<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-2514
THE WACKENHUT CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 59-0857245
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
1500 San Remo Avenue, Coral Gables, FL 33146
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (305)666-5656
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, Series A, $.10 par value New York Stock Exchange
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Common Stock, Series B, $.10 par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
At February 15, 1995, the aggregate market value of the 3,858,885 shares of
Common Stock, Series A, the registrant's sole class of voting stock, held by
non-affiliates of the registrant was $25,040,782. At February 15, 1995,
3,858,885 shares of Series A and 5,794,539 shares of Series B of the
registrant's Common Stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Parts of the registrant's Annual Report to Shareholders for the fiscal year
ended January 1, 1995 are incorporated by reference into Parts II and IV of
this report.
Parts of the registrant's Proxy Statement for its 1995 Annual Meeting of
Shareholders are incorporated by reference in Part III of this Annual Report.
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PART I
ITEM 1. BUSINESS
The Wackenhut Corporation was incorporated in Florida in 1958 as a successor
corporation to a partnership founded in 1954 by George R. Wackenhut and three
associates. The Wackenhut Corporation, together with its consolidated
subsidiaries (the corporation), engages in the business of providing security
and other support services to business, industrial and government clients. The
corporation's business is conducted from more than 275 domestic and foreign
offices and site locations.
A subsidiary of the corporation, Wackenhut Corrections Corporation (WCC)
provides facility management and construction services to detention and
correctional facilities. WCC operates in a different industry segment than
other divisions of the corporation.
The corporation had record revenues of $747.7 million for fiscal 1994, or an
increase of $83.5 million (13%). The increase in revenues over fiscal 1993 was
due principally to the Security Services Division, which reported an increase in
revenues of $37.6 million over fiscal 1993 and to Wackenhut Corrections
Corporation whose 1994 revenues exceeded 1993 revenues by $42.7 million.
Operating income was also at a record $15.3 million in 1994. Net income,
however, was $1.4 million, primarily due to a charge against earnings of $8.7
million ($5.4 million after income taxes) in the fourth quarter of 1994 to
write-down the carrying value of the corporation's headquarters building and an
extraordinary charge of $1.4 million ($887,000 after income taxes) for the early
retirement of senior debt.
SERVICES
The corporation is engaged in a variety of services, with security guard
services as the largest contributor to the corporation's revenues. Other
services provided by the corporation include, correctional food service,
integrated security programs, job corps facilities management, nuclear power
plant security and consulting services and investigative services. WCC
provides correctional and detention facilities management and construction
services to detention and correctional facilities.
SECURITY GUARD SERVICES
The corporation furnishes security officers (armed and unarmed)to protect its
clients' property against fire, theft, intrusion, vandalism, and other physical
harm. Specialized physical security services offered by the corporation include
executive protection, crash-fire-rescue services and fire protection services at
airports and governmental installations, pre-departure screening of passengers
and luggage at airport terminals and emergency and security services during
natural disasters and labor-management disputes. The corporation also provides
security consulting services to survey, analyze and minimize client security
problems and trains security officers and fire and crash-fire-rescue personnel
employed by its clients.The contracts of the corporation with private industry
for security guard services usually are for a term of one year with automatic
renewal from year to year unless terminated by either party. Most of these
contracts are subject to termination by either party on thirty days prior
notice. Billing rates are based on a specified rate per hour and generally are
subject to renegotiation or escalation if related costs increase because of
changes in mini-
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mum wage laws or other events beyond the control of the corporation. Higher
hourly rates apply to guard services requested by the client and emergency
security services during labor-management disputes.
Security guard services are provided to governmental agencies under contracts
awarded pursuant to competitive bidding. Service fees are based on one of
several accepted methods: fixed price; specified rate per guard hour; or the
corporation's cost plus either a fixed fee, an award fee or an incentive fee.
All federal government contracts are subject to termination at the convenience
of the government.
CORRECTIONAL FOOD SERVICE
The corporation's food service division provides over 21 million meals annually
to over 46 jail and prison facilities in 14 states throughout the United States.
Food for regular, therapeutic and religious diets are prepared on-site using
conventional or cook-chill methods. Dietary support is provided to facility
medical departments by registered dietitians, in addition to safety, training
and quality assurance programs. Services are provided on a cost per meal basis.
Complete food service management, commissary, laundry and janitorial chemical
programs are also available to clients.
INTEGRATED SECURITY PROGRAMS
The corporation designs, engineers, and installs integrated security programs
utilizing both security officers and electronic equipment. These services
include planning a master security program for a particular facility, custom
designing the security system, procuring the requisite electronic equipment,
contract and construction management, installing the system, training the
security personnel, and post-installation review and evaluation of the security
program. Contracts for these integrated security services generally provide for
a fixed fee and are awarded pursuant to competitive bidding.
JOB CORPS FACILITIES MANAGEMENT
The corporation manages job corps facilities for the U. S. Department of Labor
through its subsidiary Wackenhut Educational Services, Inc., (WESI). These
services include facility support and management services, administration,
medical and food services, instructional programs, counseling, and vocational
training and job placement. Services are billed on a cost plus fixed fee
basis. WESI will discontinue operations of the McKinney Job Corps Center in the
first quarter of 1995 as a result of a mutual agreement with the Department of
Labor. WESI continues to operate two Job Corp Centers at Guthrie, Oklahoma and
Gainesville, Florida.
NUCLEAR POWER PLANTS
The corporation provides specialized security and management consulting services
for nuclear power generating facilities. These services include highly trained
and qualified security personnel, emergency planning, electronic detection
equipment and integrated security systems. The services are provided pursuant
to a variety of fee arrangements, depending on the particular service performed.
A major portion of these services are furnished to the private sector.
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INVESTIGATIVE SERVICES The corporation complements physical security
services provided to its clients with investigative services. These services
include, but are not limited to, employee background screening and insurance
fraud investigations. The corporation maintains a National Research Center with
the latest information technology for public record searches and a "fraud-waste-
criminal" hot line for client employees to report work place abuses. Clients
ordinarily are charged an hourly rate for investigative services and a flat rate
for background records searches.
WACKENHUT CORRECTIONS CORPORATION
In July and September 1994, WCC, a formerly wholly-owned subsidiary of the
corporation, completed an initial public offering (IPO) in which it sold
2,185,000 shares of common stock at an offering price of $9 per share.
Following the completion of the IPO, the corporation owns approximately 73.3% of
the issued and outstanding shares of common stock of WCC.
WCC is a leading developer and manager of privatized correctional and detention
facilities in six different states, the United Kingdom and Australia. WCC
offers governmental agencies a comprehensive range of prison management services
from individual consulting projects to the integrated design, construction and
management of correctional and detention facilities. WCC also provides a wide
array of in-facility rehabilitative and educational programs, such as chemical
dependency counseling and treatment, basic education, and job and life skills
training. As of year end, WCC had contracts to manage 22 correctional and
detention facilities with an aggregate design capacity of 13,732 beds, including
the joint-venture in England. The services are provided pursuant to a variety
of fee arrangements, depending on the particular type of facility and services
performed.
WCC operates in a different industry segment than other divisions of the
corporation. For additional information concerning WCC reference is made to
information set forth in Note 2 to Consolidated Financial Statements on page 31
of the corporation's Annual Report to Shareholders, which is incorporated
herein by reference.
MARKETING
The corporation provides physical security and investigative services throughout
the United States and in numerous foreign countries under the trade name
"Wackenhut". During 1994, the corporation provided services to more than
14,000 clients. The largest client of the corporation was the U.S. Department
of Energy, which accounted for about 20% of the corporation's consolidated
revenue. The contracts at the Savannah River site (9%) and the Rocky Flats Plant
(5%) are the largest of the contracts with the U. S. Department of Energy.
COMPETITION
The corporation believes it is the third largest labor-intensive security and
protective service organization in the United States. Borg-Warner Security
Corporation, principally through three of its subsidiaries (Wells Fargo, Burns
International and Globe Security) combine to make the largest organization.
Pinkerton's, Inc. is the second largest. The corporation competes domestically
with these two organizations and numerous local and regional companies. The
corporation believes that its foreign operations are more extensive than those
of its principal domestic competitors, although there may be certain foreign
competitors that have more extensive foreign operations than does the
corporation.
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Domestic competition in the security business is intense and is based primarily
on price in relation to quality of service, the scope of services performed, and
the extent of security officer training and supervision. The corporation
believes that it enjoys a favorable competitive position because of its emphasis
on professionalism and quality of service. The corporation's principal business
is labor intensive, and is affected substantially by the availability of
qualified personnel and the cost of labor. The corporation has not experienced
any material difficulty in employing sufficient numbers of suitable security
officers.
WCC competes with a number of companies domestically and internationally,
including, but not limited to, Corrections Corporation of America, United States
Corrections Corp., Group 4 International Corrections Service, Securicor Group
and others. Some of the international competitors are larger and have greater
resources than WCC. WCC also competes on a localized basis in some markets
with small companies and in other markets, with governmental agencies that are
responsible for correctional facilities.
NON-U.S. OPERATIONS
Although most of the operations of the corporation are within the United States,
its international operations make a significant contribution to income.
Non-U.S. operations of the corporation provide physical security and private
investigative services in Canada, Central America, South America, the Caribbean,
Asia, Europe and Africa, and correctional and detention facilities management in
Australia. The table below (in thousands) summarizes the consolidated revenue,
profit (before allocation of general and administrative expenses of the home
office of the corporation and before income taxes) and assets for the last three
fiscal years attributable to the corporation's foreign operations. The effect
of 100% ownership of Australasian Correctional Management PTY., Ltd. (ACM), a
formerly 50% owned joint venture of WCC, has been reflected beginning in 1994.
<TABLE>
<CAPTION>
1994 1993 1992
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<S> <C> <C> <C>
Revenues $ 111,026 $ 83,523 $ 73,982
Profit 5,285 4,436 3,747
Assets 48,893 26,557 22,929
</TABLE>
The corporation has affiliates (50% or less owned) that operate security service
businesses in Europe, the Far East and Central and South America. In addition,
the corporation owns 50% of a joint venture for the management of a correctional
facility in the United Kingdom. The following table (in thousands) summarizes
certain financial information pertaining to these unconsolidated foreign
affiliates, on a combined basis, for the last three fiscal years.
<TABLE>
<CAPTION>
1994 1993 1992
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<S> <C> <C> <C>
Revenues $ 97,676 $ 85,222 $ 58,645
Net income 1,749 3,899 1,365
Corporation's share of net income 435 1,644 580
Assets 31,737 25,516 19,817
</TABLE>
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EMPLOYEES
As of January 1, 1995, the corporation had more than 39,000 full-time employees
(excluding those of the affiliate companies noted above), most of whom were
security officers and other personnel providing physical security services. A
small percentage of the employees of the corporation are covered by collective
bargaining agreements. Relations with employees have been generally
satisfactory and the corporation has not experienced any significant work
stoppages attributable to labor disputes. Security officers and other personnel
supplied to its clients are employees of the corporation, even though stationed
regularly at a client's premises.
BUSINESS REGULATIONS AND LEGAL CONSIDERATIONS
The corporation is subject to a myriad of city, county, and state firearm and
occupational licensing laws that apply to security officers and private
investigators. In addition, many states have laws requiring training and
registration of security officers, regulating the use of badges and uniforms,
prescribing the use of identification cards or badges, and imposing minimum
bond, surety, or insurance standards. Many foreign countries have laws that
restrict the corporation's ability to render certain services, including laws
prohibiting security guard services or limiting foreign investment. Under the
law of negligence, the corporation can be vicariously liable for acts or
omissions of its agents or employees performed in the course of their
employment. In addition, some states have statutes that expressly impose on the
corporation legal responsibility for the conduct of its employees. The nature
of the services provided by the corporation (such as armed security officers and
fire rescue and protection) ostensibly expose it to greater risks of liability
for employee acts or omissions than are posed to other non-security service
businesses. The corporation maintains public liability insurance to mitigate
against this potential risk exposure, although the laws of many states limit or
prohibit insurance coverage of liability for punitive damages arising from
willful, wanton or grossly negligent conduct.
ITEM 2. PROPERTIES
The corporation's executive offices are located in a 164,000 square foot office
building at 1500 San Remo Avenue, Coral Gables, Florida. The building is owned
by the corporation. The corporation utilizes approximately 54% of the building
and the majority of the remainder is leased to various non-affiliated parties.
On January 30, 1995, the corporation announced that it would take a special,
one-time charge in the fourth quarter of fiscal 1994, to provide for a loss
resulting from the write-down in the carrying value of its headquarters building
in Coral Gables, Florida. The charge is approximately $8.7 million ($5.4 million
or 56 cents per share after taxes). The write-down in the carrying value of the
headquarters building was due to management's decision to sell the
corporation's headquarters building in Coral Gables, Florida. It is anticipated
that the sale will generate approximately $15 million in cash and tax benefits.
The corporation owns a 66,000 square foot building in Aurora, Colorado, which is
operated as a detention center under a contract with the U.S. Government and a
15,000 square foot warehouse building in Miami, Florida. In addition, the
corporation owns three office buildings in Chile, two in Ecuador and one each in
the Dominican Republic, Costa Rica and Puerto Rico that are used for the
operations of its foreign subsidiaries in those countries. All other offices of
the corporation are in leased space. The aggregate annual rent for all
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noncancelable operating leases of office space, automobiles, data processing and
other equipment is approximately $4,993,000. The corporation owns substantially
all uniforms, firearms, and accessories used by its security officers.
ITEM 3. LEGAL PROCEEDINGS
During the first quarter of 1994, the corporation and its insurance carriers
settled a $6,000,000 judgment for $4,500,000. The corporation's insurance
carriers contributed funds for that settlement, but these carriers dispute
their legal obligation for the amounts paid. In the opinion of management,
after consultation with outside counsel, it is more likely than not that the
judgment will be covered by the corporation's insurance carriers ("International
Surplus Lines Insurance Company, Century Indemnity Company, Insurance Company
of North America and United National Insurance Company vs The Wackenhut
Corporation and Home Indemnity Company," Civil Action No. 93-10022K - United
States District Court, District of Massachusetts). In a second case, a former
employee has obtained a $1.8 million judgment against the corporation which
includes $1.7 million in punitive damages. The corporation is cautiously
optimistic that its appeal will at least result in the diminution of the
punitive damages awarded ("Cindy Boyle vs The Wackenhut Corporation," Appeal
from Cause No 92-S-0334-C - 130th Judicial District Court, Matagorda County,
Texas). Finally, in a case alleging tortious interference with contract
and other related torts, plaintiff claims multi-million dollar damages, which
the insurance carrier for the corporation has denied coverage ("Essex
Corporation vs Wackenhut Services, Inc.," Case No. 94-908 JC/DJS United States
District Court for the District of New Mexico). The corporation denies these
claims and intends to vigorously defend the action. While there can be no
absolute assurance that the reserves provided by the corporation are adequate,
management has made its best estimate of the potential exposure in these
matters.
The nature of the corporation's business results in claims or litigation
alleging that the corporation is liable for damages arising from the conduct of
its employees or others. In the opinion of management, there are no other
pending legal proceedings that would have a material effect on the consolidated
financial statements of the corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
GEORGE R. WACKENHUT is Chairman of the Board and Chief Executive Officer of the
corporation. He was President of the Corporation from the time it was founded
until April 26, 1986. He formerly was a Special Agent of the Federal Bureau of
Investigation. He is a member of the Board of Directors of SSJ Medical
Development, Inc., Miami, Florida, and is on the Dean's Advisory Board of the
University of Miami School of Business. He is on the National Council of
Trustees, Freedoms Foundation at Valley Forge, and the President's Advisory
Council for the Small Business Administration, Region IV. He is a past
participant in the Florida Governor's War on Crime and a past member of the Law
Enforcement Council, National Council on Crime and Delinquency, and the Board of
Visitors of the U.S. Army Military Police School. He is also a member of the
American Society for Industrial Security. He was a recipient in 1990 of the
Labor Order of Merit, First Class, from the government of Venezuela. Mr.
Wackenhut received his B.S. degree from the University of Hawaii and
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his M.Ed. degree from Johns Hopkins University. Mr. Wackenhut is married to
Ruth J. Wackenhut, Secretary of the Corporation. His son, Richard R. Wackenhut,
is President and Chief Operating Officer of the corporation and also a director.
(Age 75)
RICHARD R. WACKENHUT has been President and Chief Operating Officer of the
corporation and a member of the Board of Directors since April 26, 1986, and was
formerly Senior Vice President of Operations from 1983-86. He was Manager of
Physical Security from 1973-74. He also served as Manager, Development at the
corporation's Headquarters from 1974-76; Area Manager, Columbia, South Carolina,
from 1976-77; District Manager, Columbia, South Carolina from 1977-79; Director,
Physical Security Division at Corporate Headquarters from 1979-80; Vice
President, Operations from 1981-1982; and Senior Vice President, Domestic
Operations from 1982-1983. Mr. Wackenhut is Director of Wackenhut del Ecuador,
S.A.; Wackenhut UK Limited; Wackenhut Dominicana, S.A.; and a Director of
several domestic subsidiaries of the corporation. He is a member of the St.
Thomas University Advisory Board and a Director of the Florida Chamber of
Commerce Crime and Drugs Task Force. He is also a member of the American
Society for Industrial Security, the International Association of Chiefs of
Police and the International Security Management Association. He received his
B.A. degree from The Citadel in 1969, and completed the Advanced Management
Program of the Harvard University School of Business Administration in 1987.
Mr. Wackenhut is the son of George R. Wackenhut, Chairman of the Board and Chief
Executive Officer of the corporation, and Ruth J. Wackenhut, Secretary of the
Corporation. (Age 47).
ALAN B. BERNSTEIN has been Executive Vice President and President, Domestic
Operations Group since April 27, 1991. Prior to that, Mr. Bernstein was Senior
Vice President, Domestic Operations. He has been employed by the corporation
since 1976, except for a brief absence during 1982 when he was a partner in a
family-owned security alarm business in New York State. Mr. Bernstein has
served in the following positions with the corporation or its subsidiaries: Vice
President of Domestic Operations, 1985; Vice President, Corporate Business
Development, 1984; Acting President, Wackenhut Systems Corporation, 1983;
Director of Integrated Guard Security, 1981; Manager of Wackenhut Electronic
Systems Corporation (Miami) from 1976 to 1981. He received his B.S.E.E. degree
from the University of Rochester, and an M.B.A. degree from Cornell University.
(Age 47)
FERNANDO CARRIZOSA has been Senior Vice President, International Operations
since January 28, 1989. Mr. Carrizosa was Vice President of International
Operations from January 31, 1988 to January 28, 1989. He joined Wackenhut de
Colombia in 1968 as Manager of Investigations. He was promoted to Manager of
Human Resources, and then to Assistant to the President in 1974. He moved to
Headquarters as a trainee in 1974, and was promoted to Manager of Latin American
Operations, 1976 to 1979; Director of Latin American Operations, 1979 to 1980;
Vice President of Latin American Operations, 1980 to 1983; Executive Vice
President of Wackenhut International, 1983 to 1984; and President of Wackenhut
International, 1984 to 1988. He is a Director of several subsidiaries and
affiliates of the corporation. He received a B.B.A from Universidad Javeriana
in Colombia, and an M.B.A. with honors from Florida International University in
1976. (Age 51)
TIMOTHY P. COLE has been Executive Vice President and President, Government
Services Group since April 27, 1991. Mr. Cole was Senior Vice President
Government Services from 1989 to 1991. He joined the Corporation as President
of Wackenhut Services, Incorporated in 1988. Mr. Cole was associated with the
Martin Marietta Corporation from 1982 to 1988 and served in various capacities,
including Program Director, Director of Sub-contracts and Material, and Director
of Sub-contracts. He received his B.B.A degree from the University of Oklahoma
and his M.B.A. from Pepperdine University. Mr. Cole completed the Advanced
Management Program of the Harvard University School of Business Administration
in 1987. (Age 51)
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RICHARD C. DeCOOK, Senior Vice President and Chief Financial Officer, joined the
corporation in July, 1993. Mr. DeCook had spent fifteen years with Trinova
Corporation, most recently as Vice President - Financial Planning and Control,
and as Vice President - Treasurer. Prior to joining Trinova, he was with
Ernst & Young for twelve years. He is a graduate of the University of Michigan
and a Certified Public Accountant (CPA). (Age 52)
ROBERT C. KNEIP, Senior Vice President, Corporate Planning and Development,
joined the corporation in 1982. Mr. Kneip has held various positions in the
corporation including Director, Power Generating Services; Director, Contracts
Management; Vice President, Contracts Management; and Vice President, Planning
and Development. Prior to joining the corporation, Mr. Kneip was with the
Atomic Energy Commission, the Nuclear Regulatory Commission and Dravo Utility
Constructors, Inc. He received a B.A. (Honors) from the University of Iowa, and
an M.A. and Ph.D. from Tulane University. (Age 47)
JAMES P. ROWAN is Vice President and General Counsel, and Assistant Secretary of
the corporation. He joined the corporation in 1979 as Assistant General
Counsel, became Associate General Counsel in 1982 and a Vice President in 1986.
He is an attorney admitted to the Bar of the States of Indiana, Iowa and
Michigan. He holds the degrees of B.S.C. (Accounting) and J.D. (Law) from the
University of Iowa, and a CPA from the University of Illinois. (Age 61)
RUTH J. WACKENHUT has been Secretary of the corporation since 1958. She is
married to George R. Wackenhut, Chairman of the Board and Chief Executive
Officer of the corporation and her son, Richard R. Wackenhut, is President and
Chief Operating Officer of the corporation and also a director. (Age 72)
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference to Exhibit
13, the Registrant's 1994 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to Exhibit
13, the Registrant's 1994 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference to Exhibit
13, the Registrant's 1994 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference to Exhibit
13, the Registrant's 1994 Annual Report to Shareholders, except for the
Financial Statement Schedules listed in Item 14 (a) (2).
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
The information required by Items 10, 11, 12 and 13 of Form 10-K (except such
information as is furnished in a separate caption "Executive Officers of the
Registrant" and included in Part I, hereto) will be contained in, and is
incorporated by reference from, the proxy statement (with the exception of the
Board Compensation Committee Report and the Performance Graph) for the
corporation's 1995 Annual Meeting of Shareholders, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days
after the end of the fiscal year covered by this Annual Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The following consolidated financial statements of the corporation,
included in the Registrant's Annual Report to its Shareholders for the fiscal
year ended January 1, 1995 are incorporated by reference in Item 8:
Consolidated Balance Sheets - January 1, 1995 and January 2, 1994
Consolidated Statements of Income -Fiscal years ended January 1, 1995,
January 2, 1994 and January 3, 1993.
Consolidated Statements of Cash Flows - Fiscal years ended January 1, 1995,
January 2, 1994 and January 3, 1993.
Consolidated Statements of Shareholders' Interest -Fiscal years ended
January 1, 1995, January 2, 1994 and January 3, 1993.
Notes to Consolidated Financial Statements
With the exception of the information incorporated by reference from the
1994 Annual Report to Shareholders in Items 5, 6, 7, 8, and 14 of Parts II and
IV of this Form 10-K, the Registrant's 1994 Annual Report to shareholders is not
to be deemed filed as a part of this Report.
2. FINANCIAL STATEMENT SCHEDULES
Schedule VIII - Valuation and Qualifying Accounts,
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All other schedules specified in the accounting regulations of the
Securities and Exchange Commission have been omitted because they are either
inapplicable or not required. Individual financial statements of The Wackenhut
Corporation have been omitted because it is primarily an operating company and
all significant subsidiaries included in the consolidated financial statements
filed with this Annual Report are majority-owned.
3. EXHIBITS
The following exhibits are filed as part of this Annual Report:
EXHIBIT 3(a) - Amended and Restated Articles of Incorporation
(incorporated by reference to the corporation's Form 10-K Annual Report
for the year ended January 3, 1993).
EXHIBIT 3(b) - Bylaws currently in effect, as amended through October 27,
1990 (incorporated by reference to the corporation's Form 10-K Annual
Report for the year ended December 30, 1990).
EXHIBIT 4(a) - Revolving Credit and Reimbursement Agreement by and among
The Wackenhut Corporation, the company - NationsBank of Florida, N. A., and
Bank of America Illinois, as Lenders - and NationsBank of Florida, N.A., as
Agent dated January 5, 1995
EXHIBIT 4(b) - Receivables Purchase Agreement dated as of January 5, 1995
Among The Wackenhut Corporation, as Seller, and Receivables Capital
Corporation and Enterprise Funding Corporation, each as a Purchaser and
Bank of America National Trust and Savings Association and NationsBank of
North Carolina, N.A., each as a Managing Agent and Bank of America National
Trust and Savings Association as the Administrative Agent
EXHIBIT 4(c) - $15,000,000 Credit Agreement dated as of December 12, 1994
between Wackenhut Corrections Corporation as Borrower and Barnett Bank of
South Florida, N.A. as Lender.
EXHIBIT 10(a) - Amendments to the Deferred Compensation Agreements for
Executive Officers (the "Senior Plan"): Alan B. Bernstein, Richard R.
Wackenhut, Fernando Carrizosa, Timothy P. Cole, Robert C. Kneip
(incorporated by reference to the Corporation's Form 10-K Annual Report for
the year ended December 29, 1991).
EXHIBIT 10(b) - Deferred Compensation Agreement (the "Senior Plan") for
Richard C. DeCook (incorporated by reference to the Corporation's Form 10-K
Annual Report for the year ended January 2, 1994).
EXHIBIT 10(c) - Executive Retirement Plan adopted during fiscal year 1989
by the Board of Directors (incorporated by reference to the Corporation's
Form 10-K Annual Report for the year ended December 31, 1989).
EXHIBIT 10(d) - Amended, Split Dollar arrangement with George R. and
Ruth J. Wackenhut adopted by the Board of Directors in October of 1989
(incorporated by reference to the corporation's Form 10-K Annual Report for
the year ended December 31, 1989).
<PAGE>
EXHIBIT 10(e) - Amended and Restated Revolving Credit and Reimbursement
Agreement between The Wackenhut Corporation and NationsBank of Florida,
National Association dated July 1, 1993 (incorporated by reference to the
Corporation's Form 10-K Annual Report for the year ended January 2, 1994).
EXHIBIT 10(f) - Amendment dated March 7, 1995 to the Amended and Restated
Revolving Credit and Reimbursement Agreement between The Wackenhut
Corporation and NationsBank of Florida, N.A., dated July 1, 1993.
EXHIBIT 13 - Annual Report to Shareholders for the year ended January 1,
1995, beginning with page 21 to the Annual Report (to be deemed filed only
to the extent required by the instructions to exhibits for reports on Form
10-K).
EXHIBIT 21 - Subsidiaries of the Corporation.
(b). REPORTS ON FORM 8-K.
On August 12, 1994, the corporation filed a current report on Form 8-K
to report the initial public offering of Wackenhut Corrections
Corporation, a subsidiary of the corporation. After the completion of
the sale, the corporation owns 73.3% of the issued and outstanding
shares of common stock of the subsidiary. Financial statements and pro
forma financial information were not required since the transaction did
not meet materiality requirements.
On January 30, 1995, the corporation filed a current report on Form 8-K
to report that it will take a special, one-time charge in the fourth
quarter of fiscal 1994 to provide for a loss resulting from the
write-down in the carrying value of its headquarters building in Coral
Gables, Florida. The loss resulting from the write-down of the
headquarters building carrying value of $8.7 million is due to
management's decision to sell the Corporation's headquarters building.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE WACKENHUT CORPORATION
Date: March 20, 1995 By:/s/ Richard C. DeCook
----------------------
Richard C. DeCook, Senior Vice President - Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: March 20,1995 /s/ George R. Wackenhut
-----------------------
GEORGE R. WACKENHUT, Chairman of the Board
and Chief Executive Officer (principal executive
officer)
Date: March 20,1995 /s/ Richard C. DeCook
---------------------
Richard C. DeCook, Senior Vice President - Finance
and Chief Financial Officer
Date: March 20, 1995 /s/ Juan D. Miyar
-----------------
Juan D. Miyar, Vice President - Accounting
Services and Corporate Controller (principal
accounting officer)
/s/ Julius W. Becton, Jr.*
-------------------------
JULIUS W. BECTON, JR.
Director
/s/ Richard G. Capen, Jr.*
-------------------------
RICHARD G. CAPEN, JR.
Director
/s/ Anne N. Foreman *
-------------------
ANNE N. FOREMAN
Director
<PAGE>
/s/ Edward L. Hennessy, Jr. *
---------------------------
EDWARD L. HENNESSY, JR.
Director
/s/ P. X. Kelley *
--------------------
PAUL X. KELLEY
Director
/s/ Robert Q. Marston *
---------------------
ROBERT Q. MARSTON
Director
/s/ Jorge L. Mas Canosa *
-----------------------
JORGE L. MAS CANOSA
Director
/s/ Nancy Clark Reynolds *
------------------------
NANCY CLARK REYNOLDS
Director
/s/ Thomas P. Stafford *
----------------------
THOMAS P. STAFFORD
Director
/s/ George R. Wackenhut *
-----------------------
GEORGE R. WACKENHUT
Director
/s/ Richard R. Wackenhut *
------------------------
RICHARD R. WACKENHUT
Director
Dated: March 20, 1995 * By /s/ James P. Rowan
------------------------
JAMES P. ROWAN, Attorney-in-fact
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
The Wackenhut Corporation:
We have audited the accompanying consolidated balance sheets of The Wackenhut
Corporation (a Florida corporation) and subsidiaries as of January 1, 1995 and
January 2, 1994, and the related consolidated statements of income, cash flows
and shareholders' equity for each of the three fiscal years in the period ended
January 1, 1995. These financial statements and the schedule referred to below
are the responsibility of the Corporation's management. Our responsibility is
to express and opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Wackenhut Corporation and
subsidiaries as of January 1, 1995 and January 2, 1994, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended January 1, 1995, in conformity with generally accepted accounting
principles.
Our audits were made for the purposes of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 17, 1995.
<PAGE>
SCHEDULE VIII
THE WACKENHUT CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED JANUARY 1, 1995,
JANUARY 2, 1994 AND JANUARY 3, 1993
(In thousands)
<TABLE>
<CAPTION>
Balance at Charged to Charged to Deductions, Balance at
Beginning Costs and to Other Actual End of
Description of Period Expenses Accounts Charge-Offs Period
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 1, 1995:
Allowance for doubtful accounts $687 $508 - ($139) $1,056
---------------------------------------------------------------------
---------------------------------------------------------------------
Valuation allowance - $2,632 - - ($2,482) $150
Deferred tax asset
---------------------------------------------------------------------
---------------------------------------------------------------------
YEAR ENDED JANUARY 2, 1994:
Allowance for doubtful accounts $1,580 $735 - ($1,628) $687
---------------------------------------------------------------------
---------------------------------------------------------------------
Valuation allowance - $2,932 - (300) $2,632
Deferred tax asset
---------------------------------------------------------------------
---------------------------------------------------------------------
YEAR ENDED JANUARY 3, 1993:
Allowance for doubtful accounts $430 $1,193 - ($43) $1,580
---------------------------------------------------------------------
---------------------------------------------------------------------
Valuation allowance - Deferred tax asset $2,348 - $584 - $2,932
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No.
4(a) Revolving Credit and Reimbursement Agreement by and among
The Wackenhut Corporation, the Company - NationsBank of
Florida, N. A., and Bank of America Illinois, as Lenders - and
NationsBank of Florida, N.A., as Agent dated January 5,1995
4(b) Receivables Purchase Agreement dated as of January 5, 1995
Among The Wackenhut Corporation, as Seller and
Receivables Capital Corporation and Enterprise Funding
Corporation, each as a Purchaser and Bank of America National Trust
and Savings Association and NationsBank of North Carolina, N.A.,
each as a Managing Agent and Bank of America National Trust and
Savings Association as the Administrative Agent
4(c) $15,000,000 Credit Agreement dated as of December 12, 1994 between
Wackenhut Corrections Corporation as Borrower and Barnett Bank of
South Florida, N.A., as lender
10(f) Amendment dated March 7, 1995 to the Amended and Restated Revolving
Credit and Reimbursement Agreement between The Wackenhut Corporation
and NationsBank of Florida, N.A., dated July 1, 1993
13 Annual Report to shareholders for the year ended January 1, 1995,
(to be deemed filed only to the extent required by the instructions
to exhibits for reports on Form 10-K).
21 Subsidiaries of the Corporation
See Item 14(a)(3) for a complete listing of exhibits, including those exhibits
not attached to this Form 10-K Annual Report but incorporated by reference to
prior Form 10-K Annual Reports.
