules thereto, all for the period from the beginning of such fiscal year
to the end of such fiscal quarter, the financial statements setting forth in
each case corresponding figures for the like period of the preceding fiscal
year; all in
21
reasonable detail, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved and with prior periods and certified by the President or Chief
Financial Officer of the Borrower;
(e) concurrently with the delivery of the financial statements
referred to in clauses (c) and (d) above, with a certificate of the President or
Chief Financial Officer of the Borrower containing: (i) certification that the
financial statements are true and correct; that, to the best of his or her
knowledge, during such period the Borrower has kept, observed, performed and
fulfilled each and every covenant and condition contained in this Agreement, and
that he or she has no knowledge of any Default or Event of Default hereunder
except as specifically indicated in such certificate; (ii) computations and
conclusions, in such detail as Lender may request, with respect to compliance
with this Agreement and all documents executed in connection therewith,
including computations of all quantitative covenants;
(f) promptly after the filing or receiving thereof, copies of
all reports and notices which Borrower files, or after the occurrence of a
Reportable Event or condition which might constitute grounds for the termination
of or for the appointment of a trustee or administrator of any Plan, under ERISA
or the United States Department of Labor;
(g) within ten (10) days after service of process or
equivalent notice, written notice of any litigation, including arbitrations and
of any proceeding by or before any governmental agency where the amount involved
or the nature of the proceeding, if adversely determined, may materially and
adversely affect Borrower's business, operations, prospects, properties, or
assets, or the Borrower's condition, financial or otherwise;
(h) promptly, from time to time, such other information
relating to Borrower's business, properties, or conditions or operations,
financial or otherwise, as the Lender may reasonably request.
8.11 NET WORTH - BORROWER. With respect to Borrower, (A) achieve a
Net Worth (hereinafter defined) as of December 31, 1995 equal to or greater than
Borrower's Net Worth as of the Closing Date, plus an amount equal to Borrower's
net income reported as of December 31, 1995, less any amount paid in dividends
to shareholders as permitted herein; (B) achieve a Net Worth as of June 30,
1996, equal to or exceeding Borrower's Net Worth reported as of December 31,
1995; (C) achieve a Net Worth as of September 30, 1996 equal to or exceeding
Borrower's Net Worth reported as of June 30, 1996; and (D) commencing December
31,
22
1996 and each fiscal year thereafter, Borrower shall achieve and maintain a Net
Worth equal to or exceeding Borrower's Net Worth reported as of the prior fiscal
year end plus an amount equal to Borrower's net income reported as of the end of
each respective fiscal year, less any amount paid in dividends to shareholders
as permitted herein.
8.12 FUNDED DEBT/EARNINGS RATIO - BORROWER. With respect to
Borrower, maintain at all times a Funded Debt/Earnings Ratio (hereinafter
defined) not to exceed 6.0 to 1.0 as of December 31, 1996; 5.0 to 1.0 commencing
as of December 31, 1997; and 4.0 to 1.0 commencing as of December 31, 1998. As
used herein, Funded Debt/Earnings Ratio shall be defined as the ratio determined
by comparing Borrower's: (A) Funded Debt; to (B) earnings before interest
expense, taxes and depreciation/amortization expense.
The Funded Debt/Earnings Ratio shall be determined each fiscal
quarter on a rolling four (4) quarter basis including the Borrower's financial
results for the immediately preceding four (4) fiscal quarters.
8.13 FIXED CHARGE COVERAGE RATIO - BORROWER. With respect to
Borrower, commencing December 31, 1996 and quarterly thereafter, maintain at all
times a Fixed Charge Coverage Ratio (hereinafter defined) of not less than
1.5:1.0. As used herein the Fixed Charge Coverage Ratio shall be defined as the
ratio determined by comparing Borrower's: (A) earnings before interest expense,
taxes and lease expense; to (B) interest expense and lease expense.