<PAGE>
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
by and among
THE WACKENHUT CORPORATION,
the Company
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION,
BANK OF AMERICA ILLINOIS
as Lenders
and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION,
as Agent
January 5, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . 22
1.03 Directly or Indirectly . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
Revolving Credit Facility
2.01 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.02 Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.03 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.04 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.05 Payment of Interest. . . . . . . . . . . . . . . . . . . . . . . . 26
2.06 Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . 26
2.07 Company's Account. . . . . . . . . . . . . . . . . . . . . . . . . 27
2.08 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.09 Pro Rata Payments. . . . . . . . . . . . . . . . . . . . . . . . . 28
2.10 Reduction in Commitment. . . . . . . . . . . . . . . . . . . . . . 28
2.11 Conversions and Elections of Subsequent Interest
Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.12 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.13 Deficiency Advances. . . . . . . . . . . . . . . . . . . . . . . . 30
2.14 Adjustments by Agent . . . . . . . . . . . . . . . . . . . . . . . 31
2.15 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.16 Highly Leveraged Transaction . . . . . . . . . . . . . . . . . . . 31
2.17 Swing Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.18 Extension of Revolving Credit Termination Date . . . . . . . . . . 33
ARTICLE III
Letters of Credit
3.01 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 34
3.02 Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.03 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . 38
3.04 Administrative Fees. . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV
Yield Protection and Illegality
4.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.02 Suspension of Loans. . . . . . . . . . . . . . . . . . . . . . . . 40
4.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.04 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
i
<PAGE>
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.01 Conditions of Initial Advance and Issuance of
Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.02 Conditions of Loans. . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI
Representations and Warranties
6.01 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.02 Corporate Organization and Authority . . . . . . . . . . . . . . . 46
6.03 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 46
6.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.05 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.06 Pending Litigation . . . . . . . . . . . . . . . . . . . . . . . . 47
6.07 Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . 47
6.08 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . 47
6.09 Issuance is Legal and Authorized . . . . . . . . . . . . . . . . . 48
6.10 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.11 Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . 48
6.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.13 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.14 Employee Retirement Income Security Act of 1974. . . . . . . . . . 49
6.15 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 50
6.16 Compliance with Environmental Laws . . . . . . . . . . . . . . . . 50
ARTICLE VII
Company Covenants
7.01 Corporate Existence, Etc.. . . . . . . . . . . . . . . . . . . . . 51
7.02 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.03 Taxes, Claims for Labor and Materials, Compliance
with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.04 Maintenance, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 52
7.05 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . 52
7.06 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . 53
7.07 Limitations on Total Debt. . . . . . . . . . . . . . . . . . . . . 53
7.08 Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . . 53
7.09 Trading Asset Ratio. . . . . . . . . . . . . . . . . . . . . . . . 53
7.10 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 54
7.11 Restricted Payments: Joint Venture Investments. . . . . . . . . . 55
7.12 Limitation on Sale and Leasebacks. . . . . . . . . . . . . . . . . 57
7.13 Mergers, Consolidations and Sales of Assets. . . . . . . . . . . . 57
7.14 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.15 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 59
7.16 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.17 Reports and Rights of Inspection . . . . . . . . . . . . . . . . . 60
7.18 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.19 Additional Guaranties. . . . . . . . . . . . . . . . . . . . . . . 63
ii
<PAGE>
ARTICLE VIII
Events of Default and Remedies Therefor
8.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 65
8.02 Notice to Holders. . . . . . . . . . . . . . . . . . . . . . . . . 66
8.03 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.04 Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.05 Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . . 67
8.06 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.07 Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX
The Agent
9.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.02 Attorneys-in-fact. . . . . . . . . . . . . . . . . . . . . . . . . 69
9.03 Limitation on Liability. . . . . . . . . . . . . . . . . . . . . . 69
9.04 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.05 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . 70
9.06 No Representations . . . . . . . . . . . . . . . . . . . . . . . . 70
9.07 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.08 Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.09 Resignation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.10 Sharing of Payments, etc . . . . . . . . . . . . . . . . . . . . . 72
9.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE X
Miscellaneous
10.01 Assignments and Participation . . . . . . . . . . . . . . . . . . 73
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.03 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.05 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.06 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.07 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.08 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.09 Waivers by the Company. . . . . . . . . . . . . . . . . . . . . . 79
10.10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.13 Agreement Controls. . . . . . . . . . . . . . . . . . . . . . . . 81
EXHIBIT A APPLICABLE COMMITMENT PERCENTAGES . . . . . . . . . . . . . 85
EXHIBIT B FORM OF ASSIGNMENT AND ACCEPTANCE . . . . . . . . . . . . . 86
EXHIBIT C NOTICE OF APPOINTMENT (OR REVOCATION)
OF AUTHORIZED OFFICER . . . . . . . . . . . . . . . . . . . 89
EXHIBIT D-1 BORROWING NOTICE (LOAN) . . . . . . . . . . . . . . . . . . 90
EXHIBIT D-2 FORM OF BORROWING NOTICE--SWING LINE LOANS. . . . . . . . . 92
iii
<PAGE>
EXHIBIT E FORM OF NOTE. . . . . . . . . . . . . . . . . . . . . . . . 94
EXHIBIT F [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . 97
EXHIBIT G-1 OPINION OF VICE PRESIDENT AND LEGAL COUNSEL . . . . . . . . 98
EXHIBIT G-2 OPINION OF COUNSEL TO THE GUARANTORS. . . . . . . . . . . . 99
EXHIBIT H FORM OF GUARANTY AGREEMENT. . . . . . . . . . . . . . . . .100
SCHEDULE 1.01 EXISTING LCs . . . . . . . . . . . . . . . . . . . . . .111
SCHEDULE 6.01 SUBSIDIARIES OF THE COMPANY. . . . . . . . . . . . . . .112
SCHEDULE 6.04 DESCRIPTION OF INDEBTEDNESS AND LEASES . . . . . . . . .113
SCHEDULE 6.06 LITIGATION . . . . . . . . . . . . . . . . . . . . . . .115
SCHEDULE 7.10 EXISTING LIENS . . . . . . . . . . . . . . . . . . . . .116
iv
<PAGE>
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT, dated
January 5, 1995 (the "Agreement"), is made by and among:
THE WACKENHUT CORPORATION, a corporation organized and existing under the
laws of the State of Florida and having its principal place of business located
in Coral Cables, Florida (the "Company"); and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION ("NationsBank"), BANK OF
AMERICA ILLINOIS ("BofA") and each other lender which may hereafter execute and
deliver an instrument of assignment with respect to this Agreement pursuant to
Section 10.01 (hereinafter NationsBank and such other lenders may be referred
to individually as a "Lender" or collectively as the "Lenders"); and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America and having a principal place of business in Miami, Florida in its
capacity as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, NationsBank as Lender and the Agent entered into an
Amended and Restated Revolving Credit and Reimbursement Agreement dated July 1,
1993 (the "Prior Agreement") pursuant to which the Lender under the Prior
Agreement made available to the Company a revolving credit facility of up to
$60,000,000 and a letter of credit facility which is available under the
Revolving Credit Facility of up to $20,000,000; and
WHEREAS, the Company, the Lenders and the Agent desire to enter into this
Agreement and the other Loan Documents to provide a revolving credit facility of
up to $60,000,000 and a letter of credit facility as a part of the revolving
credit facility upon the terms and conditions hereinafter set forth, the
proceeds of which revolving credit facility are to be used to repay the
indebtedness arising under the Prior Agreement and for other purposes as herein
provided;
NOW, THEREFORE, the Company, the Lenders and the Agent hereby
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and the
following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Advance" means a borrowing under the Revolving Credit Facility
consisting of the aggregate principal amount of a Floating Rate Loan or
Fixed Rate Loan, as the case may be;
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of
the Company or (iii) 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by the Company or a Subsidiary. The
term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
person, whether through the ownership of Voting Stock, by contract or
otherwise;
"Applicable Base Rate" means:
(i) for any Fixed CD Loan, in respect of the Interest Period
specified by an Authorized Officer in the Borrowing Notice for such
Fixed CD Loan, the per annum rate of interest (expressed as a
percentage and rounded upwards if necessary to the nearest 1/100 of
1%) (which shall be the same for each day of such Interest Period)
determined in good faith by the Agent in accordance with the usual
procedures for its customers generally (which determination shall be
conclusive absent manifest error) to be the average of the secondary
market bid rates at approximately 10:00 A.M. Miami, Florida time on
the first day of such Interest Period of at least two dealers of
recognized standing in negotiable certificates of deposit for the
purchase at face value of negotiable certificates of deposit of major
money center banks for delivery on such day in an amount approximately
equal to the principal amount of, and for a period comparable to the
Interest Period for, such Fixed CD Loan and maturing at the end of
such Interest Period, and
(ii) for any Floating CD Loan the per annum rate of interest
(expressed as a percentage and rounded upwards if necessary to the
nearest 1/100 of 1%) determined in
2
<PAGE>
good faith by the Agent in accordance with the usual procedures for
its customers generally to be the average of the secondary market bid
rates at approximately 10:00 A.M. Miami, Florida time on each day of
such Floating CD Loan of at least two dealers of recognized standing
in negotiable certificates of deposit for the purchase at face value
of negotiable certificates of deposit of major money center banks for
delivery on such day in an amount approximately equal to the principal
amount of such Floating CD Loan for a period of 90 days, and
(iii) for any LIBOR Loan, in respect of the Interest Period
specified by the Authorized Officer in the Borrowing Notice for such
LIBOR Loan, the rate (expressed as a percentage and rounded upward if
necessary to the nearest 1/100 of 1%) (which shall be the same for
each day of such Interest Period) determined by the Agent in good
faith in accordance with its usual procedures for its customers
generally to be the average of the rates per annum for deposits in
Dollars offered to major money center banks in the London interbank
market at approximately 11:00 A.M. London time two (2) LIBOR Business
Days prior to the commencement of the applicable Interest Period in an
amount approximately equal to the principal amount of, and for a
period comparable to the Interest Period for, such LIBOR Loan;
"Applicable Commitment Percentage" means, for each Lender, with
respect to the Obligations hereunder (each a type of "credit exposure"), a
fraction (expressed as a percentage), the numerator of which shall be the
then amount of such Lender's Revolving Loan Commitment and the denominator
of which shall be the Total Revolving Loan Commitment, which Applicable
Commitment Percentage for each Lender as of the Closing Date is as set
forth in EXHIBIT A attached hereto and incorporated herein by this
reference;
"Applicable Interest Addition" means with respect to a CD Loan and
LIBOR Loan that percent per annum set forth below which percent shall be
the Applicable Interest Addition effective beginning on the first day of
the fiscal quarter (i) next following the Four-Quarter Period as at the end
of which the Fixed Charge Coverage Ratio and (ii) next following the
quarter as at the end of which the ratio of (x) Consolidated Funded Debt to
(y) Total Capitalization is more or less, as the case may be, than that set
forth below opposite such Applicable Interest Addition (in the event that
the two ratios fall within different Applicable Interest Addition
categories, then the larger Applicable Interest Addition shall apply):
3
<PAGE>
<TABLE>
<CAPTION>
Applicable
Ratio Interest Addition
----- -----------------
Fixed Charge Funded Debt to CD LIBOR
Coverage Capitalization Loan Loan
------------ -------------- ---- ----
<S> <C> <C> <C>
Greater than 2.25 Less than or equal .50 .50
to 1.00 to .40 to 1.00
Greater than 1.65 Less than or equal
to 1.00 to .52 to 1.00 .625% .625%
Greater than 1.60 Less than or equal
to 1.00 to .55 to 1.00 .75% .75%
Greater than 1.60 Greater than .55
to 1.00 to 1.00 .875% .875%
</TABLE>
"Applicable Reserve Requirement" means, for any CD Loan or LIBOR Loan
with respect thereto, the maximum aggregate rate at which reserves
(including, without limitation, any marginal, supplemental or emergency
reserves) are required to be maintained with respect thereto under
Regulation D by the member banks of the Federal Reserve System against (i)
non-personal Dollar time deposits in an amount of $100,000 or more in the
case of any CD Loan or (ii) with respect to Dollar funding in the London
interbank market in the case of any LIBOR Loan. Without limiting the
effect of the foregoing, the Applicable Reserve Requirement shall reflect
any other reserves required to be maintained by such member banks by reason
of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Applicable Base Rate is to be
determined or (ii) any category of extensions of credit or other assets
which include CD Loans or LIBOR Loans;
"Asset Securitization Facility" means the asset backed commercial
paper funded receivables securitization facility among the Company as
Seller, BofA and NationsBank as co-Managing Agents, and BofA as
Administrative Agent, providing for the sale by the Company and certain of
its Subsidiaries of fractional undivided interests in trade receivables,
provided that at no time shall the aggregate face amount of outstanding
trade receivables of the Company and its Subsidiaries sold or otherwise
transferred (in whole or in part) through such program exceed $50,000,000;
"Assessment Rate" means the rate per annum (rounded upward to the
nearest 1/100 of 1%) determined in good faith by the Agent in accordance
with its usual procedures for its customers generally (which determination
shall be conclusive absent manifest error) to be the maximum effective
assessment rate per annum payable by a bank insured by the Federal Deposit
Insurance Corporation (or any successor) for such day for insurance on
Dollar time deposits, exclusive of any credit
4
<PAGE>
allowed against such annual assessment on account of assessment payments
made or to be made by such bank and exclusive of any adjustments not
applicable to banks generally. The CD Rate shall be adjusted automatically
as of the effective date of each change in the Assessment Rate;
"Assignment and Acceptance" means an Assignment and Acceptance in the
form of EXHIBIT B (with blanks appropriately filled in) delivered to the
Agent in connection with an assignment of a Lender's interest under this
Agreement pursuant to Section 10.01;
"Atrium Debt" means the indebtedness of the Company in the outstanding
principal amount as of December 5, 1994 of approximately $16,242,500
incurred to finance, and secured by, the Company's headquarters building
located at 1500 San Remo Avenue, Coral Gables, Florida;
"Authorized Officer" means any of the Chairman, President, Senior Vice
Presidents or Vice Presidents of the Company or, with respect to financial
matters, the Treasurer or Chief Financial Officer of the Company or any
other person expressly designated by the Board of Directors (or the
appropriate committee thereof) of the Company as an Authorized Officer for
purposes of this Agreement, as set forth from time to time in a certificate
in the form attached hereto as EXHIBIT C;
"Base Loan" means all of the Loans for which the rate of interest is
determined by reference to the Base Rate;
"Base Rate" means the greater of (i) the Federal Funds Effective
Rate plus 1/2%, or (ii) the Prime Rate;
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body);
"Borrowing Notice" means the telephonic request of the Authorized
Officer to obtain an Advance or a Swing Line Loan Advance or to elect a
subsequent Interest Period for or convert a Loan or Loans of any type
hereunder, as the obtaining of such Advance, such election or conversion of
such Loan or Loans shall be otherwise permitted herein. Any Borrowing
Notice shall be binding on and irrevocable by the Company, and shall be
confirmed in writing within three (3) Business Days an Authorized Officer
in the form attached hereto as EXHIBIT D;
"Business Day" means any day which is not a Saturday, Sunday or legal
holiday and which is a day on which banks are open for business in the
State of Florida;
5
<PAGE>
"Capitalized Lease" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP;
"Capitalized Rentals" of any Person and as of the date of any
determination thereof means the amount at which the aggregate Rentals due
and to become due under all Capitalized Leases under which such Person is
lessee would be reflected as a liability on a consolidated balance sheet of
such Person;
"CD Loan" means all of the Loans for which the rate of interest is
determined by reference to the CD Rate;
"CD Rate" means, for any CD Loan, the rate of interest per annum
determined pursuant to the following formula:
Applicable Base Rate Applicable
--------------------
CD Rate = + Assessment Rate +
1 - Applicable Interest
Reserve Requirement Addition
"Closing Date" means the date as of which this Agreement is executed
by the Company, the Lenders and the Agent and on which the conditions set
forth in Section 5.01 hereof have been satisfied;
"Company's Account" means a demand deposit account number 3601603454,
or any successor account with the Agent, which may be maintained at one or
more offices of the Agent, or an agent for the Agent;
"Consolidated Current Assets" and "Consolidated Current Liabilities"
means as of the date of any determination thereof such assets and
liabilities of the Company and its Subsidiaries on consolidated basis as
shall be determined in accordance with GAAP to constitute current assets
and current liabilities, respectively;
"Consolidated Funded Debt" means all Funded Debt of the Company and
its Subsidiaries, determined on a consolidated basis eliminating
intercompany items;
"Consolidated Net Income" for any period means the gross revenues of
the Company and its Subsidiaries for such period LESS all expenses and
other proper charges (including taxes on income and Interest Charges),
determined on a consolidated basis after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in any event:
(a) any gains on the sale or other disposition of Investments or
fixed or capital assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses;
6
<PAGE>
(b) the proceeds of any life insurance policy except for
proceeds received during such period with respect to deferred
compensation plans to the extent that the Company or any Subsidiary
recognized any expenses during such period with respect to such plans;
(c) net earnings and losses of any Subsidiary accrued prior to
the date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired
in any manner by the Company or any Subsidiary, realized by such
corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a
Subsidiary) in which the Company or any Subsidiary has an ownership
interest unless such net earnings shall have actually been received by
the Company or such Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to the Company or
any other Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of
the Company or any Subsidiary; and
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been
made from income arising during such period;
"Consolidated Net Assets" means as of the date of any
determination thereof, the amount of all Total Assets of the Company and
its Subsidiaries after deducting all Restricted Investments and all items
which in accordance with GAAP would be included on the liability side of a
consolidated balance
7
<PAGE>
sheet, except deferred income taxes, deferred investment tax credits,
capital stock of any class, surplus and Funded Debt;
"Consolidated Net Worth" means at any time as of which the amount
thereof is to be determined, the sum of the following in respect of the
Company and its Subsidiaries (on a consolidated basis and excluding
intercompany items): (i) the amount of issued and outstanding share
capital, plus (ii) the amont of additional paid-in capital and retained
income (or, in the case of a deficit, minus the amount of such deficit),
MINUS (iii) the sum of the following (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings): (A) all reserves, except legal reserves and other contingency
reserves (i.e., reserves not allocated to specific purposes and not
deducted from assets), which are properly treated as appropriations of
surplus or retained earnings; (B) any treasury stock, capital stock
subscribed and unissued and other contra-equity accounts; and (C) the
cumulative amount of any net write-up of asset values after the date of
the audit immediately preceding the Closing Date, PLUS or MINUS, as the
case may be (iv) the cumulative effect of foreign exchange valuations;
"Consolidated Total Assets" means as of the date of any determination
thereof the total amount of all assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP;
"Current Debt" of any Person as of the date of any determination
thereof means (i) all Indebtedness of such Person for borrowed money other
than Funded Debt of such Person and (ii) Guaranties by such Person of
Current Debt of others;
"Default" means any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice,or both, constitute an Event
of Default;
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of
America;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections;
"ERISA Affiliate" means any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or
controlled group of trades
8
<PAGE>
or businesses, as described in section 414(b) and 414(c), respectively,
of the Code of Section 4001 of ERISA;
"Event of Default" shall have the meaning set forth in Section 8.01;
"Existing LCs" means the letters of credit issued by NationsBank or
BofA prior to the Closing Date and remaining outstanding as of the Closing
Date, all as more particularly described on SCHEDULE 1.01 attached hereto;
"Federal Funds Effective Rate" for any day, as used herein, means the
rate per annum (rounded upward to the nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York (or any successor) on such day as being
the weighted average of the rates on overnight Federal funds transactions
arranged by Federal funds brokers on the previous trading day, as computed
and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced;
"Fixed CD Loan" means a CD Loan for which the Company elects an
Interest Period of 30, 60, 90 or 180 days pursuant to Section 2.03 hereof;
"Fixed Charges" for any period means on a consolidated basis the sum
of (i) 100% of all Rentals (other than Rentals on Capitalized Leases)
payable during such period by the Company and its Subsidiaries (other than
WCC), and (ii) all Interest Charges on all Indebtedness (including the
interest component of Rentals on Capitalized Leases and the discount factor
or other economic equivalent of interest under the Asset Securitization
Facility) of the Company and its Subsidiaries (other than WCC) payable
during said period by the Company and its Subsidiaries (other than WCC);
"Fixed Charges Coverage Ratio" means the ratio of Net Income Available
for Fixed Charges to Fixed Charges;
"Fixed Rate Loan" means a Loan which is either a Fixed CD Loan or a
LIBOR Loan;
"Floating CD Loan" means a CD Loan other than a Fixed CD Loan;
"Floating Rate Loan" means a Loan which is either a Base Loan or a
Floating CD Loan;
9
<PAGE>
"Four-Quarter Period" means a period of four full consecutive quarter
annual periods, taken together as one accounting period;
"Funded Debt" of any Person shall mean (i) all Indebtedness of such
Person for borrowed money or which has been incurred in connection with the
acquisition of assets, including all payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, whether or not the obligation to make such payments shall
constitute a current liability of the obligor under GAAP, (ii) all
Capitalized Rentals of such Person, (iii) all Guaranties by such Person of
Funded Debt of others, (iv) with respect to Funded Debt of the Company, the
product of (x) the aggregate amounts available for drawing under all
outstanding Letters of Credit and (y).50; and (v) to the extent not
otherwise included in clauses (i) through (iv) above, outstanding amounts
received by the Company or any Subsidiary in exchange for the transfer of
interests in trade receivables under the Asset Securitization Facility in
excess of the amounts repaid to the purchasers in respect of such purchase
price from collections on such trade receivables;
"GAAP" means generally accepted accounting principles at the time;
"Gross Revenues" for any period means the gross revenues, determined
in accordance with GAAP, of the Company and its Subsidiaries for such
period, determined on a consolidated basis after eliminating revenues
attributable to outstanding Minority Interests;
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect,
guaranteeing any Indebtedness, dividend or other obligation, of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, or
(iii) to lease property or to purchase Securities or other Property or
services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness of obligation, or (iv) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor against loss
in respect thereof. For the
10
<PAGE>
purposes of all computations made under this Agreement, a Guaranty in
respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for
borrowed money which has been guaranteed, and a Guaranty in respect of any
other obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend;
"Guaranty Agreements" means, collectively, the Guaranty and Suretyship
Agreements executed and delivered by each wholly-owned Subsidiary of the
Company pursuant to the terms hereof substantially in the form of EXHIBIT
H, as the same may be amended, modified or restated from time to time;
"Guarantors" means, collectively, (i) as of the date hereof, each
wholly-owned domestic Subsidiary of the Company as listed on SCHEDULE 6.01
hereof, and (ii) thereafter, each Person who is required to execute and
deliver a Guaranty pursuant to Section 7.19 hereof;
"Indebtedness" of any Person means and include all obligations of such
Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which has
been incurred in connection with the acquisition of property or assets,
(ii) obligations secured by any Lien upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person, notwithstanding the fact that the rights
and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, (iv)
Capitalized Rentals under any Capitalized Lease, (v) Guaranties of
Indebtedness of others, (vi) the Reimbursement Obligations, and (vii)
outstanding amounts received by the Company or any Subsidiary in exchange
for the transfer of interests in trade receivables under the Asset
Securitization Facility in excess of the amounts repaid to the purchasers
in respect of such purchase price from collections on such trade
receivables;
"Interest Charges" for any period means all interest and all
amortization of debt discount and expense on any particular Indebtedness
for which such calculations are being made, and shall include without
limitation the discount factor or other economic equivalent of interest
arising under the Asset Securitization Facility. Computations of Interest
Charges on a pro forma basis for Indebtedness having a variable interest
rate shall be calculated at the rate in effect on the date of any
determination;
11
<PAGE>
"Interest Period" for each Fixed Rate Loan means a period commencing
on the date such Fixed Rate Loan is made or converted and each subsequent
period commencing on the last day of the immediately preceding Interest
Period for such Fixed Rate Loan and ending, at the Company's option, (A)
for any Fixed CD Loan on the date 30, 60, 90 or 180 days thereafter as
notified to the Agent by an Authorized Officer two (2) Business Days prior
to the beginning of such Interest Period and (B) for any LIBOR Loan, on the
date one, two, three or six months thereafter as notified to the Agent by
the Authorized Officer three (3) LIBOR Business Days prior to the beginning
of such Interest Period; PROVIDED, that,
(i) if an Authorized Officer fails to notify the Agent of
the length of an Interest Period for any Fixed CD Loan two (2)
Business Days or for any LIBOR Loan three (3) LIBOR Business Days, as
the case may be, prior to the first day of such Interest Period, the
Loan for which such Interest Period was to be determined shall be
deemed to be a Prime Loan as of the first day thereof for an Interest
Period ending on the following Business Day;
(ii) if an Interest Period for a Fixed Rate Loan would end
on a day which is not a Business Day or a LIBOR Business Day, as the
case may be, such Interest Period shall be extended to the next
Business Day or LIBOR Business Day (unless in the case of any LIBOR
Loan, such extension would cause the applicable Interest Period to end
in the succeeding calendar month, in which case such Interest Period
shall end on the next preceding LIBOR Business Day); and
(iii) there shall not be more than six (6) Interest Periods
in effect on any day, provided that all Floating Rate Loans shall be
treated as having the same Interest Period;
"Investments" means all investments, in cash or by delivery of
Property made, directly or indirectly in any Person, whether by acquisition
of shares of capital stock, indebtedness or other obligations or Security
or by loan, advance, capital contribution or otherwise; PROVIDED, HOWEVER,
that "Investments" shall not mean or include routine investments in
Property to be used or consumed in the ordinary course of business or
investments in accounts receivable or notes receivable arising in the
ordinary course of business;
"Joint Venture Investment" means any Investment in an amount not to
exceed $500,000 in any Person by the Company with any other Person or
Persons which Investment is made in order to permit the Company to make
bids with respect to government contracts for the providing of services by
the
12
<PAGE>
Company of the type provided by the Company and its Subsidiaries on the
date of this Agreement;
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Authorized
Officer and the Agent as the office by which its Loans are to be made and
maintained;
"Letter of Credit" or "Letters of Credit" means a letter of credit
issued by a Letter of Credit Issuer for the account of the Company or the
Company and Titania in favor of a Person advancing credit, providing
insurance or securing obligations on behalf of the Company or the Company
and Titania, and shall include without limitation all Existing LCs;
"Letter of Credit Account Agreement" means that Letter of Credit
Account Agreement of even date herewith by and between the Company and the
Agent, as amended and modified from time to time, providing for deposit of
amounts of cash with the Agent;
"Letter of Credit Facility" means the facility described in Article
III hereof providing for the issuance by the Letter of Credit Issuers for
the account of the Company or the Company and Titania of Letters of Credit
in an aggregate stated amount at any time outstanding not exceeding the
Total Letter of Credit Commitment;
"Letter of Credit Issuer" means NationsBank or, with respect to
Existing LCs, NationsBank or BofA, as the case may be, as issuer of a
Letter of Credit;
"LIBOR Business Day" means a Business Day on which the relevant
international financial markets are open for the transaction of the
business contemplated by this Agreement in London, England and New York,
New York;
"LIBOR Loan" means all of the Loans for which the rate of interest is
determined by reference to the LIBOR Rate;
"LIBOR Rate" means, for the Interest Period for any LIBOR Loan, the
rate of interest per annum determined pursuant to the following formula:
Applicable Base Rate
--------------------
LIBOR Rate = 1 - Applicable + Applicable Interest
Reserve Requirement Addition
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the
13
<PAGE>
owner of the Property, whether such interest is based on the common law,
statute or contract, and including but not limited to the security interest
lien arising from a mortgage, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
The term "Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances (including, with respect to stock,
stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
Agreement, the Company or a Subsidiary shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement, Capitalized Lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes and such retention or vesting shall constitute a Lien;
"Loan" or "Loans" means any of the Fixed Rate Loans or Floating Rate
Loans, as the context may require;
"Loan Documents" means this Agreement, the Letter of Credit Account
Agreement, the Notes, the Guaranty Agreements, any applications for
issuance of Letters of Credit and all other instruments and documents
executed or delivered to and in favor of any Lender or the Agent in
connection with the Loans or the Letters of Credit as the same may be
amended, modified or supplemented from time to time;
"Material Subsidiary" means a Subsidiary which as of any date of
determination (i) has total assets equal to 5% or more of Consolidated
Total Assets or (ii) contributed 5% or more of Consolidated Net Income for
the preceding fiscal year of the Company;
"Minority Interests" means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law)
that are not owned by the Company and/or one or more of its Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating
value of such preferred stock, whichever is greater, and by valuing
Minority Interests constituting common stock at the book value of capital
and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the foregoing
method of valuing Minority Interests in preferred stock;
"Multiemployer Plan" shall have the same meaning as in ERISA;
14
<PAGE>
"Net Income Available for Fixed Charges" for any period means the sum
of (i) Consolidated Net Income during such period (excluding, for the
purpose of determining Net Income Available for Fixed Charges, revenues,
expenses and other appropriate charges or adjustments attributable to WCC)
plus (to the extent deducted in determining Consolidated Net Income), (ii)
all provisions for any Federal, state or other income taxes made by the
Company and its Subsidiaries (other than WCC) during such period, (iii)
Fixed Charges of the Company and its Subsidiaries (other than WCC) during
such period and (iv) for each of the last fiscal quarter of the fiscal year
of the Borrower ending January 1, 1995 and the first three fiscal quarters
in the succeeding fiscal year, the amount of the reserve (not to exceed
$5,000,000), if any, established by the Company in connection with the
anticipated sale of its headquarters building located at 1500 San Remo
Avenue, Coral Gables, Florida;
"Net Tangible Assets" means as of the date of determination thereof,
the total amount of all Tangible Assets of the Company (excluding
Subsidiaries) after deducting all Restricted Investments of the Company and
all items which in accordance with GAAP would be included on the liability
side of a balance sheet, except deferred income taxes, deferred investment
tax credits, capital stock of any class, surplus and Funded Debt;
"Notes" means, collectively, the promissory notes of the Company
executed and delivered to the Lenders as provided in Section 2.08 hereof in
substantially the form attached hereto as Exhibit E, with appropriate
insertions as to amounts, dates and names of Lenders;
"Obligations" means the obligations, liabilities and Indebtedness of
the Company with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations, and (iii) the
payment and performance of all other obligations, liabilities and
Indebtedness of the Company to the Lenders or the Agent hereunder, under
any one or more of the other Loan Documents or with respect to the Loans;
"Outstanding Letter of Credit Obligations" means the sum of (i) the
aggregate stated amount available for drawing under all Letters of Credit
and (ii) the aggregate amount of all Reimbursement Obligations;
"Participation" means, with respect to any Lender and either a Letter
of Credit or a Swing Line Loan, as the case may be, the extension of credit
represented by the participation of such Lender hereunder in the Letter of
Credit Issuer's liability in respect of a Letter of Credit issued by the
Letter of Credit Issuer in accordance with the terms
15
<PAGE>
hereof, or in NationsBank's liability in respect of a Swing Line Loan made
in accordance with the terms hereof;
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA;
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof;
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to
which the Company or any ERISA Affiliate contributed or is a member or
otherwise may have any liability;
"Prior Notes" means the promissory notes issued to the Lenders under
the Prior Agreement;
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible;
"Prime Rate" means the rate of interest per annum announced publicly
by the Agent as its prime rate from time to time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the Agent;
"Principal Office" means the principal office of the Agent at 150
Southeast Third Avenue, Miami, Florida 33102-5337, Attention: Corporate
Banking Department or such other office and address as the Agent may from
time to time designate;
"Reimbursement Obligation" means at any time, the obligation of the
Company with respect to any Letter of Credit to reimburse the Letter of
Credit Issuer and the Lenders to the extent of their respective
Participation (including by the receipt of proceeds of Revolving Loans
pursuant to Section 3.02) for amounts theretofore paid by the Letter of
Credit Issuer pursuant to a drawing under such Letter of Credit;
"Rentals" means and include as of the date of any determination
thereof, all fixed payments (including as such all payments which the
lessee is obligated to make to the lessor on termination of the lease or
surrender of the Property) payable by the Company or a Subsidiary, as
lessee or sublessee under a lease of real or personal property, but shall
be exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any
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so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of
sales volume or gross revenues;
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time;
"Regulatory Change" means any change effective after the Closing Date
in United States federal or state laws or regulations (including Regulation
D and capital adequacy regulations) or foreign laws or regulations or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks, which includes any of the Lenders,
under any United States federal or state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration
thereof or compliance by any Lender with any request or directive regarding
capital adequacy, including with respect to "highly leveraged
transactions," whether or not having the force of law, whether or not
failure to comply therewith would be unlawful and whether or not published
or proposed prior to the date hereof;
"Reportable Event" shall have the same meaning as in ERISA;
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 66-2/3% of the
aggregate Credit Exposures of all the Lenders on such date. For purposes
of the preceding sentence, the amount of the "CREDIT EXPOSURE" of each
Lender shall be equal to the aggregate principal amount of the Loans owing
to such Lender plus the aggregate unutilized amounts of such Lender's
Revolving Loan Commitment (without regard to any outstanding Swing Line
Loans) plus the amount of such Lender's Applicable Commitment Percentage of
the aggregate undrawn stated amount of outstanding Letters of Credit and of
the Reimbursement Obligations; provided that if any Lender shall have
failed to pay to a Letter of Credit Issuer its Applicable Commitment
Percentage of any drawing under any Letter of Credit resulting in an
outstanding Reimbursement Obligation, such Lender's Credit Exposure
attributable to Letters of Credit and Reimbursement Obligations with
respect to all Letters of Credit shall be deemed to be held by the
respective Letter of Credit Issuers of such Letters of Credit and, if the
Lender who fails to so pay is any Lender other than NationsBank, such
Lender's Credit Exposure attributable to Swing Line Loans shall be deemed
held by NationsBank for purposes of this definition;
"Restricted Investments" means all Investments in any Person, other
than:
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(a) Investments by the Company and its Subsidiaries in and to
Subsidiaries, including any investment in a corporation which, after
giving effect to such investment, will become a Subsidiary;
(b) Investments in (i) Commercial paper maturing in 270 days or
less from the date of issuance and which, at the time of acquisition
by the Company or any Subsidiary, is accorded one of the two highest
ratings by Standard & Poor's Corporation or Moody's Investors Service,
Inc.; (ii) Variable Rate Demand Notes of issuers whose commercial
paper, at the time of acquisition, is accorded one of the two highest
ratings by Standard & Poor's Corporation or Moody's Investors Service,
Inc.; or (iii) Direct obligations of any State of the United States of
America or of any political subdivision thereof located in the United
States of America and which, at the time of acquisition, is accorded
one of the two highest ratings by Standard & Poor's Corporation or
Moody's Investors Service, Inc., maturing in twelve months or less
from the date of acquisition;
(c) Investments in direct obligations of the United States of
America, or investments in any Person, which Investments are
guaranteed by the full faith and credit of the United States of
America, in either case maturing in twelve months or less from the
date of acquisition thereof by the Company or any Subsidiary;
(d) Investments in certificates of deposit maturing within one
year from the date of issuance thereof, issued by a bank or trust
company organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits aggregating at
least $100,000,000 and whose long-term certificates of deposit are, at
the time of acquisition thereof by the Company or Subsidiary, rated A
by Standard & Poor's Corporation or A by Moody's Investors Services,
Inc.;
(e) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to carrying on the
business of the Company or any Subsidiary; PROVIDED, HOWEVER that the
Company may make up to an aggregate at any one time outstanding of up
to $300,000 of such loans or advances which are not incidental to
carrying on the business of the Company or any Subsidiary; and
(f) receivables arising from the sale of goods and services in
the ordinary course of business of the Company and its Subsidiaries;
and
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(g) provided, however, that with respect to investments made by
or on behalf of Titania, the following shall not be Restricted
Investments:
(1) Certificates of deposit, time deposits and banker's
acceptances maturing within one year from the date of
acquisition, issued by a bank or trust company organized
under the laws of the United States or any state thereof, or
any foreign bank whose branch is organized under the laws of
the United States or any state thereof, having capital,
surplus and undivided profits aggregating at least
$100,000,000 and whose long-term certificates of deposit
are, at the time of acquisition, rated at least A by
Standard & Poor's Corporation or Moody's Investors Service,
Inc.;
(2) Repurchase Agreements with any domestic bank with debt rated
'AA' or better by Standard & Poor's Corporation, or any
foreign bank rated at least 'AA' by Standard & Poor's
Corporation and 'Aa' by Moody's Investors Service, Inc.; or
repurchase agreements with such other Persons on such terms
as the Company and the Agent shall agree in writing;
provided the term of all such repurchase agreements is for
one year or less;
(3) Direct obligations of the United States of America, or
Investments in any Person, which Investments are guaranteed
by the full faith and credit of the United States of
America;
(4) Mortgage-backed securities issued by the United States
Government or an agency or instrumentality thereof, having
at the time of acquisition, a credit rating of at least AA
by a nationally recognized rating service;
(5) Bonds, notes and other direct obligations (other than those
referred to in clause (b), above) of any corporation
domiciled in the United States of America, of a State of the
United States of America, or of any sovereign or
supranational institution whose obligations are denominated
in United States dollars, at the time of acquisition rated
at least A by a nationally recognized rating service.
Obligations of sovereign or supranational institutions at
the time of acquisition, shall be rated at least AA by a
nationally recognized rating service;
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(6) Preferred stock obligations of any corporation domiciled
in the United States of America, whose obligations at the
time of acquisition are rated at least A by a nationally
recognized rating service;
(7) Shares in mutual funds that invest solely in investments of
the types described in clause b(i), clause (b)(iii), clause
(3), clause (4), clause (5) and/or clause (6) above and have
assets in excess of One Hundred Million Dollars
($100,000,000);
(8) Any Investments (other than the Investments set forth in
clause (b) and clause (1) through clause (7) inclusive,
above), provided that the aggregate fair value for all such
investments shall not, at any time, exceed five percent (5%)
of the aggregate fair value of all Investments set forth in
clause (1) through clause (8) inclusive, above. For the
purposes of this subsection (8) only, fair value shall mean
the greater of book value or fair market value.
In valuing any investments for the purpose of applying the limitations
set forth in this Agreement, such investments, loans and advances shall be
taken at the original cost thereof, without allowance for any subsequent
write-offs or appreciation or depreciation therein, but less any amount
repaid or recovered on account of capital or principal.
For purposes of this Agreement, at any time when a corporation becomes
a Subsidiary, all Investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Subsidiary, at such
time.
"Revolving Credit Facility" means the facility described in Article II
hereof providing for Loans to the Company by the Lenders in the aggregate
principal amount of Total Revolving Loan Commitment less the aggregate
amount of outstanding Swing Line Loans and outstanding Letters of Credit
and Reimbursement Obligations;
"Revolving Credit Termination Date" means the earlier of (i) January
5, 1998 or such later date to which the Revolving Credit Termination Date
may be extended pursuant to Section 2.18, or (ii) such date as the Company
may voluntarily terminate the Revolving Credit Facility by payment in full
of all Obligations pursuant to Section 2.10(a) hereof;
"Revolving Loan" means Loans made by the Lenders to the Company
pursuant to Section 2.01 hereof;
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"Revolving Loan Advance Account" means an account on the books of the
Agent in which
(i) each Advance by the Agent shall be debited thereto by
recording therein on the date of such Advance a debit entry in the
amount of such Advance; and
(ii) each payment made to the Agent for credit to the Revolving
Credit Advance Account shall be credited thereto by recording therein
on the date paid to the Agent a credit entry in the amount of such
payment;
"Revolving Loan Commitment" means with respect to each Lender, the
obligation of such Lender to make Loans to the Company up to an aggregate
principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Loan Commitment as
the same may be increased or decreased from time to time pursuant to this
Agreement;
"Revolving Loan Debit Balance" means an amount equal to the excess, if
any, of all debit entries over all credit entries required to be recorded
pursuant to Section 2.01 hereof in a Revolving Credit Advance Account of
the Agent up to and including the date of computation;
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended;
"Subordinated Funded Debt" means all unsecured Funded Debt of the
Company which shall contain or have applicable thereto subordination
provisions in form and substance acceptable to the Agent and the Required
Lenders;
The term "subsidiary" means, as to any particular parent corporation,
any corporation of which more than 50% (by number of votes) of the Voting
Stock shall be owned by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation.
The term "Subsidiary" shall mean a subsidiary of the Company and The Atrium
At Coral Gables, Ltd., a Florida limited partnership;
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Company pursuant to Section 2.17;
"Swing Line Loans" means Loans made by NationsBank to the Company
pursuant to Section 2.17;
"Swing Line Outstandings" means, as of any date of determination, the
aggregate principal Indebtedness of the Company on all Swing Line Loans
then outstanding;
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"Titania" means Titania Insurance Company of America, a corporation
organized under the laws of Vermont and a wholly-owned Subsidiary of the
Company;
"Total Assets" means, as of the date of any determination thereof, the
total amount of all assets of the Company and its Subsidiaries (less
depreciation, depletion and other properly deductible valuation reserves);
"Total Capitalization" means the sum of (i) Consolidated Funded Debt
PLUS (ii) Consolidated Net Worth;
"Total Letter of Credit Commitment" means an amount not to exceed the
Total Revolving Loan Commitment;
"Total Revolving Loan Commitment" means $60,000,000, as reduced
pursuant to Section 2.10 hereof;
"Voting Stock" means Securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate directors (or Persons performing similar
functions);
"Wackenhut Family Group" means (i) George R. Wackenhut, Ruth J.
Wackenhut, Richard R. Wackenhut and other lineal descendants of George R.
Wackenhut, the founder of the Company; (ii) the spouses and lineal
descendants of the persons named in clause (i); and (iii) the estates or
legal representatives of the persons named in clause (i);
"WCC" means Wackenhut Corrections Corporation, a Florida corporation
and a Subsidiary of the Borrower as of the Closing Date;
"Wholly-owned" when used in connection with any Subsidiary means a
Subsidiary of which all of the issued and outstanding shares of stock
(except shares required as directors' qualifying shares) and all Funded
Debt and Current Debt shall be owned by the Company and/or one or more of
its Wholly-owned Subsidiaries;
1.02 ACCOUNTING PRINCIPLES. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
1.03 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be
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applicable whether the action in question is taken directly or indirectly by
such Person.
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ARTICLE II
REVOLVING CREDIT FACILITY
2.01 COMMITMENT. Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Advances to the Company (individually a
"Loan" and collectively the "Loans") from time to time from the Closing Date
until the Revolving Credit Termination Date on a pro rata basis as to the total
borrowing requested by the Company on any day determined by its Applicable
Commitment Percentage up to but not exceeding the Revolving Loan Commitment of
such Lender, PROVIDED, however, that the Lenders will not be required and shall
have no obligation to make any Advance (i) so long as a Default or an Event of
Default has occurred and is continuing or (ii) if the Agent has accelerated the
maturity of the Notes; PROVIDED further, however, that immediately after giving
effect to each Advance, the sum of the principal amount of outstanding Loans and
Swing Line Loans plus Outstanding Letter of Credit Obligations shall not exceed
the Total Revolving Loan Commitment. Within such limits, the Company may
borrow, repay and reborrow hereunder, on a Business Day in the case of a Base
Loan or Fixed CD Loan, and on a LIBOR Business Day in the case of a LIBOR Loan,
from the Closing Date until, but (as to borrowings and reborrowings) not
including, the Revolving Credit Termination Date; PROVIDED, however, that (x) no
Fixed CD Loan shall be made less than thirty (30) days before the Revolving
Credit Termination Date and no LIBOR Loan shall be made less than one month
before the Revolving Credit Termination Date and (y) each Fixed Rate Loan may,
subject to the provisions of Section 2.06, be repaid only on the last day of the
Interest Period with respect thereto.
2.02 AMOUNTS. Except as otherwise permitted by the Lenders the aggregate
unpaid principal amount of the Revolving Loans and Swing Line Loans from time to
time outstanding, plus Outstanding Letter of Credit Obligations shall not exceed
at any time, an amount equal to the Total Revolving Loan Commitment. Each
Advance hereunder (i) for a Base Loan shall be in an amount of at least
$300,000, and (ii) for a Fixed Rate Loan shall be in an amount of $300,000, or
an integral multiple thereof.
2.03 INTEREST PERIODS. Each Revolving Loan shall be, at the option of
the Company specified in the Borrowing Notice furnished to the Agent pursuant to
subsection 2.04 hereof, either a Base Loan or a Fixed Rate Loan, which shall in
each case be made or maintained by each Lender at its applicable Lending Office.
Base Loans and Fixed Rate Loans may be outstanding at the same time, PROVIDED,
however, there shall not be outstanding at any one time Revolving Loans having
more than six (6) different Interest Periods; provided that all Base Loans shall
be treated as having the same Interest Period. No Revolving Loan may bear
interest at the Floating CD Rate.
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2.04 ADVANCES. (a) An Authorized Officer shall give the Agent (i) at
least two (2) Business Days' irrevocable telephonic notice of each Fixed CD Loan
(whether representing an additional borrowing hereunder or the conversion of
borrowings hereunder from Base Loans or other Fixed Rate Loans to Fixed CD
Loans) prior to 10:30 A.M. Miami, Florida time; (ii) at least three (3) LIBOR
Business Days' irrevocable telephonic notice of each LIBOR Loan (whether
representing an additional borrowing hereunder or the conversion of borrowing
hereunder from Base Loans or other Fixed Rate Loans to LIBOR Loans) prior to
12:30 P.M., Miami, Florida time; and (iii) irrevocable telephonic notice of each
Base Loan representing an additional borrowing hereunder prior to 12:30 P.M.
Miami, Florida time on the day of such proposed Base Loan. Each such Borrowing
Notice, which shall be effective upon receipt by the Agent, shall specify the
amount of the borrowing, the type (Base, Fixed CD or LIBOR) of Revolving Loan,
the date of borrowing and, if a Fixed Rate Loan the Interest Period to be used
in the computation of interest. The Authorized Officer shall provide the Agent
written confirmation of each such telephonic notice in the form attached hereto
as EXHIBIT D with appropriate insertions but failure to provide such
confirmation shall not affect the validity of such telephonic notice. Notice of
receipt of such Borrowing Notice shall be provided by the Agent to each Lender
by telephone with reasonable promptness, but not later than 1:30 P.M., Miami,
Florida time on the same day as Agent's receipt of such notice. The Agent shall
provide each Lender written confirmation of such telephonic confirmation but
failure to provide such notice shall not affect the validity of such telephonic
notice.
(b) Not later than 3:00 P.M., Miami, Florida time on the date specified
for each borrowing hereunder, each Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, make the amount of the Revolving
Loan or Loans to be made by it on such day available to the Agent, by depositing
or transferring the proceeds thereof in immediately available funds at the
Principal Office. The amount so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Company by
depositing the proceeds thereof in immediately available funds, in the Company's
Account.
(c) Notwithstanding the foregoing, if the Agent receives telephonic or
written notice from a Letter of Credit Issuer that a drawing has been made under
any Letter of Credit prior to the Revolving Credit Termination Date, the drawing
shall be paid by the Agent without the requirement of notice from the Company
from immediately available funds which shall be advanced by the Lenders under
the Revolving Credit Facility. If a drawing is presented under any Letter of
Credit in accordance with the terms thereof notice of such drawing shall be
provided promptly by the Letter of Credit Issuer to the Agent and the Agent
shall provide notice to each other Lender by telephone. If notice to the
Lenders of a drawing under any Letter of Credit is given by the Agent at or
before 12:00 noon Miami, Florida time on any Business Day, each
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other Lender shall, pursuant to the conditions of this Agreement, make a Base
Loan in the amount of such Lender's Applicable Commitment Percentage of such
drawing and shall pay such amount to the Agent for the account of the Letter of
Credit Issuer at the Principal Office in Dollars and in immediately available
funds before 2:30 P.M. Miami, Florida time on the same Business Day. If notice
to the Lenders of a drawing under a Letter of Credit is given by the Agent after
12:00 noon Miami, Florida time on any Business Day, each Lender shall, pursuant
to the terms and subject to the conditions of this Agreement, make a Base Loan
in the amount of such Lender's Applicable Commitment Percentage of such drawing
and shall pay such amount to the Agent for the account of the Letter of Credit
Issuer at the Principal Office in Dollars and in immediately available funds
before 12:00 noon Miami, Florida time on the next following Business Day. Such
Base Loan shall be deemed made for a period ending on the following Business
Day, which shall be extended automatically to the next succeeding Business Day
unless and until the Company converts such Base Loan in accordance with the
terms of Section 2.11 hereof.
2.05 PAYMENT OF INTEREST. (a) The Company shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Revolving Loan made by such Lender for the period commencing on the date of
such Revolving Loan until such Revolving Loan shall be due at the then
applicable Base Rate for Base Loans, CD Rate for Fixed CD Loans or LIBOR Rate
for LIBOR Loans, as designated by the Authorized Officer pursuant to Section
2.04 hereof or as otherwise provided herein; PROVIDED, however, that if any
amount shall not be paid when due (at maturity, by acceleration or otherwise),
such amount shall bear interest thereafter until paid (i) in the case of a Fixed
Rate Loan, until the end of the Interest Period with respect to such Loan, at a
rate of two percent (2%) above the then Fixed Rate for such Loan, and (ii)
thereafter, and with respect to Base Loans, at a rate of interest per annum
which shall be two percent (2%) above the Base Rate or the maximum rate
permitted by applicable law, whichever is lower, from the date such amount was
due and payable until the date such amount is paid in full.
(b) Interest on each Revolving Loan shall be computed on the basis of a
year of 360 days and calculated for the actual number of days elapsed. Interest
on each Revolving Loan shall be paid (a) quarterly in arrears on the last
Business Day of each month on each Base Loan, (b) on the last day of the
applicable Interest Period for each Fixed Rate Loan and if such Interest Period
extends for more than three months or 90 days, respectively, at intervals of
three months or 90 days, as appropriate, after the first day of such Interest
Period, and (c) upon payment in full of the principal amount of such Loan.
2.06 PAYMENT OF PRINCIPAL. (a) The principal amount of each Revolving
Loan shall be due and payable in full on the Revolving Credit Termination Date.
The duration of the initial Interest
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Period for each Revolving Loan shall be as specified in the Borrowing Notice.
The Company shall have the option to elect the duration of subsequent Interest
Periods and to convert Revolving Loans in accordance with Section 2.11 hereof.
If the Agent does not receive a notice of election of duration of an Interest
Period or to convert by the time prescribed by Section 2.11 hereof, the Company
shall be deemed to have elected to convert such Revolving Loan to (or continue
such Loan as) a Base Loan for a period extending to the next succeeding
Business Day until the Company notifies the Agent in accordance with Section
2.11.
(b) Each payment of principal (including any prepayment) and payment of
interest shall be made to the Agent at the Principal Office, for the account of
each Lender's applicable Lending Office, in Dollars and in immediately available
funds before 12:30 P.M. Miami, Florida time on the date such payment is due.
The Agent may, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to the Company's Account or any ordinary
deposit account of the Company with the Agent.
(c) The Agent shall deem any payment by or on behalf of the Company
hereunder that is not made both (a) in Dollars and in immediately available
funds and (b) prior to 12:30 P.M. Miami, Florida time (other than if such
payment is made by a debit by the Agent to the Company's Account) to be a non-
conforming payment. Any such payment shall not be deemed to be received by the
Agent until the time such funds become available funds. Any nonconforming
payment may constitute or become a Default or Event of Default. The Agent shall
give prompt telephonic notice to the Company and each of the Lenders (confirmed
in writing) if any payment is non-conforming. Interest shall continue to accrue
on any principal as to which a non-conforming payment is made until such funds
become available funds (but in no event less than the period from the date of
such payment to the next succeeding Business Day) at a rate of interest per
annum which shall be two percent (2%) above the rate at which interest was
payable on such Revolving Loan on the day immediately preceding the due date or
the maximum rate permitted by applicable law, whichever is lower, from such due
date until the funds become available.
(d) In the event that any payment hereunder or under the Notes becomes due
and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day; provided that interest shall
continue to accrue during the period of any such extension.
2.07 COMPANY'S ACCOUNT. The Agent shall render to the Company each month
a Loan ledger statement and a copy of the statement of the Company's Account.
The Company shall give the Agent written notice of its exceptions to any such
statement within 45 days after such statement has been rendered to the Company.
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2.08 NOTES. Loans made by each Lender shall be evidenced by,and be
repayable with interest in accordance with the terms of, a promissory note
payable to the order of such Lender in the amount of its Applicable Commitment
Percentage of the Total Revolving Loan Commitment, which Note shall be dated the
Closing Date or such later date pursuant to an Assignment and Acceptance and
shall be duly completed, executed and delivered by the Company.
2.09 PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans, and
fees (other than (i) payments on Swing Line Loans, which shall be retained by
NationsBank, (ii) the Agent's fees payable under Section 9.11 hereof, which
shall be retained by the Agent, and (iii) Letter of Credit fronting and
administrative fees payable under Sections 3.03 and 3.04 hereof, which shall be
paid in respect of each Letter of Credit to the applicable Letter of Credit
Issuer) described in this Agreement shall be made to the Agent for the account
of the Lenders pro rata based on their Applicable Commitment Percentages, (b)
all payments to be made by the Company for the account of each of the Lenders on
account of principal, interest and fees, shall be made without set-off or
counterclaim, and (c) the Agent will promptly distribute payments received to
the Lenders.
2.10 REDUCTION IN COMMITMENT. (a) The Company shall have the right from
time to time (but not more frequently than once during each quarterly period),
upon not less than ten (10) Business Days written notice to the Agent to reduce
the Total Revolving Loan Commitment. The Agent shall give each Lender, within
one (1) Business Day, telephonic notice (confirmed in writing) of such
reduction. Each such reduction shall be in the aggregate amount of $5,000,000
or such greater amount which is in an integral multiple of $1,000,000, and shall
permanently reduce the Revolving Loan Commitment of the Lenders pro rata. No
such reduction shall result in the payment of any Fixed Rate Loan other than on
the last day of the Interest Period of such Loan. Each reduction of the Total
Revolving Loan Commitment shall be accompanied by payment of the Notes to the
extent that the sum of Swing Line Outstandings, Outstanding Letter of Credit
Obligations and the Revolving Loan Debit Balance exceeds the Total Revolving
Loan Commitment, after giving effect to such reduction, together with accrued
and unpaid interest on the amounts prepaid. The Company shall pay to the Agent
for the benefit of the Lenders at the date of such permanent reduction a
reduction fee equal to one-eighth of one percent (1/8%) per annum, times the
amount of such reduction, for the period from the date of reduction to the
Revolving Credit Termination Date.
(b) The amount of the Total Revolving Loan Commitment which shall be
available to the Company shall be increased and decreased, from time to time by
the stated amount of all Swing Line Outstandings and Outstanding Letter of
Credit Obligations; provided, that the sum of the Revolving Loan Debit Balance,
Swing
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Line Outstandings and Outstanding Letter of Credit Obligations shall at no time
exceed the Total Revolving Loan Commitment.
2.11 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Sections 4.01(b) and 4.02
hereof, the Company may with respect to Revolving Loans:
(a) on two (2) Business Days' notice to the Agent on or before 10:30 A.M.
Miami, Florida time:
(i) elect a subsequent Interest Period for all Fixed CD Loans having
the same Interest Period to begin on the last day of the Interest Period
for such Fixed CD Loans;
(ii) convert Base Loans to Fixed CD Loans on any date; and
(iii) convert all LIBOR Loans having the same Interest Period to Fixed
CD Loans on the last day of the Interest Period for such LIBOR Loans.
(b) on three (3) LIBOR Business Days' notice to the Agent on or before
1:00 P.M. Miami, Florida time:
(i) elect a subsequent Interest Period for all LIBOR Loans having
the same Interest Period to begin on the last day of the Interest Period
for such LIBOR Loans;
(ii) convert all Fixed CD Loans having the same Interest Period to
LIBOR Loans on the last day of the Interest Period for such Fixed CD Loans;
and
(iii) convert all Base Loans to LIBOR Loans on any date.
Notice of any such elections or conversions shall specify the effective
date of such election or conversion and the Interest Period to be applicable to
the Revolving Loan as continued or converted. Each election and conversion
pursuant to this Section 2.11 shall be subject to the limitations on Fixed CD
Loans and LIBOR Loans set forth in the definition of "Interest Period" herein
and in Sections 2.01, 2.02 and 2.03 hereof. All such continuations or
conversions of Revolving Loans shall be effected pro rata based on the
Applicable Commitment Percentages of the Lenders.
2.12 FEES. (a) For the period beginning on the Closing Date and ending
on the Revolving Credit Termination Date (or such earlier date on which the
Revolving Credit Facility has terminated), the Company agrees to pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a commitment fee for such period at a rate of .20%
(twenty basis points) per annum of the sum of the daily
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amount by which the Total Revolving Loan Commitment exceeds the Revolving Loan
Debit Balance. Such payments of fees provided for in this Section 2.12 shall be
due in arrears on the last day of each December, March, June and September
beginning December 31, 1994 to and on the Revolving Credit Termination Date (or
such earlier date on which the Revolving Credit Facility has terminated).
Notwithstanding the foregoing, so long as any Lender fails to make available any
portion of its Revolving Loan Commitment when requested, such Lender shall not
be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion. For purposes of this Section 2.12
only, the amount of the Revolving Credit Debit Balance shall include the stated
amount of all outstanding Letters of Credit. The Swing Line outstandings shall
be deemed outstanding Loans for purposes of determining such fee.
(b) For the period beginning on the Closing Date and ending on the
Revolving Credit Termination Date (or such earlier date on which the Revolving
Credit Facility has terminated), the Company agrees to pay to the Agent, for the
pro rata benefit of the Lenders, other than NationsBank as provider of Swing
Line Loans, a fee for such period equal to one eighth of one percent (1/8%) per
annum of the average Swing Line Outstandings. Such fees shall be payable
quarterly at the times set forth in Section 2.12 (a) above.
(c) The Company agrees to pay to the Agent for the benefit of the Lenders
on or before the Closing Date all required commitment fees. The fees provided
for in subsection (a) and (b) of this Section 2.12 shall be calculated on the
basis of a year of 360 days and computed for actual days elapsed.
2.13 DEFICIENCY ADVANCES. No Lender shall be responsible for any default
of any other Lender in respect to such other Lender's obligation to make any
Revolving Loan hereunder nor shall the Revolving Loan Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to the Company as herein provided, the Agent may in its
discretion, but shall not be obligated to, advance under the Note in its favor
as a Lender all or any portion of such amount (the "deficiency advance") and
shall thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such advance under
its Note; provided that, upon payment to the Agent from such other Lender of the
entire outstanding amount of such deficiency advance, together with interest
thereon, from the most recent date or dates interest was paid to the Agent by
the Company on each Revolving Loan comprising the deficiency advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be credited against the Note of the Agent
in full payment of such deficiency advance and the Company shall be deemed to
have borrowed the amount of such
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deficiency advance from such other Lender as of the most recent date or dates,
as the case may be, upon which any payments of interest were made by the Company
thereon.
2.14 ADJUSTMENTS BY AGENT. Notwithstanding the construction of "pro rata"
to mean based on the Applicable Percentage Commitments and any provisions
contained herein for the advancement of funds or distribution of payments on a
pro rata basis, the Agent may, in its discretion, but shall not be obligated to,
adjust downward or upward (but not in excess of any applicable Revolving Loan
Commitment) the principal amount of any Revolving Loan to be made by any Lender
to the nearest amount which is evenly divisible by $100, and make appropriate
related adjustment in the distribution of payments of principal and interest on
the Revolving Loans.
2.15 USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Company to repay in
full amounts outstanding under the Prior Notes, to provide working capital needs
of the Company and to fund general corporate needs including capital
expenditures and acquisitions.
2.16 HIGHLY LEVERAGED TRANSACTION. If at any time after the date hereof,
any Lender is required, pursuant to any law, regulation, interpretation, ruling,
decree, judgment, guideline, directive or recommendation (whether or nor having
the force of law but as to which the Lender would adhere in its reasonable
business judgment) by any regulatory body, central bank or any administrative or
governmental authority charged or claiming to be charged with regulation or
administration thereof, to classify the transactions contemplated hereunder as a
highly leveraged transaction or similar classification (an "HLT"), then in each
such event the Company and the Agent shall commence as soon as practicable, and
in any event within five (5) days after notice by the Agent to the Company,
negotiations in good faith on the extent to which fees or interest rates shall
be increased to reflect the then current market requirements for the transaction
contemplated herein that are classified as HLTs. In the event the Company and
the Agent are unable to agree as to the amount of such fees or interest rates,
then the Agent shall have the right to terminate, on thirty (30) days notice,
the Revolving Credit Facility. At the expiration of such thirty (30) day period
the Company shall pay in full all Obligations.
2.17 SWING LINE. Notwithstanding any other provision of this Agreement to
the contrary, in order to administer the Revolving Credit Facility in an
efficient manner and to minimize the transfer of funds between the Agent and the
Lenders, NationsBank shall make available Swing Line Loans to the Company prior
to the Revolving Credit Termination Date. NationsBank shall not make any Swing
Line Loan pursuant hereto (i) if to the actual knowledge of NationsBank the
Company is not in compliance with all the conditions to the
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making of Revolving Loans set forth in this Agreement, (ii) if after giving
effect to such Swing Line Loan, the Swing Line Outstandings exceed
$10,000,000, or (iii) if after giving effect to such Swing Line Loan, the sum of
the Swing Line Outstandings, Revolving Loan Debit Balance and Outstanding Letter
of Credit Obligations exceeds the Total Revolving Loan Commitment. Loans made
pursuant to this Section 2.17 shall be limited to Floating CD Loans. The
Company may borrow, repay and reborrow under this Section 2.17. Unless notified
to the contrary by NationsBank, borrowings under the Swing Line may be made in
amounts which are integral multiples of $50,000 upon telephonic request by an
Authorized Representative of the Company made to NationsBank not later than
12:30 a.m., Miami, Florida time, on the Business Day of the requested borrowing.
Each such Borrowing Notice, which shall be effective upon receipt by
NationsBank, shall specify the amount of the borrowing, and the date of
borrowing. An Authorized Representative shall provide NationsBank written
confirmation of each such telephonic notice on the same day by telefacsimile
transmission in the form attached hereto as EXHIBIT D-2, with appropriate
insertions but failure to provide such confirmation shall not affect the
validity of such telephonic notice. Unless notified to the contrary by
NationsBank, each repayment of a Swing Line Loan shall be in an amount which is
an integral multiple of $50,000. If the Company instructs NationsBank to debit
any demand deposit account of the Company in the amount of any payment with
respect to a Swing Line Loan, or NationsBank otherwise receives repayment, after
12:30 p.m., Miami, Florida time, on a Business Day, such payment shall be deemed
received on the next Business Day.
Swing Line Loans shall bear interest at the Floating CD Rate, and the
interest payable on Swing Line Loans is solely for the account of NationsBank.
The Swing Line Outstandings shall be evidenced by the Note delivered to
NationsBank pursuant to Section 2.08 hereof.
Upon the making of a Swing Line Loan, each Lender shall be deemed to have
purchased from NationsBank a Participation therein in an amount equal to that
Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon demand
made by NationsBank, each Lender shall, according to its Lender's Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein.
Any Advance made by a Lender pursuant to demand of NationsBank of the purchase
price of its Participation shall be deemed a Base Loan until the Company
converts such Base Loan in accordance with the terms of Section 2.11 hereof.
The obligation of each Lender to so provide its purchase price to NationsBank
shall be absolute and unconditional and shall not be affected by the occurrence
of an Event of Default or any other occurrence or event.
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The Company at its option may request a Revolving Loan pursuant to Section
2.01 in an amount sufficient to repay the Swing Line Loan on any date and the
Agent shall provide the proceeds of such Revolving Loan to NationsBank the
amount necessary to repay such Swing Line Outstandings (which NationsBank shall
then apply to such repayment) and credit any balance of the Revolving Loan in
immediately available funds in the manner directed by the Company pursuant to
Section 2.04(b) hereof. The proceeds of such Advances shall be paid to
NationsBank for application to the Swing Line Outstandings and the Lenders shall
then be deemed to have made Revolving Loans in the amount of such Advances. The
Swing Line shall continue in effect until the earlier of (i) occurrence of a
Default, or (ii) the Revolving Credit Termination Date.
2.18 EXTENSION OF REVOLVING CREDIT TERMINATION DATE. At the request of the
Company the Lenders may, in their sole discretion, elect to extend the Revolving
Credit Termination Date then in effect for two successive periods of one year
each. The Borrower shall notify the Lenders of its request for each such
extension by delivering to the Agent and the Lenders notice of such request
signed by an Authorized Officer not more than sixty (60) days nor less than
thirty (30) days prior to the first (as to the first such extension period) or
second (as to the second such extension period and provided that the Lenders
shall theretofore have previously granted a one year extension) anniversary of
the Closing Date. If the Lenders shall elect to so extend, the Agent shall
notify the Borrower in writing within ninety (90) days of its receipt of such
request for extension of the decision of the Lenders of whether to extend the
Revolving Credit Termination Date. Failure by the Agent to give such notice
shall constitute refusal by the Lenders to extend the Revolving Credit
Termination Date.
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ARTICLE III
LETTERS OF CREDIT
3.01 LETTERS OF CREDIT. Each of NationsBank and BofA agrees, subject to
the terms and conditions of this Agreement, upon request of the Company to issue
from time to time for the account of the Company or Titania Letters of Credit;
provided, that (i) the undrawn face amount of all Letters of Credit outstanding
hereunder shall not exceed the Total Letter of Credit Commitment and (ii) to the
extent required by the Letter of Credit Issuer such request shall be accompanied
by an application for letter of credit in form and content acceptable to the
Letter of Credit Issuer. No Letter of Credit shall be issued by either Letter
of Credit Issuer with an expiry date occurring subsequent to the Revolving
Credit Termination Date. Neither Letter of Credit Issuer shall issue any Letter
of Credit if the aggregate amount which may be drawn under all outstanding
Letters of Credit when added to the face amount of any requested Letter of
Credit, Reimbursement Obligations, the Swing Line Outstandings and the Revolving
Loan Debit Balance exceeds the Total Revolving Loan Commitment, without regard
to any increase or decrease pursuant to Section 2.10(b).
3.02 REIMBURSEMENT.
(a) The Company hereby unconditionally agrees to pay to each Letter of
Credit Issuer on demand at its Lending Office (i) all amounts required to pay
all drafts drawn or purporting to be drawn under the Letters of Credit issued by
it and (ii) the face amount of each draft accepted by the Letter of Credit
Issuer on the maturity date of such draft, or in the event of a Default or Event
of Default, and any and all expenses of every kind incurred by the Letter of
Credit Issuer in connection with the Letters of Credit and in any event and
without demand to place in possession of the Letter of Credit Issuer (which
shall include Advances under the Revolving Credit Facility if permitted by
Section 2.04(c) hereof) sufficient funds to pay all debts and liabilities
arising under any Letter of Credit. The Company's obligations to pay each
Letter of Credit Issuer under this Section 3.02, and the Letter of Credit
Issuer's right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever. Each Letter of Credit
Issuer may charge any account, including the Company's Account, the Company may
have with it for any and all amounts such Letter of Credit Issuer pays under a
Letter of Credit, plus commissions, charges and expenses as from time to time
agreed to by the Letter of Credit Issuer and the Company; provided that to the
extent permitted by Section 2.04(c), amounts shall be paid pursuant to Advances
under the Revolving Credit Facility. The Company agrees that either Letter of
Credit Issuer may, in its sole discretion, accept or pay, as complying with the
terms of any Letter of Credit issued by it, any drafts or other documents
otherwise in order which may be signed or issued by an administrator, executor,
trustee in bankruptcy, debtor in
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possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents. The
Company agrees to pay the Letter of Credit Issuer interest on any amounts not
paid when due hereunder at the Base Rate plus two percent (2%), or such lower
rate as may be required by law.
(b) In accordance with the provisions of Section 2.04(c) hereof, the
Letter of Credit Issuer shall notify the Agent (and shall also notify the
Company) of any drawing under any Letter of Credit issued for account of the
Company or the Company and Titania as promptly as practicable following the
receipt by the Letter of Credit Issuer of such drawing. In addition, each
Letter of Credit Issuer shall notify the Agent of (i) any proposed issuance of a
Letter of Credit, including the proposed stated amount thereof, (ii) any
reduction or increase in the stated amount of any previously issued Letter of
Credit, and (iii) any surrender, cancellation or expiration of any Letter of
Credit.
(c) Each Lender (other than the Letter of Credit Issuer) shall
automatically acquire on the date of issuance thereof, or with respect to
Existing LCs on the Closing Date, a Participation in the Letter of Credit
Issuer's liability in respect of each Letter of Credit in an amount equal to
such Lender's Applicable Commitment Percentage of such liability, and to the
extent that the Company is obligated to pay the Letter of Credit Issuer under
Section 3.02(a), each Lender (other than the Letter of Credit Issuer) thereby
shall absolutely, unconditionally and irrevocably assume, and shall be
unconditionally obligated to pay to the Letter of Credit Issuer as hereinafter
described, its Applicable Commitment Percentage of the Letter of Credit Issuer's
liability under such Letter of Credit. Prior to the Revolving Credit
Termination Date, each Lender (including the Letter of Credit Issuer in its
capacity as a Lender) shall, subject to the terms and conditions of Article II,
make a Base Loan to the Company by paying to the Agent for the account of the
Letter of Credit Issuer at the Principal Office in Dollars and in immediately
available funds, an amount equal to its Applicable Commitment Percentage of any
drawing under a Letter of Credit, all as described and pursuant to Section
2.04(c). With respect to drawings under any of the Letters of Credit, each
Lender, upon receipt from the Agent of notice of a drawing in the manner
described in Section 2.04(c), shall promptly pay to the Agent for the account of
the Letter of Credit Issuer, prior to the applicable time set forth in Section
2.04(c), its Applicable Commitment Percentage of such drawing. Simultaneously
with the making of each such payment by a Lender to the Letter of Credit Issuer,
such Lender shall, automatically and without any further action on the part of
the Letter of Credit Issuer or such Lender, acquire a Participation in an amount
equal to such payment (excluding the portion thereof constituting interest) in
the related Reimbursement Obligation of the Company. The Reimbursement
Obligations of the Company shall be immediately due and payable
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whether by Advances made in accordance with Section 2.04(c) or otherwise. Each
Lender's obligation to make payment to the Agent for the account of the Letter
of Credit Issuer pursuant to this Section 3.02(c), and the Letter of Credit
Issuer's right to receive the same, shall be absolute and unconditional, shall
not be affected by any circumstance whatsoever and shall be made without any
offset, abatement, withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the account of the
Letter of Credit Issuer in full upon such request as required by this Section
3.02(c), such Lender shall, on demand, pay to the Agent for the account of the
Letter of Credit Issuer interest on the unpaid amount for each day during the
period commencing on the date of notice given to such Lender pursuant to Section
2.04(c) until such Lender pays such amount to the Agent for the account of the
Letter of Credit Issuer in full at the interest rate per annum for overnight
borrowing by the Letter of Credit Issuer from the Federal Reserve Bank.
(d) Promptly following the end of each calendar month, each Letter of
Credit Issuer shall deliver to the Agent, and the Agent shall deliver to each
Lender, a notice describing the aggregate undrawn amount of all Letters of
Credit outstanding at the end of such month. Upon the request of any Lender
from time to time, the Letter of Credit Issuer shall deliver to the Agent, and
the Agent shall deliver to such Lender, any other information reasonably
requested by such Lender with respect to each Letter of Credit then outstanding.
(e) The issuance by the Letter of Credit Issuers of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 5.01 hereof,
be subject to the conditions that such Letter of Credit be in such form, contain
such terms and support such transactions or obligations as shall be reasonably
satisfactory to the Letter of Credit Issuer consistent with the Letter of Credit
Issuer's then current practices and procedures with respect to similar letters
of credit. All Letters of Credit (other than Existing LCs) shall be issued
pursuant to and subject to the Uniform Customs and Practice for Documentary
Credits, 1993 revision, International Chamber of Commerce Publication No. 500
and all subsequent amendments and revisions thereto. The Company shall have
executed and delivered such other instruments and agreements relating to such
Letter of Credit as the Letter of Credit Issuer shall have reasonably requested
consistent with such practices and procedures.
(f) Without duplication of Section 9.07 hereof, the Company hereby
indemnifies and holds harmless the Letter of Credit Issuers, each other Lender
and the Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which the Letter of Credit Issuer, such other
Lender or the Agent may incur (or which may be claimed against the Letter of
Credit Issuer, such other Lender or the Agent) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure
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to pay under any Letter of Credit; provided that the Company shall not be
required to indemnify the Letter of Credit Issuer, any other Lender or the Agent
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, (i) caused by the willful misconduct or gross negligence
of the party to be indemnified, (ii) caused by the Letter of Credit Issuer's
failure to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, unless such payment is prohibited by any law, regulation, court order or
decree, or (iii) paid or payable by any Lender under Sections 2.14 or 9.10
hereof.
(g) Without limiting the Company's rights as set forth in Section 3.02(f)
above, the obligation of the Company to reimburse the Letter of Credit Issuers
immediately for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and such Letters of Credit, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of Credit or
any other agreement or instrument relating thereto (collectively, the
"Related Documents");
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related Documents;
(iii) the existence of any claim, setoff, defense or other rights
which the Company may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any persons or entities for whom
any such beneficiary or any such transferee may be acting), Agent,
Lenders or any other person or entity, whether in connection with the
Loan Documents, the Related Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the Company
and any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or any such transferee
may be acting), Agent, Lenders or any other person or entity;
(v) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) payment by the Letter of Credit Issuer under the Letter of
Credit against presentation of a sight
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draft or certificate which does not comply with the terms of the
Letter of Credit;
(vii) any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by Agent, with or
without notice to or approval by the Company in respect of any of the
Company's indebtedness under this Agreement; or
(viii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
3.03 LETTER OF CREDIT FEE. For the period beginning on the Closing Date
and ending on the Revolving Credit Termination Date, the Company agrees to pay
to the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee equal to the Applicable Interest Addition for
LIBOR Loans from time to time in effect times the stated amount of outstanding
Letters of Credit; PROVIDED, however, if the Company shall elect to secure any
Letter of Credit by depositing with the applicable Letter of Credit Issuer cash
or cash equivalents acceptable to the Agent over which the Agent shall have sole
control and a perfected security interest for the benefit of the Lenders, then
the fee with respect to such Letter of Credit shall be .40%. Such fees provided
in this Section 3.03 shall be paid quarterly in arrears. In the event that the
risk based capital required to be maintained by the Letter of Credit Issuer for
Letters of Credit securing performance by the Company or Titania shall be
reduced below that required for Letters of Credit providing credit support, the
Company, the Agent, the Letter of Credit Issuers and the Lenders may agree in
writing without further amendment to this Agreement to an adjustment in the
amount of the letter of credit fee payable with respect to such Letters of
Credit securing performance.
3.04 ADMINISTRATIVE FEES. The Company shall pay to each Letter of Credit
Issuer a fronting fee of .05% (5 basis points) per annum of the stated amount of
all Letters of Credit issued by such Letter of Credit Issuer, such fee to be
paid quarterly in arrears. The fronting fee shall be calculated on the basis of
a year of 360 days and computed for actual days elapsed. The Company shall also
pay to each Letter of Credit Issuer administrative and other fees, if any, in
connection with the Letters of Credit in such amounts and at such times as the
Letter of Credit Issuers and the Company shall agree from time to time.
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ARTICLE IV
YIELD PROTECTION AND ILLEGALITY
4.01 ADDITIONAL COSTS. (a) The Company shall promptly pay to the Agent
for the account of a Lender from time to time, such amounts as such Lender may
determine to be necessary to compensate it for any costs incurred by such Lender
which it determines are attributable to its making or maintaining any Loan or
its obligation to make any Loans, or either Letter of Credit Issuer's issuance
or maintenance of or any other Lender's Participation in any Letter of Credit
issued hereunder or any reduction in any amount receivable by such Lender under
this Agreement, the Notes, or the Letters of Credit in respect of any of such
Loans or such obligation or the Letters of Credit, including reductions in the
rate of return on a Lender's capital (such increases in costs and reductions in
amounts receivable and returns being herein called "Additional Costs"),
resulting from any Regulatory Change which: (i) changes the basis of taxation of
any amounts payable to such Lender under this Agreement or the Notes in respect
of any of such Loans or Letters of Credit (other than taxes imposed on the
income of such Lender by any jurisdiction in which the Principal Office or the
applicable Lending Office of such Lender is located); or (ii) imposes or
modifies any reserve, special deposit, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (other than any such reserve, deposit or requirement
reflected in the Base Rate, the CD Rate or the LIBOR Rate, in each case computed
in accordance with the respective definitions of such terms set forth in Section
1.01 hereof); or (iii) has or would have the effect of reducing the rate of
return on capital of any such Lender to a level below that which the Lender
could have achieved but for such Regulatory Change (taking into consideration
such Lender's policies with respect to capital adequacy); or (iv) imposes any
other condition affecting this Agreement, the Notes or the issuance or
maintenance of, or any Lender's Participation in, the Letters of Credit (or any
of such extensions of credit or liabilities). Each Lender will notify the
Authorized Officer of any event occurring after the Closing Date which would
entitle it to compensation pursuant to this Section 4.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.01, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Lender which includes deposits by reference to which the interest rate on CD
Loans or LIBOR Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of any Lender which includes CD Loans or
LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or
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assets which it may hold, then, if the Lender so elects by notice to the other
Lenders, the obligation of such Lender to make, and to convert Base Loans of
any other type into, CD Loans or LIBOR Loans, as the case may be, hereunder
shall be suspended until the date such Regulatory Change ceases to be in effect
and the Company shall, on the last day(s) of the then current Interest Period(s)
for outstanding CD Loans or LIBOR Loans, as the case may be, convert such CD
Loans or LIBOR Loans into Base Loans or CD Loans or LIBOR Loans, if available
hereunder, in accordance with Section 2.11 hereof.
(c) Determinations by any Lender for purposes of this Section 4.01 of the
effect of any Regulatory Change on its costs of making or maintaining, or being
committed to make Loans or as to NationsBank or BofA as issuer of any Letter of
Credit, the issuance or maintenance of, or any other Lender's Participation in,
any Letter of Credit issued hereunder or on amounts receivable by it in respect
of Loans or Letters of Credit, and of the additional amounts required to
compensate the Lender in respect of any Additional Costs, shall be conclusive
absent manifest error, provided that such determinations are made on a
reasonable basis. The Lender requesting such compensation shall furnish to the
Authorized Officer an explanation of the Regulatory Change and calculations, in
reasonable detail, setting forth such Lender's determination of any such
Additional Costs.
4.02 SUSPENSION OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any CD Loan or LIBOR Loan for any Interest Period therefor, or, as to Swing Line
Loans only, any Floating CD Loan, the Agent or in the case of Swing Line Loans,
NationsBank, determines (which determination made on a reasonable basis shall be
conclusive absent manifest error) that:
(a) quotations of interest rates for the relevant deposits referred
to in the definition of "CD Rate" or "LIBOR Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such CD
Loan or LIBOR Loan as provided in this Agreement; or
(b) the relevant rates of interest referred to in the definition of
"Applicable Base Rate" in Section 1.01 hereof upon the basis of which the
CD Rate or LIBOR Rate for such Interest Period is to be determined do not
adequately reflect the cost to the Lenders of making or maintaining such CD
Loan or LIBOR Loan for such Interest Period;
then the Agent, or in the case of Swing Line Loans, NationsBank, shall give the
Company prompt notice thereof, and so long as such condition remains in effect,
the Lenders shall be under no obligation to make CD Loans or LIBOR Loans, as the
case may be, or to convert Base Loans into CD Loans or LIBOR Loans, as the case
may
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be, and the Company shall, on the last day(s) of the then current Interest
Period(s) for outstanding CD Loans or LIBOR Loans, as applicable, convert such
CD Loans or LIBOR Loans, into Base Loans or CD Loans or LIBOR Loans, if
available hereunder, in accordance with Section 2.11 hereof. The Agent, or in
the case of Swing Line Loans, NationsBank, shall give the Company notice
describing in reasonable detail any event or condition described in this Section
4.02 promptly following the Agent's or NationsBank's, as the case may be,
determination that the availability of CD Loans or LIBOR Loans, as the case may
be, is, or is to be, suspended as a result thereof.
4.03 ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender to honor its obligation to
make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify
the Company thereof (with a copy to the Agent) and such Lender's obligation to
make or continue LIBOR Loans, or convert Base Loans or CD Loans into LIBOR
Loans, shall be suspended until such time as such Lender may again make and
maintain LIBOR Loans, and such Lender's outstanding LIBOR Loans shall be
converted into Base Loans or CD Loans in accordance with Section 2.11 hereof.
4.04 COMPENSATION. The Company shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Fixed CD Loan or LIBOR
Loan on a date other than the last day of the Interest Period for such
Fixed CD Loan or LIBOR Loan, including without limitation any conversion
required pursuant to Section 4.03, the amount of such compensation to be
determined by each Lender; or
(b) any failure by the Company to borrow a Fixed CD Loan or LIBOR
Loan on the date for such borrowing specified in the relevant Borrowing
Notice under Section 2.04 hereof, such compensation to include, without
limitation, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount so paid, prepaid
or converted or not borrowed for the period from the date of such payment,
prepayment or conversion or failure to borrow to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the
date scheduled for such borrowing) at the applicable rate of interest for
such Fixed CD Loan or LIBOR Loan provided for herein over (ii) the
Applicable Base Rate (as reasonably determined by the Agent) for Dollar
deposits of amounts comparable to such principal amount and maturities
comparable to such period. A determination of a Lender as to the amounts
payable pursuant
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to this Section 4.04 shall be conclusive, provided that such determinations
are made on a reasonable basis. The Lender requesting compensation under
this Section 4.04 shall furnish to the Company calculations in reasonable
detail setting forth such Lender's determination of the amount of such
compensation.
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ARTICLE V
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
5.01 CONDITIONS OF INITIAL ADVANCE AND ISSUANCE OF LETTERS OF CREDIT. The
obligation of the Lenders to make the initial Advance and of the Letter of
Credit Issuers to issue the Letters of Credit is subject to the conditions
precedent that the Agent shall have received, prior to the Initial Advance or
the issuance of Letters of Credit (other than Existing LCs) in form and
substance satisfactory to the Agent the following:
(a) executed originals of each of the Loan Documents, together with
all schedules and exhibits thereto in form and substance satisfactory to
the Agent and the Lenders;
(b) favorable written opinions of counsel to the Company dated the
Closing Date, addressed to the Agent and the Lenders and satisfactory to
Smith Helms Mulliss & Moore, special counsel to the Agent, substantially in
the form of EXHIBIT G-1 attached hereto;
(c) resolutions of the board of directors (or of the appropriate
committee thereof) of the Company certified by its secretary or assistant
secretary as of the Closing Date, appointing the initial Authorized
Officer(s) and approving and adopting the Loan Documents to be executed by
the Company, and authorizing the execution and delivery thereof; specimen
signatures of officers of the Company executing the Loan Documents,
certified by the Secretary or Assistant Secretary of the Company;
(d) the charter documents of the Company certified as of a recent
date by the Secretary of State of its state of incorporation;
(e) the by-laws of the Company certified as of the Closing Date as
true and correct by the respective secretary or assistant secretary of the
Company;
(f) certificates issued as of a recent date by the Secretary of State
of the state of the incorporation of the Company as to the corporate good
standing of the Company therein;
(g) appropriate certificates of qualification to do business and of
corporate good standing issued as of a recent date by the Secretary of
State of each jurisdiction in which the failure to be qualified to do
business could materially adversely affect the business, operations or
conditions, financial or otherwise, of Company;
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(h) favorable written opinions of counsel to the Guarantors dated the
Closing Date, addressed to the Agent and the Lenders and satisfactory to
Smith Helms Mulliss & Moore, special counsel to the Agent, substantially in
the form of EXHIBIT G-2 attached hereto;
(i) resolutions of the board of directors (or of the appropriate
committee thereof) of each Guarantor certified by its secretary or
assistant secretary as of the Closing Date, approving and adopting the
Loan Documents to be executed by such Guarantor, and authorizing the
execution and delivery thereof; specimen signatures of officers of the
Guarantor executing the Loan Documents, certified by the Secretary or
Assistant Secretary of such Guarantor;
(j) the charter documents of each Guarantor certified as of a recent
date by the Secretary of State of its state of formation;
(k) the by-laws of each Guarantor certified as of the Closing Date as
true and correct by the respective secretary or assistant secretary of such
Guarantor;
(l) certificates issued as of a recent date by the Secretary of State
of the state of the incorporation of each Guarantor as to the corporate
good standing of the Guarantor therein;
(m) appropriate certificates of qualification to do business and of
corporate good standing issued as of a recent date by the Secretary of
State of each jurisdiction in which the failure to be qualified to do
business could materially adversely affect the business, operations or
conditions, financial or otherwise, of each Guarantor;
(n) closing statement;
(o) notice of appointment of the Authorized Officer(s);
(p) evidence of insurance complying with the requirements of Section
7.02 of this Agreement;
(q) all fees payable by the Company on the Closing Date to the Agent
and the Lenders;
(r) evidence satisfactory to the Agent that the Prior Notes and the
Atrium Debt shall have been paid in full; and
(s) such other documents, instruments, certificates and opinions as
the Agent or any Lender may reasonably request on or prior to the Closing
Date in connection with the consummation of the transactions contemplated
hereby.
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5.02 CONDITIONS OF LOANS. The obligations of the Lenders to make any
Advance, and the Letter of Credit Issuers to issue Letters of Credit, hereunder
subsequent to the Closing Date are subject to the satisfaction of the following
conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank, shall
have received a notice of such borrowing or request if required by Section
2.04 or 2.17 hereof;
(b) the representations and warranties of the Company set forth in
Article VI hereof and in each of the other Loan Documents shall be true and
correct on and as of the date of such Advance or Swing Line Loan or
issuance of such Letters of Credit, as the case may be, with the same
effect as though such representations and warranties had been made on and
as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date and except that the
financial statements referred to in Section 6.03 shall be deemed to be
those financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 7.20 hereof;
(c) in the case of the issuance of a Letter of Credit, the Company
shall have, upon request of the applicable Letter of Credit Issuer,
executed and delivered to the Letter of Credit Issuer an application and
agreement for Letter of Credit in form and content acceptable to such
Letter of Credit Issuer with such other instruments and documents as it
shall request;
(d) at the time of such Advance, Swing Line Loan or issuance of each
Letter of Credit, no Default or Event of Default specified in Article VIII
hereof, shall have occurred and be continuing;
(e) immediately after giving effect to a Loan or Letter of Credit (i)
the aggregate principal balance of all outstanding Loans and Participations
for each Lender shall not exceed such Lender's Applicable Commitment
Percentage of the Total Revolving Loan Commitment, and (ii) the aggregate
principal balance of the sum of all outstanding Loans, Swing Line
Outstandings and Outstanding Letter of Credit Obligations shall not exceed
the Total Revolving Loan Commitment; and
(f) immediately after giving effect to a Swing Line Loan the
aggregate Swing Line Outstandings shall not exceed $10,000,000.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders with respect to itself
and to its Subsidiaries, to the extent indicated, that:
6.01 SUBSIDIARIES. SCHEDULE 6.01 attached hereto states the name of each
of the Company's Subsidiaries, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or its Subsidiaries.
Those Subsidiaries listed in Section 1 of said SCHEDULE 6.01 constitute
Subsidiaries. The Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and non-assessable.
6.02 CORPORATE ORGANIZATION AND AUTHORITY. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licensees and permits to own and operate its Properties and to carry on its
business as now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes
such licensing or qualification necessary.