The Fixed Charge Coverage Ratio shall be determined each
fiscal quarter on a rolling four (4) quarter basis utilizing the Borrower's
financial results for the immediately preceding four (4) fiscal quarters.
8.14 DISTRIBUTORSHIP AGREEMENT - BORROWER. With respect to the
Borrower, maintain in full force and effect the Rheem Agreement.
WITH RESPECT TO GUARANTOR:
8.15 REPORTING REQUIREMENTS - GUARANTOR. Guarantor shall cause to
be furnished to the Lender:
(a) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of each fiscal year of the Guarantor,
an audited consolidated balance sheet of the Borrower for such fiscal year as at
the end of such fiscal year, related audited statements of income and retained
earnings and the related consolidated statements of changes in financial
position, and cash flows, showing the cash inflows and cash
23
outflows of the Guarantor for such fiscal year, setting forth, in each case in
comparative form, the corresponding figures for the preceding fiscal year, all
in reasonable detail, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved and the prior year; such financial statements to be certified by
independent certified public accountants selected by the Guarantor and
acceptable to the Lender (the "CPA") (such certification not to be qualified or
limited by such accountants) and certified by its chief financial officer; (the
Lender's acceptance of the CPA shall not be unreasonably withheld);
(b) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of each fiscal year of the Guarantor,
consolidating financial statements of the Guarantor for such fiscal year,
including a consolidating balance sheet, related consolidating statements of
income and retained earnings, and schedules thereto, setting forth in each case
in comparative form, the corresponding figures for the preceding fiscal year,
all in reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied.
(c) within ten (10) days of the filing thereof with the
Securities and Exchange Commission ("SEC") each 10-K and 10-Q filed by the
Guarantor with the SEC, together with all schedules and exhibits filed
therewith, said statements to be prepared according to the standards set forth
by the SEC for such reports;
(d) concurrently with the delivery of the financial statements
referred to in clause (a), (b) and (c) above, if requested by Lender, a
certificate of the President or Chief Financial Officer of Guarantor containing:
(i) certification that the financial statements are true and correct; that, to
the best of his or her knowledge, during such period the Guarantor has kept,
observed, performed and fulfilled each and every covenant and condition
contained in this Agreement and that he or she has obtained no knowledge of any
Default or Event of Default hereunder except as specifically indicated in such
certificate; and (ii) computations and conclusions, in such detail as Lender may
request, with respect to compliance with this Agreement and all documents
executed in connection therewith, including computations of all quantitative
covenants;
(e) promptly after the same are sent, copies of all proxy
statements, financial statements and reports which the Guarantor sends to its
stockholders, and within ten (10) days after the same are filed, copies of all
regular, periodic and special reports (including but not limited to reports on
Forms 10-K, 10-Q and 8-K), and all registration statements which the Guarantor
files with the SEC or any governmental authority which
24
may be substituted therefor, or with any national securities exchange;
(f) promptly after the filing or receiving thereof, copies of
all reports and notices which the Guarantor files, after the occurrence of a
Reportable Event or condition which might constitute grounds for the termination
of or for the appointment of a trustee or administrator of any Plan, under ERISA
or the United States Department of Labor;
(g) within ten (10) days after service of process or
equivalent notice, written notice of any litigation, including arbitrations and
of any proceeding by or before any governmental agency where the amount involved
or the nature of the proceeding, if adversely determined, may materially and
adversely affect the Guarantor's business, operations, prospects, properties, or
assets, or the Guarantor's condition, financial or otherwise;
(h) promptly, from time to time, such other information
relating to Guarantor's business, properties, or conditions or operations,
financial or otherwise, as the Lender may reasonably request.
8.16 TANGIBLE NET WORTH - GUARANTOR. With respect to Guarantor,
achieve and maintain a Tangible Net Worth equal to at least THIRTY MILLION
DOLLARS ($30,000,000.00).