6.03 FINANCIAL STATEMENTS. (a) The consolidated balance sheets of the
Company and its consolidated Subsidiaries as of the Sunday closest to December
31 in each of the years 1992 to 1993, both inclusive, and the statements of
income and retained earnings and changes in cash flows for the fiscal years
ended on said dates accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise without
qualification except as therein noted, by Arthur Andersen & Co., have been
prepared in accordance with GAAP consistently applied except as therein noted,
are correct and complete and present fairly the financial position of the
Company and its consolidated Subsidiaries as of such dates and the results of
their operations and changes in their cash flows for such periods. The
unaudited consolidated balance sheets of the Company and its consolidated
Subsidiaries as of October 2, 1994, and the unaudited statements of income and
retained earnings and changes in financial position for the nine-month period
ended on said date prepared by
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the Company have been prepared in accordance with generally accepted accounting
principles consistently applied, are correct and complete and present fairly the
financial position of the Company and its consolidated Subsidiaries as of said
date and the results of their operations and changes in their cash flows for
such period.
(b) Since October 2, 1994, there has been no change in the condition,
financial or otherwise, of the Company and its consolidated Subsidiaries as
shown on the consolidated balance sheet as of such date except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse.
6.04 INDEBTEDNESS. SCHEDULE 6.04 attached hereto correctly describes
all Current Debt, Funded Debt and Capitalized Leases of the Company and its
Subsidiaries outstanding on October 2, 1994.
6.05 FULL DISCLOSURE. The financial statements referred to in paragraph
6.03 hereof do not, nor does this Agreement or any other written statement
furnished by the Company to you in connection with the issuance of the Notes,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact peculiar to the Company or its Subsidiaries which the Company
has not disclosed to you in writing which materially affects adversely nor, so
far as the Company can now foresee, will materially affect adversely the
Properties, business, prospects, profits or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole.
6.06 PENDING LITIGATION. Except as set forth in SCHEDULE 6.06, there are
no proceedings pending or, to the knowledge of the Company threatened, against
or affecting the Company or any Subsidiary in any court or before any
governmental authority or arbitration board or tribunal which reasonably may
result in a judgment in excess of $1,000,000 which judgment is either (i) not
covered by insurance or insurance is contested, or (ii) not covered by reserves
set aside by the Company in an amount equal to such judgment.
6.07 TITLE TO PROPERTIES. The Company and each Subsidiary has good and
marketable title in fee simple (or its equivalent under applicable law) to all
material parcels of real property and has good title to all the other material
items of Property it purports to own, including that reflected in the most
recent balance sheet referred to in Section 6.03 hereof except as sold or
otherwise disposed of in the ordinary course of business and except for Liens
permitted by this Agreement.
6.08 PATENTS AND TRADEMARKS. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks, copyright,
licenses and rights with respect
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to the foregoing necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others.
6.09 ISSUANCE IS LEGAL AND AUTHORIZED. The issuance of the Notes and
compliance by the Company and the Guarantors with all of the provisions of this
Agreement, the Notes, the Guaranty Agreements and the Letter of Credit Account
Agreement to which it is signatory--
(a) are within the corporate powers of the Company or Guarantor a
party thereto;
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the Articles of Incorporation or By-laws of the
Company or any Guarantor or any indenture or other agreement or instrument
to which the Company or any Guarantor is a party or by which it may be
bound or result in the imposition of any Liens or encumbrances on any
Property of the Company or any Guarantor; and
(c) have been duly authorized by proper corporate action on the part
of the Company and each Guarantor (no action by the stockholders of the
Company or any Guarantor being required by law, by the Articles of
Incorporation or By-laws of the Company or any Guarantor or otherwise),
executed and delivered by the Company and each Guarantor signatory thereto,
and this Agreement, the Letter of Credit Account Agreement, the Notes and
the Guaranty Agreements constitute the legal, valid and binding
obligations, contracts and agreements of the Company and each Guarantor
signatory thereto enforceable in accordance with their respective terms.
6.10 NO DEFAULTS. No Default or Event of Default has occurred and is
continuing. Neither the Company nor any Subsidiary is in default in the payment
of principal or interest on any Funded Debt or Current Debt and is not in
default under any instrument or instruments or agreements under and subject to
which any Funded Debt or Current Debt has been issued and no event has occurred
and is continuing under the provisions of any such instrument or agreement which
with the lapse of time or the giving of notice, or both, would constitute an
event of default thereunder.
6.11 GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal, or local, is
necessary in connection with the execution and delivery by the Company or any
Guarantor of the Agreement, the Letter of Credit Account Agreement, the Notes or
any Guaranty Agreement, or compliance by the Company and the Guarantors with any
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of the provisions of this Agreement, the Letter of Credit Account Agreement, the
Notes or the Guaranty Agreements.
6.12 TAXES. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. For all
taxable years ending on or before January 1, 1992, the Federal income tax
liability of the Company and its Subsidiaries has been satisfied and either the
period of limitations on assessment of additional Federal Income tax has expired
or the Company and its Subsidiaries have entered into an agreement with the
Internal Revenue Service closing conclusively the total tax liability for the
taxable year. The Company does not know of any proposed additional tax
assessment against it for which adequate provision has not been made on its
accounts, and no material controversy in respect of additional Federal or state
income taxes due since said date is pending or to the knowledge of the Company
threatened. The provisions for taxes on the books of the Company and each
Subsidiary are adequate for all open years, and for its current fiscal period.
6.13 USE OF PROCEEDS. The net proceeds of the Loans will be used to
repay in full the Prior Notes and for general corporate purposes. None of the
transactions contemplated in this Agreement (including, without limitation
thereof, the use of proceeds from the Loans), will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulation issued pursuant thereto, including, without limitation,
Regulations G, T, U, and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns or
intends to carry or purchase any "margin stock" within the meaning of said
Regulation U. None of the proceeds from the Loans will be used to purchase, or
refinance any borrowing, the proceeds of which were used to purchase any
"security" within the meaning of the Securities Exchange Act of 1934, as
amended.
6.14 EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The consummation
of the transactions provided for in this Agreement and compliance by the Company
and the Guarantors with the provisions hereof, the Notes issued hereunder and
the Guaranty Agreements will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Internal Revenue Code. Each Plan
complies in all material respects with all applicable statutes and governmental
rules and regulations, and (a) no Reportable Event has occurred and is
continuing with respect to any Plan, (b) neither the Company nor any ERISA
Affiliate has withdrawn from any Plan or Multiemployer Plan or instituted steps
to do so, and (c) no steps have been instituted to terminate any Plan. No
condition exists or event or transaction has occurred in connection with any
Plan which could result in the incurrence by the Company or any ERISA Affiliate
of any material liability, fine or penalty. No Plan
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maintained by the Company or any ERISA Affiliate, nor any trusts created
thereunder, have incurred any "accumulated funding deficiency" as defined in
Section 302 of ERISA nor does the present value of all benefits vested under all
Plans exceed, as of the last annual valuation date, the value of the assets of
the Plans allocable to such vested benefits by an amount greater than $1,000,000
in the aggregate. Neither the Company nor any ERISA Affiliate is a member of or
contributes to any multiple employer plan as defined in ERISA. Neither the
Company nor any ERISA Affiliate is a participant in or is obligated to make any
payment to a Multiemployer Plan. Neither the Company or any ERISA Affiliate has
any contingent liability with respect to any post- retirement "welfare benefit
plan" (as such term is defined in ERISA) except as has been disclosed to the
Purchasers.
6.15 COMPLIANCE WITH LAW. Neither the Company nor any Subsidiary (a) is
in violation of any law, ordinance, franchise, governmental rule or regulation
to which it is subject; or (b) has failed to obtain any license, permit,
franchise or other governmental authorization necessary to the ownership of its
property or to the conduct of its business, which violation or failure to obtain
would materially adversely affect the business, prospects, profits, properties
or condition (financial or otherwise) of the Company and its Subsidiaries, taken
as a whole, or impair the ability of the Company or any Guarantor to perform its
obligations contained in this Agreement, the Letter of Credit Account Agreement,
the Notes or any Guaranty Agreement. Neither the Company nor any Subsidiary is
in default with respect to any order of any court or governmental authority or
arbitration board of tribunal.
6.16 COMPLIANCE WITH ENVIRONMENTAL LAWS. Neither the Company nor any
Subsidiary is in violation of any applicable Federal, state, or local laws,
statutes, rules, regulations or ordinances relating to public health, safety or
the environment, including, without limitation, relating to releases,
discharges, emissions or disposals to air, water, land or ground water, to the
use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances which
violation could have a material adverse effect on the business, prospects,
profits, properties or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole. The Company does not know of any liability or
class of liability of the Company or any Subsidiary under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 ET SEQ.), or the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901 ET SEQ.).
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ARTICLE VII
COMPANY COVENANTS
From and after the Closing Date and continuing until the Obligations have
been paid and satisfied in full and this Agreement has been terminated in
accordance with the terms hereof unless the Required Lenders shall otherwise
consent in writing:
7.01 CORPORATE EXISTENCE, ETC. The Company will preserve and keep in full
force and effect, and will cause each Subsidiary to preserve and keep in full
force and effect, its corporate existence and all licenses and permits necessary
to the proper conduct of its business, PROVIDED that the foregoing shall not
prevent any transaction permitted by section 7.15.
7.02 INSURANCE. The Company will maintain, and will cause each domestic
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers accorded a rating by A.M. Best Company, Inc. of A-XII or better at the
time of the issuance of any such policy and in such forms and amounts and
against such risks as are customary for corporations of established reputation
engaged in the same or a similar business and owning and operating similar
properties; PROVIDED, HOWEVER, that (i) if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than A-XII, the
Company will, on the date of renewal of any such policy (or, if such change in
rating shall occur within 90 days prior to such renewal date, within 90 days of
the date of such change in rating), obtain such insurance policy from an insurer
accorded such rating and (ii) notwithstanding the requirements of this Section
7.02, the Company or any such Subsidiary may (a) maintain self-insurance
programs with respect to employee benefits such as medical and disability
coverage and casualty risks on its Property; PROVIDED that any such programs are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties and the Company or
the Subsidiary concerned shall maintain adequate and actuarially determined
reserves for losses in an amount and manner approved by nationally recognized
and reputable independent insurance consultants retained by the Company and (b)
maintain any insurance policy or program as in effect on the Closing Date with
Titania Insurance Co. of America, PROVIDED that such policies or programs are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties. The Company will
cause each Subsidiary which is not organized under the laws of the Unites States
or any state thereof to maintain in accordance with sound business practice,
insurance coverage with financially sound reputable insurers in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties. The Company will not permit Titania Insurance Co. of
America to enter
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into insurance or reinsurance relationships with any Person other than the
Company or any Subsidiary, provided, that, notwithstanding the foregoing, the
Company may permit Titania to maintain such relationships at such levels and in
such amounts as are in effect on the Closing Date.
7.03 TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS. The
Company will promptly pay and discharge, and will cause each Subsidiary promptly
to pay and discharge, all lawful taxes, assessments and governmental charges or
levies imposed upon the Company or such Subsidiary, respectively, or upon or in
respect of all or any part of the Property or business of the Company or such
Subsidiary, respectively, all trade accounts payable in accordance with usual
and customary business terms, and all claims for work, labor or materials, which
if unpaid might become a Lien upon any Property of the Company or such
Subsidiary; PROVIDED the Company or such Subsidiary shall not be required to pay
any such tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any Property of the Company or such Subsidiary or any material interference with
the use thereof by the Company or such Subsidiary, and (ii) the Company or such
Subsidiary shall set aside on its books, reserves deemed by it to be adequate
with respect thereto. The Company will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules and
regulations to which it is subject including, without limitation, the
Occupational Safety and Health Act of 1970, the Employee Retirement Income
Security Act of 1974 and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all applicable
jurisdictions, the violation of which would materially and adversely affect the
properties, business, prospects, profits or condition of the Company and its
Subsidiaries or would result in any Lien not permitted under Section 7.13.
7.04 MAINTENANCE, ETC. The Company will maintain, preserve and keep, and
will cause each Subsidiary to maintain, preserve and keep, its properties which
are used or useful in the conduct of its business (whether owned in fee or a
leasehold interest) in good repair and working order and from time to time will
make all necessary repairs, replacements, renewals and additions so that at all
times the efficiency thereof shall be maintained.
7.05 NATURE OF BUSINESS. Neither the Company nor any Subsidiary will
engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
its Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and its Subsidiaries on the date of this
Agreement.
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7.06 CONSOLIDATED NET WORTH. The Company will at all times keep and
maintain Consolidated Net Worth at an amount not less than the sum of (i)
$60,000,000 (or, if the Company shall establish a reserve in respect of the
anticipated sale of the Company's headquarters building located at 1500 San Remo
Avenue, Coral Gables, Florida, $60,000,000 minus the amount of such reserve, but
in no event shall resulting Consolidated Net Worth be less than $55,000,000)
plus, (ii) 50% of Consolidated Net Income (or if such Consolidated Net Income is
a deficit then no change) for the period from October 2, 1994 to and including
the date of determination, plus (iii) 75% of the net proceeds to the Company
from the sale of shares of the Company's capital stock.
7.07 LIMITATIONS ON TOTAL DEBT.
(a) The Company will at all times keep and maintain Consolidated
Funded Debt in an amount not to exceed 60% of Total Capitalization.
(b) The Company and its Subsidiaries (other than WCC) will not, at
any time, issue, incur, assume, be or become liable in respect of any
Indebtedness other than (i) Indebtedness arising under this Agreement, (ii)
the purchase of products, merchandise and services in the ordinary course
of business, (iii) Indebtedness outstanding on the Closing Date, (iv)
Indebtedness of a Guarantor to the Company or to another Guarantor, (v)
Indebtedness representing amounts received by the Company or any Subsidiary
in exchange for the transfer of interests in trade receivables under the
Asset Securitization Facility in excess of the amounts repaid to the
purchasers in respect of such purchase price from collections on such trade
receivables, which shall at no time exceed $50,000,000 in aggregate amount
outstanding, and (vi) Indebtedness in an aggregate amount for the Company
and all Subsidiaries (other than WCC) taken as a whole not greater than
$15,000,000.
(c) Any corporation which becomes a Subsidiary after the date hereof
shall for all purposes of this Section 7.07 be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary all Indebtedness of
such corporation existing immediately after it becomes a Subsidiary.
7.08 FIXED CHARGE COVERAGE RATIO. The Company will at all times keep and
maintain the ratio of Net Income Available for Fixed Charges, determined as of
the last day of each fiscal quarter for the immediately preceding Four-Quarter
Period, to Fixed Charges for such Four-Quarter Period, at not less than
1.60:1.00.
7.09 TRADING ASSET RATIO. The Company will at all times keep and maintain
a ratio of (a) the sum of (1) unencumbered cash, net accounts receivable and net
inventory of the Company and its Subsidiaries (other than WCC) all as determined
in accordance with
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GAAP, plus (2) provided that no Indebtedness is outstanding to finance or
refinance the Company's headquarters building located at 1500 San Remo Avenue,
Coral Gables, Florida, the net book value of such building, to (b) the sum of
(1) Consolidated Funded Debt, excluding the Funded Debt of WCC, (2) the stated
amount of outstanding unsecured Letters of Credit and (3) accounts payable of
the Company and its Subsidiaries (other than WCC) all determined as of the last
day of each fiscal quarter, of not less than 1.15 to 1.00.
7.10 LIMITATION ON LIENS. The Company will not, and will not permit any
Subsidiary to, create or incur, or suffer to be incurred or to exist, any Lien
on its or their Property, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to acquire, or permit any
Subsidiary to acquire, any property or assets upon conditional sales agreements
or other title retention, devices, except;
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required by
Section 7.03;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or
proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their
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use in the operation of the business of the Company and its Subsidiaries;
(e) Liens existing as of _______ __, 1994 and reflected in SCHEDULE
7.10 hereto, securing Funded Debt of the Company or any Subsidiary
outstanding on such date;
(f) [reserved];
(g) Liens securing Indebtedness of a Guarantor to the Company or to
another Guarantor;
(h) the interests in trade receivables of the purchasers thereof
created pursuant to the Asset Securitization Facility, to the extent the
same may constitute Liens; and
(i) Liens incurred after the Closing Date given to secure the payment
of the purchase price incurred in connection with the acquisition of
fixed assets useful and intended to be used in carrying on the business of
the Company or a Subsidiary, including Liens existing on such fixed assets
at the time of acquisition thereof or at the time of acquisition by the
Company or a Subsidiary of any business entity then owning such fixed
assets, whether or not such existing Liens were given to secure the payment
of the purchase price of the fixed assets to which they attach so long as
they were not incurred, extended or renewed in contemplation of such
acquisition, PROVIDED that (i) the Lien shall attach solely to the fixed
assets acquired or purchased, (ii) at the time of acquisition of such fixed
assets, the aggregate amount remaining unpaid on all Indebtedness secured
by Liens on such fixed assets whether or not assumed by the Company or a
Subsidiary shall not exceed an amount equal to 80% (or 100% in the case of
Capitalized Leases) of the lesser of the total purchase price or fair
market value at the time of acquisition of such fixed assets (as determined
in good faith by the Board of Directors of the Company), and (iii) all such
Indebtedness shall have been incurred within the applicable limitations
provided in Section 7.07.
7.11 RESTRICTED PAYMENTS: JOINT VENTURE INVESTMENTS.
(a) The Company will not except as hereinafter provided:
(i) Declare or pay any dividends, either in cash or
Property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital
stock of the Company);
(ii) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital
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stock (other than (x) in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of
other shares of capital stock of the Company or warrants, rights or
options to purchase or acquire any shares of its capital stock or (y)
purchases or acquisitions of shares of Voting Stock of the Company
which were issued pursuant to an employee stock plan, PROVIDED, that
the aggregated amount expended therefor does not exceed $250,000 in
any one fiscal year of the Company and PROVIDED FURTHER, that such
amounts expended shall not exceed that amount necessary in order to
maintain beneficial ownership or control, directly or indirectly, of
50.1% (by number of votes) of the Voting Stock of the Company by the
Wackenhut Family Group);
(iii) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(iv) Make any payment or distribution, either directly or
indirectly or through any Subsidiary, of principal of any Subordinated
Funded Debt prior to the date such payment shall be due; or
(v) Make any Restricted Investments other than any Joint Venture
Investments;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, Restricted
Investments and all such other distributions being herein collectively
called "RESTRICTED PAYMENTS"), if after giving effect thereto the aggregate
amount of Restricted Payments made during the period from and after
December 31, 1989 to and including the date of the making of the Restricted
Payment in question, would exceed the sum of (i) $5,000,000 plus (ii) 50%
of Consolidated Net Income for such period, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a deficit
figure, then minus 100% of such deficit).
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 90 days after the date of declaration
thereof.
For the purposes of this Section 7.11(a) the amount of any Restricted
Payment declared, paid or distributed in Property shall be deemed to be the
greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of
the making of the Restricted Payment in question.
(b) The Company will not make any Joint Venture Investment if after
giving effect thereto the aggregate value
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of all Joint Venture Investments of the Company would exceed 10% of
Consolidated Net Worth of the Company as of the date of the making of such
Joint Venture Investment.
7.12 LIMITATION ON SALE AND LEASEBACKS.
The Company will not, and will not permit any Subsidiary to, enter into any
arrangement whereby the Company or any Subsidiary shall sell or transfer any
property currently owned by the Company or any Subsidiary to any Person other
than the Company or a Subsidiary and thereupon the Company or any Subsidiary
shall lease or intend to lease, as lessee, the same property, PROVIDED, that the
Company may sell and leaseback pursuant to a Capitalized Lease the Company's
headquarters building located at 1500 San Remo Avenue, Coral Gables, Florida and
the Immigration and Naturaliza- tion Service detention facility located in
Aurora, Colorado which was opened in February, 1987.
7.13 MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Company will not, and will not permit any Subsidiary to, (i)
consolidate with or be a party to a merger with any other corporation or
(ii) sell, lease or otherwise dispose of all or any substantial part (as
defined in paragraph (d) of this Section 7.13) of the assets of the Company
and its Subsidiaries, PROVIDED, HOWEVER, that:
(1) any Subsidiary may merge or consolidate with or into the
Company or any Wholly-owned Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall be the
surviving or continuing corporation;
(2) The Company may consolidate or merge with any other
corporation if (i) either (x) the Company shall be the surviving or
continuing corporation or (y) the surviving corporation is organized
and existing under the laws of the United States of America or any
state thereof or the District of Columbia and such continuing or
surviving corporation expressly assumes in writing, in form and
substance satisfactory to the Required Lenders, all obligations of the
Company under this Agreement, (ii) at the time of such consolidation
or merger and after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, (iii) after giving
effect to such consolidation or merger the Company or such surviving
corporation, as the case may be, would be permitted to incur at least
$1.00 of additional Consolidated Indebtedness under the provisions of
Section 7.07(a);
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(3) any Subsidiary may sell, lease or otherwise dispose of all
or any substantial part of its assets to the Company or any Wholly-
owned Subsidiary;
(4) the Company and its Subsidiaries may sell trade receivables
or fractional undivided interests therein pursuant to and in
accordance with the terms of the Asset Securitization Facility; and
(5) the Company may sell, lease or otherwise dispose of the
Company's headquarters building located at 1500 San Remo Avenue, Coral
Gables, Florida and the Immigration and Naturalization Service
detention facility located in Aurora, Colorado which was opened in
February, 1987.
(b) The Company will not permit any Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purposes of this
Section 7.13, any warrants, rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into
stock) of such Subsidiary to any Person other than the Company or a Wholly-
owned Subsidiary, except for the purpose of qualifying directors, or except
in satisfaction of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of stock to the
Company and/or a Subsidiary whereby the Company and/or such Subsidiary
maintain their same proportionate interest in such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Subsidiary (except (i) the minimal amount necessary
to qualify directors and (ii) shares of stock of WCC provided that, after
giving effect to any such sale of WCC stock, the Company shall own not less
than 69% of the stock of every class issued by WCC) or any Indebtedness of
any Subsidiary, and will not permit any Subsidiary to sell, transfer or
otherwise dispose of (except to the Company or a Wholly-owned Subsidiary)
any shares of stock or any Indebtedness of any other Subsidiary, unless:
(1) simultaneously with such sale, transfer, or
disposition, all shares of stock and all Indebtedness of such
Subsidiary at the time owned by the Company and by every other
Subsidiary shall be sold, transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined,
as evidenced by a resolution thereof, that the purposed sale, transfer
or disposition of said shares of stock and Indebtedness is in the best
interests of the Company;
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(3) said shares of stock and Indebtedness are sold, transferred
or otherwise disposed of to a Person, for a cash consideration and on
terms reasonably deemed by the Board of Directors to be adequate and
satisfactory;
(4) the Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Subsidiary not being
simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the Company
and its Subsidiaries.
(d) As used in this Section 7.13, a sale, lease or other disposition
of assets shall be deemed to be a "substantial part" of the assets of the
Company and its Subsidiaries only if the book value of such assets, when
added to the book value of all other assets sold, leased or otherwise
disposed of by the Company and its Subsidiaries (other than in the ordinary
course of business) during the period from and after the Closing Date to
and including the date of the sale, lease or disposition in question,
computed on a cumulative basis for said entire period, exceeds 10% of
Consolidated Net Assets, determined as of the end of the immediately
preceding fiscal quarter.
7.14 GUARANTIES. The Company will not, and will not permit any Subsidiary
to, become or be liable in respect of any Guaranty except the Guaranty
Agreements.
7.15 TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person other
than an Affiliate.
7.16 ERISA COMPLIANCE.
(a) The Company will not, and will not permit any Subsidiary to,
permit any Plans at any time maintained by the Company or any Subsidiary to
have any Unfunded Vested Pension Liabilities. As used herein "UNFUNDED
VESTED PENSION LIABILITY" shall mean an excess of the actuarial present
value of accumulated vested Plan benefits as at the end of the immediately
preceding Plan year of such Plans (or as of any more recent valuation date)
over the net assets allocated to such Plans which are available for
benefits, all as determined
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and disclosed in the most recent actuarial valuation report for such Plans.
(b) All assumptions and methods used to determine the actuarial
valuation of vested employee benefits under all Plans at any time
maintained by the Company or any Subsidiary and the present value of assets
of such Plans shall be reasonable in the good faith judgment of the Company
and shall comply with all requirements of law.
(c) The Company will not, and will not permit any Subsidiary to,
cause any Plan which it maintains or in which it participates at any time
to:
(1) engage in any "prohibited transaction" (as such term is
defined in ERISA);
(2) incur any "accumulated funding deficiency" (as such term is
defined in ERISA), whether or not waived; or
(3) terminate any such Plan in a manner which could result in
the imposition of a lien on any Property of the Company or any of its
Subsidiaries pursuant to ERISA.
(d) The Company will not, and will not permit any Subsidiary to,
withdraw from any Multiemployer Plan if such withdrawal shall subject the
Company or any Subsidiary to withdrawal liability (as described under Part
1 of Subtitle E of Title IV of ERISA).
7.17 REPORTS AND RIGHTS OF INSPECTION. The Company will keep, and will
cause each Subsidiary to keep, proper books of record and account in which full
and correct entries will be made of all dealings or transactions of or in
relation to the business and affairs of the Company or such Subsidiary, in
accordance with GAAP consistently applied (except for changes disclosed in the
financial statements furnished to the Lenders and the Agent pursuant to this
Section 7.17 and concurred in by the independent public accountants referred to
in Section 7.17(b) hereof), and will furnish to the Agent and each Lender (in
duplicate if so specified below or otherwise requested):
(a) QUARTERLY STATEMENTS. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except the
last) of each fiscal year, copies of:
(1) (i) consolidated balance sheets of the Company and its
Subsidiaries and (ii) consolidating balance sheet of WCC as of the
close of such quarterly fiscal period, setting forth in comparative
form as to the consolidated balance sheets the consolidated figures
for the fiscal year then most recently ended,
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(2) (i) consolidated statements of income of the Company and its
Subsidiaries and (ii) consolidating statement of income of WCC for
such quarterly fiscal period and for the portion of the fiscal year
ending with such period, in each case setting forth in comparative
form as to the consolidated statements of income the consolidated
figures for the corresponding periods of the preceding fiscal year,
and
(3) (i) consolidated statements of cash flows of the Company and
its Subsidiaries and (ii) consolidating statement of cash flows of WCC
for the portion of the fiscal year ending with such quarterly fiscal
period, setting forth in comparative form as to the consolidated
statements of cash flows the consolidated figures for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
(b) ANNUAL STATEMENTS. As soon as available and in any event within
90 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
retained earnings and cash flows of the Company and its Subsidiaries
for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and, in the case of
such consolidated statements, accompanied by a report thereon of a firm of
independent public accountants of recognized national standing selected by
the Company to the effect that the consolidated financial statements have
been prepared in conformity with GAAP and present fairly, in all material
respects, the financial condition of the Company and its Subsidiaries and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary and any management letter received from such
accountants;
(d) SEC AND OTHER REPORTS. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders
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generally and of each regular or periodic report, and any registration
statement or prospectus filed by the Company or any Subsidiary with any
securities exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceedings (other than
immaterial regulatory proceedings relating to obtaining or maintaining
licenses, permits or approvals by the Company or any Subsidiary) to which
the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the company
or any of its Subsidiaries;
(e) ERISA REPORTS. promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC or
any other person to terminate any Plan; (iii) the institution of any steps
by the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a
"prohibited transaction; within the meaning of Section 406 of ERISA in
connection with any Plan; (v) any material increase in the contingent
liability of the Company or any restricted Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any of the
foregoing;
(f) OFFICERS' CERTIFICATES. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether
the Company was in compliance with the requirements of Section 7.06 through
Section 7.14, inclusive, and Section 7.20 at the end of the period covered
by the financial statements then being furnished, and (ii) whether there
existed as of the date of such financial statements and whether, to the
best of such officer's knowledge, there exists on the date of the
certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate, specifying the
nature and period of existence thereof and the action the Company is taking
and proposes to take with respect thereto, which certificate shall be in
the form attached hereto as EXHIBIT I;
(g) ACCOUNTANT'S CERTIFICATES. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion
with respect to such financial statements, stating that they have reviewed
this Agreement and stating further whether, in making their audit, such
accountants have become aware of any Default or Event of
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Default under any of the terms or provisions of this Agreement insofar as
any such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying
the nature and period of existence thereof;
(h) REQUESTED INFORMATION. With reasonable promptness, such other
data and information including, without limitation, quarterly consolidating
financial statements of the Company and its Subsidiaries of the type
described in foregoing paragraph (a), as any of the Lender or Agent may
reasonably request;
(i) QUARTERLY SCHEDULES. Within the period provided in paragraph (a)
above, a schedule of (i) outstanding Letters of Credit issued for the
account of the Company and Titania, jointly, and (ii) investments held by
Titania.
Without limiting the foregoing, the Company will permit the Agent and the
Lenders (or such persons as the Agent and the Lenders may designate), to visit
and inspect, under the Company's guidance, any of the properties of the Company
or any Subsidiary, to examine all of their books of account, records, reports
and other papers, to make copies and extracts therefrom and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with the Agent and the Lenders the
finances and affairs of the Company and its Subsidiaries) all at such reasonable
times and as often as may be reasonably requested. The Company shall not be
required to pay or reimburse the Agent or the Lenders for expenses which the
Agent or the Lenders may incur in connection with any such visitation or
inspection, PROVIDED, that if such visitation or inspection is made during any
period when a Default or an Event of Default shall have occurred and be
continuing, the Company agrees to reimburse the Agent and Lenders for all such
expenses promptly upon demand.
7.18 ACQUISITIONS. The Company will not, and will not permit any
Subsidiary, to enter into any agreement, contract or arrangement, providing for
the acquisition of any Person or the assets of any Person where the amount to be
paid exceeds $5,000,000 unless the Company shall have furnished to each Lender a
certificate of an authorized financial officer of the Company (i) certifying
that after giving effect to such acquisition there will be no Default or Event
of Default hereunder, and (ii) containing calculations based upon historical
financial information demonstrating that after giving effect to the proposed
acquisition the Company will not be in violation of any covenant contained in
Sections 7.06 through 7.09 hereof.
7.19 ADDITIONAL GUARANTIES. Not later than each date (a "Delivery Date")
upon which the officer's certificate described in
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Section 7.17(f) is required to be delivered by the Company, cause to be
delivered to the Agent for the benefit of the Lenders each of the following
documents in respect of each domestic wholly-owned Subsidiary of the Company
created or acquired after the Closing Date, as to whom such documents have not
been delivered on a prior Delivery Date (a "New Guarantor"):
(i) a Guaranty Agreement duly executed by such New Guarantor
substantially in the form attached hereto as EXHIBIT H;
(ii) an opinion of counsel to the New Guarantor (which opinion may be
rendered by in-house counsel to the Company unless the Agent requests as to
any particular New Guarantor that outside counsel be engaged to furnish the
opinion) dated as of the date of delivery of the Guaranty Agreement
provided in the foregoing clause (i) and addressed to the Agent and the
Lenders, in form and substance reasonably acceptable to the Agent, which
opinion shall include the opinions with respect to the New Guarantor and
its Guaranty Agreement as are provided on the Closing Date with respect to
Guarantors and Guaranty Agreements on such date pursuant to Section 5.01(h)
hereof, and may include assumptions and qualifications of similar effect to
those contained in the opinions of counsel to the Guarantors delivered
pursuant to Section 5.01(h) hereof); and
(iii) current copies of the charter documents, including partnership
agreements and certificate of limited partnership, if applicable, and
bylaws of such New Guarantor, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such charter documents,
bylaws or by applicable laws, of the shareholders or partners) of such New
Guarantor authorizing the actions and the execution and delivery of
documents described in clause (i) of this Section 7.19 and evidence
satisfactory to the Agent (confirmation of the receipt of which will be
provided by the Agent to the Lenders) that such New Guarantor is solvent as
of such date and after giving effect to the Guaranty.
7.20 ADVANCES TO WCC. The Company will not, and will not permit any
Subsidiary, to make or maintain loans or advances to WCC, enter into Guaranties
for the benefit of WCC, make capital contributions to WCC or purchase securities
from WCC, if, after giving effect to any such transaction, the aggregate amount
of such outstanding loans and advances, Guarantied obligations, capital
contributions and securities purchases shall exceed $1,500,000 in the aggregate.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.01 EVENTS OF DEFAULT. Any one or more of the following shall constitute
an "EVENT OF DEFAULT" as such term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five days; or
(b) Default shall occur in the making of any payment of the principal
of any Note at the expressed or any accelerated maturity date; or
(c) Default shall be made in the payment when due(whether by lapse of
time, by declaration, by call for redemption or otherwise) of the principal
of or interest on any Funded Debt or Current Debt (other than the Funded
Debt evidenced by the Notes) aggregating $100,000 or more of the Company or
any Subsidiary and such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
(d) Default or the happening of any event shall occur under any
indenture, agreement or other instrument under which any Funded Debt or
Current Debt aggregating $100,000 or more of the Company or any Subsidiary
may be issued and such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of any Funded Debt or
Current Debt aggregating $100,000 or more of the Company or any Subsidiary
outstanding thereunder; or
(e) Default shall occur in the observance or performance of any
covenant or agreement contained in Section 7.06 through Section 7.16, or in
Section 7.18 through Section 7.20; or
(f) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 days after
notice thereof to the Company by the holder of any Note; or
(g) Any representation or warranty made by the Company herein, or
made by the Company or any Guarantor in any other Loan Document or in any
statement or certificate furnished by the Company or any Guarantor in
connection with the consummation of the issuance and delivery of the Notes
or furnished by the Company or any Guarantor pursuant hereto or pursuant to
any other Loan Document, is untrue in any material respect as of the date
of the issuance or making thereof; or
(h) Final judgment or judgments for the payment of money aggregating
in excess of $100,000 is or are outstanding
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against the Company or any Subsidiary or against any property or assets of
either and any one such judgments has remained unpaid, unvacated, unbonded
or unstayed by appeal or otherwise for a period of 30 days from the date of
its entry; or
(i) A custodian, liquidator, trustee or receiver is appointed for the
Company or any Subsidiary or for the major part of the property of either
and is not discharged within 30 days after such appointment; or
(j) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary causes or
suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver for the Company
or such Subsidiary or for the major part of the property of either; or
(k) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors,are instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any
Subsidiary, are consented to or are not dismissed within 60 days after the
institution of such proceedings; or
(l) The Wackenhut Family Group shall own or control,directly or
indirectly, less than 33.33% of the Voting Stock of the Company.
8.02 NOTICE TO HOLDERS. When an Event of Default described in the
foregoing Section 8.01 has occurred, or if the holder of any Note or of any
other evidence of Funded Debt or Current Debt of the Company gives any notice or
takes any other action with respect to a claimed default, the Company agrees to
give notice within three Business Days of such event to the Agent and all
Lenders; such notice to be in writing and sent by registered or certified mail
or by telegram.
8.03 ACCELERATION. Upon the happening of any Event of
Default, if such Event of Default or any other Event of Default shall then be
continuing,
(A) either or both of the following actions may betaken: (i) the
Agent, with the consent of the Required Lenders, may, and at the direction
of the Required Lenders shall, declare any obligation of the Lenders to
make further Loans or issue Letters of Credit terminated, whereupon the
obligation of each Lender to make further Loans or issue Letters of Credit
hereunder shall terminate immediately, and (ii) the Agent shall at the
direction of the Required Lenders,
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at their option, declare by notice to the Company any or all of the
Obligations to be immediately due and payable, and the same, all interest
accrued thereon and all other obligations of the Company to the Lenders
shall forthwith become immediately due and payable without presentment,
demand,protest, notice or other formality of any kind, all of which are
hereby expressly waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding; PROVIDED,
however, that notwithstanding the above, if there shall occur an Event of
Default under clause (j) or (k) above, then the obligation of the Lenders
to lend hereunder shall automatically terminate and any and all of the
Obligations shall be immediately due and payable without the necessity of
any action by the Agent or the Required Lenders or notice to the Agent or
the Lenders; and
(B) The Company shall, upon demand of Agent, deposit cash with the
Agent in an amount equal to the amount of any Letters of Credit remaining
undrawn, as collateral security for the repayment of any future drawings
under such Letters of Credit, and such amounts shall be held by Agent
pursuant to the terms of the Letter of Credit Account Agreement.
8.04 AGENT TO ACT. In case any one or more Events of Default shall occur
and be continuing, the Agent may, and at the direction of the Required Lenders
shall, proceed to protect and enforce their rights or remedies either by suit in
equity or by action at law, or both, whether for the specific performance of any
covenant,agreement or other provision contained herein or in any other Loan
Document, or to enforce the payment of the Obligations or any other legal or
equitable right or remedy.
8.05 CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
8.06 NO WAIVER. No course of dealing between the Company and any Lender
or the Agent or any failure or delay on the part of any Lender or the Agent in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights or remedies hereunder and no single or partial exercise of any rights or
remedies hereunder shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder or of the same right or remedy on a future
occasion.
8.07 ALLOCATION OF PROCEEDS. If an Event of Default has occurred and is
continuing, and the maturity of the Notes has been accelerated pursuant to
Article VIII hereof, all payments received by the Agent hereunder in respect of
any principal of or interest
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on the Obligations or any other amounts payable by the Company hereunder shall
be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to Sections 2.12, 3.02(f),
3.03, 3.04, 10.06 and 10.12 hereof;
(b) amounts due to the Agent pursuant to Section 9.11 hereof;
(c) payments of interest, to be applied in accordance with Section
2.09 hereof;
(d) payments of principal, to be applied in accordance with Section
2.09 hereof;
(e) payments of all other amounts due under this Agreement, if any,
to be applied in accordance with each Lender's pro rata share of all
principal due to the Lenders.
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ARTICLE IX
THE AGENT
9.01 APPOINTMENT. Each Lender (including NationsBank in its capacity as
maker of Swing Line Loans and as an issuer of the Letters of Credit and BofA as
an issuer of the Letters of Credit) hereby irrevocably designates and appoints
NationsBank as the Agent of the Lenders under this Agreement, and each of the
Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are expressly delegated to
the Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent.
9.02 ATTORNEYS-IN-FACT. The Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The
Agent shall not be responsible for the gross negligence or willful misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.
9.03 LIMITATION ON LIABILITY. Neither the Agent nor any of its officers,
directors, employees, agents or attorneys-in-fact shall be liable to the Lenders
for any action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement except for its or their own gross negligence or
willful misconduct. Neither the Agent nor any of its affiliates shall be
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Company, any of its Subsidiaries, or
any officer thereof contained in this Agreement or in any of the other Loan
Documents, or in any certificate, report, statement or other document referred
to or provided for in or received by the Agent under or in connection with this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any of the other Loan Documents, or for any
failure of the Company to perform its obligations thereunder. The Agent shall
not be under any obligation to any of the Lenders to ascertain or to inquire as
to the observance or performance of any of the terms, covenants or conditions of
this Agreement or any of the other Loan Documents on the part of the Company or
to inspect the properties, books or records of the Company or its Subsidiaries.
9.04 RELIANCE. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing,
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resolution, notice, consent certificate, affidavit, letter, cablegram, telegram,
telecopy or telex message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent accountants
and other experts selected by the Agent. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless an Assignment shall
have been filed with and accepted by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first receive advice or concurrence of the Lenders or the Required
Lenders as provided in this Agreement or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all present and future holders
of the Notes.
9.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender, the Authorized Officer or the
Company or any of the Subsidiaries referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.06 NO REPRESENTATIONS. Each Lender expressly acknowledges that neither
the Agent nor any of its affiliates has made any representations or warranties
to it and that no act by the Agent hereafter taken, including any review of the
affairs of the Company or any of its Subsidiaries, shall be deemed to constitute
any representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
financial condition, creditworthiness, affairs, status and nature of the Company
and its Subsidiaries and made its own decision to enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at
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the time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and to make such investigation
as it deems necessary to inform itself as to the status and affairs, financial
or otherwise, of the Company and its Subsidiaries. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Agent hereunder, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Company or any of its Subsidiaries which
may come into the possession of the Agent or any of its affiliates.