8.17 LEVERAGE RATIO - GUARANTOR. With respect to the Guarantor,
report a ratio of total Liabilities to Tangible Net Worth not to exceed 3.0 to
1.0 at all times.
8.18 MANAGEMENT - GUARANTOR. With respect to Guarantor, maintain
Albert H. Nahmad and Ronald P. Newman in its active day to day control and
management.
SECTION 9
NEGATIVE COVENANTS
The Borrower and Guarantor, as applicable, covenant and agree with the
Lender that from the date hereof and so long as this Agreement remains in effect
or any obligations under the Loan Documents remain outstanding and unpaid,
unless the Lender shall otherwise consent in writing, the Borrower and Guarantor
will not:
WITH RESPECT TO BORROWER AND GUARANTOR:
9.1 DEFAULT UNDER OTHER AGREEMENTS OR CONTRACTS. Commit or do, or
fail to commit to do, any act or thing which would constitute a default under
any of the terms or provisions of any
25
other agreement, contract, indenture, document or instrument executed, or to be
executed by it if the effect of such default could materially and adversely
affect the business or financial condition of (i) the Borrower; (ii) Guarantor
and its subsidiaries taken as a whole;
9.2 ACCOUNTING PRACTICES. Change any of its accounting practices
or procedures, unless such change is in accordance with or permitted within
generally accepted accounting principles.
WITH RESPECT TO BORROWER:
9.3 GUARANTIES/DEBT ASSUMPTIONS - BORROWER. With respect to
Borrower, guarantee any obligations or assume any indebtedness, except that
Borrower shall be entitled to endorse instruments for collection in the ordinary
course of business.
9.4 SALE/LEASEBACK AND CAPITALIZED LEASE TRANSACTIONS - BORROWER.
With respect to Borrower, enter into any sale and lease-back or capitalized
lease obligation with respect to any of its fixed assets which would exceed TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) in the aggregate.
9.5 DISPOSAL OF PROPERTY - BORROWER. With respect to Borrower,
except for the sale of inventory in the ordinary course of business, sell
significant assets where the consideration or purchase price for such assets
would exceed TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) in the aggregate
during any fiscal year.
9.6 OWNERSHIP - BORROWER. With respect to Borrower, change in any
way its ownership.
9.7 ADDITIONAL INDEBTEDNESS - BORROWER. With respect to Borrower,
with the exception of (i) Indebtedness incurred in connection with the Asset
Purchase, in an amount not to exceed FOUR MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS ($4,250,000.00), and including the Subordinated Indebtedness; and (ii)
Indebtedness to Guarantor, advanced by Guarantor to Borrower to support short
term working capital needs of Borrower in an amount not to exceed TWO MILLION
DOLLARS ($2,000,000.00) outstanding at any time; incur, create, assume or permit
to exist any additional Indebtedness for borrowed money, secured or unsecured,
or in the form of purchase money obligations or capitalized leases in an amount
exceeding FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in the aggregate at any
one time outstanding.
9.8 DIVIDENDS - BORROWER. With respect to Borrower, pay or declare
dividends to shareholders in excess of one hundred percent (100%) of net profit
after taxes for the immediately preceding fiscal year end.
26
9.9 ADDITIONAL LIENS - BORROWER. With respect to Borrower, incur,
create, assume or permit to exist any additional Liens on any of its property or
assets now owned or hereafter acquired, except for Liens incurred in connection
with the purchase money financing permitted under Section 9.7 hereinabove.
9.10 CAPITAL EXPENDITURES - BORROWER. With respect to Borrower,
make capital expenditures in any fiscal year exceeding TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000.00) in the aggregate.
9.11 ADVANCES TO AFFILIATES. Make any loans, advances or
distributions to stockholders, subsidiaries, Affiliates, officers, employees or
third parties.
9.12 LIMITATION ON MERGERS AND SALE OF ASSETS. With the exception
of the Asset Purchase, enter into any transaction or merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or a substantial part of
its business or assets.