9.07 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Company or any of its
Subsidiaries and without limiting any obligations of the Company or any of its
Subsidiaries so to do), ratably according to the respective principal amount of
the Notes held by them (or, if no Notes are outstanding, ratably in accordance
with their respective Applicable Commitment Percentages as then in effect) from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time (including without limitation at any
time following the payment of the Note) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other document contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Obligations and
the termination of this Agreement.
9.08 LENDER. The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Company and
its Subsidiaries as though it were not the Agent hereunder. With respect to its
Loans made or renewed by it and any Note issued to it, the Agent shall have the
same rights and powers under this Agreement as any Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity.
9.09 RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint a successor Agent for the
Lenders, which shall be a commercial bank organized under the laws of the United
States or any state thereof, having a combined surplus and capital of not less
than $500,000,000, whereupon such successor Agent shall succeed to the rights,
powers and duties of the former Agent and the obligations of the former
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Agent shall be terminated and cancelled, without any other or further act or
deed on the part of such former Agent or any of the parties to this Agreement;
PROVIDED, if the Required Lenders cannot agree as to a successor Agent within
ninety (90) days after such resignation, the Agent shall appoint a successor
Agent and the parties hereto agree to execute whatever documents are necessary
to effect such action under this Agreement or any other document executed
pursuant to this Agreement; PROVIDED, however, in such event all provisions of
this Agreement and the Loan Documents, shall remain in full force and effect.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. In the event
NationsBank shall cease to act as Agent hereunder NationsBank, at its option,
shall not be obligated to make Swing Line Loans or issue Letters of Credit
hereunder.
9.10 SHARING OF PAYMENTS, ETC. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than any
payment pursuant to Article IV) which results in its receiving more than its pro
rata share of the aggregate payments with respect to all of the Obligations
(other than any payment pursuant to Article IV), then (A) such Lender shall be
deemed to have simultaneously purchased from the other Lenders a share in their
Obligations so that the amount of the Obligations held by each of the Lenders
shall be pro rata and (B) such other adjustments shall be made from time to time
as shall be equitable to insure that the Lenders share such payments ratably;
PROVIDED, however, that for purposes of this Section 9.10 the term "pro rata"
shall be determined with respect to both the Revolving Loan Commitment of each
Lender and to the Total Revolving Loan Commitments after subtraction in each
case of amounts, if any, by which any such Lender has not funded its share of
the outstanding Loans and Reimbursement Obligations. If all or any portion of
any such excess payment is thereafter recovered from the Lender which received
the same, the purchase provided in this Section 9.10 shall be rescinded to the
extent of such recovery, without interest. The Company expressly consents to
the foregoing arrangements and agrees that each Lender so purchasing a portion
of the other Lenders' Obligations may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or counterclaim) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
9.11 FEES. The Company agrees to pay to the Agent, for its individual
account, an annual Agent's fee in such amount as shall be agreed to from time to
time, such fee to be paid in quarterly installments in advance on the last day
of each December, March, June and September, the first such installment to be
paid on the first such date next following there being more than one Lender
party to this Agreement.
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ARTICLE X
MISCELLANEOUS
10.01 ASSIGNMENTS AND PARTICIPATION.
(a) At any time after the Closing Date each Lender may, with the prior
consent of the Agent and the Company (which consents shall not be unreasonably
withheld), assign to one or more banks or financial institutions all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Note payable to its order); PROVIDED, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all of the assigning Lender's rights and obligations (including Loans and
Participation) under this Agreement (ii) for each assignment involving the
issuance and transfer of a Note, the assigning Lender shall execute an
Assignment and Acceptance and the Company hereby consents to execute replacement
Notes to give effect to the assignment, (iii) the minimum Revolving Loan
Commitment which shall be assigned is $2,000,000 (together with which the
assigning Lender's applicable portion of Participation and the Letter of Credit
Commitment shall also be assigned) and (iv) such assignee shall have an office
located in the United States, provided, that an assignment by NationsBank shall
not include any portion of the Swing Line. Upon such execution, delivery,
approval and acceptance, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder or under such Note have
been assigned or negotiated to it pursuant to such Assignment and Acceptance
have the rights and obligations of a Lender hereunder and a holder of such Note
and (y) the assignor thereunder shall, to the extent that rights and obligations
hereunder or under such Note have been assigned or negotiated by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. No assignee shall have the right to further
assign its rights and obligations pursuant to this Section 10.01. Any Lender
who makes an assignment shall pay to the Agent a one-time administrative fee of
$5,000.00.
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) the assignment made under
such Assignment and Acceptance is made under such Assignment and Acceptance
without recourse; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Company or any Subsidiary or the performance or observance by the Company or any
Subsidiary of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements delivered pursuant to
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Section 7.20(a) and (b) and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement, the Note and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender and a
holder of such Note.
(c) The Agent shall maintain at its address referred to herein a copy of
each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to the Company.
(e) Each Lender may sell participations to one or more banks or other
entities as to all or a portion of its rights and obligations under this
Agreement; PROVIDED, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any Note issued to it for the purpose of this
Agreement, (iv) such participation shall be in a minimum amount of $1,000,000
and shall include an allocable portion of such Lender's Participation, and (v)
the Company, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement; PROVIDED, that the participation agreement between a
Lender and its participants may provide that such Lender will obtain the
approval of such participant prior to such Lender's agreeing to any amendment or
waiver of any provisions of this Agreement which would (A) extend the maturity
of the Note, (B) reduce the interest rate hereunder, (C) increase the Revolving
Loan Commitment of the Lender granting the participation, and (vi) the sale of
any such participation which require Company to file a registration statement
with the United States Securities and Exchange Commission or under the
securities regulations or laws of any state shall not be permitted.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, any Lender may assign all or any portion of its rights and
obligations under the Loan Documents and the Notes to any affiliate of such
Lender, and any Lender may pledge all or any portion of its
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interest under the Loan Documents and the Notes to the Board as security for
obligations of such Lender to the Board, without the consent of the Company, the
Agent or any other Lender and without the payment of the administrative fee
referred to in Section 10.01(a).
10.02 NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy, telegram or telex (where
the receipt of such message is verified by return) expressly provided for
hereunder, when received at such telephone, telecopy or telex number as may from
time to time be specified in written or verbal notice to the other parties
hereto or otherwise received), or if sent prepaid by certified or registered
mail return receipt requested on the third Business Day after the day on which
mailed, addressed to such party at said address:
(a) if to the Company:
The Wackenhut Corporation
1500 San Remo Avenue
Coral Gables, Florida 33146
Attention: James P. Rowan
with a copy to Chief Financial Officer or Treasurer
at the same address.
(b) if to an Authorized Officer:
at the address set forth for
receipt of notices in the
notice of appointment thereof.
(c) if to the Agent:
NationsBank of Florida, National
Association
150 S.E. Third Avenue
Miami, Florida 33131
Attention: Corporate Banking Department
(d) if to NationsBank in its capacity as issuer of the
Letters of Credit:
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NationsBank of Florida, National
Association
c/o NationsBank of North Carolina, N.A.
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: International
Letter of Credit Department
NC 1007-09-02
(e) if to Bank of America in its capacity as issuer of the
Letters of Credit:
Bank of America Illinois
20 West Jackson, 17th Floor
Chicago, Illinois 60697
Attention: Phil Kelly
Re: Wackenhut Titania
(f) if to the Lenders:
At the addresses set forth on the signature pages hereof and on the
signature page of each Assignment and Acceptance.
10.03 NO WAIVER. No failure or delay on the part of the Agent or any
Lender in the exercise of any right, power or privilege hereunder shall operate
as a waiver of any such right, power or privilege nor shall any such failure or
delay preclude any other or further exercise thereof. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
provided by law.
10.04 SETOFF. The Company agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Company upon all deposits or deposit
accounts, of any kind, or any interest in any deposits or deposit accounts
thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of the Agent or
such Lender (other than for safekeeping) for any purpose for the account or
benefit of the Company and including any balance of any deposit account or of
any credit of the Company with the Agent or such Lender, whether now existing or
hereafter established, hereby authorizing the Agent and each Lender at any time
or times with or without prior notice to apply such balances or any part thereof
to such of the Obligations of the Company to the Lenders then past due and in
such amounts as they may elect, and whether or not the responsibility of other
Persons primarily, secondarily or otherwise liable may be deemed adequate. For
the purposes of this paragraph, all remittances and property shall be deemed to
be in the possession of the Agent or such Lender as soon as the same may be put
in transit to it by mail or carrier or by other bailee.
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10.05 SURVIVAL. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lenders of the Loans and the
expiration of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of the Obligations remain outstanding or any Lender has
any commitment hereunder. Whenever in this Agreement, any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Company which are contained in this Agreement and the Notes
shall inure to the benefit of the successors and permitted assigns of the
Lenders or any of them.
10.06 EXPENSES. The Company agrees (a) to pay or reimburse the Agent for
all its reasonable and customary out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, this Agreement or any of the other
Loan Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable and customary fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and the
Lenders for all their costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the Notes, the
Guaranty Agreements and the Letter of Credit Account Agreement, including
without limitation, the reasonable fees and disbursements of their counsel
(including allocated cost of in-house counsel), (c) to pay, indemnify and hold
the Agent and the Lenders harmless from any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any failure to
pay or delay in paying, documentary, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, and (d) to pay, indemnify, and hold the Agent and the Lenders
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement or in any respect
relating to the transactions contemplated hereby or thereby, (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED, HOWEVER, that the
Company shall have no obligation hereunder with respect to indemnified
liabilities arising from (i) the willful misconduct or gross negligence of the
party seeking indemnification, (ii) legal proceedings commenced against the
Agent or any Lender by any security holder or creditor thereof arising out of
and based upon rights afforded any such security holder or creditor solely in
its capacity as such, (iii) any taxes imposed upon the Agent or any Lender other
than the documentary, stamp, excise and similar taxes described in clause (c)
above or any tax resulting from any
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Regulatory Change, which tax would be payable to Lenders by Company pursuant to
Article IV hereof, (iv) taxes imposed as a result of a transfer or assignment of
any Note, participation or assignment of a portion of its rights or (v) any
taxes imposed upon any transferee of any Note. The agreements in this
subsection shall survive repayment of the Notes and all other Obligations
hereunder.
10.07 AMENDMENTS. No amendment, modification or waiver of any provision
of this Agreement or any of the Loan Documents and no consent by the Lenders to
any departure therefrom by the Company shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Agent, but only
upon having received the written consent of the Required Lenders, and the same
shall then be effective only for the period and on the conditions and for the
specific instances and purposes specified in such writing; PROVIDED, however,
that, no such amendment, modification or waiver
(i) which changes, extends or waives any provision of Section 9.10 or
this Section 10.07, the due date of any scheduled installment of or the
rate of interest payable on any Loan, the definition of Required Lenders,
which increases or extends the Revolving Loan Commitment of any Lender or
which increases or extends the Total Letter of Credit Commitment or which
waives any condition to the making of any Loan (including without
limitation any Swing Line Loan), shall be effective unless in writing and
signed by each of the Lenders; PROVIDED, however, the Required Lenders may
in their sole discretion waive any Default or Event of Default (other than
any Event of Default under Section 8.01(a) or (b)); or
(ii) which affects the rights, privileges, immunities or indemnities
of the Agent, shall be effective unless in writing and signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
10.08 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
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10.09 WAIVERS BY THE COMPANY. In any litigation in any court with respect
to, in connection with, or arising out of this Agreement, the Guaranty
Agreements, the Loans, any of the Notes, any of the Letters of Credit, any of
the other Loan Documents, the Obligations, or any instrument or document
delivered pursuant to this Agreement, or the validity, protection,
interpretation, collection or enforcement thereof, or any other claim or dispute
howsoever arising between the Company and the Lenders or the Agent, (i) the
Company hereby waives the right to interpose any setoff, recoupment,
counterclaim or cross-claim in connection with any such litigation, irrespective
of the nature of such setoff, recoupment, counter-claim or cross-claim unless
such setoff, recoupment, counter-claim or cross-claim could not, by reason of
any applicable federal or state procedural laws, be interposed, pleaded or
alleged in any other action and (ii) the Company and each Lender and the Agent
hereby waive, to the extent permitted by applicable law, trial by jury in
connection with any such litigation.
10.10 TERMINATION. This Agreement shall continue in full force and effect
until terminated pursuant to the terms hereof; however, the Lenders shall have
the right to terminate this Agreement immediately, at any time, during the
continuance of an Event of Default under Article VIII hereof as provided
therein. The termination of this Agreement shall not affect any rights of the
Company, the Lenders or the Agent or any obligation of the Company, the Lenders
or the Agent, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into or rights created or obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated and the Obligations arising
prior to or after such termination have been irrevocably paid in full. Upon the
termination of this Agreement, all Obligations (including, without limitation,
the Loans and the Reimbursement Obligations) shall be due and payable without
notice or demand. The security interests, liens and rights granted to the Agent
for the benefit of the Lenders hereunder and under the other Loan Documents
shall continue in full force and effect, notwithstanding the termination of this
Agreement, until all of the Obligations have been paid in full after the
termination hereof or the Company has furnished the Lenders and the Agent with
an indemnification satisfactory to the Agent and each Lender with respect
thereto. All representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing, if
after receipt of any payment of all or any part of the Obligations, any Lender
is for any reason compelled to surrender such payment to any Person because such
payment is determined to be void or voidable as a preference, impermissible
setoff, a diversion of trust funds or for any other reason, this Agreement shall
continue in full force and the Company shall be liable to, and shall indemnify
and hold such Lender harmless for, the amount of such payment surrendered until
such Lender shall have been finally and irrevocably paid in full.
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The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lenders in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lenders' rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
10.11 GOVERNING LAW. ALL DOCUMENTS EXECUTED PURSUANT TO THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT AND EACH OF
THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND JUDICIAL
DECISIONS OF THE STATE OF FLORIDA. THE COMPANY HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF FLORIDA FOR THE
PURPOSES OF RESOLVING DISPUTES HEREUNDER OR FOR THE PURPOSES OF COLLECTION.
10.12 INDEMNIFICATION. In consideration of the execution and delivery of
this Agreement by the Agent and each Lender and the extension of the Revolving
Loan Commitments and Swing Line, the Company hereby indemnifies, exonerates and
holds the Agent and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or supported by any
Letter of Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the release by the Company or any of its
Subsidiaries of any Hazardous Material; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Company or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Company or
such Subsidiary,
80
<PAGE>
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
10.13 AGREEMENT CONTROLS. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any term of this Agreement,
the terms and provisions of this Agreement shall control.
81
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
WITNESS: THE WACKENHUT CORPORATION
_______________________
By /s/ Terry P. Mayotte
_______________________ ----------------------------
Name: Terry P. Mayotte
Title: Assistant Treasurer
82
<PAGE>
NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION, as Agent for the Lenders
By /s/ John Miller
------------------------------
Name: John Miller
Title: Vice President
NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION
By /s/ John Miller
------------------------------
Name: John Miller
Title: Vice President
Lending Office:
150 S.E. Third Avenue
Miami, Florida 33131
Wire Transfer Instructions:
NationsBank of Florida, National
Association
Tampa, Florida
ABA# 063100277
Reference: The Wackenhut Corporation
Attention:
Specialized Loan Support
Account # 109360-4025
83
<PAGE>
BANK OF AMERICA ILLINOIS
By________________________________
Name:_____________________________
Title:____________________________
Lending Office:
231 S. LaSalle
Chicago, Illinois 60697
Wire Transfer Instructions:
Bank of America Illinois
Chicago, Illinois
ABA# 071000039
Reference: Wackenhut
Attention: Sharon Young, Loan Division
Account # 6570083
84
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EXHIBIT A
APPLICABLE COMMITMENT PERCENTAGES
Lender Committed Percentage
- ------ --------------------
NationsBank of Florida, 50.00%
National Association
Bank of America Illinois 50.00%
------
100.00%
85
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
DATED _________________, 19_____
Reference is made to the Revolving Credit and Reimbursement Agreement dated
as of January 5, 1995 (the "Agreement") among The Wackenhut Corporation, a
Florida corporation (the "Company"), the Lenders (as defined in the Agreement)
and NationsBank of Florida, National Association, as Agent for the Lenders
("Agent"). Unless otherwise defined herein, terms defined in the Agreement are
used herein with the same meanings.
___________________________________ (the "Assignor") and _____________
______________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a _______%
interest in and to all of the Assignor's rights and obligations under the
Agreement as of the Effective Date (as defined below), including, without
limitation, such percentage interest in the Assignor's Loan owing to, and
Participation held by, the Assignor on the Effective Date, and the Note held by
the Assignor.
2. The Assignor (i) represents and warrants that, as of the date hereof,
the aggregate outstanding principal amount of the Loan owing to it (without
giving effect to assignments thereof which have not yet become effective) is
$________ and the aggregate principal amount of Letters of Credit in which it is
deemed to have a Participation under this Agreement is $_____________; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Agreement or any of the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement or any of the Loan Documents or any other instrument or
document furnished pursuant thereto; (iv) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of Company
or the performance or observance by the Company of any of its obligations under
the Agreement or any of the Loan Documents or any other instrument or document
furnished pursuant thereto and (v) attaches the Note referred to in paragraph 1
above and requests that the Agent exchange such Note for new Note(s) as follows:
A Note, dated _____________, 19__ in the principal amount of
____________________
1 Specify percentage in no more than 4 decimal points.
86
<PAGE>
$________________, payable to the order of the Assignor, and a Note, dated
____________________________ 19__, in the principal amount of $_________________
payable to the order of the Assignee.
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.17(a) and (b) thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor, or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Agreement; (iii) appoints and authorizes the Agent to take such
actions on its behalf and to exercise such powers under the Loan Documents as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Agreement are required to be performed by the Lender; and (v) specifies as its
address for notices the office set forth beneath its name on the signature pages
hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the execution
of this Assignment and Acceptance, it will be delivered to the Agent for
acceptance and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Agreement and Notes in respect of
the interest assigned hereby (including, without limitation, all payments of
principal, interest, commitment fees and letter of credit fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Agreement and the Notes for periods prior to
the Effective Date directly between themselves.
87
<PAGE>
7. This Assignment and Acceptance shall be governed by and construed in
accordance with, the laws of the State of Florida.
[NAME OF ASSIGNOR]
By:____________________________________
Name:
Title:
Notice Address:________________________
________________________
________________________
After the Effective Date
Outstanding Revolving Loans:$______
[NAME OF ASSIGNEE]
By:____________________________________
Name:
Title:
Notice Address:________________________
________________________
________________________
After the Effective Date
Outstanding Revolving Loans:$_____
Accepted this ____ day of _______, 19___
NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION, as Agent
By:_________________________________________
Name:
Title:
Consented to this _____ day
of _______________, 199_.
THE WACKENHUT CORPORATION
By:_________________________
88
<PAGE>
EXHIBIT C
NOTICE OF APPOINTMENT (OR REVOCATION) OF AUTHORIZED
OFFICER
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement, dated as of January 5, 1995 (the "Agreement") among NATIONSBANK OF
FLORIDA, NATIONAL ASSOCIATION, as Agent for certain Lenders signatory thereto,
such Lenders, and THE WACKENHUT CORPORATION (the "Company"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Company hereby nominates, constitutes and appoints each individual
named below as an Authorized Officer under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's corporate office (to which
such individual has been duly elected or appointed), a genuine specimen
signature of such individual and an address for the giving of notice, and (ii)
each such individual has been duly authorized by the Company to act as
Authorized Officer thereunder:
Name and Address Corporate Office Specimen Signature
___________________
__________________ ___________________
___________________
__________________ ___________________
___________________
__________________ ___________________
___________________
__________________ ___________________
___________________
__________________ ___________________
___________________
Company hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Officer.
This the ___ day of __________________, 19__.
WITNESS: THE WACKENHUT CORPORATION
_________________________ By_______________________________
_________________________ Title____________________________
<PAGE>
EXHIBIT D-1
BORROWING NOTICE (LOAN)
(SECTION 2.04)
To: NationsBank of Florida,
National Association, as Agent
150 S.E. Third Avenue
Miami, Florida 33131
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement, dated as of January 5, 1995, (the "Agreement") among NATIONSBANK OF
FLORIDA, NATIONAL ASSOCIATION, as Agent for certain Lenders signatory thereto,
such Lenders and THE WACKENHUT CORPORATION. Capitalized terms used but not
defined herein shall have the respective meanings therefor set forth in the
Agreement.
The Company through its Authorized Officer hereby confirms its prior notice
of borrowing given to the Agent by telephone on ____________, 19__ to the effect
that Revolving Loans or conversions of Revolving Loans of the type and amount
set forth below be made on the date indicated by deposit of such amount to the
Company's Account:
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ------------ --------- --------- ---------------
Base
Loan _____
Fixed CD
Loan _____
LIBOR Loan _____
_______________________
(1) For any Fixed CD Loan 30, 60, 90 or 180 days and for any LIBOR Loan, one,
two, three or six months.
(2) (i) If a Base Loan, in an amount equal to $300,000 or any integral multiple
thereof, (ii) if a Fixed CD Loan or LIBOR Loan, in a minimum amount of
$300,000 or, if greater, in additional amounts which are integral multiples
of $300,000 in excess thereof.
(3) At least two (2) Business Days after date of telephonic notice if a Fixed
CD Loan and three (3) LIBOR Business Days if a LIBOR Loan; may be same
Business Day in the case of Base Loans.
90
<PAGE>
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in the Agreement
(other than those expressly stated to refer to a particular date) are true and
correct as of the date hereof except that the reference to the financial
statements in Section 6.03 thereof are to those financial statements most
recently delivered to you pursuant to Section 7.17 of the Agreement (it being
understood that any financial statements delivered pursuant to Section 7.17(a)
have not been certified by independent public accountants).
This the ___ day of ____________, 19__.
THE WACKENHUT CORPORATION
By: _______________________________
Authorized Officer
91
<PAGE>
EXHIBIT D-2
FORM OF BORROWING NOTICE--SWING LINE LOANS
To: NationsBank of Florida, National Association
150 S.E. Third Avenue
Miami, Florida 33131
Telefacsimile: 305-___-____
Attention: Corporate Banking Department
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of January 5, 1995 (the "Agreement") among the Wackenhut
Corporation (the "Company"), the Lenders (as defined in the Agreement), and
NationsBank of Florida, National Association, as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Company through its Authorized Representative hereby confirms its prior
notice of borrowing given to the Agent by telephone on _____________, 199_ to
the effect that Swing Line Loans in the amount set forth below be made on the
date indicated by deposit of such amount to the Company's Account:
Aggregate
Amount (1) Date of Loan
------ ------------
________________
(1) Must be an integral multiple of $50,000.
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in the Loan Documents
(other than those expressly stated to refer to a particular date) are true and
correct in all material respects as of the date hereof as if made on and as of
the date hereof except that the reference to the financial statements in Section
6.03 thereof are to those financial statements most recently delivered to you
pursuant to Section 7.17 of the Agreement (it being understood that any
financial statements delivered pursuant to Section 7.17(a) have not been
certified by independent public accountants).
92
<PAGE>
3. After giving effect to Loans requested hereby, (i) the principal
amount of outstanding Loans plus Outstanding Letters of Credit will not exceed
the Total Revolving Loan Commitment and (ii) Swing Line Outstandings will not
exceed $10,000,000.
THE WACKENHUT CORPORATION
By:____________________________________
Authorized Officer
93
<PAGE>
EXHIBIT E
FORM OF NOTE
_______________(1) [____________, ___________](2)
_______________, 199__
FOR VALUE RECEIVED, THE WACKENHUT CORPORATION, a Florida corporation having
its principal place of business located in Coral Gables, Florida (the
"Company"), hereby promises to pay to the order of
___________________________________(3) (the "Lender"), in its individual
capacity, at the office of NationsBank of Florida, National Association, as
agent for the Lender (the "Agent"), located at 150 Southeast Third Avenue,
Miami, Florida 33131 (or at such other place or places as the Agent may
designate) at the times set forth in the Revolving Credit and Reimbursement
Agreement dated as of January 5, 1995 among the Company, the financial
institutions parties thereto as lenders (collectively, the "Lenders") and the
Agent (as the same may be amended, modified or restated from time to time, the
"Agreement" -- all capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement), in lawful money of the United
States of America, in immediately available funds, the principal amount of
[______________________________________________](4) DOLLARS
($__________)(1) or, if less than such principal amount, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender to the Company
pursuant to the Agreement on the Revolving Credit Termination Date or such
earlier date as may be required pursuant to the terms of the Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates provided in Article II of
the Agreement.
_______________________________
1 Insert Lender's pro rata share of Total Revolving Commitment in
arabic numerals.
2 Insert name of city of Lender's Principal Office.
3 Insert name of Lender in capital letters
4 Insert Lender's pro rata share of Total Revolving Loan
Commitment in words.
94
<PAGE>
If payment of all sums due hereunder is accelerated under the
terms of the Agreement or under the terms of the other Loan Documents executed
in connection with the Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on demand
at a rate two percent (2%) per annum in excess of the rate at which interest was
payable on such amount under the Agreement immediately preceding the date of
such acceleration or the maximum rate permitted under applicable law, if lower,
until such principal and interest have been paid in full. Further, in the event
of such acceleration, this Note, and all other indebtedness of the Company to
the Lender shall become immediately due and payable, without presentation,
demand, protest or notice of any kind, all of which are hereby waived by the
Company.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Company agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees, and interest
thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360 day year for the
actual number of days in the interest period.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
95
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be made, executed
and delivered by its duly authorized officer as of the date and year first above
written, all pursuant to authority duly granted.
WITNESS: THE WACKENHUT CORPORATION
_________________________ By________________________________
Title____________________________
_________________________
96
<PAGE>
EXHIBIT F
[Reserved]
97
<PAGE>
EXHIBIT G-1
OPINION OF VICE PRESIDENT AND LEGAL COUNSEL
(SECTION 5.01)
See attached.
98
<PAGE>
[WACKENHUT LETTERHEAD]
January 5, 1995
NationsBank of Florida, N.A. and
NationsBank of Florida, N.A. as Agent
for the Lenders under the Credit Agreement
Bank of America Illinois
c/o NationsBank of Florida, N.A.
150 Southeast Third Avenue
Miami, Florida 33131
RE: $60,000,000 REVOLVING CREDIT FACILITY
MADE AVAILABLE BY NATIONSBANK OF FLORIDA, N.A. AND
BANK OF AMERICA, ILLINOIS
TO THE WACKENHUT CORPORATION, A FLORIDA CORPORATION
Ladies and Gentlemen:
I am Vice President, General Counsel and Assistant Secretary for The Wackenhut
Corporation, a Florida corporation and this letter is given in connection with
the negotiation, execution and delivery of that certain Revolving Credit and
Reimbursement Agreement, dated January 5, 1995 (the "Agreement") by and among
the Company, NationsBank of Florida, N.A. as Agent, and NationsBank of Florida,
N.A. and Bank of America, Illinois (the "Lenders").
In so acting, I have examined and relied upon originals (or copies thereof
certified to our satisfaction) of (i) the Letter of Credit and the Notes; and
(ii) such corporate and other documents, records and papers and certificates of
public officials and of officers of the Company as we deemed relevant and
necessary in order to give the opinions hereinafter set forth.
This letter is delivered to you pursuant to Section 5.01(b) of the Agreement in
connection with the conditions precedent to the Lenders making the initial
Advance and issuing the Letter of Credit. All capitalized terms used herein and
not otherwise defined have the meaning ascribed to them in the Agreement.
Based upon the foregoing and subject to the comments, assumptions, exceptions,
qualifications and limitations set forth herein, we are of the opinion that:
<PAGE>
page 2
1. Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the corporate
power and authority to own its properties and to carry on its business as
presently conducted by it in the state of its incorporation and other
jurisdictions where it does business.
2. Company has the corporate power to execute and deliver the Loan Documents
to which it is a party and to perform thereunder. The execution, delivery and
performance by Company of the Loan Documents has been duly authorized by all
requisite corporate action and the same will not violate any provision of the
Articles of Incorporation or the By-laws of Company, or, to the best of our
knowledge, (i) any applicable law of the State of Florida or of any local
jurisdiction within the State of Florida, (ii) any applicable law of the United
States, or (iii) any order of any court or governmental agency binding upon such
Company.
3. The following officers of Company are duly authorized and empowered to
execute and deliver the Loan Documents on behalf of Company:
Name Title
---- -----
Richard R. Wackenhut President
Richard C. DeCook Senior Vice President - Finance and Treasurer
Terry P. Mayotte Assistant Treasurer
Paul N. Brownell Assistant Treasurer
James P. Rowan Vice President & Assistant Secretary
Timothy J. Howard Vice President & Assistant Secretary
4. The execution, delivery and performance by Company of the Loan Documents
will not, (i) violate the terms of any instrument, document or agreement to
which Company is a party or by which it or any of its property is bound or (ii)
be in conflict with, result in a breach of or constitute (with giving of notice
and/or lapse of time, or both) a default under any such instrument, document or
agreement, or (iii) result in the creation or imposition of any lien upon any of
the property or assets of Company.
5. The loan Documents have been duly executed and delivered by Company, and,
assuming due authorization, execution and delivery of the Loan Documents by the
other parties thereto, constitute the valid and legally binding obligations of
Company, enforceable in accordance with their respective terms, except that
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting creditors' rights generally from
time to time in effect, and except as such enforceability may be limited by
applicable laws or judicial decisions which may affect the availability of the
remedy of specific performance or the application of equitable principles which
my limit the right of specific performance.
<PAGE>
page 3
6. No consent, license, approval or authorization of any Federal, State of
Florida or local State of Florida governmental authority, bureau or agency is
required in connection with the execution, delivery, performance validity and
enforceability of the Loan Documents which has not been duly obtained on or
prior to the date hereof.
7. To the best of my knowledge, (i) there is no material action, suit or
proceeding at law or in equity by or before any court, governmental
instrumentality or agency now pending or threatened against or affecting the
Company or any property or rights of the Company, and (ii) there are no
judgments, liens, contingent liabilities, claims or counterclaims which might
materially adversely affect the Lender's rights under the Loan Documents.
8. To the best of my knowledge, after due inquiry, the Company is NOT in
default under any document, instrument or agreement to which it is a party or by
which it is bound which might materially adversely affect the Company's rights
under the Loan Documents.
9. To the best of my knowledge, after due inquiry, the Company has NOT
received any notice to the effect that it is not in full compliance with any of
the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations promulgated thereunder, and to the best
of our knowledge, after due inquiry, there exists no event of the type described
in Section 4043 of ERISA, excluding subsections 4043(b)(2) and 4043(b)(3)
thereof.
10. To the best of my knowledge, after due inquiry, the Company is NOT in
violation of any applicable statute, regulation or ordinance of any government
entity or of any agency thereof, which could materially adversely affect the
financial condition or operations of Company.
11. Payment of interest on the Document in the amounts provided for therein
will not result in a violation of the laws of Florida relating to interest or
usury.
This opinion letter has been issued solely for the benefit of the Lender, and
their counsel and no other party or entity shall be entitled to rely hereon
without my express written consent. Without my prior written consent, this
opinion letter may not be quoted in whole or in part or otherwise referred to in
any document or report and may not be furnished to any person or entity other
than successors or assigns of the lender which are institutional investors.
Respectfully submitted,
/s/ J.P. Rowan
-------------------------
J.P. Rowan
Vice President,
General Counsel,
and Assistant Secretary
<PAGE>
EXHIBIT G-2
OPINION OF COUNSEL TO THE GUARANTORS
(SECTION 5.01)
See attached.
99
<PAGE>
[WACKENHUT LETTERHEAD]
January 5, 1995
NationsBank of Florida, N.A. and
NationsBank of Florida, N.A. as Agent
for the Lenders under the Credit Agreement
Bank of America Illinois
c/o NationsBank of Florida, N.A.
150 Southeast Third Avenue
Miami, Florida 33131
RE: $60,000,000 REVOLVING CREDIT FACILITY
MADE AVAILABLE BY NATIONSBANK OF FLORIDA, N.A.
AND BANK OF AMERICA, ILLINOIS
TO THE WACKENHUT CORPORATION, A FLORIDA CORPORATION
Ladies and Gentlemen:
I am Vice President, General Counsel and Assistant Secretary for The Wackenhut
Corporation, a Florida corporation (the "Company") and Counsel to each of the
Guarantors and this letter is given in connection with the negotiation,
execution and delivery of that certain Revolving Credit and Reimbursement
Agreement, dated January 5, 1995 (the "Agreement") by and among the Company,
NationsBank of Florida, N.A. as Agent, and NationsBank of Florida, N.A. and Bank
of America, Illinois (the "Lenders").
In so acting, I have examined and relied upon originals (or copies thereof
certified to our satisfaction) of (i) the Letter of Credit and the Notes; and
(ii) such corporate and other documents, records and papers and certificates of
public officials and of officers of the Company as we deemed relevant and
necessary in order to give the opinions hereinafter set forth.
This letter is delivered to you pursuant to Section 5.01(b) of the Agreement in
connection with the conditions precedent to the Lenders making the initial
Advance and issuing the Letter of Credit. All capitalized terms used herein and
not otherwise defined have the meaning ascribed to them in the Agreement.
Based upon the foregoing and subject to the comments, assumptions, exceptions,
qualifications and limitations set forth herein, we are of the opinion that:
<PAGE>
page 2
1. Each Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has the
corporate power and authority to own its properties and to carry on its business
as presently conducted by it in the state of its incorporation and other
jurisdictions where it does business.
2. Each Guarantor has the corporate power to execute and deliver the Loan
Documents to which it is a party and to perform thereunder. The execution,
delivery and performance by each Guarantor of the Guaranty Agreement has been
duly authorized by all requisite corporate action and the same will not violate
any provision of the Articles of Incorporation or the By-laws of such Guarantor,
or, to the best of our knowledge, (i) any applicable law of the State of Florida
or of any local jurisdiction within the State of Florida, (ii) any applicable
law of the United States, or (iii) any order of any court or governmental agency
binding upon such Guarantor.
3. The following officer of each of the Guarantors is duly authorized and
empowered to execute and deliver the Guaranty Agreement on behalf of each
Guarantor:
Name Title
---- -----
Terry P. Mayotte Assistant Treasurer
4. The execution, delivery and performance by the Guarantors of the Guaranty
Agreement will not, (i) violate the terms of any instrument, document or
agreement to which Company is a party or by which it or any of its property is
bound or (ii) be in conflict with, result in a breach of or constitute (with
giving of notice and/or lapse of time, or both) a default under any such
instrument, document or agreement, or (iii) result in the creation or imposition
of any lien upon any of the property or assets of any Guarantor.
5. Each Guaranty Agreement has been duly executed and delivered by each
Guarantor signatory thereto, and, constitutes the valid and legally binding
obligations of each Guarantor, enforceable in accordance with its respective
terms, except that enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting creditors' rights
generally from time to time in effect, and except as such enforceability may be
limited by applicable laws or judicial decisions which may affect the
availability of the remedy of specific performance or the application of
equitable principles which my limit the right of specific performance.
<PAGE>
page 3
6. No consent, license, approval or authorization of any Federal, State of
Florida or local State of Florida governmental authority, bureau or agency is
required in connection with the execution, delivery, performance validity and
enforceability of the Loan Documents which has not been duly obtained on or
prior to the date hereof.
7. To the best of my knowledge, (i) there is no material action, suit or
proceeding at law or in equity by or before any court, governmental
instrumentality or agency now pending or threatened against or affecting any
Guarantor or any property or rights of any Guarantor, and (ii) there are no
judgments, liens, contingent liabilities, claims or counterclaims which might
materially adversely affect the Lender's rights under the Guaranty Agreement.
8. To the best of my knowledge, after due inquiry, no Guarantor is in default
under any document, instrument or agreement to which it is a party or by which
it is bound.
9. To the best of my knowledge, after due inquiry, no Guarantor has received
any notice to the effect that it is not in full compliance with any of the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations promulgated thereunder, and to the best of our
knowledge, after due inquiry, there exists no event of the type described in
Section 4043 of ERISA, excluding subsections 4043(b)(2) and 4043(b)(3) thereof.
10. To the best of my knowledge, after due inquiry, no Guarantor is in
violation of any applicable statute, regulation or ordinance of any government
entity or of any agency thereof, which could materially adversely affect the
financial condition or operations of such Guarantor.
Very truly yours,
/s/ J. P. Rowan
----------------------------------
J.P. Rowan
Vice President, General Counsel, &
Assistant Secretary
<PAGE>
EXHIBIT H
FORM OF GUARANTY AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of January __, 1995 (the
"Guaranty"), is made by _____________________, ____________________ (the
"Guarantor"), to the parties named in Section 1 hereof. Except as otherwise
defined herein, terms used herein defined in the Revolving Credit and
Reimbursement Agreement referred to below shall be used herein as so defined.
W I T N E S S E T H:
--------------------
WHEREAS, The Wackenhut Corporation, a Florida corporation (the "Borrower"),
the banks party thereto (the "Lenders"), and NationsBank of Florida, National
Association, as Agent (in such capacity and together with any successor agent in
such capacity, the "Agent") have entered into a Revolving Credit and
Reimbursement Agreement dated as of January 5, 1995 (as at any time amended,
modified or restated, the "Credit Agreement"); and
WHEREAS, the Guarantor is a Subsidiary of the Borrower and has been or may
be provided with advances from the Borrower or other working capital made
available directly or indirectly by the Lenders under the Credit Agreement, and
has thereby materially benefitted or will materially benefit from the loans made
to the Borrower pursuant to the Credit Agreement; and
WHEREAS, pursuant to the terms of the Credit Agreement the Guarantor is
required to deliver this Guaranty;
NOW, THEREFORE, in consideration of the premises, the Guarantor hereby
agrees as follows:
1. GUARANTY AND SURETY. The Guarantor does hereby absolutely and
unconditionally for the benefit of the Agent and the Lenders (collectively, the
"Beneficiaries"), guarantee and become surety for the full and timely payment
when due (whether by acceleration or otherwise) (including amounts which, but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code (or any successor statute), would become due) of:
A. All Obligations as defined in the Credit Agreement; and
B. all other indebtedness, obligations and liabilities of the
Borrower under written financing arrangements stated by the Guarantor and each
of the Beneficiaries to be guaranteed hereby;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, extended,
renewed, replaced, refinanced or restructured,
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whether or not from time to time decreased or extinguished and later increased,
created or incurred (all indebtedness, obligations and liabilities of the
Borrower described in this Section 1 are collectively referred to as the
"Guarantied Obligations"); PROVIDED, HOWEVER, that the liability of the
Guarantor with respect to the Guarantied Obligations shall not exceed at any
time the Maximum Amount (as hereinafter defined). The "Maximum Amount" means
the greater of (X) the aggregate amount of all advances to or investments in the
Guarantor made directly or indirectly with the proceeds of Loans under the
Credit Agreement or (Y) 95% of (a) the fair salable value of the assets of such
Guarantor as of the date hereof minus (b) the total liabilities of the Guarantor
(including contingent liabilities, but excluding liabilities of the Guarantor
under this Guaranty and the other Loan Documents executed by the Guarantor) as
of the date hereof; PROVIDED FURTHER, HOWEVER, that if the calculation of the
Maximum Amount in the manner provided above as of the date payment is required
of the Guarantor pursuant to this Guaranty would result in a greater positive
number, then the Maximum Amount shall be deemed to be such greater positive
number.
2. GUARANTY OF PAYMENT. This is a guaranty of payment and not merely of
collection. In the event of any default by the original obligor in payment or
otherwise on any of the Guarantied Obligations, the Guarantor will pay all or
any portion of the Guarantied Obligations due or thereafter becoming due,
whether by acceleration or otherwise, without offset of any kind whatsoever,
without any Beneficiary first being required to make demand upon the original
obligor or pursue any of its rights against the original obligor, or against any
other Person, including other guarantors (whether or not party to this
Guaranty); and without being required to liquidate or to realize on any
collateral security. In any right of action accruing to any Beneficiary, such
Beneficiary may elect to proceed against (a) the Guarantor together with the
original obligor or obligors; (b) the Guarantor and the original obligor or
obligors individually; or (c) the Guarantor only without having first commenced
any action against the original obligor or obligors.