9.13 CONTROL/NAME. Change in any way its control, name or otherwise
change its nature of business.
9.14 NOTES, ACCOUNTS RECEIVABLE. Except for the purpose of
collection in the ordinary course of business, sell, assign, transfer, discount
or otherwise dispose of notes, accounts receivable or other rights to receive
payment, with or without recourse.
BORROWER, GUARANTOR AND LENDER EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE
COVENANTS SET FORTH HEREIN PERTAINING TO GUARANTOR SHALL BE MODIFIED AND AMENDED
IN ACCORDANCE AND SIMULTANEOUSLY WITH ANY MODIFICATION OR AMENDMENT OF THE
COVENANTS SET FORTH IN THE LINE AGREEMENT.
SECTION 10
DEFAULTS AND REMEDIES
10.1 EVENTS OF DEFAULT AND REMEDIES. If any one or more of the
following Events of Default shall occur for any reason whatsoever (and whether
such occurrences shall be voluntary or involuntary, or come about or be affected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or
governmental body), that is to say:
27
(a) any representation or warranty made herein or by the
Borrower or Guarantor in any report, certificate, financial statement or other
instrument furnished in connection with this Agreement, or any Advance or
borrowing hereunder, shall prove to be false or misleading in any material
respect, or any representation or warranty made by the Borrower or Guarantor in
any future report, certificate, financial statement or other instrument
furnished in connection with this Agreement, or any Advances or borrowings
hereunder, shall prove to be false or misleading in any material respect, which
representation or warranty made by the Borrower or Guarantor remains false or
misleading in any material respect for a period of thirty (30) days after the
occurrence thereof;
(b) the Borrower shall fail to pay the principal of or
interest on any obligations created hereunder, within five (5) days of when and
as the same shall become due and payable, whether at the due date or by
acceleration or otherwise;
(c) any default shall occur on the part of the Borrower or
Guarantor in the due observance or performance of any covenant, agreement or
other provision of this Agreement or any of the Loan Documents, other than for
the payment of money, which default remains in effect for a period of thirty
(30) consecutive days after the occurrence thereof;
(d) the Borrower or Guarantor shall fail to make payment of
principal or interest on any other Indebtedness beyond any period of grace
provided with respect thereto, or shall default in the performance of any other
agreement, covenant, term or condition contained in any agreement under which
any such obligation is created, if the effect of such default is to cause the
holder or holders of such Indebtedness to accelerate the maturity thereof or
results in a material adverse effect on its business or financial condition;
(e) Borrower or Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee in bankruptcy for benefit of creditors,
or liquidator of it or of any of its property; (ii) admit in writing its
inability to pay its debts as they mature or generally fail to pay such debts as
they mature; (iii) make a general assignment for the benefit of creditors; (iv)
be adjudicated a bankrupt or insolvent; (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors, or seeking to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute or
an answer admitting an act of bankruptcy alleged in a petition filed against it
in any proceeding under any such law; or (vi) take any corporate action for the
purpose of effecting any of the foregoing;
28
(f) an order, judgment or decree shall be entered against
Borrower or Guarantor, without its application, approval or consent, or by any
court of competent jurisdiction, approving a petition seeking the reorganization
of it or appointing a receiver, trustee or liquidator of it or of all or a
substantial part of the assets thereof, and such order, judgment or decree shall
continue unstayed and in effect for a period of thirty (30) consecutive days
from the date of entry thereof;
(g) a final judgment or final judgments, excluding claims
covered by insurance, shall be rendered against the Borrower or Guarantor except
for final judgments which do not exceed FIVE HUNDRED THOUSAND DOLLARS
($500,000.00) in the aggregate, and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed, provided that a judgment shall be deemed "final" only when