3. RIGHT TO DEAL WITH GUARANTIED OBLIGATIONS. Subject to the terms and
conditions of the Credit Agreement, any Beneficiary, without notice to
Guarantor, may deal with any Guarantied Obligations and any collateral security
therefor in such manner as it may deem advisable and may renew or extend the
Guarantied Obligations or any part thereof; accept partial payment, or settle,
release, compound, or compromise the same; demand additional collateral security
therefor, and substitute or release the same; and may compromise or settle with
or release and discharge from liability any other guarantor of any Guarantied
Obligation, or any other Person liable to such Beneficiary for all or any
portion of the obligations of any original obligor; all without impairing the
liability of the Guarantor hereunder.
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4. OTHER WAIVERS. Guarantor hereby unconditionally waives with respect to
this Guaranty: (a) notice of acceptance of this Guaranty by any Beneficiary and
any notice of the incurring by the Borrower of any Guarantied Obligation; (b)
presentment for payment, protest, notice of protest and notice of dishonor to
any party including the Borrower or the Guarantor; (c) any disability of the
original obligor or obligors or defense available to the original obligor or
obligors, including absence or cessation of any original obligor's liability for
any reason whatsoever; (d) any defense or circumstances which might otherwise
constitute a legal or equitable discharge of a guarantor or surety; and (e) all
rights under any state or federal statute dealing with or affecting the rights
of creditors.
5. SUBORDINATION. Until the Guarantied Obligations are paid in full and
no Beneficiary is under any further obligation to lend or extend funds or credit
which would constitute Guarantied Obligations, Guarantor hereby unconditionally
subordinates all present and future debts, liabilities or obligations of the
original obligor to such Guarantor to the Guarantied Obligations, and all
amounts due under such debts, liabilities, or obligations shall, upon the
occurrence and during the continuance of an Event of Default, be collected and
paid over forthwith to the Beneficiaries on account of the Guarantied
Obligations and, pending such payment, shall be held by the Guarantor as agent
and bailee of the Beneficiaries separate and apart from all other funds,
property and accounts of the Guarantor. Guarantor, at the request of any
Beneficiary, shall execute such further documents in favor of such Beneficiary
to further evidence and support the purpose of this Section 5. Guarantor hereby
irrevocably waives and releases any right or rights of subrogation or
contribution existing at law, by contract or otherwise to recover all or any
portion of any payment made hereunder from the Borrower or any other guarantor.
6. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to the
Beneficiaries that: (a) no other agreement, representation or special condition
exists between the Guarantor and any Beneficiary regarding the liability of the
Guarantor under this Guaranty; nor does any understanding exist between the
Guarantor and any Beneficiary that the obligations of the Guarantor under this
Guaranty are or will be other than as set out herein; and (b) as of the date
hereof, the Guarantor has no defense whatsoever to any action or proceeding that
may be brought to enforce this Guaranty. Furthermore, the Guarantor affirms to
the Beneficiaries that each of the representations and warranties contained in
the Credit Agreement and made by the Borrower with respect to the Guarantor is
true and correct.
7. NO WAIVER BY BENEFICIARIES. No failure or delay on the part of any
Beneficiary in exercising any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof, or
the exercise of
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any other right, power or privilege. Failure by any Beneficiary to insist upon
strict performance hereof shall not constitute a relinquishment of its right to
demand strict performance at another time. Receipt by any Beneficiary of any
payment by any person on any GuaraSubordination. Until the Guarantied
Obligations are paid in full and no Beneficiary is under any further obligation
to lend or extend funds or credit which would constitute Guarantied Obligation,
with knowledge of a default on any Guarantied Obligation or of a breach of this
Guaranty, or both, shall not be construed as a waiver of the default or breach.
8. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING
GUARANTY AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL
GUARANTIED OBLIGATIONS SHALL HAVE BEEN INDEFEASIBLY PAID IN FULL (OTHER THAN
GUARANTIED OBLIGATIONS IN THE NATURE OF CONTINUING INDEMNITIES OR EXPENSE
REIMBURSEMENT OBLIGATIONS NOT YET DUE AND PAYABLE) AND NO BENEFICIARY SHALL BE
UNDER ANY FURTHER OBLIGATION TO LEND OR TO ADVANCE FUNDS TO THE ACCOUNT OF THE
BORROWER CONSTITUTING GUARANTIED OBLIGATIONS.
9. BENEFITS OF AGREEMENT. This Guaranty is freely assignable and
transferable by the Beneficiaries to any permitted assignee and transferee of
any Guarantied Obligation; however, the duties and obligations of the Guarantor
may not be delegated or transferred by the Guarantor without the written consent
of all Beneficiaries. The rights and privileges of the Beneficiaries shall
inure to the benefit of their respective successors and assigns, and the duties
and obligations of the Guarantors shall bind their respective successors and
assigns.
10. EXPENSES; INDEMNITY. The Guarantor will upon demand pay to each
Beneficiary the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
it may reasonably incur in connection with enforcement of this Guaranty or the
failure by the Guarantor to perform or observe any of the provisions hereof.
The Guarantor agrees to indemnify and hold harmless each Beneficiary from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, growing out
of or resulting from this Guaranty or the exercise by any Beneficiary of any
right or remedy granted to it hereunder or under the other Loan Documents, other
than such items arising out of the bad faith, gross negligence or willful
misconduct on the part of such Beneficiary or an officer, co-officer, director,
co-director, employee, co-employee, agent or co-agent thereof or breach of this
Agreement by such Beneficiary or an officer, co-officer, director, co-director,
employee, co-employee, agent or co-agent thereof. If and to the extent that the
obligations of the Guarantor under this Section 10 are unenforceable for any
reason, the Guarantor hereby agree to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
11. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Guaranty or consent to any departure by the Guarantor herefrom
shall in any event be effective unless the
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same shall be in writing and signed by the Guarantor and the Agent (which
execution by Agent shall be evidence that Agent has received the consent thereto
of the Lenders required to effect such amendment or waiver), and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no such amendment,
waiver or consent shall (a) deprive any Beneficiary of the benefits generally of
this Guaranty without the written consent of such Beneficiary, or (b) alter the
provisions of this Section 11 without the written consent of all of the
Beneficiaries.
12. ADDRESSES FOR NOTICES. All notices and other communications provided
for hereunder shall be in writing (including telecopy communication) and shall
be sent by registered or certified mail, return receipt requested, or first
class express mail or overnight courier, or by telecopy, in all cases with
charges prepaid, and shall be effective when delivered against a receipt
therefor or when telecopy transmission is confirmed, as the case may be. All
notices shall be sent to the applicable party at the address stated on the
signature page hereof or in accordance with the last unrevoked written direction
from such party to the other parties hereto.
13. INTERPRETATION; PARTIAL INVALIDITY. Whenever possible each provision
of this Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
14. MISCELLANEOUS; REMEDIES CUMULATIVE. Unless the context of this
Guaranty otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole and "or" has the
inclusive meaning represented by the phrase "and/or." The section headings used
herein are for convenience of reference only and shall not define, limit or
extend the provisions of this Guaranty. All remedies hereunder are cumulative
and are not exclusive of any other rights and remedies of the Beneficiaries
provided by law or under the Credit Agreement, the other Loan Documents, or
other applicable agreements or instruments. The making of the Loans to the
Borrower and the issuance of Letters of Credit pursuant to the Credit Agreement
shall be presumed conclusively to have been made, extended or issued,
respectively, in reliance upon the obligations of the Guarantor incurred
pursuant to this Guaranty.
14. GOVERNING LAW. This Guaranty shall in all respects be governed by the
internal substantive laws of the State of Florida without regard to its choice
of law principles. Guarantor hereby (i) submits to the jurisdiction and venue
of the state and federal courts of Florida for the purposes of resolving
disputes hereunder or under any of the other Loan Documents to which it is a
party or
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for the purpose of collection and (ii) to the maximum extent permitted by
applicable law, waives trial by jury in connection with any such litigation.
15. REPAYMENT OR RECOVERY. If claim is ever made upon any Beneficiary for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guarantied Obligations and any of the Beneficiaries repays all or
part of said amount by reason of (a) any judgment, decree or order of any court
or administrative body having jurisdiction over such payee or any of its
property, or (b) any settlement or compromise of any such claim effected by such
Beneficiary with any such claimant (including the original obligor), then and in
such event the Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon it, notwithstanding any
revocation hereof or the cancellation of any Revolving Note or other instrument
evidencing any Guarantied Obligation or any security therefor, and the Guarantor
shall be and remain liable to the aforesaid Beneficiary for the amount so repaid
or recovered to the same extent as if such amount had never originally been
received by any such Beneficiary.
17. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (as defined in the
Credit Agreement), Guarantor agrees that each Beneficiary shall have a lien for
all the liabilities of the Guarantor upon all deposits or deposit accounts, of
any kind, or any interest in any deposits or deposit accounts thereof, now or
hereafter pledged, mortgaged, transferred or assigned to such Beneficiary or
otherwise in the possession or control of such Beneficiary (other than for
safekeeping) for any purpose for the account or benefit of the Guarantor and
including any balance of any deposit account or of any credit of the Guarantor
with such Beneficiary, whether now existing or hereafter established, hereby
authorizing each Beneficiary at any time or times with or without prior notice
to apply such balances or any part thereof to such of the liabilities of the
Guarantor to such Beneficiary then past due and in such amounts as they may
elect, and whether or not the collateral or the responsibility of other Persons
primarily, secondarily or otherwise liable may be deemed adequate. For the
purposes of this Section 17, all remittances and property shall be deemed to be
in the possession of such Beneficiary as soon as the same may be put in transit
to it by mail or carrier or by other bailee.
18. CREDIT AGREEMENT CONTROLS. In the event that any term of this
Guaranty or of any other Loan Document (other than the Credit Agreement)
conflicts with any term of the Credit Agreement, then the term of the Credit
Agreement shall control.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officers hereunto duly authorized as of the date
first above written.
WITNESS: __________________________
_______________________ By:________________________________
Name:______________________________
_______________________ Title:_____________________________
Address: _________________________
_________________________
_________________________
_________________________
Telephone No. _____________________
Telefacsimile No. _________________
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EXHIBIT I
COVENANT COMPLIANCE CERTIFICATE
NationsBank of Florida, National Association
as Agent
NationsBank Plaza
150 S.E. Third Avenue
Miami, Florida 33131
Attention: Corporate Banking Department
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of January 5, 1995 (the "Agreement") among The Wackenhut
Corporation (the "Company"), the Lenders (as defined in the Agreement) and
NationsBank of Florida, National Association, as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement. The undersigned, a
duly authorized and acting Authorized Officer, hereby certifies to you as of
__________ [insert Determination Date] as follows:
1. Calculations:
A. Compliance with Section 7.06: Net Worth
1. Paid in capital + retained income $________
2. Aggregate amount of reserves, treasury
stock, contra-equity accounts and asset
value write ups $________
3. A.1 - A.2 $________
4. A.3 adjusted for cumulative effect of
foreign exchange valuations $________
5. $60,000,000 - Atrium sale reserve, but
not less than $55,000,000 $_________
6. Consolidated Net Income since
October 2, 1994 X .25 $_________
7. Net proceeds of sale of Company
stock X .75 $_________
8. Required Consolidated Net Worth
A.5 + A.6 + A.7 $_________
Line A.4 must not be less than Line A.8
B. Compliance with Section 7.07: Indebtedness
1. Consolidated Funded Debt: $__________
2. Consolidated Total Capitalization
B.1 + A.4 $__________
3. B.1 divided by B.2 __________
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4. Outstanding trade receivables subject
to Asset Securitization Facility $__________
5. Additional Indebtedness described in
Section 7.07(vi) $__________
Line B.3 must not exceed .60. Line B.4 must not exceed $50,000,000.
Line B.5 must not exceed $15,000,000.
C. Compliance with Section 7.08: Fixed Charge Ratio
1. Consolidated Net Income $_________
2. Income taxes deducted in arriving
at C.1 $_________
3. Fixed Charges $_________
4. C.1 + C.2 + C.3 $_________
5. Ratio of C.4 to C.3 ___to 1.00
Line C.5 must not be less than 1.75 to 1.00.
D. Compliance with Section 7.09: Trading Asset
Ratio
1. Unencumbered cash, accounts and
receivables $__________
2. Net book value of headquarters $__________
(if applicable)
3. D.1+ D.2 $__________
4. Consolidated Funded Debt $__________
5. Outstanding Letters of Credit $__________
6. Accounts payable $__________
7. D.4 + D.5 + D.6 $__________
8. Ratio of D.3 to D.7 ___ to 1.00
Line B.8 must not be less than 1.15 to 1.00.
E. Compliance with Section 7.11: Restricted Payments
1. Restricted Payments since
December 31, 1989 $_________
2. Consolidated Net Income since
December 31, 1989 X .50 $_________
3. E.2 + $5,000,000 $_________
4. E.3 - E.1 $_________
Line E.4 must be 0 or greater than 0.
F. Compliance with Section 7.20: Loans to WCC
1. Loans and advances to WCC $_________
in current Fiscal Year in
Line F.1 must not exceed $1,500,000.
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2. No Default
A. To the best knowledge of the undersigned, since
__________ (the date of the last similar certification),
(a) the Company has not defaulted in the keeping, observance,
performance or fulfillment of any of the Loan Documents; and (b) no
Default or Event of Default specified in Article IX of the Agreement
has occurred.
B. If a Default or Event of Default has occurred since
__________ (the date of the last similar certification), the Company
proposes to take the following action with respect to such Default or
Event of Default: ___________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________.
(NOTE, if no Default or Event of Default
has occurred, insert "Not Applicable").
3. Additional Subsidiaries
Listed on the Schedule of Additional Persons attached hereto is a true and
correct description of all Subsidiaries in respect of which the Company is
required pursuant to Section 7.19 of the Agreement to deliver or cause to be
delivered a Guaranty Agreement and related documents not later than the date of
this Certificate, and all documents so required to be delivered in respect of
each such Persons are delivered to you simultaneously herewith.
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 7.17 of the
Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
_____________________________________________
Authorized Officer for The Wackenhut
Corporation
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Schedule of Additional Persons to Compliance Certificate
___________________, 199__
[Insert Applicable Determination Date]
[Provide for each Subsidiary listed the same
information furnished on Schedule 6.01 of the
Agreement in respect of Subsidiaries]
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SCHEDULE 1.01
EXISTING L/C's
BENEFICIARY ISSUER L/C NUMBER AMOUNT
----------- ------ ---------- ------
National Union Fire Bank of America 7197986 $29,816,997
Insurance Company of
Pittsburgh
National Union Fire NationsBank of 16383 $9,354,917
Insurance Company of Florida, N.A.
Pittsburgh
Credit Lyonnais Credit Lyonnais 940112/S895 (A$)3,500,000
Australia Limited 920611/S55 (A$)500,000
(Australian dollars) 930890/5506 (A$)1000,000
The Aetna Casualty and NationsBank of 16231 $1,090,084
Insurance Company Florida, N.A.
County of San Joaquin, NationsBank of 16393 $250,000
California Florida, N.A.
Thai Farmers Bank NationsBank of 40078 $39,200
Florida, N.A.
Wackenhut Education NationsBank of 40508 $47,000
Services (Gainesville) Florida, N.A.
Wackenhut Mozambique NationsBank of 40644 $3,551
Florida, N.A.
Texas Youth Commission NationsBank of 40750 $656,256
Florida, N.A.
Wackenhut Security NationsBank of 40925 $165,337
Hellas Greece Florida, N.A.
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SCHEDULE 6.01
SUBSIDIARIES OF THE COMPANY
Percentage of
Voting Stock
Owned by
Jurisdiction of Company and each
Name of Subsidiary Incorporation other Subsidiary
------------------ --------------- ----------------
* Wackenhut Services, Incorporated Florida 100%
* Wackenhut International, Incorporated Florida 100%
American Guard and Alert, Incorporated Alaska 100%
* Wackenhut Corrections Corporation Florida 73.3%
Wackenhut Airline Services, Inc. Florida 100%
Wackenhut Education Services, Inc. Florida 100%
* Titania Insurance Company of Vermont 100%
America
Tuhneklan, Inc. Delaware 100%
Subsidiaries of Wackenhut International, Incorporated
-----------------------------------------------------
Wackenhut Liberia Incorporated Liberia 55%
Wackenhut Dominicana, S.A. Dominican Republic 90%
Wackenhut Del Ecuador, S.A. Ecuador 90%
Wackenhut El Salvador, S.A. El Salvador 70%
Wackenhut De Honduras, S.A. Honduras 80%
Wackenhut S.A. Costa Rica 66.7%
Peruana De Seguridad y Vigilancia, S.A. Peru 70%
Wackenhut Paraguay S.R.L. Paraguay 55%
Wackenhut Belize Ltd. Belize 100%
Wackenhut Central Europe GMBH Federal Republic 100%
of Germany
Wackenhut of Canada Limited Canada 100%
Wackenhut Du Quebec Quebec 100%
Protection Securite Detek Ltee. Quebec 100%
Wackenhut U K Limited United Kingdom 100%
Advanced Security Technology, Ltd. United Kingdom 100%
Wackenhut Investigations Limited United Kingdom 100%
Wackenhut Appointments Limited United Kingdom 100%
Wackenhut Puerto Rico Puerto Rico 100%
* Material Restricted Subsidiary
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SCHEDULE 6.04
DESCRIPTION DEBT OF THE COMPANY AND ITS SUBSIDIARIES
1. FUNDED DEBT OF THE COMPANY AND ITS SUBSIDIARIES
DESCRIPTION AMOUNT
----------- ------
* Revolving credit agreement to provide working
capital and support a letter of credit facility,
expires in December, 1994 (various rates). $20,450,000
* First mortgage note on the Headquarters Building
matures on May 30, 1995. Quarterly payments of
$182,500 commenced March 30, 1992. Several rate
options for the borrowings at prime rate or lower. $16,060,000
2. CURRENT DEBT OF THE COMPANY AND ITS SUBSIDIARIES:
Revolving credit line for start-up and working
capital for a correctional facility in Australia.
Both lines expire in February, 1995 and are fully
secured by L/C's issued by the lender's parent
bank (various rates). ($A)1,500,000
3. CAPITALIZED LEASES OF THE COMPANY AND ITS SUBSIDIARIES:
None
* Funded debt which will be paid off from use of the new "Receivables
Purchase Agreement".
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SCHEDULE 6.04
DESCRIPTION DEBT OF THE COMPANY AND ITS SUBSIDIARIES
(CONTINUED)
4. LETTERS OF CREDIT OUTSTANDING:
Beneficiary Issuer L/C Number Amount
----------- ------ ---------- ------
National Union Fire Bank of America 7197986 $29,816,997
Insurance Company of
Pittsburgh
National Union Fire NationsBank of 16383 $ 9,354,917
Insurance Company of Florida, N.A.
Pittsburgh
Credit Lyonnais Credit Lyonnais 940112/S895 (A$)3,500,000
Australia Limited 920611/S55 (A$)500.000
(Australia dollars) 9309901/5506 (A$)1,000,000
The Aetna Casualty and NationsBank of 16231 $1,090,084
Insurance Company Florida, N.A.
County of San Joaquin, NationsBank of 16393 $250,000
California Florida, N.A.
Thai Farmers Bank NationsBank of 40078 $39,200
Florida, N.A.
Wackenhut Education NationsBank of 40508 $47,000
Services (Gainesville) Florida, N.A.
Wackenhut Mozambique NationsBank of 40644 $3,551
Florida, N.A.
Texas Youth Commission NationsBank of 40750 $656,256
Florida, N.A.
Wackenhut Security NationsBank of 40925 $165,337
Hellas Greece Florida, N.A.
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SCHEDULE 6.06
-------------
LITIGATION
----------
Except for ordinary routine AND NON-MATERIAL litigation incidental to the
Company's business, there are no pending material legal proceedings to which the
Company or any of its subsidiaries is a party or of which any of their property
is subject, except as follows:
The Company, in conjunction with its primary and excess insurance carriers,
contributed funds to create a pool to settle an underlying $4,500,000 judgement
against the Company for which all of the insurance carriers dispute
responsibility. It is the opinion of management, after consultation with
outside counsel, that it is more likely than not that the judgement would be the
responsibility of the insurance carriers. While there can be no absolute
assurance that the reserve provided by the Company is adequate, management
believes it has made its best estimate of the potential exposure to the Company
in this matter.
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SCHEDULE 7.10
EXISTING LIENS
An existing lien is the first mortgage note on the Headquarters building owned
by The Atrium at Coral Gables, Ltd. due on May 30, 1995, which will be paid off
from the use of this new credit facility.
116
<PAGE>
LETTER OF CREDIT ACCOUNT AGREEMENT
This LETTER OF CREDIT ACCOUNT AGREEMENT (the "Agreement") is dated as of
January , 1995, and made between THE WACKENHUT CORPORATION, a Florida
corporation ("Pledgor"), and NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION
("NationsBank"), as collateral agent for an representative of (in such capacity
herein and together with any successors in such capacity, the "Agent") the
financial institutions (the "Lenders") party to the Credit Agreement (as
hereinafter defined).
RECITALS
WHEREAS, the Lenders and NationsBank, as Agent for the Lenders, have
entered into a Revolving Credit and Reimbursement Agreement dated as of January
, 1995, with Pledgor (said Credit Agreement, as it may hereafter be amended and
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and in effect, hereinafter referred to as the "Credit
Agreement");
WHEREAS, as a condition precedent to the Lenders' obligations to make the
Loans and to issue Letters of Credit, Pledgor is required to execute and deliver
to NationsBank a copy of this Agreement on or before the Effective Time;
NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions and covenants contained herein, Pledgor and Agent hereby agree as
follows:
Section 1. Agreement shall have the following meanings:
"COLLATERAL" means (a) all funds from time to time on deposit in the LC
Account; (b) all Investments and all certificates and instruments from time to
time representing of evidencing such Investments; (c) all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by Agent for or on behalf of Pledgor in substitution for
or in addition to any or all of the Collateral described in clause (a) or (b)
above; (d) all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Collateral described in clause (a), (b) or (c)
above; and (e) to the extent not covered by clauses (a) through (d) above, all
proceeds of any or all of the foregoing Collateral.
"EFFECTIVE TIME" means the Closing Date as defined in the Credit Agreement.
"INVESTMENTS" means those investments, if any, made by the Agent pursuant
to Section 5 hereof.
"LC ACCOUNT" means the cash collateral account established and maintained
pursuant to Section 2 hereof.
<PAGE>
"SECURED OBLIGATIONS" means (i) all obligations of Pledgor now existing or
hereafter arising under or in respect of the Credit Agreement (including,
without limitation, Pledgor's obligations to pay principal and interest and all
other charges, fees, expenses, commissions, reimbursements, indemnities and
other payments related to or in respect of the Obligations contained in the
Credit Agreement) or any documents or agreement related to the Credit Agreement;
and (ii) without duplication, all obligations of Pledgor now or hereafter
existing under or in respect of this Agreement, including, without limitation,
with respect to all charges, fees, expenses, commissions, reimbursements,
indemnities and other payments related to or in respect of the obligations
contained in this Agreement. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Credit Agreement.
Section 2. LC ACCOUNT; CASH COLLATERALIZATION OF LETTERS OF CREDIT.
(i) Agent shall establish and maintain at its offices at 150
Southeast Third Avenue, Miami, Florida 33131, in the name of the Agent and
under the sole dominion and control of the Agent, a cash collateral
account designated as NationsBank/Wackenhut Cash LC Account, Account No.
3601603489.
(ii) In accordance with Article VIII of the Credit Agreement, in the
event that an Event of Default has occurred and is continuing and Pledgor
is required to pay to Agent an amount equal to the maximum amount which may
at any time be drawn under the Letters of Credit, Agent shall, upon receipt
of any such amounts, exercise the remedies set forth in Section 12 hereof
and shall apply the proceeds as provided in Article VIII of the Credit
Agreement. Any such amounts received by Agent pursuant to Section 8.03 (B)
of the Credit Agreement shall be deposited in the Collateral Account. Upon
a drawing under the Letters of Credit in respect of which any amounts
described above have been deposited in the LC Account, Agent shall apply
such amounts to reimburse the appropriate Letter of Credit Issuer or the
Lenders, as the case may be, for the amount of such drawing. In the event
the Letters of Credit are cancelled or expire or in the event of any
reduction in the maximum amount available at any time for drawing under
such Letters of Credit (the "Maximum Available Amount"), Agent shall apply
the amount then in the Collateral Account designated to reimburse the
appropriate Letter of Credit Issuer or the Lenders, as the case may be,
for any drawings under the Letters of Credit less the Maximum Available
Amount immediately after such cancellation, expiration or reduction, if
any, FIRST, to the cash collateralization of the Letters of Credit if
Pledgor has failed to pay all or a portion of the maximum amounts
described above and, SECOND, to the payment in full of the outstanding
Secured Obligations.
2
<PAGE>
(iii) Interest received in respect of Investments of any amounts
deposited in the LC Account pursuant to clause (ii) of this Section 2
shall be delivered by Agent to Pledgor on the last Business Day of each
calendar month or, if earlier, in the case of Investments (x) of any amounts
deposited in the LC Account pursuant to clause (ii), upon cancellation or
expiration of or drawing of the Maximum Available Amount for drawing under
the Letters of Credit, as the case may be, in respect of which such amounts
were so deposited and (y) of any amounts deposited in the LC Account
pursuant to clause (ii), upon payment of the tax liability in respect of
which such amounts were so deposited; PROVIDED, HOWEVER, that the Agent
shall not deliver to Pledgor any such interest received in respect of
Investments of any amounts deposited in the LC Account pursuant to this
Section 2 if an Event of Default has occurred and is continuing or unless
all outstanding Secured Obligations have been indefeasibly paid in full
in cash.
Section 3. PLEDGE; SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby pledges
to Agent, a first priority lien and security interest in, the Collateral, as
collateral security for the prompt payment in full when due, whether at stated
maturity, by acceleration or otherwise (including, without limitation, the
payment of interest and other amounts which would accrue and become due but foe
the filing of a petition in bankruptcy or the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code), of all Secured Obligations.
Section 4. DELIVERY OF COLLATERAL. All certificates of instruments, if any,
representing or evidencing the Collateral shall be delivered to and held by the
Agent pursuant hereto and shall be a suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Agent. In the
event any Collateral is not evidenced by a certificate, a notation, reflecting
title in the name of the Agent or the security interest of the Agent, shall be
made in the records of the issuer of such Collateral or in such other
appropriate records as the Agent may require, all in form and substance
reasonably satisfactory to the Agent. The Agent shall have the right, at any
time and without notice to the Company, to transfer to or to register in the
name of the Agent or any of its nominees any or all of the Collateral. In
addition, the Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
Section 5. INVESTING OF THE AMOUNTS IN THE LC ACCOUNT; AMOUNTS HELD BY THE
AGENT. Cash held by the Agent in the LC Account shall not be invested or
reinvested except as provided in this Section 5.
(i) Except as otherwise provided in Section 12 hereof, any funds on
deposit in the LC Account shall be invested by
3
<PAGE>
the Agent so long as no Default or Event of Default shall have
occurred and be continuing, in cash equivalents; provided that such
investment can be effected and maintained without the lapse or termination
of the Agent's perfected, first priority security interest therein.
(ii) The Agent is hereby authorized to sell and shall sell, all or
any designated part of the Collateral (A) so long as no Default or Event of
Default shall have occurred and be continuing, upon the receipt of
appropriate written instructions from Pledgor or (B) in any event if such
sale is necessary to permit the Agent to perform its duties hereunder or
under the Credit Agreement. The Agent shall have no responsibility for any
loss in the value of the Collateral resulting from a fluctuation in
interest rates or otherwise. Any interest on securities constituting part
of the Collateral and the net proceeds of the sale or payment of any such
securities shall be held in the LC Account by the Agent.
Section 6. REPRESENTATIONS AND WARRANTIES. In addition to its
representations and warranties made pursuant to Article VI of the Credit
Agreement, Pledgor represents and warrants to the Agent, as the agent for the
Lenders, that the following statements are true, correct and complete:
(i) The Pledgor will be the legal and beneficial owner of the
Collateral free and clear of any Lien except for the lien and security
interest created by this Agreement;
(ii) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations.
Section 7. FURTHER ASSURANCES. Pledgor agrees that at any time and from
time to time, at its expense, it will promptly execute and deliver to the Agent
any further instruments and documents, and take any further actions, that may be
necessary or that the Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.
Section 8. TRANSFERS AND OTHER LIENS. Pledgor agrees that it will not (a)
sell or otherwise dispose of any of the Collateral, or (b) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for the
lien and security interest created by this Agreement.
Section 9. THE AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby appoints
the Agent as its attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in the
Agent's reasonable
4
<PAGE>
discretion to take any action and to execute any instrument which the Agent may
reasonable deem necessary or advisable to accomplish the purposes of the
Agreement, including, without limitations, to receive, endorse and collect all
instruments made payable to Pledgor representing any payment, dividend, or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same. In performing its functions and duties under this
Agreement, the Agent shall act solely as the agent of the Lenders and the Agent
has not assumed nor shall be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Pledgor.
Section 10. THE AGENT MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, after notice to Pledgor, the Agent may itself
perform, or cause performance of, such agreement and the expenses of the Agent
incurred in connection therewith shall be payable by Pledgor under Section 13
hereof.
Section 11. STANDARD OF CARE; NO RESPONSIBILITY FOR CERTAIN MATTERS. In
dealing with the Collateral in its possession, the Agent shall exercise the same
care which it would exercise in dealing with its own property of a similar
nature, but it shall not be responsible for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters, (b) taking any steps to preserve rights against
any parties with respect to any Collateral (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the
Collateral), (c) the collection of any proceeds, (d) any loss resulting from
Investments made pursuant to Section 5 hereof, or (e) determining (x) the
correctness of any statement or calculation made by Pledgor in any written or
telex (tested or otherwise) instructions, or (y) whether any deposit in the LC
Account is proper.
Section 12. REMEDIES UPON DEFAULT; APPLICATION OF PROCEEDS. If any Event
of Default shall have occurred and be continuing:
(i) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "Code") as in effect in the State of
Florida at that time, and the Agent may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange or broker's board or at any of the
Agent's offices or elsewhere, for cash, on credit for future delivery, and
at such price or prices, and upon such other terms as the Agent may deem
commercially reasonable. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute
5
<PAGE>
reasonable notification. The Agent shall not be obligated to make any sale
of the Collateral regardless of notice of sale having been given. The Agent
may adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(ii) Subject to the provisions of Section 2(ii) hereof, any cash
held by the Agent as Collateral and all cash proceeds received by the Agent
in respect of any sale of, collection from, or other realization upon all
or part of the Collateral shall be applied (after payment of any amounts
payable to the Agent pursuant to Section 13 hereof) by the Agent to pay the
Secured Obligations. Any surplus of such cash or cash proceeds held by the
Agent and remaining after payment in full of all Secured Obligations shall
be paid over to Pledgor or to whomsoever may be lawfully entitled to
receive such surplus.
Section 13. EXPENSES. In addition to any payments of expenses of
Collateral Agent pursuant to Section 10.06 of the Credit Agreement, Pledgor
agrees to pay promptly to the Agent all the costs and expenses which the Agent
may incur in connections with (a) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, (b) the
exercise or enforcement of any of the rights of the Agent hereunder, or (c) the
failure by Pledgor to perform or observe any of the provision hereof.
Section 14. NO DELAY'S WAIVER, ETC. No delay or failure on the part of the
Agent in exercising, and no course of dealing with respect to, any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by the Agent of any power or right hereunder preclude other or
further exercise thereof of the exercise of any other power or right. The
remedies herein provided are to the fullest extent permitted by law cumulative
and are not exclusive of any remedies provided by law.
Section 15. AMENDMENTS, ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure by
Pledgor therefrom, shall in any event be effective without the written
concurrence of the Agent.
Section 16. NOTICES. Except as otherwise specifically provided herein, all
notices which are to be sent to Pledgor or Collateral Agent shall be given in
accordance with the Credit Agreement.
Section 17. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement
shall create a continuing security interest in the Collateral and shall (a)
remain in full force and effect until all Secured Obligations (other than
Secured Obligations in the nature of continuing indemnities or expense
reimbursement obligations not
6
<PAGE>
yet due and payable) shall have been indefeasibly paid in full in cash, the
Commitments of the Lenders to make any Loan under the Credit Agreement shall
have expired and the Letters of Credit shall have expired, (b) be binding upon
Pledgor, its successors and assigns, and (c) inure to the benefit of the Agent,
the Lenders and their respective successors, transferees and assigns. Without
limiting the generally of the foregoing clause (c) and subject to the provisions
of Section 10.01 of the Credit Agreement, any Lender may assign or otherwise
transfer any Note held by it to any other person or entity, and such other
person or entity shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise. Upon the indefeasible
payment in full in cash of the Secured Obligations (other than Secured
Obligations in the nature of continuing indemnities or expense reimbursement
obligations not yet due and payable) and the cancellation or expiration of the
Letters of Credit and termination or expiration of all Commitments, Pledgor
shall be entitled to the return, upon its request and at its expense, of such of
the Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
Section 18. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
FLORIDA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF FLORIDA. UNLESS OTHERWISE DEFINED
HEREIN OR IN THE CREDIT AGREEMENT, TERMS DEFINED IN ARTICLE 9 OF THE CODE ARE
USED HEREIN AS THEREIN DEFINED.
Section 19. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF FLORIDA AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGEMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT SUBJECT TO RIGHT OF
APPEAL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
Section 20. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party and all covenants, promises, and agreements
by or on behalf of Pledgor or by and on behalf of the Agent shall bind and inure
to the benefit of the successors and assigns of Pledgor, the Agent and the
Lenders.
7
<PAGE>
Section 21. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the different parties on separate counterparts
and each such counterpart shall for all purposes be deemed an original, but all
such counterparts shall together constitute but one and the same Agreement.
Pledgor and the Agent hereby acknowledge receipt of a true, correct, and
complete counterpart of this Agreement.
Section 22. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 23. HEADINGS. The section headings in this Agreement are inserted
for convenience of reference and shall not be considered a part of this
Agreement or used in its interpretation.
8
<PAGE>
IN WITNESS WHEREOF, Pledgor and the Agent have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
WITNESS: THE WACKENHUT CORPORATION
- ---------------------------- ---------------------------------------
By:
------------------------------------
Title:
---------------------------------
- ----------------------------
NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION, as Agent
---------------------------------------
By:
------------------------------------
Title:
Vice President
----------------
9
<PAGE>
NationsBank of Florida, National Association
150 S.E. Third Avenue
Miami, Florida 33131
Attention: John Miller January ,1995
Re: Revolving Credit and Letter of Credit Facility for the Wackenhut
Corporation (the "Facilities") pursuant to Revolving Credit and Reimbursement
Agreement dated as of January , 1995 (the "Credit Agreement")
Ladies and Gentlemen:
In connection with your execution and delivery of the Credit Agreement and
the extension of the Facilities to us thereunder, we reaffirm our agreement to
pay, in addition to all fees described in the Credit Agreement (all capitalized
terms not defined herein shall have the respective meanings therefor provided in
the Credit Agreement), the following fees:
1. An upfront fee payable to the Agent for the ratable benefit of
the Lenders as of the Closing Date in an amount equal to .05% (5 basis
points) of the Total Revolving Loan Commitment, of $30,000, payable to you
in full on the Closing Date; and
2. An annual Agent fee, payable to the Agent for its own account, of
$10,000, such annual fee to be payable as provided in Section 9.11 of the
Credit Agreement.
WITNESS: THE WACKENHUT CORPORATION
- ---------------------------- By:
------------------------------------
Title:
- ---------------------------- ---------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale
Agreement to be executed by their respective officers thereunto duly authorized.
as of the date first above written.