the time for appeal shall have expired without an appeal having been claimed, or
all appeals and further review claimed shall have been determined adversely to
it;
(h) any monies, deposits other property of the Borrower or
Guarantor now or hereafter on deposit with, or in the possession or under
control of the Lender, shall become subject to attachment proceedings, or
distraint proceedings or any order or process of court, and such proceedings are
not effectively stayed within a period of thirty (30) consecutive days after the
institution thereof;
(i) any default shall occur under any other existing or future
written agreements between the Borrower or Guarantor and the Lender which
remains uncured after expiration of any applicable grace period;
(j) any material adverse change in the business or financial
condition of Borrower or Guarantor, as determined by Lender;
(k) the liquidation, dissolution, or wind-up of Borrower or
Guarantor, whether voluntarily or involuntarily, or failure of Borrower or
Guarantor to maintain its corporate existence;
(l) the invalidation, discharge or subordination, in whole or
in part, of any of Lender's security documents or any of the Lender's liens;
(m) the sale, transfer or conveyance of any part or portion of
the Collateral, or any interest therein;
29
(n) cancellation, termination or material breach of the Rheem
Agreement; provided, however, Borrower shall have thirty (30) days to cure any
breach of the Rheem Agreement;
(o) any default shall occur under the Guaranty, the Line
Agreement or the Standby L/C Agreement.
THEN, and in every such Event of Default, the Lender may, at its
option: (i) declare all obligations of the Borrower to the Lender hereunder and
under the Standby L/C Agreement to be due and payable forthwith, including
without limitation principal, interest, fees, costs and expenses, whereupon the
Note shall become due and payable immediately, both as to principal and
interest, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in such Notes to
the contrary notwithstanding; (ii) declare permanently terminated any commitment
of the Lender to make further Advances or issue any further Standby L/C's; and
(iii) pursue all of the rights and remedies available to the Lender under this
Agreement and each of the Loan Documents.
SECTION 11
MISCELLANEOUS
11.1 NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed by
registered or certified mail, sent by facsimile transmission or hand delivered
to the applicable party at the address indicated below:
IF TO THE BORROWER: CAC ACQUISITION, INC./CENTRAL
AIR CONDITIONING DISTRIBUTORS, INC.
c/o Watsco, Inc.
2665 South Bayshore Drive
Coconut Grove, Florida 33133
Attn: Ronald P. Newman
IF TO GUARANTORS: WATSCO, INC.
2665 South Bayshore Drive
Coconut Grove, Florida 33133
Attn: Ronald P. Newman,
Vice President-Finance
WITH A COPY TO: GREENBERG TRAURIG
1221 Brickell Avenue
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
30
IF TO THE LENDER: NATIONSBANK OF FLORIDA, N.A.
150 S.E. Third Avenue
Miami, Florida 33131
Attn: Commercial Banking Manager
and Steven C. Mayer, Vice President
WITH A COPY TO: BUCHANAN INGERSOLL P.C.
One Turnberry Place
19495 Biscayne Boulevard, Suite 606
Miami, Florida 33180-2320
Attn: Ralph B. Bekkevold, Esq.
or, as to any party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices, requests, demands and other communications
shall be deemed to have been duly given or made, in the case of facsimile
transmission when an appropriate answerback has been received by the sending
party, in the case of registered or certified mail, on the third Business Day
after the day on which mailed, and in the case of hand delivery, upon actual
delivery.
11.2 SURVIVAL OF REPRESENTATIONS. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by the Lender of the borrowings herein
contemplated, and the execution and delivery to the Lender of each of the Loan
Documents and shall continue in full force and effect so long as any
Indebtedness created hereunder is outstanding and unpaid. All covenants and
agreements by or on behalf of the parties hereto which are contained or
incorporated in this Agreement shall bind and inure to the benefit of the
successors and assigns of all parties hereto.
11.3 EFFECT OF DELAY. Neither any failure nor any delay on the part
of the Lender in exercising any right, power or privilege hereunder or under any
of the Loan Documents shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege.