THE WACKENHUT CORPORATION
as Initial Purchaser
By:
------------------------------------
Title: Assistant Treasurer
---------------------------------
1500 San Romo Avenue
Coral Gables, Florida 33146
Attention:
-----------------------------
Telephone:
-----------------------------
Facsimile:
-----------------------------
WACKENHUT AIRLINES SERVICES, INC.
as an Originator
By:
------------------------------------
Title: Assistant Treasurer
---------------------------------
1500 San Romo Avenue
Coral Gables, Florida 33146
Attention:
-----------------------------
Telephone:
-----------------------------
Facsimile:
-----------------------------
24
<PAGE>
EXHIBIT 4(b)
RECEIVABLES PURCHASE AGREEMENT
Dated as of January 5, 1995
Among
THE WACKENHUT CORPORATION
as Seller
---------
and
RECEIVABLES CAPITAL CORPORATION
and
ENTERPRISE FUNDING CORPORATION
each as a Purchaser
-------------------
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
and
NATIONSBANK OF NORTH CAROLINA, N.A.
each as a Managing Agent
------------------------
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as the Administrative Agent
----------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE COMMITMENT. . . . . . . . . . . . .2
SECTION 1.01. Commitment . . . . . . . . . . . . . . . . .2
SECTION 1.02. Purchase and Reinvestment Limits . . . . . .2
SECTION 1.03. Making Purchases from Seller . . . . . . . .3
SECTION 1.04. Number of Undivided Interests. . . . . . . .3
SECTION 1.05. Commitment Termination Date. . . . . . . . .3
SECTION 1.06. Purchase Termination Date. . . . . . . . . .4
SECTION 1.07. Voluntary Termination of Commitment or
Reduction of Maximum Purchase Limit. . . . .5
SECTION 1.08. Limitation of Ownership Interest . . . . . .5
SECTION 1.09. Special Undivided Interests. . . . . . . . .5
SECTION 1.10. Benefits of Agreement. . . . . . . . . . . .5
ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE . . . . . .6
SECTION 2.01. Undivided Interest . . . . . . . . . . . . .6
SECTION 2.02. Purchaser's Investment . . . . . . . . . . .7
SECTION 2.03. Net Pool Balance . . . . . . . . . . . . . .9
SECTION 2.04. Shares . . . . . . . . . . . . . . . . . . 10
ARTICLE III
SETTLEMENTS . . . . . . . . . . . . 11
SECTION 3.01. Non-Run Off Settlement Procedures for
Collections. . . . . . . . . . . . . . . . 11
SECTION 3.02. Run Off Settlement Procedures for
Collections. . . . . . . . . . . . . . . . 12
SECTION 3.03. Special Settlement Procedures; Reduction
of Purchaser's Investment, Etc.. . . . . . 13
SECTION 3.04. Reporting. . . . . . . . . . . . . . . . . 16
SECTION 3.05. Payments and Computations, Etc.. . . . . . 16
SECTION 3.06. Dividing or Combining Undivided Interests. 17
SECTION 3.07. Treatment of Collections and Deemed
Collections. . . . . . . . . . . . . . . . 18
ARTICLE IV
FEES AND YIELD PROTECTION. . . . . . . . . 18
SECTION 4.01. Fees . . . . . . . . . . . . . . . . . . . 18
SECTION 4.02. Yield Protection . . . . . . . . . . . . . 19
ARTICLE V
CONDITIONS OF PURCHASES . . . . . . . . . 21
SECTION 5.01. Conditions Precedent to Initial Purchase . 21
SECTION 5.02. Conditions Precedent to All Purchase
and Reinvestments. . . . . . . . . . . . . 23
SECTION 5.03. Additional Condition Precedent to
Purchases. . . . . . . . . . . . . . . . . 24
-i-
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES. . . . . . . . 24
SECTION 6.01. Representations and Warranties of Seller . 24
ARTICLE VII
GENERAL COVENANTS OF SELLER . . . . . . . . 29
SECTION 7.01. Affirmative Covenants of Seller. . . . . . 29
SECTION 7.02. Reporting Requirements of Seller . . . . . 30
SECTION 7.03. Negative Covenants of Seller . . . . . . . 32
ARTICLE VIII
ADMINISTRATION AND COLLECTION. . . . . . . . 35
SECTION 8.01. Designation of Servicer. . . . . . . . . . 35
SECTION 8.02. Duties of Servicer . . . . . . . . . . . . 36
SECTION 8.03. Rights of the Agents . . . . . . . . . . . 37
SECTION 8.04. Responsibilities of Seller . . . . . . . . 39
SECTION 8.05. Further Action Evidencing Purchases. . . . 39
SECTION 8.06. Application of Collections . . . . . . . . 40
ARTICLE IX
SECURITY INTEREST. . . . . . . . . . . 40
SECTION 9.01. Grant of Security Interest . . . . . . . . 40
SECTION 9.02. Further Assurances . . . . . . . . . . . . 41
SECTION 9.03. Remedies . . . . . . . . . . . . . . . . . 41
ARTICLE X
TERMINATION EVENTS. . . . . . . . . . . 41
SECTION 10.01. Termination Events . . . . . . . . . . . . 41
SECTION 10.02. Remedies . . . . . . . . . . . . . . . . . 43
ARTICLE XI
THE AGENTS. . . . . . . . . . . . . 44
SECTION 11.01. Authorization and Action . . . . . . . . . 44
SECTION 11.02. Agents' Reliance, Etc. . . . . . . . . . . 44
SECTION 11.03. Agents and Affiliates. . . . . . . . . . . 45
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST. . . . . . . 45
SECTION 12.01. Restrictions on Assignments. . . . . . . . 45
SECTION 12.02. Rights of Assignee . . . . . . . . . . . . 46
SECTION 12.03. Authorization of Managing Agent. . . . . . 47
SECTION 12.04. Notice of Assignment . . . . . . . . . . . 47
SECTION 12.05. Evidence of Assignment; Endorsement of
Certificate. . . . . . . . . . . . . . . . 47
SECTION 12.06. Rights of Support Providers . . . . . . . 47
ARTICLE XIII
INDEMNIFICATION . . . . . . . . . . . 48
SECTION 13.01. Indemnities by Seller. . . . . . . . . . . 48
-ii-
<PAGE>
ARTICLE XIV
MISCELLANEOUS. . . . . . . . . . . . 50
SECTION 14.01. Amendments, Etc. . . . . . . . . . . . . . 50
SECTION 14.02. Notices, Etc.. . . . . . . . . . . . . . . 50
SECTION 14.03. No Waiver; Remedies. . . . . . . . . . . . 51
SECTION 14.04. Binding Effect; Survival . . . . . . . . . 51
SECTION 14.05. Costs, Expenses and Taxes. . . . . . . . . 52
SECTION 14.06. No Proceedings . . . . . . . . . . . . . . 52
SECTION 14.07A BofA Program Confidentiality . . . . . . . 52
SECTION 14.07B NationsBank Program Confidentiality . . . 55
SECTION 14.08. Confidentiality of Seller Information. . . 57
SECTION 14.09. Captions and Cross References. . . . . . . 59
SECTION 14.10. Integration. . . . . . . . . . . . . . . . 60
SECTION 14.11. Governing Law. . . . . . . . . . . . . . . 60
SECTION 14.12. Waiver Of Jury Trial . . . . . . . . . . . 60
SECTION 14.13. Consent To Jurisdiction; Waiver
Immunities . . . . . . . . . . . . . . . . 60
SECTION 14.14. Execution in Counterparts. . . . . . . . . 60
SECTION 14.15. Purchasers' Liabilities. . . . . . . . . . 61
SECTION 14.16. Agents' Liabilities. . . . . . . . . . . . 61
SECTION 14.17. Characterization of the Transaction
Contemplated by the Agreement. . . . . . . 61
APPENDICES
APPENDIX A Definitions
APPENDIX B Calculation of Discount and Reserve
SCHEDULES
SCHEDULE 2.03(b) Special Concentration Limit Certificate
SCHEDULE 6.01(i) Description of Material Adverse Changes
SCHEDULE 6.01(j) Description of Litigation
SCHEDULE 6.01(n) List of Offices of Seller where Records Are
Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(w) Tradenames
SCHEDULE A-1 Description of Agent's Credit and Collection
Policy
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EXHIBITS
EXHIBIT 3.04(a) Form of Periodic Report
EXHIBIT 5.01(a) Form of Certificate of Assignments
EXHIBIT 5.01(h) Form of Lock-Box Agreement
EXHIBIT 5.01(i) Form of Opinion of Counsel for Seller
EXHIBIT 5.01(j) Form of Opinion of Counsel for Agent
EXHIBIT 5.01(o) Form of Purchase and Sale Agreement
EXHIBIT 12.05 Form of Assignment (for assignment to third
party)
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RECEIVABLES PURCHASE AGREEMENT
Dated as of January 5, 1995
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among THE WACKENHUT CORPORATION
("WACKENHUT"), a Florida corporation ("SELLER"), RECEIVABLES CAPITAL CORPORATION
("RCC") and each of their respective successors and assignees, a Delaware
corporation, ENTERPRISE FUNDING CORPORATION, a Delaware corporation
("ENTERPRISE"; and together with RCC, the "PURCHASERS" and each individually a
"PURCHASER") and each of their respective successors and assignees, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association
("BOFA"), as agent for RCC, NATIONSBANK OF NORTH CAROLINA, N.A., a national
banking association ("NATIONSBANK") as agent for Enterprise (each in such
capacity as agent for the specified Purchaser, together with its successors and
assigns in each capacity, a "MANAGING AGENT" and together, the "MANAGING
AGENTS") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
administrative agent for the Purchasers and the Managing Agents (in such
capacity, together with its successors and assigns in such capacity, the
"ADMINISTRATIVE AGENT"). Unless otherwise indicated, capitalized terms used in
this Agreement are defined in APPENDIX A.
BACKGROUND
1. Seller has, and expects to have, Pool Receivables generated in the
ordinary course of its business and in the ordinary course of business of one or
more of its wholly-owned subsidiaries a party to that certain Purchase and Sale
Agreement pursuant to which each such subsidiary, each referred to herein as an
Originator, sells such Pool Receivables to Seller. Seller has requested the
Purchasers, and the Purchasers have agreed, subject to the terms and conditions
contained in this Agreement, to purchase undivided interests in such Pool
Receivables, referred to herein as Undivided Interests, from Seller from time to
time during the term of this Agreement.
2. Seller and the Purchasers also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of
such Undivided Interests be reinvested in Pool Receivables through the sale by
Seller to the Purchasers of additional undivided interests in the Pool
Receivables, such daily reinvestment of Collections to be effected by an
automatic daily adjustment to each Purchaser's Undivided Interests, and to be
intended to permit the Purchasers to maintain their Purchaser's Investments
fully invested in uncollected Pool Receivables.
3. BofA has been requested, and is willing, to act as the Administrative
Agent.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE COMMITMENT
SECTION 1.01. COMMITMENT. On the terms and subject to the conditions
set forth in this Agreement (including ARTICLE V):
(a) PURCHASES. Each Purchaser shall severally and not jointly
purchase from Seller Undivided Interests (as defined in SECTION 2.01)
in an amount equal, for each Purchaser, to such Purchaser's Percentage
of each proposed Purchase from time to time during the period from the
date hereof to the Purchase Termination Date. Each such purchase is
herein called a "PURCHASE". Each Purchase shall be in accordance with
SECTION 1.03(b). Under no circumstances shall any Purchaser (x)
purchase Undivided Interests in excess of its Percentage of each
proposed Purchase, (y) Purchase the unfunded portion of any other
Purchaser's portion of any proposed Purchase and (z) be required to
make any Purchase if the other Purchaser shall not then be purchasing
its Percentage of such Purchase (other than to the extent of any
required adjustments pursuant to SECTIONS 1.06 AND 1.09). Under no
circumstances shall Reinvestments be deemed to be Purchases.
(b) REINVESTMENTS. Pursuant to SECTION 3.01, during the period
from the date hereof to the Purchase Termination Date, Servicer shall
cause certain of the Collections in respect of the Undivided Interests
to be applied to the purchase of additional undivided interests in
Pool Receivables, thereby resulting in an appropriate readjustment of
such Undivided Interests. Each such purchase of an additional
undivided interest pursuant to SECTION 3.01 is herein called a
"REINVESTMENT".
The Purchasers' obligation to make such Purchases and Reinvestments is
herein called the "COMMITMENT".
SECTION 1.02. PURCHASE AND REINVESTMENT LIMITS. Under no
circumstances shall a Purchaser make any Purchase or Reinvestment to the
extent that, after giving effect to such Purchase or Reinvestment, as the
case may be:
(a) PURCHASE LIMIT. The Aggregate Total Investments would exceed an
amount (the "PURCHASE LIMIT") equal to the lesser of (x) $40,000,000 as
such amount may be reduced pursuant to SECTION 1.07 (the "MAXIMUM PURCHASE
LIMIT"), and (y) the then Net Pool Balance;
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(b) REQUIRED ALLOCATIONS LIMIT. The Aggregate Required Allocations
would exceed an amount (the "REQUIRED ALLOCATIONS LIMIT") equal to 100% of
the Net Pool Balance (as defined in SECTION 2.03); or
(c) the Aggregate Purchaser's Investments of such Purchaser would
exceed its Percentage of the Aggregate Total Investments.
SECTION 1.03. MAKING PURCHASES FROM SELLER. (a) NOTICE OF PURCHASE.
Each Purchase from Seller shall be made by each Purchaser and shall be made on
notice from Seller to the Administrative Agent received by the Administrative
Agent not later than 11:00 a.m. (New York time) on the Business Day next
preceding the date of such proposed Purchase. If received by 11:00 a.m. (New
York time) the Administrative Agent will notify each Managing Agent by 2:00 p.m.
(New York time) of such proposed Purchase. If received after 11:00 a.m. (New
York time) by the Administrative Agent or after 2:00 p.m. (New York time) by any
Managing Agent such notice shall be deemed provided on the next following
Business Day. Each such notice of a proposed Purchase shall specify the desired
amount and date of such Purchase and the desired duration of the initial Yield
Periods for the resulting Undivided Interests. Each Managing Agent (or, if then
funding, an RCC Program Support Provider, an Enterprise Liquidity Provider or
Enterprise Credit Support Provider, as applicable) shall select the duration of
such initial, and each subsequent, Yield Period with regard to its Purchaser's
Percentage of such Purchase in its discretion; provided that each shall use
reasonable efforts, taking into account market conditions, to accommodate
Seller's preferences.
(b) AMOUNT OF PURCHASE. The amount of each Purchase shall be equal to the
lesser of (x) the amount proposed by Seller pursuant to SECTION 1.03(a) and (y)
the maximum amount permitted for each Purchaser under SECTION 1.02.
(c) FUNDING OF PURCHASE. On the date of each Purchase, each Purchaser
shall, upon satisfaction of the applicable conditions set forth in ARTICLE V,
make available to its Managing Agent at the address of its office set forth on
the signature pages hereto, the amount of its Percentage of such Purchase
(determined pursuant to SECTION 1.03(b)) in same day funds, and each such
Managing Agent will make such funds immediately available to Seller at such
office.
SECTION 1.04. NUMBER OF UNDIVIDED INTERESTS. The number of Undivided
Interests hereunder at any one time, after giving effect to any Purchase,
Reinvestment, division or combination, shall not exceed 8 for each Purchaser.
SECTION 1.05. COMMITMENT TERMINATION DATE. (a) The "COMMITMENT
TERMINATION DATE" shall be the earlier to occur of (i) January 6, 1998 (herein,
as the same may be extended, called the "SCHEDULED COMMITMENT TERMINATION
DATE"), and (ii) the date
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of termination of the Commitment pursuant to Section 1.07 or 10.02.
(b) The then Scheduled Commitment Termination Date may be extended from
time to time beginning with January 6, 1998, on each January 6 from a January 6
to a January 6, by written notice of request given by Seller to each Managing
Agent at least 75 days before such January 6, and written notice of acceptance
given by each Managing Agent to Seller not later than 15 days prior to such
January 6. No such extension shall be effective unless the related Managing
Agent shall provide such notice of acceptance to Seller.
SECTION 1.06. PURCHASE TERMINATION DATE. As to any Purchaser (a) the
"PURCHASE TERMINATION DATE" with respect to such Purchaser shall be the earlier
to occur of (i) the Commitment Termination Date and (ii) the date of termination
of the Commitment with respect to Purchases by such Purchaser pursuant to
SUBSECTIONS (b) OR (c). The occurrence of the Purchase Termination Date as to
one Purchaser shall permit the other Purchaser, in its sole discretion, to deem
the Purchase Termination Date to have occurred with regard to it.
(b) The Commitment shall terminate with respect to Purchases by RCC, and
RCC shall have no obligation to make any further Purchases or Reinvestments
hereunder, on the date of termination of any RCC Program Support Provider
commitment under any RCC Program Support Agreement. RCC agrees to give Seller at
least 30 days' prior written notice (with a copy to the Managing Agent for
Enterprise), unless circumstances shall not permit such 30 days' notice, of the
termination of the Commitment with respect to Purchases by RCC pursuant to the
foregoing sentence, but failure to give or delay in giving such notice shall not
prevent or delay such termination.
(c) The Commitment shall terminate with respect to Purchases by
Enterprise, and Enterprise shall have no obligation to make any further
Purchases or Reinvestments hereunder, on the date of termination of the
commitment of any (i) Enterprise Liquidity Provider under an Enterprise
Liquidity Agreement or (ii) Enterprise Credit Support Provider under an
Enterprise Credit Support Agreement. Enterprise agrees to give Seller (with a
copy to the Managing Agent for RCC) at least 30 days' prior written notice,
unless circumstances shall not permit such 30 days' notice, of the termination
of the Commitment with respect to Purchases by Enterprise pursuant to the
foregoing sentence, but failure to give or delay in giving such notice shall not
prevent or delay such termination.
(d) In the event that the Purchase Termination Date shall have occurred
pursuant to SECTION (a)(ii) above, the Purchase Termination Date shall be deemed
to have occurred solely as to the Purchaser providing notification, unless the
other Purchaser notifies Seller and the Administrative Agent that such Purchaser
also deems the Purchase Termination Date to have occurred with
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respect to it as of the date specified in its notification. The provisions of
Section 3.01 or Section 3.02, as applicable, shall apply with respect to the
terminating Purchaser's Investment until such time as the terminating Purchaser
has received the return of its Aggregate Purchaser's Investments, Earned
Discount thereon and all other amounts due to such Purchaser, at which time the
terminating Purchaser's rights and obligations under this Agreement shall
terminate. In such event the Maximum Purchase Limit shall be deemed to be
reduced by the amount of the terminating Purchaser's Percentage thereof (and in
no event shall exceed $20,000,000) and the remaining Purchaser's Percentage
shall be deemed to be 100%.
SECTION 1.07. VOLUNTARY TERMINATION OF COMMITMENT OR REDUCTION OF
MAXIMUM PURCHASE LIMIT. Seller may, upon at least five Business Days' notice to
each Agent, terminate the Commitment in whole or reduce in part the unused
portion of the Maximum Purchase Limit; PROVIDED, HOWEVER, that (a) each partial
reduction shall be in an amount equal to $5,000,000 or an integral multiple
thereof and (b) after giving effect to such reduction, the remaining Maximum
Purchase Limit will not be less than $20,000,000.
SECTION 1.08. LIMITATION OF OWNERSHIP INTEREST. Nothing in this
Agreement shall be interpreted as providing any Purchaser with an ownership
interest in Receivables that are not Pool Receivables.
SECTION 1.09. SPECIAL UNDIVIDED INTERESTS. Seller shall maintain with
each Purchaser at least one Undivided Interest the related Purchaser's
Investment of which shall be no less than $4,000,000 (unless otherwise agreed by
each Managing Agent) and which shall have a related Yield Period of no more than
35 days ending on the twenty-fourth day of each calendar month (or if such day
is not a Business Day, the next succeeding Business Day) and beginning on the
last day of the previous Yield Period (provided that the first Yield Period
shall begin on the date of the first Purchase hereunder). If on any day the
Undivided Interest required to be maintained with each Purchaser pursuant to
this SECTION 1.09 shall for any reason have a related Purchaser's Investment as
to either such Purchaser of less than $4,000,000, the related Managing Agent for
such Purchaser shall manage the Yield Periods related to such Purchaser's other
Undivided Interests in a manner such that within 60 days of such day the related
Purchaser's Investment of such Undivided Interest required to be maintained
pursuant to this SECTION 1.09 shall again equal $4,000,000.
SECTION 1.10. BENEFITS OF AGREEMENT. Each Purchaser shall be equally
and ratably entitled to the benefits of this Agreement, the other Agreement
Documents and the Receivables Pool, the Related Security and the Collections
without preference, priority or distinction on account of the actual timing of
the filing of any financing statements under the UCC,
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all in accordance with the terms and provisions of this Agreement and the other
Agreement Documents.
ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE
SECTION 2.01. UNDIVIDED INTEREST. (a) DEFINITION AND COMPUTATION OF
UNDIVIDED INTEREST. For purposes of this Agreement, "UNDIVIDED INTEREST" for
each Purchaser means, as the context may require (i) an undivided ownership
interest, in a percentage determined from time to time as provided in CLAUSE
(ii) below, in (A) all then outstanding Pool Receivables, (B) all Related
Security with respect to such Pool Receivables, and (C) all Collections with
respect to, and other proceeds of, such Pool Receivables and Related Security;
and (ii) at any time, the quotient, expressed as a percentage, obtained by
dividing the Required Allocation for such Undivided Interest by the Net Pool
Balance. Each Undivided Interest shall be computed as follows:
UI = RA = PI + DF + DR + LR + SFR
-- -----------------------------------
NPB NPB
WHERE:
UI = the Undivided Interest at any time;
RA = the Required Allocations of such Undivided
Interest at such time, which shall be an amount at
any time equal to the amount of the numerator of
the fraction set forth above;
PI = such Purchaser's Investment of such Undivided
Interest at such time as determined pursuant to
SECTION 2.02;
DF = the Discount Factor of such Undivided Interest at
such time, as determined pursuant to PART I of
APPENDIX B;
DR = the Dilution Reserve of such Undivided Interest at
such time, as determined pursuant to PART II of
APPENDIX B;
LR = the Loss Reserve of such Undivided Interest at
such time, as determined pursuant to PART II of
APPENDIX B;
SFR = the Servicer's Fee Reserve of such Undivided
Interest at such time, as determined pursuant to
PART III of APPENDIX B; and
NPB = the Net Pool Balance at such time, as determined
pursuant to SECTION 2.03.
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The "RELATED" Undivided Interest with respect to any of the foregoing items
shall mean the Undivided Interest as to which such item is calculated.
(b) FREQUENCY OF COMPUTATION OF PURCHASER'S INTEREST. Each Undivided
Interest shall initially be computed as of the opening of business of Servicer
on the date of Purchase of such Undivided Interest from Seller, and such
Undivided Interest shall be recomputed upon receipt of each Periodic Report.
Each Managing Agent on behalf of the related Purchaser may at any time request
Servicer to recompute its Undivided Interests. In addition, until such Undivided
Interest shall be reduced to zero, such Undivided Interest shall be deemed to be
automatically recomputed as of the close of business of Servicer on each day
(other than a day on which an actual recomputation is done), and, as so
recomputed, shall constitute the percentage ownership interest in Pool
Receivables held by Purchaser on such day. Such Undivided Interest shall become
zero at such time as the related Purchaser shall have received the accrued
Earned Discount for such Undivided Interest, shall have recovered the
Purchaser's Investment of such Undivided Interest and shall have received all
other amounts payable to such Purchaser pursuant to this Agreement in respect of
such Undivided Interest and Servicer shall have received the accrued Servicer's
Fee for such Undivided Interest. Such Undivided Interest shall remain constant
from the time as of which any such computation or recomputation is made until
the time as of which the next such recomputation, if any, shall be made.
SECTION 2.02. PURCHASER'S INVESTMENT. (a) Subject to SUBSECTIONS (b)
and (c), the "Purchaser's Investment" of an
Undivided Interest owned by any Purchaser at any time means an
amount equal to
(i) the aggregate of the amounts theretofore paid by the Purchaser
thereof to Seller for the acquisition of such Undivided Interest (A) by
Purchase pursuant to SECTIONS 1.01(a) and 1.03 and (B) by Reinvestments
pursuant to SECTIONS 1.01(b) and 3.01, less
(ii) the aggregate amount of Collections theretofore received and
distributed on account of such Purchaser's Investment pursuant to SECTIONS
3.01 and 3.02.
(b) Solely for purposes of calculating the Earned Discount (and each
component thereof) with respect to a portion of an Undivided Interest initially
owned by RCC or purchased by any RCC Program Support Provider pursuant to RCC's
commitment hereunder pursuant to the PROVISO to the definition of "Earned
Discount" in APPENDIX B:
(i) RCC's "PURCHASER'S INVESTMENT" of any portion of an Undivided
Interest owned by any RCC Program Support Provider (or any assignee
thereof) for RCC or otherwise funded by a Funding for RCC shall be deemed
to be the amount
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paid to RCC by such RCC Program Support Provider as the purchase price of,
or the original principal amount loaned or otherwise funded with respect
to, such portion (less any portion of such purchase price or principal
amount allocable to Earned Discount accrued and unpaid at the time of
assignment or Funding), as reduced from time to time by Collections
received and distributed to such RCC Program Support Provider (or any such
assignee) on account of such Funding (other than any portion allocable to
Earned Discounts pursuant to SECTIONS 3.01 and 3.02 or (without
duplication) by payments by RCC to any such RCC Program Support Provider in
reimbursement of any Funding; and
(ii) RCC's "PURCHASER'S INVESTMENT" of any other portion of an
Undivided Interest shall mean such Purchaser's Investment of such Undivided
Interest less the sum of such Purchaser's Investments of all portions of
such Undivided Interest described in CLAUSES (i) and (ii) above, calculated
in accordance with such CLAUSES (i) and (ii), as applicable.
(c) Solely for purposes of calculating the Earned Discount (and each
component thereof) with respect to a portion of an Undivided Interest purchased
or funded by an Enterprise Liquidity Provider or Enterprise Credit Support
Provider pursuant to the proviso to the definition of "Earned Discount" in
APPENDIX B:
(i) Enterprise's "PURCHASER'S INVESTMENT" of any portion of an
Undivided Interest owned by an Enterprise Liquidity Provider or otherwise
funded pursuant to an Enterprise Liquidity Agreement shall be deemed to be
the amount paid to Enterprise by such Enterprise Liquidity Provider as the
purchase price of, or the original principal amount loaned with respect to,
such portion (less any portion of such purchase price or principal amount
allocable to Earned Discount accrued and unpaid at the time of purchase or
funding by such Enterprise Liquidity Provider), as reduced from time to
time by Collections indefeasibly received and distributed to such
Enterprise Liquidity Provider on account of such purchase price or
principal amount (other than any portion allocable to Earned Discount
pursuant to Sections 3.01 and 3.02 hereof);
(ii) Enterprise's "PURCHASER'S INVESTMENT" of any portion of an
Undivided Interest funded under an Enterprise Credit Support Agreement
shall be deemed to be the principal amount of the advance or drawing under
such Enterprise Credit Support Agreement with respect to such portion (less
the amount, if any, of such advance or drawing used to fund Earned Discount
accrued and unpaid at the time of the making of such advance or drawing),
as reduced by any payments indefeasibly made by Enterprise or the
Enterprise Liquidity Provider to the Enterprise Credit Support Provider in
reimbursement of such drawing or repayment of such advance, as the case may
be (less any amount allocable to such accrued and unpaid Earned Discount);
and
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(iii) Enterprise's "PURCHASER'S INVESTMENT" of any other portion of
an Undivided Interest shall mean such Purchaser's Investment of such
Undivided Interest less the sum of such Purchaser's Investments of all
portions of such Undivided Interest described in CLAUSES (i) and (ii)
above, calculated in accordance with such CLAUSES (i) and (ii), as
applicable.
(d) The Purchaser's Investment of a Purchaser shall not be considered
reduced by any distribution of any portion of Collections if at any time such
distribution is rescinded or must otherwise be returned for any reason.
(e) The "RELATED" Purchaser's Investment of a Purchaser with regard to a
Yield Period or Undivided Interest (or portion thereof) means the Purchaser's
Investment calculated with regard to such Yield Period or Undivided Interest (or
such portion), as the case may be.
SECTION 2.03. NET POOL BALANCE. (a) The "NET POOL BALANCE" at any
time means an amount equal to
(i) the aggregate Unpaid Balance of the Eligible Receivables in the
Receivables Pool at such time, MINUS
(ii) the aggregate (for all Obligors) of the amounts by which (x) the
Unpaid Balance of all Pool Receivables of each Obligor exceeds (y) the
Concentration Limit for such Obligor at such time.
(b) "CONCENTRATION LIMIT" for any Obligor or Government Obligor
(Government Obligors in the aggregate may not exceed 15% of the Net Pool Balance
at any time as set forth on Schedule 2.03(b)) at any time means the greater of
(x) the Special Concentration Limit, if any, for such Obligor and (y) 2.0% of
the Aggregate Unpaid Balance of the Eligible Receivables in the Receivables Pool
at such time.
(c) "SPECIAL CONCENTRATION LIMIT" for any Obligor means the amount
designated from time to time as such by the Administrative Agent (with the
written consent of both Managing Agents) with regard to any Obligor in a writing
in the form of SCHEDULE 2.03(b) delivered to Seller (it being understood that
the most recent writing at any time delivered to Seller shall supersede each
previous writing).
(d) In the case of any Obligor which is an Affiliate of any other Obligor,
the Concentration Limit, the Special Concentration Limit, if any, and the
aggregate Unpaid Balance of Pool Receivables of such Obligors shall be
calculated as if such Obligors were one Obligor.
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SECTION 2.04. SHARES.
(a) AGGREGATE PURCHASER'S SHARE. Each Purchaser's "AGGREGATE PURCHASER'S
SHARE" of Collections of Pool Receivables received (or deemed received) by
Seller or Servicer on any day means an amount calculated by the Servicer
(subject to recalculation by any Agent) for each such Purchaser equal to the
product of
(i) the amount of all Collections of Pool Receivables received (or
deemed received) by Seller or Servicer on such day, TIMES,
(ii) the Purchasers' Aggregate Required Allocations divided by the
Net Pool Balance, TIMES
(iii) such Purchaser's Percentage;
PROVIDED THAT, if at any time a Purchaser's Aggregate Purchaser's Investments
shall have been reduced to zero and there shall be no other amounts owing to
such Purchaser or the related Managing Agent at such time, the other Purchaser's
Percentage set forth in clause (iii) shall equal 100%.
(b) PURCHASER'S SHARE. With respect to each Undivided Interest, the
related "PURCHASER'S SHARE" of Collections of Pool Receivables received (or
deemed received) by Seller or Servicer on any day means an amount equal to the
product of
(i) the Aggregate Purchaser's Share of Collections calculated for the
related Purchaser of such Undivided Interest for such day, TIMES
(ii) (A) if such day is not a Run Off Day, the quotient of (1) such
Undivided Interest on such day, expressed as a decimal divided by (2) all of
such Purchaser's Undivided Interests on such day, expressed as a decimal, and
(B) if such day is a Run Off Day, the quotient of (1) such Undivided
Interest on the first Run Off Day to have occurred during the then current Run
Off Period, expressed as a decimal, divided by (2) all of such Purchaser's
Undivided Interests on such day, expressed as a decimal;
PROVIDED that after such time as an Undivided Interest shall equal zero the
Purchaser's Share of Collections therefor shall also equal zero; and PROVIDED,
FURTHER, that no Purchaser shall be entitled to any Collections allocated to the
other Purchaser's Aggregate Purchaser's Share, whether or not the application of
this proviso would result in a shortfall with respect to any amounts then due
and payable with respect to any Undivided Interest owned by any Purchaser.
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ARTICLE III
SETTLEMENTS
SECTION 3.01. NON-RUN OFF SETTLEMENT PROCEDURES FOR COLLECTIONS. (a)
DAILY PROCEDURE. On each day (other than a Run Off Day) in any Yield Period for
any Undivided Interest, Servicer shall deem an amount equal to the related
Purchaser's Share but not in excess of such Purchaser's Aggregate Purchaser's
Share (as determined in SECTION 2.04) of Collections of Pool Receivables
received or deemed received on such day to be received in respect of such
Undivided Interest; and
(i) out of Purchaser's Share of such Collections, hold in trust for
the benefit of the Purchaser of such Undivided Interest an amount equal to
the related Earned Discount and related Servicer's Fee accrued through such
day and not previously so held for the benefit of such Purchaser,
(ii) apply an amount equal to the remainder of Purchaser's Share of
such Collections (the "REMAINING COLLECTIONS") to reduce the related
Purchaser's Investment of such Undivided Interest (it being understood that
such amount need not be physically paid to such Purchaser under this CLAUSE
(ii)),
(iii) Subject to SECTION 3.03, after such reduction, (A) apply such
Remaining Collections to the Reinvestment, for the benefit of such
Purchaser, of additional undivided interests in Pool Receivables by
recomputation of such Undivided Interest pursuant to SECTION 2.01 as of the
end of such day, thereby increasing the related Purchaser's Investment, and
(B) pay to Seller such Remaining Collections.
The recomputed Undivided Interest shall constitute the percentage ownership
interest in Pool Receivables on such day held by such Purchaser with regard to
such Undivided Interest.
(b) SETTLEMENT DATE PROCEDURE. On the Settlement Date for each Undivided
Interest, for each day in the related Yield Period of such Settlement
Period that is not a Run Off Day for such Undivided Interest, out of the
related Purchaser's Share of Collections for each such Undivided Interest,
Servicer shall deposit to the Managing Agent's account for the Purchaser
then owning such Undivided Interest, as described in SECTION 3.05, the
amounts set aside as described in SECTION 3.01(a)(i) and the amounts, if
any, set aside pursuant to SECTION 3.03(b) or (c) for payment to the
related Managing Agent on such Settlement Date; PROVIDED, HOWEVER, that if
the related Managing Agent and the Administrative Agent give their
respective consent (which consent may be revoked at any time), Servicer may
retain amounts which would otherwise be deposited in respect of Servicer's
Fee, in which case no distribution shall be made in respect of Servicer's
Fee under CLAUSE (c) below.
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(c) ORDER OF APPLICATION. Upon receipt by a Managing Agent of funds
distributed pursuant to SUBSECTION (b) in respect of an Undivided Interest owned
by the related Purchaser, such Managing Agent shall distribute them first, (i)
to the related Purchaser in payment of the accrued and unpaid Earned Discount
and Program Fee for such Undivided Interest until paid in full, then (ii) to
Servicer in payment of the accrued and unpaid Servicer's Fee payable with
respect to such Undivided Interest until paid in full, and (iii) in the case of
any amounts set aside pursuant to SECTION 3.03(b) or (c), to the related
Purchaser in reduction of the Purchaser's Investment therein.
SECTION 3.02. RUN OFF SETTLEMENT PROCEDURES FOR COLLECTIONS. (a)
DAILY PROCEDURE. On each Run Off Day occurring in any Yield Period for an
Undivided Interest, Servicer shall set aside and hold in trust for the related
Purchaser, such Purchaser's Share of the Collections of Pool Receivables in
respect of such Undivided Interest for such Run Off Day but not in excess of
such Purchaser's Aggregate Purchaser's Share and, if requested in writing (a
copy of such request to be forwarded to the other Managing Agent simultaneously)
by the related Managing Agent (in its sole discretion), by depositing such
Collections within one Business Day of Servicer's receipt thereof into a bank
account at the Administrative Agent on behalf of such Purchaser in which no
other funds shall be deposited (it being understood that, if one Managing Agent
so requests, the other Managing Agent shall also be entitled to so request,
whether or not a Run Off Day shall have occurred with respect to any Undivided
Interest owned by it).
(b) SETTLEMENT DATE PROCEDURE. On each Settlement Date for each Undivided
Interest, if one or more Run Off Days for such Undivided Interest occurred
during the related Yield Period for the Settlement Period ending on such
Settlement Date for such Undivided Interest, Servicer shall deposit to the
account of the Administrative Agent (such deposited funds shall be deemed
deposited on behalf of the Managing Agent for the Purchaser then owning such
Undivided Interest) for the Purchaser then owning such Undivided Interest, as
described in SECTION 3.05, the amounts set aside pursuant to SECTION 3.02(a) out
of Purchaser's Share of Collections during such Settlement Period, but not to
exceed the sum of (i) the accrued and unpaid Earned Discount, (ii) the
Purchaser's Investment of such Undivided Interest, (iii) the aggregate of other
amounts owed hereunder by Seller to such Purchaser or the related Managing Agent
in respect of such Undivided Interest, and (iv) the accrued Servicer's Fee
payable with respect to such Undivided Interest. If no Termination Event or
Unmatured Termination Event shall have occurred and be continuing, any amounts
set aside pursuant to the first sentence of this SECTION 3.02 and not required
to be deposited to the Administrative Agent's account pursuant to the next
preceding sentence shall be paid to Seller by Servicer.
(c) ORDER OF APPLICATION. Upon receipt by a Managing Agent of funds
deposited to its account pursuant to SECTION 3.02(b),
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the Managing Agent shall distribute them (i) to the related Purchaser or such
Managing Agent (as the case may be) (A) in payment of the accrued and unpaid
Earned Discount and Program Fee for such Undivided Interest, (B) in reduction of
the related Purchaser's Investment of such Undivided Interest and (C) in payment
of any other amounts owed by Seller hereunder to the related Purchaser or such
Managing Agent, in each case until reduced to zero, and (ii) to Servicer in
payment of the accrued Servicer's Fee payable with respect to such Undivided
Interest, also until reduced to zero. If there shall be insufficient funds on
deposit for such Managing Agent to distribute funds in payment in full of the
aforementioned amounts, such Managing Agent shall distribute funds on deposit,
FIRST, in payment of the Earned Discount and Program Fee for such Undivided
Interest, SECOND, in payment of the Servicer's Fee payable with respect to such
Undivided Interest, if any, (if Servicer is not Seller or an Affiliate of
Seller), THIRD, in reduction of Purchaser's Investment of such Undivided
Interest, FOURTH, in payment of any other amounts payable to such Purchaser or
such Managing Agent hereunder, and FIFTH, in payment of the Servicer's Fee
payable with respect to such Undivided Interest (if Servicer is Seller or an
Affiliate of Seller).
SECTION 3.03. SPECIAL SETTLEMENT PROCEDURES; REDUCTION OF PURCHASER'S
INVESTMENT, ETC. (a) DEEMED COLLECTIONS. If on any day
(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any defective, rejected or returned
merchandise or services, any cash discount, or any adjustment by
Seller, any Originator or any Affiliate of Seller or any Originator
(other than any adjustment permitted by SECTION 8.02(c) unless any
Agent or Purchaser shall reasonably object thereto within 30 days of
being informed thereof),
(B) reduced or cancelled as a result of a setoff in respect of
any claim by the Obligor thereof against Seller, any Originator or any
Affiliate of Seller or any Originator (whether such claim arises out
of the same or a related or an unrelated transaction), or
(C) reduced on account of the obligation of Seller to pay to the
related Obligor any rebate or refund; or
(ii) any of the representations or warranties of Seller set forth in
SECTION 6.01(l) or (p) is no longer true with respect to a Pool Receivable,
then, on such day, Servicer shall be deemed to have received a Collection of
such Pool Receivable
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(I) in the case of CLAUSE (i) above, in the amount of such
reduction or cancellation; and
(II) in the case of CLAUSE (ii) above, in the amount of the
Unpaid Balance of such Pool Receivable.
(b) UNREINVESTED COLLECTIONS. Collections that may not be reinvested by
means of Reinvestments in an Undivided Interest on account of the application of
the Required Allocations Limit or the Purchase Limit pursuant to SECTION 2.01
shall be so reinvested as soon as it is possible to do so without violating such
Required Allocations Limit or Purchase Limit, as the case may be. To the extent
and so long as such Collections may not be so reinvested, Servicer shall hold
such Collections ratably intrust for the benefit of the Purchasers and, if
requested by the Managing Agent for any Purchaser in its sole discretion
(request by one Managing Agent shall be deemed to be request by each Managing
Agent unless otherwise notified to Seller by the second Managing Agent), in a
separate deposit account at the Administrative Agent containing only such
Purchaser's Share of such Collections and no other funds, for payment to each
Managing Agent on the next following Settlement Date for application to the
related Purchaser's next maturing Undivided Interests.
(c) SELLER'S REDUCTION OF AGGREGATE TOTAL INVESTMENT. If at any time
Seller shall wish to cause the reduction of the Aggregate Total Investment (but
not to commence the liquidation,or reduction to zero, of all Undivided
Interests), Seller may do so as follows:
(i) Seller shall give the Agents at least three Business Days' prior
written notice thereof (including the amount of such proposed reduction and
the proposed date on which such reduction will commence),
(ii) Seller shall cause the reduction to be allocated ratably among
the Purchasers such that each Purchaser shall receive its Percentage of the
aggregate amount of such proposed reduction,
(iii) on the proposed date of commencement of such reduction and on
each day thereafter, Servicer shall refrain from reinvesting Remaining
Collections in Undivided Interests of each Purchaser until the amount
thereof not so reinvested shall equal the desired amount of reduction for
each such Purchaser, and
(iv) Servicer shall hold such Collections for the benefit of the
Purchasers, for the ratable payment to the Managing Agents for each
Undivided Interest proposed to be reduced in connection herewith, in which
such Collections are accumulated, and such amounts shall be applied to
reduce each Purchaser's Investment in such Undivided Interests in
accordance with the PROVISOS hereto and with regard to any Undivided
Interest, the related Purchaser's Investment of
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such Undivided Interest shall be deemed reduced in the amount to be paid to
the Managing Agents only when in fact finally so paid;
PROVIDED that,
(A) with regard to each Purchaser, any such reduction may only be
effected on the last day of the related Yield Period for any Undivided
Interest the related Purchaser's Investment in which has been requested to
be reduced and only to the extent that after giving effect to any such
reduction the remaining Purchaser's Investment of each Purchaser in each
such Undivided Interest shall not be less than $1,000,000 (unless
Purchaser's Investment of any such Undivided Interest shall thereby be
reduced to zero) and shall be in an integral multiple of $100,000,
(B) if Seller shall commence any voluntary reduction in a Yield
Period containing all or a portion of any Run Off Period, Collections not
so reinvested shall be treated as if collected on the next following Run
Off Day,
(C) Seller shall use reasonable efforts to attempt to choose a
reduction amount, and the date of commencement thereof, so that such
reduction shall commence and conclude in the same Yield Period, and
(D) if two or more Undivided Interests of any Purchaser shall be
outstanding at the time of any proposed reduction, such proposed reduction
shall be applied, unless the related Managing Agent shall consent
otherwise, to the Undivided Interest with the shortest remaining Yield
Period.
(d) ALLOCATIONS OF OBLIGOR'S PAYMENTS. Except as provided in SECTION
3.03(a) or as otherwise required by law or the underlying Contract, all
Collections received from an Obligor of any Receivable shall be applied to
Receivables then outstanding of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable; PROVIDED, HOWEVER, that,
if payment is designated by such Obligor for application to specific
Receivables, it shall be applied to such specified Receivables.
(e) DEPOSIT TO COLLECTION ACCOUNT. Notwithstanding anything herein to the
contrary, the Administrative Agent upon request of any Managing Agent or any
Purchaser may require Seller and Servicer (or their designees or successors) at
any time (such instruction shall be deemed given upon the occurrence and
continuance of a Termination Event), to deposit all Collections of Pool
Receivables received (including, without limitation, received by any Lock-Box
Bank) to an account established at the Administrative Agent (the "COLLECTION
ACCOUNT") within one Business Day of receipt thereof. Such Collections shall be
applied by the Administrative Agent in accordance with the provisions of this
Agreement, including SECTIONS 3.01, 3.02 or
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3.03 hereof. Servicer (or its designee or successor) shall notify the Agents of
the amount of funds deposited in the Collection Account not received from Pool
Receivables and shall remit such funds as soon as practicable after such
notification to such account as Servicer (or its designee or successor) shall
designate.
(f) CERTAIN REQUIRED DEPOSITS. Notwithstanding anything in this Agreement
to the contrary, if at any time any Purchaser's Share of Collections is at such
time being paid to such Purchaser in reduction of such Purchaser's Undivided
Interest, and at such time the other Purchaser's Share of Collections shall not
then be required to be paid over in reduction of such Purchaser's Investment in
an Undivided Interest, such other Purchaser's Share of Collections in an amount
equal to the amount of reduction in the first Aggregate Purchaser's Investments
shall be deposited into a bank account at the Administrative Agent on behalf of
such other Purchaser for application to such Purchaser's next maturing Undivided
Interests. Interest earnings on such bank account shall be for the account of
the Seller.