11.4 EXPENSES. The Borrower shall pay all fees and out-of-pocket
expenses reasonably incurred by the Lender in connection with the preparation
and closing of this Agreement, including but not limited to the fees and
expenses of special counsel for the Lender, and shall pay the fees and expenses
incurred by the Lender in connection with the borrowings hereunder, and the
enforcement of the rights of the Lender in connection with this Agreement,
including but not limited to the reasonable fees and expenses of counsel.
31
11.5 MODIFICATIONS AND WAIVERS. No modification or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and such waiver or consent shall be effective
only in the specific instance and for the purpose of which given. No notice to
or demand on the Borrower or Guarantor in any case shall thereby entitle it to
any other or further notice or demand in the same, similar or other
circumstances.
11.6 DISCLAIMER. The Lender shall incur no liability to the
Borrower or Guarantor in acting upon any advice received by the Lender, whether
oral or written, which the Lender believes in good faith to have been given by
an officer or other person authorized to borrow on behalf of the Borrower or in
otherwise acting in good faith under this Agreement. Further, all documents
required to be executed in conjunction with borrowings under this Agreement may
be signed by any of the officers or other persons duly authorized by the general
borrowing resolutions of the Borrower and Guarantor, as applicable, as such
resolutions may be amended from time to time.
11.7 REMEDIES CUMULATIVE. Any rights or remedies of the Lender
hereunder, or under any other writing shall be cumulative and in addition to
every other right or remedy contained therein or herein, now in existence or
existing hereafter, at law or in equity by statute or otherwise. Upon the
occurrence of an Event of Default, the Lender may proceed to enforce any of the
rights and remedies against the Borrower and Guarantor, or against any
collateral given as security for the Indebtedness hereunder, and the Lender may
enforce such rights and remedies simultaneously, or in such order and at such
time, or from time to time, as the Lender determines in its sole and absolute
discretion.
11.8 APPLICATION OF PAYMENTS. Payments received by the Lender from
the Borrower or Guarantor, whether direct or from realizations on any
collateral, may be applied to payment of such obligations of the Borrower in
such order of application as the Lender may elect, and the Borrower and
Guarantor hereby waives any rights to designate to which of its obligations any
such payments shall be applied.
11.9 CONSTRUCTION. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida except as to regulations
governing interest rates or other terms of lending which are governed by all
applicable laws.
11.10 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective only to the extent of such unenforceability, without invalidating
the remaining provisions
32
thereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
11.11 HEADINGS. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
11.12 SUCCESSORS AND ASSIGNS. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, except that neither
the Borrower nor Guarantor shall have the right to assign its rights hereunder
or any interest herein.
11.13 INDEMNIFICATION. The Borrower agrees to indemnify the Lender
and to pay for all documentary stamp taxes, intangible taxes and penalties
thereon which may become due in connection with this Agreement or the Note. The
Borrower shall execute a letter in favor of the Lender evidencing this
indemnification.
11.14 TIME OF PAYMENTS. All payments required to be made by the
Borrower hereunder (except for direct debits by the Lender) shall be paid to the
Lender in readily available funds on or before 2:00 P.M. (Miami, Florida time)
on the dates such payments are due. Payments received by the Lender subsequent
to that time will be credited to the Borrower on the next successive Business
Day.
11.15 MANDATORY ARBITRATION. Any controversy or claim between or
among the parties hereto including but not limited to those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) SPECIAL RULES. The arbitration shall be conducted in the
city of Lender's domicile at time of this Agreement's execution and administered
by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
33
Association will serve. All arbitration hearings will be commenced within ninety
(90) days of the demand for arbitration; further, the arbitrator shall only,
upon a showing of cause, be permitted to extend the commencement of such hearing
for up to an additional sixty (60) days.
(b) RESERVATION OF RIGHTS. Nothing in this Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) be a
waiver by Lender of the protection afforded to it by 12 U.S.C. ss.91 or any
substantially equivalent state law; or (iii) limit the right of Lender (A) to
exercise self help remedies such as (but not limited to) setoff, or (B) to
foreclose against any real or personal property collateral, or (C) to obtain
from a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. Lender may exercise such
self help rights, foreclose upon such property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At Lender's option, foreclosure
under a pledge and assignment agreement, a deed of trust or mortgage may be
accomplished by any of the following: the exercise of a power of sale under the
security instrument, or by judicial sale under the security instrument, or by
judicial foreclosure. Neither this exercise of self help remedies nor the
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
(c) ARBITRAL AWARD. The arbitral award shall include (i) a
provision that the prevailing party in such arbitration shall recover its costs
of the arbitration and reasonable attorneys' fees and expenses from the other
party; and (ii) the amount of such costs, fees and expenses. Any cause of action
subject to such arbitration shall be subject to the same statute of limitations
that would have been applicable to such cause of action in an action of law.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
[BORROWER]
CAC ACQUISITION, INC.,
a North Carolina corporation
By: /s/ BARRY S. LOGAN
----------------------------
As: President
---------------------------
[CORPORATE SEAL]
[GUARANTOR]
WATSCO, INC.,
a Florida corporation
By: /s/ RONALD P. NEWMAN
----------------------------
As: V.P. of Finance
----------------------------
[CORPORATE SEAL]
[LENDER]
NATIONSBANK OF FLORIDA, N.A.
By: /s/ SIGFREDO BIRRIEL
------------------------------
As: Senior Vice President
-----------------------------
35
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Barry S. Logan, as President
of CAC ACQUISITION, INC., a North Carolina corporation, on behalf of said
corporation, who is personally known to me or has produced Florida Driver's
License as identification.
/s/ KAY F. HARPER
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Kay F. Harper
Serial No: ###-##-####
My Commission Expires: 3/8/98
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Ronald P. Newman, as
V.P. of Finance of WATSCO, INC., a Florida corporation, on behalf of said
corporation, who is personally known to me or has produced Florida Driver's
License as identification.
/s/ KAY F. HARPER
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Kay F. Harper
Serial No: ###-##-####
My Commission Expires: 3/8/98
36
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Sigfredo Birriel, as
Sr. Vice President of NATIONSBANK OF FLORIDA, N.A., a national banking
association on behalf of said Bank, who is personally known to me or has
produced Florida Driver's License as identification.
/s/ KAY F. HARPER
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Kay F. Harper
Serial No: ###-##-####
My Commission Expires: 3/8/98
37
[Rheem logo]
- --------------------------------------------------------------------------------
Rheem Manufacturing Company Telex: 5106006-166
405 Lexington Avenue /bullet/ 22nd Floor Fax: (212) 916-8109
New York, New York 10174-0307
(212) 916-8100
Gary L. Tapella
President and
Chief Executive Officer
January 1, 1996
Watsco, Inc.
2665 South Bayshore Drive
Coconut Grove, Florida 33133
Attention: A. H. Nahmad, Chairman
Gentlemen:
This is to advise that Rheem will not exercise its right to Call Watsco's
interest in Gemaire Distributors, Heating and Cooling Supply and Comfort Supply
through the Election Period in 1997 as provided and defined in Sections 3.1.1
and 3.2 of our Shareholders Agreement in each company.
To assist Watsco in its examination of certain financing options this letter of
advise is being provided on this date rather than the effective date of such
right to Call.
Rheem Manufacturing Company
By /s/ GARY L. TAPELLA
------------------------
President
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Fort Lauderdale,
January 18, 1996.
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of
Watsco, Inc. of our report on our audit of the financial statements of Three
States Supply Company, Inc. We also consent to the reference to our firm under
the caption "Experts."
RHEA & IVY, P.L.C.
Memphis, Tennessee,
January 18, 1996.