SECTION 3.04. REPORTING. (a) On or prior to the twentieth day of each
month (or if such day is not a Business Day, the next succeeding Business Day),
Servicer shall prepare and forward to the Managing Agents a Periodic Report
(including a certification that no Termination Event or Unmatured Termination
Event shall have occurred) relating to all Undivided Interests owned by the
Purchasers, as of the close of business of Servicer on the next preceding Month
End Date.
(b) On or prior to each Settlement Date, Seller will advise the Managing
Agents and, if Seller is not Servicer, Servicer of each Run Off Day occurring
during the Settlement Period ending on such Settlement Date.
(c) On or prior to each Purchase or Reinvestment hereunder, Seller shall
permanently mark in the computer records for each Receivable subject to such
Purchase or Reinvestment that such Receivable is subject to the interest of the
Purchasers hereunder.
SECTION 3.05. PAYMENTS AND COMPUTATIONS, ETC. (a) Unless otherwise
required pursuant to this Agreement, all amounts to be paid or deposited by
Seller hereunder shall be paid or deposited in accordance with the terms hereof
no later than noon (New York time) on the day when due in lawful money of the
United States of America in same day funds to accounts specified by the
Administrative Agent and located at 231 South LaSalle Street, Chicago, Illinois.
If the Administrative Agent shall have received such funds by noon (New York
time) it shall forward the portion of the funds deposited that are due to the
Purchasers by 3:00 p.m. (New York time) on such day and if received after noon
(New York time), on the next following Business Day.
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(b) Seller or Servicer, as applicable, shall, to the extent permitted by
law, pay to the applicable Agent interest on all amounts not paid or deposited
when due hereunder at 2% PER ANNUM above the Alternate Reference Rate, payable
on demand, PROVIDED, HOWEVER, that such interest rate shall not at any time
exceed the maximum rate permitted by applicable law. Such interest shall be
retained by the applicable Agent except to the extent that such failure to make
a timely payment or deposit has continued beyond the date for distribution by
the applicable Agent of such overdue amount to the related Purchaser, if any, or
any other Person having an interest in such overdue amount, in which case such
interest accruing after such date shall be for the account of, and distributed
by the applicable Agent, to such Persons ratably in accordance with their
respective interests in such overdue amount.
(c) All computations of interest, Earned Discount, Negative Spread Fee and
any other fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last day)
elapsed.
SECTION 3.06. DIVIDING OR COMBINING UNDIVIDED INTERESTS.
(a) DIVISION OF UNDIVIDED INTERESTS. Each Managing Agent may at any time,
as of the last day of any Yield Period for any then existing Undivided Interest
owned by its related Purchaser, divide such existing Undivided Interest on such
last day into two or more new Undivided Interests, each such new Undivided
Interest having a Purchaser's Investment as designated by such Managing Agent
and all such new Undivided Interests collectively having aggregate Purchaser's
Investments equal to the Purchaser's Investment of such existing Undivided
Interest.
(b) COMBINATION OF UNDIVIDED INTERESTS. Each Managing Agent may at any
time, as of the last day of any Yield Period for two or more existing Undivided
Interests owned by its related Purchaser, on or before the date of any proposed
Purchase of an Undivided Interest pursuant to SECTIONS 1.01 and 1.04 by the
related Purchaser, on such last day or such date of Purchase, as the case may
be, combine into one new Undivided Interest such existing and/or proposed
Undivided Interests or any combination thereof, such new Undivided Interest
having a Purchaser's Investment equal to the aggregate Purchaser's Investments
of such Undivided Interests so combined.
(c) EFFECT OF DIVISION OR COMBINATION. On and after any division or
combination of Undivided Interests as described above, each of the new Undivided
Interests resulting from such division, or the new Undivided Interest resulting
from such combination, as the case may be, shall be a separate Undivided
Interest having a Purchaser's Investment as set forth above, and shall take the
place of such existing Undivided Interest or Undivided Interests or proposed
Undivided Interest, as the case
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may be, in each case under and for all purposes of this Agreement.
SECTION 3.07. TREATMENT OF COLLECTIONS AND DEEMED COLLECTIONS.
Seller shall forthwith deliver to Servicer all Collections deemed received by
Seller pursuant to SECTION 3.03(a), and Servicer shall hold or distribute such
Collections as Earned Discount, accrued Servicer's Fee, repayment of Purchaser's
Investment, etc. to the same extent as if such Collections had actually been
received on the date of such delivery to Servicer. If Collections are then
being paid to the Administrative Agent, or lock boxes or accounts directly or
indirectly owned or controlled by the Administrative Agent, Servicer shall
forthwith cause such deemed Collections to be ratably paid to the Administrative
Agent or to such lock boxes or accounts, as applicable. So long as Seller shall
hold any Collections or deemed Collections required to be paid to Servicer or
the Administrative Agent, it shall hold such Collections in trust and separate
and apart from its own funds and shall clearly mark its records to reflect such
trust.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. FEES. (a) ADMINISTRATIVE AGENT'S FEES. Fees payable
to the Administrative Agent for its own account payable on such dates and in
such amounts set forth in the letter dated January 5, 1995 from the
Administrative Agent to Seller (the "FEE LETTER").
(b) FACILITY FEE. From the date hereof, until the date following the
Commitment Termination Date, on which Aggregate Total Investments shall be
reduced to zero, Seller shall pay to each Managing Agent a facility fee
("FACILITY FEE") for each day in such period equal, for each Purchaser, to the
product of (x) its related Purchaser's Percentage of the Maximum Purchase Limit
on each such day TIMES (y) .15% TIMES (z) 1/360. Such Facility Fee shall be
paid in arrears on the first Business Day of each month for the preceding
calendar month and on the date, following the Commitment Termination Date, when
such Purchaser's Aggregate Purchaser's Investments shall have been reduced to
zero, in the amount of such Facility Fee that shall have accrued during the
calendar month or other period then ending and which shall not have been
previously paid. The Managing Agents shall have the right to change the
percentage set forth in clause (y) in their reasonable discretion hereof on each
anniversary of the date hereof upon 30 days notice to the Seller.
(c) PROGRAM FEE. From the date hereof until the date, following the
Commitment Termination Date, on which Aggregate Total Investments shall be
reduced to zero, Seller shall pay to each Purchaser a program fee ("PROGRAM
FEE") for each day in such period equal, for each Purchaser, to the product of
(x) the
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Aggregate Purchaser's Investments of such Purchaser on such day, TIMES (y) .20%,
TIMES (z) 1/360. Such Program Fee shall be paid in arrears on the first
Business Day of each month for the preceding calendar month and on the date,
following the Commitment Termination Date, when such Purchaser's Aggregate
Purchaser's Investments shall have been reduced to zero, in the amount of such
Program Fee that shall have accrued during the calendar month or other period
then ending and which shall not have been previously paid.
(d) NOTE FEE. From the date hereof until the date, after the Commitment
Termination Date, on which the Aggregate Purchaser's Investments shall be
reduced to zero, Seller shall pay to each Managing Agent for the account of the
related Purchaser a note issuance fee ("NOTE FEE") in an amount equal to the
product of (x) the greater of the amount of the per-note fee (currently $15)
paid or payable by such Purchaser to the issuing agent and depositary for the
Commercial Paper Notes for the authentication and delivery of each Commercial
Paper Note, as notified by Purchaser to Seller and Servicer from time to time,
TIMES (y) the number of Commercial Paper Notes issued by such Purchaser to fund
its Undivided Interests hereunder during the period for which such Note Fee is
payable, as notified by such Purchaser to Seller and Servicer; PROVIDED THAT, if
such Commercial Paper Notes shall at any time become "book-entry" Notes, the
"Note Fee" therefor shall equal $30 per trade. Such Note Fee shall be paid in
arrears on the first Business Day of each month for the preceding calendar month
for the number of Commercial Paper Notes issued to fund the Undivided Interests
owned by each Purchaser during the preceding calendar month for which no Note
Fee shall have theretofore been paid. Each Purchaser shall notify Seller and
Servicer at least one Business Day prior to the end of each calendar month of
the number of Commercial Paper Notes issued by such Purchaser to fund its
Undivided Interests hereunder during such calendar month.
(e) DEALER FEE. The dealer fee is set forth in clause (ii) of the
definition of Commercial Paper Rate.
SECTION 4.02. YIELD PROTECTION. (a) If (i) Regulation D or (ii) any
Regulatory Change occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or other charge
with respect to any Undivided Interest owned by or funded by it or any
obligations or right to make Purchases or Reinvestments or to provide
funding therefor, or shall change the basis of taxation of payments to the
Affected Party of any Purchaser's Investments or Earned Discount owned by,
owed to or funded by it or any other amounts due under this Agreement in
respect of any Undivided Interest owned by or funded by it or its
obligations or rights, if any, to make Purchases or Reinvestments or to
provide funding therefor (except for changes in the rate of tax on the
overall net income of such Affected Party imposed by the United States of
America, by the jurisdiction in
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which such Affected Party's principal executive office is located and,
if such Affected Party's principal executive office is not in the United
States of America, by the jurisdiction where such Affected Party's
principal office in the United States is located); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve Board, but
excluding any reserve included in the determination of Earned Discount),
special deposit or similar requirement against assets of any Affected
Party, deposits or obligations with or for the account of any Affected
Party or with or for the account of any affiliate (or entity deemed by the
Federal Reserve Board to be an affiliate) of any Affected Party, or credit
extended by any Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(D) shall impose any other condition affecting any Undivided Interest
owned or funded by any Affected Party, or its obligations or rights, if
any, to make Purchases or Reinvestments or to provide funding therefor; or
(E) shall impose on any Affected Party any other expense (including
attorneys' fees and litigation costs)
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D referred
to above, to impose a cost on) (I) an Affected Party funding or making or
maintaining any Purchases or Reinvestments, any purchases, reinvestments,
or loans or other extensions of credit under any RCC Program Support
Agreement, or any Funding, or under the Enterprise Liquidity Agreement or
Enterprise Credit Support Agreement, as applicable or any commitment of
such Affected Party with respect to any of the foregoing, or (II) any Agent
for continuing its, or Seller's, or any Originator's relationship with any
Purchaser,
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement or the Certificate of Assignments, or
under the Enterprise Liquidity Agreement, the Enterprise Credit Support
Agreement, or any RCC Program Support Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to reduce the
rate of return on the capital of an Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below
that which such Affected Party could otherwise have achieved,
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then within thirty days after demand by such Affected Party (which demand
shall be accompanied by a statement setting forth the basis of such
demand), Seller shall pay directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such
additional or increased cost or such reduction; PROVIDED THAT, such demand
shall be made only with regard to amounts accruing not more than six months
prior to the earlier of (x) such demand being made upon Seller and (y)
notification of Seller pursuant to PARAGRAPH (b) below.
(b) Each Affected Party will promptly notify Seller and the Agent of
any event of which it has knowledge which will entitle such Affected Party
to compensation pursuant to this SECTION 4.02; PROVIDED, HOWEVER, no
failure to give or delay in giving such notification shall adversely affect
the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
SECTION 4.02, an Affected Party may use any reasonable averaging and
attribution methods that it (in its sole discretion) shall deem applicable.
Any Affected Party when making a claim under this SECTION 4.02 shall submit
to Seller a statement as to such increased cost or reduced return
(including calculation thereof in reasonable detail), which statement
shall, in the absence of manifest error, be conclusive and binding upon
Seller.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial
Purchase hereunder is subject to the condition precedent that each Agent shall
have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to each Agent (subject to approval by the RCC Program Support
Provider, the Enterprise Liquidity Provider and Enterprise Credit Support
Provider):
(a) A Certificate of Assignments for each Purchaser in
substantially the form attached hereto as EXHIBIT 5.01(a);
(b) A copy of the resolutions of the Board of Directors of Seller
approving this Agreement, the Purchase and Sale Agreement, the Certificate
of Assignments and the other Agreement Documents to be delivered by it
hereunder and the transactions contemplated hereby, certified by its
Secretary or Assistant Secretary;
(c) Good standing certificates for Seller and each Originator issued
by the Secretary of State of Florida;
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(d) A certificate of the Secretary or Assistant Secretary of each of
Seller and each Originator certifying the names and true signatures of the
officers authorized on its behalf to sign this Agreement, the Purchase and
Sale Agreement, the Certificate of Assignments and the other Agreement
Documents to be delivered by them hereunder (on which certificate each
Agent and each Purchaser may conclusively rely until such time as each
Agent shall receive from Seller or the applicable Originator, as
applicable, a revised certificate meeting the requirements of this
SUBSECTION (d));
(e) The Articles of Incorporation of each of Seller and each
Originator, duly certified by the Secretary of State of Florida, as of a
recent date acceptable to each Agent, together with a copy of the By-laws
of each of Seller and each Originator, duly certified by the Secretary or
an Assistant Secretary of Seller and such Originator, as applicable;
(f) Acknowledgment copies of proper Financing Statements (Form UCC-
1), filed on or prior to the date of the initial Purchase, naming (i) each
Originator as debtor/seller, Seller as secured party/purchaser and
Purchaser as assignee and filed in connection with transactions
contemplated by the Purchase and Sale Agreement and (ii) Seller as the
debtor/seller of Receivables or an undivided interest therein and
Purchasers as the secured party/purchaser, or other, similar instruments or
documents, as may be necessary or, in the opinion of the Managing Agents,
desirable under the UCC or any comparable law of all appropriate
jurisdictions to perfect Purchaser's interests in all Undivided Interests
assigned to it or otherwise created or arising hereunder;
(g) A search report provided in writing to each Agent by LEXIS
Document Services, listing all effective financing statements that name
Seller or any Originator as debtor and that are filed in the jurisdictions
in which filings were made pursuant to SUBSECTION (f) above and in such
other jurisdictions that any Agent shall reasonably request, together with
copies of such financing statements (none of which shall cover any
Receivables or Contracts or interests therein or Collections or proceeds of
any thereof);
(h) Duly executed copies of Lock-Box Agreements with each of the
Lock-Box Banks, in substantially the form attached hereto as EXHIBITS
5.01(h);
(i) A favorable opinion of associate General Counsel for Seller, each
Originator and Servicer, in substantially the form of EXHIBIT 5.01(i);
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(j) A favorable opinion of Faegre & Benson, counsel for BofA as
Administrative Agent and as Managing Agent, substantially in the form of
EXHIBIT 5.01(j);
(k) Such sublicenses as the Administrative Agent shall require with
regard to all programs leased by Seller, any Originator or Servicer and
used in the servicing of the Receivables Pool;
(l) Such powers of attorney as the Administrative Agent shall
reasonably request to enable the Administrative Agent to collect all
amounts due under any and all Pool Receivables;
(m) A Periodic Report as of the most recent Month End Date;
(n) A report from Coopers & Lybrand or other independent certified
public accountants or other auditors acceptable to each Agent, with respect
to the application of certain procedures to Seller's books and records
relating to the Pool Receivables;
(o) Evidence (i) of the execution and delivery by Seller and each
Originator of the Purchase and Sale Agreement (substantially in the form
attached hereto as EXHIBIT 5.01(o)) and each other Agreement Document to be
executed and delivered in connection therewith and (ii) that each of the
conditions precedent to the execution, delivery and effectiveness of the
Purchase and Sale Agreement and each other Agreement Document has been
satisfied;
(p) Executed Letter Agreement (Segregation of Funds) of even date
herewith among Wackenhut, BofA and NationsBank;
(q) A computer tape or disc containing such information relating to
each of the Pool Receivables the subject of the first Purchase hereunder as
is satisfactory to the Managing Agents; and
(r) Evidence of the payment of all fees required to be paid prior to
closing.
SECTION 5.02. CONDITIONS PRECEDENT TO ALL PURCHASES AND
REINVESTMENTS. Each Purchase (including the initial Purchase) and each
Reinvestment hereunder shall be subject to the further conditions precedent
("CONDITIONS PRECEDENT") that on the date of such Purchase or Reinvestment the
following statements shall be true (and Seller by accepting the amount of such
Purchase or by receiving the proceeds of such Reinvestment shall be deemed to
have certified that):
(a) The representations and warranties contained in SECTION 6.01 and
in the Purchase and Sale Agreement are
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correct on and as of such day as though made on and as of such day and
shall be deemed to have been made on such day,
(b) No event has occurred and is continuing, or would result from
such Purchase or Reinvestment, that constitutes a Termination Event or
Unmatured Termination Event,
(c) After giving effect to each proposed Purchase or Reinvestment,
(i) Aggregate Total Investments will not exceed the Purchase Limit, (ii)
Aggregate Required Allocations will not exceed the Required Allocations
Limit and (iii) the Aggregate Purchaser's Investments of the Purchaser
making such Purchase would not exceed its Percentage of the Aggregate Total
Investments, and
(d) The Commitment Termination Date shall not have occurred;
PROVIDED, HOWEVER, the absence of the occurrence and continuance of an Unmatured
Termination Event shall not be a Condition Precedent to any reinvestment being
made with the proceeds of Collections that were, on the same day, applied in
reduction of the Aggregate Purchaser's Investments.
SECTION 5.03. ADDITIONAL CONDITION PRECEDENT TO PURCHASES. Each
Purchase (including the initial Purchase) shall be subject to the further
condition precedent that the Purchase Termination Date shall not have occurred.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Florida, with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and now
has, all necessary power, authority, and legal right to acquire and own the
Pool Receivables.
(b) DUE QUALIFICATION. Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualification, licenses or approvals.
(c) POWER AND AUTHORITY; DUE AUTHORIZATION. Seller (i) has all
necessary power, authority and legal right to
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(A) execute and deliver this Agreement, the Certificate of Assignments and other
Agreement Documents, (B) carry out the terms of the Agreement Documents, and (C)
sell and assign Undivided Interest on the terms and conditions herein provided
and (ii) has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement and the other Agreement Documents and
the sale and assignment of the Undivided Interests on the terms and conditions
herein provided.
(d) VALID SALE; BINDING OBLIGATIONS. This Agreement constitutes a valid
sale, transfer, and assignment of Undivided Interests to the Purchasers,
enforceable against creditors of, and purchasers from, Seller; and this
Agreement constitutes, and each other Agreement Document to be signed by Seller
when duly executed and delivered will constitute, a legal, valid and binding
obligation of Seller enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Agreement Documents and the fulfillment of the
terms hereof will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, the articles of incorporation or by-laws of Seller, or
any indenture, loan agreement, receivables purchase agreement, mortgage, deed of
trust, or other agreement or instrument to which Seller is a party or by which
it or any of its properties is bound, (ii) result in the creation or imposition
of any Adverse Claim upon any of Seller's properties pursuant to the terms of
any such indenture, loan agreement, receivables purchase agreement, mortgage,
deed of trust, or other agreement or instrument, other than this Agreement and
the Certificate of Assignments, or (iii) violate any law or order, rule, or
regulation applicable to Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or
threatened, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Agreement, the Certificate of Assignments or any other Agreement Documents, (ii)
seeking to prevent the sale and assignment of any Undivided Interest, the
issuance of the Certificate of Assignments or the consummation of any of the
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other transactions contemplated by this Agreement or any other Agreement
Document, (iii) seeking any determination or ruling that might materially
and adversely affect (A) the performance by Seller or Servicer of its
obligations under this Agreement, or (B) the validity or enforceability of
this Agreement, the Certificate of Assignments, any other Agreement
Document, the Receivables or the Contracts or (iv) seeking to adversely
affect the federal income tax attributes of the Purchases hereunder or the
Certificate of Assignments.
(g) BULK SALES ACT. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) GOVERNMENT APPROVALS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by Seller of this Agreement, the Certificate of Assignments or any other
Agreement Document, except for the filing of the UCC Financing Statements
referred to in Article V, all of which, at the time required in Article V,
shall have been duly made and shall be in full force and effect.
(i) FINANCIAL CONDITION. (x) The consolidated balance sheets of
Seller and its consolidated subsidiaries as at September 30, 1994, and
the related statements of income and shareholders' equity of Seller and its
consolidated subsidiaries for the fiscal year then ended, copies of which
have been furnished to the Agent, fairly present the consolidated financial
condition, business, business prospects and operations of Seller and its
consolidated subsidiaries as at such date and the consolidated results of
the operations of Seller and its consolidated subsidiaries for the period
ended on such date all in accordance with generally accepted accounting
principles consistently applied, and (y) since September 30, 1994 there has
been no material adverse change in any such condition, business, business
prospects or operations except as described in Schedule 6.01(i).
(j) LITIGATION. No injunction, decree or other decision has been
issued or made by any court, governmental agency or instrumentality thereof
that prevents, and no threat by any person has been made to attempt to
obtain any such decision that would prevent, Seller from conducting a
significant part of its business operations, except as described in
Schedule 6.01(j).
(k) MARGIN REGULATIONS. The use of all funds obtained by Seller
under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
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(l) QUALITY OF TITLE. Each Pool Receivable, together with the related
Contract and all purchase orders and other agreements related to such Pool
Receivable, is owned by Seller free and clear of any Adverse Claim (other than
any Adverse Claim arising solely as the result of any action taken by a
Purchaser (or any assignee thereof) or by any Agent) and restriction on
assignment, except as provided herein; when a Purchaser makes a Purchase, it
shall have acquired and shall continue to have maintained a valid and perfected
first priority undivided percentage ownership interest to the extent of its
Undivided Interest in each Pool Receivable and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim (other
than any Adverse Claim arising solely as the result of any action taken by a
Purchaser (or any assignee thereof) or by any Agent) except as provided
hereunder; and no effective financing statement or other instrument similar in
effect covering any Pool Receivable, any interest therein, the Related Security
or Collections with respect thereto is on file in any recording office except
such as may be filed (i) in favor of Seller in accordance with the Contracts,
(ii) in favor of a Purchaser or any Agent in accordance with this Agreement or
in connection with any Adverse Claim arising solely as the result of any action
taken by a Purchaser (or any assignee thereof) or by the Agent, or (iii) in
favor of BofA or NationsBank, or any successor, as described in SECTION 11.01.
(m) ACCURATE REPORTS. No Periodic Report (if prepared by Seller, or to
the extent that information contained therein was supplied by Seller),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by Seller to any Agent or Purchaser in connection
with this Agreement was or will be inaccurate in any material respect as of the
date it was or will be dated or (except as otherwise disclosed to any such Agent
or Purchaser, as the case may be, at such time) as of the date so furnished, or
contained or will contain any material misstatement of fact or omitted or will
omit to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(n) OFFICES. The chief place of business and chief executive office of
Seller are located at the address of Seller referred to in SECTION 13.02, and
the offices where Seller keeps all of its books, records, and documents
evidencing Pool Receivables, the related Contracts and all purchase orders and
other agreements related to such Pool Receivables are located at the addresses
specified in SCHEDULE 6.01(n) (or at such other locations, notified to the
Agents in accordance with SECTION 7.01(f), in jurisdictions where all action
required by SECTION 8.05 has been taken and completed).
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(o) LOCK-BOX ACCOUNTS. The names and addresses of all the Lock-Box Banks,
together with the account numbers of the lock-box accounts of Seller or Servicer
at such Lock-Box Banks, are specified in SCHEDULE 6.01(o) (or have been notified
to the Agents in accordance with SECTION 7.03(d)).
(p) ELIGIBLE RECEIVABLES. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Purchase or Reinvestment
shall be an Eligible Receivable on such date.
(q) SERVICING PROGRAMS. Any and all programs used by Seller in the
servicing of the Receivables Pool are owned by it and not leased or licensed.
(r) TRANSFERS. No purchase of an interest in Receivables by a Purchaser
from Seller or by Seller from any Originator constitutes a fraudulent transfer
or fraudulent conveyance or is otherwise void or voidable under similar laws or
principles, the doctrine of equitable subordination or for any other reason.
(s) PURCHASE AND SALE AGREEMENT. Each of the representations and
warranties made by Seller and each Originator in the Purchase and Sale Agreement
is true and correct as of the date or dates made.
(t) SOLVENCY. Immediately after giving effect to Seller's and the
Originators' obligations now or hereafter arising pursuant to any Agreement
Document and to each transaction contemplated thereby, Seller and each
Originator will each be Solvent.
(u) USE OF PROCEEDS. Neither Seller nor any Originator will use the
proceeds of the Purchases hereunder to acquire a security in a transaction
subject to Section 13 or 14 of the Securities Exchange Act of 1934.
(v) TAX. Seller has filed each and every tax return required to be filed
by it in each jurisdiction in which it is required to do so and has paid in each
such jurisdiction all taxes required to be paid by it on a consolidated basis.
(w) TRADENAMES, ETC. As of the date hereof: (A) the Seller's chief
executive office is located at the address set forth under its signature to this
Agreement; and (B) the Seller has, within the last five (5) years, used only the
tradenames identified in Exhibit 6.01(w) hereto, and, within the last five (5)
years, has not changed its name, merged with or into or consolidated with any
other corporation or been the subject of any proceeding under Title 11, United
States Code (Bankruptcy).
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(x) NO TERMINATION EVENT. No event has occurred and is continuing and no
condition exists which constitutes a Termination Event or an Unmatured
Termination Event.
(y) ERISA. The Seller is in compliance in all material respects with ERISA
and there exists no lien in favor of the Pension Benefit Guaranty Corporation on
any of the Receivables.
ARTICLE VII
GENERAL COVENANTS OF SELLER
SECTION 7.01. AFFIRMATIVE COVENANTS OF SELLER. From the date hereof until
the date, following the Commitment Termination Date, on which all Undivided
Interests shall be reduced to zero, Seller will, unless each Agent shall
otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to the Pool
Receivables and related Contracts.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect (i) the interests of any
Agent or Purchaser hereunder or (ii) the ability of Seller or Servicer to
perform their respective obligations hereunder.
(c) FIELD REVIEWS. (i) At any time and from time to time during
regular business hours, permit any Agent, or its agents or representatives,
(A) to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of Seller relating to Pool Receivables,
including, without limitation, the related Contracts and purchase orders
and other agreements, and (B) to visit the offices and properties of Seller
for the purpose of examining such materials described in CLAUSE (i) (A)
next above, and to discuss matters relating to Pool Receivables or Seller's
performance hereunder with any of the officers or employees of Seller
having knowledge of such matters; and (ii) without limiting the provisions
of CLAUSE (i) next above, from time to time on request of any Agent, permit
Coopers & Lybrand or other certified public accountants or other auditors
acceptable to the Agents to conduct, at Seller's expense, a review of
Seller's books and records with respect to the Pool Receivables.
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(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Pool Receivables (including, without
limitation, records adequate to permit the daily identification of each new
Pool Receivable and all Collections of and adjustments to each existing
Pool Receivable); such records to be retained by Servicer for such periods
as are usual and customary and in accordance with the Agent's Credit and
Collection Policy.
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. At its
expense timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the
Contracts related to the Pool Receivables and all purchase orders and other
agreements related to such Pool Receivables.
(f) LOCATION OF RECORDS. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Pool Receivables, all related Contracts and all purchase orders and other
agreements related to such Pool Receivables (and all original documents
relating thereto), at the address(es) of Seller referred to in Section
6.01(n) or, upon 30 days' prior written notice to each Agent, at such other
locations in jurisdictions where all action required by Section 8.05 shall
have been taken and completed.
(g) AGENT'S CREDIT AND COLLECTION POLICIES. Comply in all material
respects with the Agent's Credit and Collection Policy in regard to each
Pool Receivable and the related Contract.
(h) COLLECTIONS. Instruct all Obligors to cause all Collections of
Pool Receivables to be deposited directly with a Lock-Box Bank.
(i) RIGHTS UNDER PURCHASE AND SALE AGREEMENT. Exercise all of its
rights under or in connection with the Purchase and Sale Agreement to the
fullest extent thereof except to the extent otherwise consented to in
writing by each Agent.
SECTION 7.02. REPORTING REQUIREMENTS OF SELLER. From the date hereof
until the date, following the Commitment Termination Date, on which all
Undivided Interests shall be reduced to zero and all other amounts owing
hereunder shall have been paid, Seller will, unless each Agent shall otherwise
consent in writing, furnish to each Agent:
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(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the end of each of the first three quarters of
each fiscal year of Seller, copies of Seller's quarterly financial reports,
on Form 10-Q, as filed with the Securities and Exchange Commission (or if
Seller is no longer required to file such Form 10-Q, Seller shall furnish
such financial reports containing the information typically found on Form
10-Q, certified by the vice president and treasurer, chief financial
officer or chief accounting officer of Seller; together with a certificate
from such officer certifying that no Termination Event or Unmatured
Termination Event has occurred and containing a computation of, and showing
compliance with, the financial restrictions contained in SECTION 7.03;
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within 90 days after the end of each fiscal year of Seller, a copy of
Seller's Annual Report, on Form 10-K, as filed with the Securities and
Exchange Commission (or if Seller is no longer required to file such Form
10-K, Seller shall furnish such financial reports containing information
typically found on Form 10-K) and as reported on by nationally recognized
independent certified public accountants on a consolidated (for the
Originator only) basis; together with a copy of the year-end financial
statements of each Originator (which need not be reported by independent
certified accountants); and together with a certificate from vice president
and treasurer, chief financial officer or chief accounting officer of
Seller certifying that no Termination Event or Unmatured Termination Event
has occurred and containing a computation of, and showing compliance with,
the financial restrictions contained in SECTION 7.03;
(c) REPORTS TO HOLDERS AND EXCHANGES. In addition to the reports
required by SUBSECTIONS (a) and (b) next above, promptly upon any Agent's
request, copies of any reports specified in such request which Seller sends
to any of its security holders, and any reports or registration statements
that Servicer files with the Securities and Exchange Commission or any
national securities exchange other than registration statements relating to
employee benefit plans and to registrations of securities for selling
security holders;
(d) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which Seller or any Originator files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or which Seller or any Originator receives
from the Pension Benefit Guaranty Corporation;
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(e) TERMINATION EVENTS. As soon as possible and in any event within
five days after the occurrence of each Termination Event and each Unmatured
Termination Event, written statement of the vice president and treasurer,
chief financial officer or chief accounting officer of Seller setting forth
details of such Event and the action that Seller proposes to take with
respect thereto;
(f) LITIGATION. As soon as possible and in any event within three
Business Days of Seller's or any Originator's knowledge thereof, notice of
(i) any litigation, investigation or proceeding which may exist at any time
which could have a material adverse effect on the business, operations,
property or financial condition of Seller or any Originator or impair the
ability of Seller or any Originator to perform its obligations under this
Agreement and (ii) any material adverse development in previously disclosed
litigation; and
(g) PURCHASE AND SALE AGREEMENT. Promptly after receipt thereof,
copies of all documents and other information delivered by any Originator
to Seller pursuant to the Purchase and Sale Agreement.
(h) OTHER. Promptly, from time to time, such other information
(including a listing by Obligor of all Pool Receivables), documents,
records or reports respecting the Receivables or the condition or
operations, financial or otherwise, of Seller as any Agent may from time to
time reasonably request in order to protect the interests of such Agent or
any Purchaser under or as contemplated by this Agreement.
SECTION 7.03. NEGATIVE COVENANTS OF SELLER. From the date hereof
until the date, following the Commitment Termination Date, on which all
Undivided Interests shall be reduced to zero and all other amounts owing
hereunder shall have been paid, Seller will not, without the prior written
consent of each Agent:
(a) SALES, LIENS, ETC. Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon or with respect to, any
Pool Receivable or related Contract or Related Security, or any interest
therein, or any lock-box account to which any Collections of any Pool
Receivable are sent, or any right to receive income from or in respect of
any of the foregoing.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
permitted in SECTION 8.02, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
Contract related thereto unless such extension, amendment or modification
does not affect the collectibility of the related Receivable.
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(c) CHANGE IN BUSINESS OR AGENT'S CREDIT AND COLLECTION POLICY. Make
any change in the character of its business or in the Agent's Credit and
Collection Policy.
(d) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Add or terminate any
bank as a Lock-Box Bank from those listed in SCHEDULE 6.01(o) or make any
change in its instructions to Obligors regarding payments to be made to
Servicer or Servicer or payments to be made to any Lock-Box Bank, unless
the Agents shall have received notice of such addition, termination or
change and duly executed copies of Lock-Box Agreements with each new Lock-
Box Bank in a form satisfactory to the Managing Agents.
(e) AMENDMENTS TO PURCHASE AND SALE AGREEMENT. Amend, supplement,
waive the application of any provision of, amend and restate or otherwise
modify the Purchase and Sale Agreement except in each case (i) in
accordance with the terms thereof and (ii) with the prior written consent
of each Agent.
(f) FIXED CHARGE COVERAGE RATIO. At any time fail to keep and
maintain the ratio ("FIXED CHARGE COVERAGE RATIO") of Net Income Available
for Fixed Charges, determined as of the last day of each fiscal quarter for
the immediately preceding Four-Quarter Period, to Fixed Charges for such
Four-Quarter Period, at not less than 1.60:1.00.
(g) CONSOLIDATED NET WORTH. At any time fail to keep and maintain
Consolidated Net Worth at an amount greater than or equal to sum of (i)
$60,000,000 (or, if the Seller shall establish a reserve in respect of the
anticipated sale of Seller's Headquarters, $60,000,000 minus the amount of
such reserve, but in no event shall the resulting Consolidated Net Worth be
less than $55,000,000) plus, (ii) 50% of Consolidated Net Income (or if
such Consolidated Net Income is a deficit then no change) for the period
from October 2, 1994 to and including the date of determination, plus (iii)
75% of the net proceeds to the Seller from the sale of shares of the
Seller's capital stock.
(h) CONSOLIDATED FUNDED DEBT TO TOTAL CAPITALIZATION. At any time
permit the Seller's Consolidated Funded Debt to exceed 60% of its Total
Capitalization.
(i) SOURCE OF BUSINESS. At any time permit more than 50% of Seller's
aggregate consolidated revenues to be derived from businesses other than
from the protective and/or correctional services business.
(j) MERGERS, ACQUISITIONS, LINE OF BUSINESS. Be a party to any merger
or consolidation, or purchase or otherwise acquire all or substantially all
of the assets, or any stock of any class of, or any partnership or joint
venture interest in any other Person, or, except in the
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ordinary course of its business, sell transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse,
any receivables (other than pursuant hereto), or permit any Subsidiary to
do any of the foregoing, PROVIDED, HOWEVER, that:
(A) any Subsidiary may merge or consolidate with or into Seller
or any wholly-owned Subsidiary so long as in any merger or
consolidation involving Seller, Seller shall be the surviving or
continuing corporation;
(B) Seller may consolidate or merge with any other corporation
if (1) either (x) Seller shall be the surviving or continuing
corporation or (y) the surviving corporation is organized and existing
under the laws of the United States of America or any state thereof or
the District of Columbia and such continuing or surviving corporation
expressly assumes in writing, in form and substance satisfactory to
the Agent, all obligations of Seller under this Agreement, (2) at the
time of such consolidation or merger and after giving effect thereto
no Unmatured Termination Event or Termination Event shall have
occurred and be continuing and (3) after giving effect to such
consolidation or merger Seller or such surviving corporation, as the
case may be, could incur at least $1.00 of additional Consolidated
Funded Debt without causing Consolidated Funded Debt to exceed 60% of
Total Capitalization;
(C) any Subsidiary may sell, lease or otherwise dispose of all
or any substantial part of its assets to Seller or any wholly-owned
Subsidiary; and
(D) Seller and each Subsidiary may enter into, any agreement,
contract or arrangement, providing for the acquisition of any Person
or all or substantially all of the assets of any Person (however
structured); but if the amount to be paid exceeds $5,000,000, Seller
may do so only if it shall, at least 30 days prior to consummation of
such transaction, have furnished to each Agent a certificate of an
authorized financial officer of Seller (x) certifying that after
giving effect to such acquisition no Unmatured Termination Event or
Termination Event will have occurred hereunder, and (y) containing
calculations conclusively demonstrating that after giving effect to
the proposed transaction, and for the prior twelve months, if the
transaction had been consummated at the beginning of such twelve month
period, Seller will not be, and would not have been, in violation of
any covenant contained in SECTIONS 7.03(f) and 7.03(g) hereof.
(k) CORPORATE IDENTITY. At any time change its name, identity,
corporate structure or location unless at least 10
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days prior thereto Seller shall have delivered to the Administrative Agent
UCC financing statements or other statements amending or otherwise
modifying UCC financing statements filed hereunder in order to maintain a
first perfected ownership interest in the Purchasers hereunder.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. DESIGNATION OF SERVICER. (a) SELLER AS INITIAL
SERVICER. The servicing, administering and collection of the Pool Receivables
shall be conducted by the Person designated as Servicer hereunder ("SERVICER")
from time to time in accordance with this SECTION 8.01. Until the Administrative
Agent gives to Seller a Successor Notice (as defined in SECTION 8.01(b)), Seller
is hereby designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
(b) SUCCESSOR NOTICE; SERVICER TRANSFER EVENTS. Upon Seller's receipt of
a notice from the Administrative Agent (provided with the written consent of the
Managing Agents) of the Administrative Agent's designation of a new Servicer (a
"SUCCESSOR NOTICE"), Seller agrees that it will terminate its activities as
Servicer hereunder in a manner that the Agents believe will facilitate the
transition of the performance of such activities to the new Servicer, and the
Administrative Agent (or its designee) shall assume, until a new Servicer is
appointed or designated, each and all of Seller's said obligations to service
and administer such Receivables, on the terms and subject to the conditions
herein set forth, and Seller shall use its best efforts to assist the
Administrative Agent (or its designee) in assuming such obligations. The
Administrative Agent will not give Seller a Successor Notice until after the
occurrence of any Termination Event listed in any of CLAUSES (a), (e), (f),
(g),(h), (i), (j) or (k) of SECTION 10.01 or any event which, in the reasonable
opinion of the Administrative Agent (with the consent of both Managing Agents),
could have a material adverse effect on Seller's ability to perform its
obligations as Servicer hereunder(any such Termination Event or other event
being herein called a "SERVICER TRANSFER EVENT"), in which case such Successor
Notice may be given at any time in the Administrative Agent's discretion or upon
direction by any Managing Agent. If Seller disputes the occurrence of a
Servicer Transfer Event, Seller may take appropriate action to resolve such
dispute; PROVIDED that Seller must terminate its activities hereunder as
Servicer and allow the newly designated Servicer to perform such activities on
the date provided by the Administrative Agent as described above,
notwithstanding the commencement or continuation of any proceeding to resolve
the aforementioned dispute. The Administrative Agent may at any time after the
occurrence of a Servicer Transfer Event designate, with the consent of the
Managing Agents, any other Person as successor Servicer
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hereunder. If at any time the Administrative Agent shall be servicing
hereunder, upon the transfer of servicing by the Administrative Agent to any
successor Servicer, the Administrative Agent shall no longer perform the duties
of Servicer and shall have no further obligations or liabilities whatsoever in
respect thereof.
(c) Subcontracts. Servicer may, with the prior consent of the Agents,
subcontract with any other person for servicing,administering or collecting the
Pool Receivables, provided that Servicer shall remain liable for the performance
of the duties and obligations of Servicer pursuant to the terms hereof.
SECTION 8.02. DUTIES OF SERVICER. (a) APPOINTMENT; DUTIES IN
GENERAL. Each of Seller, each Purchaser and each Agent hereby appoints as its
agent Servicer, as from time to time designated pursuant to SECTION 8.01, to
enforce its rights and interests in and under the Pool Receivables, the Related
Security and the Contracts. Servicer shall take or cause to be taken all such
actions as may be necessary or advisable in accordance with the Agent's Credit
and Collection Policy or otherwise at the direction or with the consent of the
Agents to collect each Pool Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence.
Servicer shall adopt the Agent's Credit and Collection Policy for the servicing
of the Pool Receivables.
(b) ALLOCATION OF COLLECTIONS; SEGREGATION. Servicer shall set aside for
the account of Seller and each Purchaser their respective allocable shares of
the Collections of Pool Receivables in accordance with SECTIONS 3.01 and 3.02
but shall not be required (unless otherwise requested by any Agent, and subject
to SECTION 3.07) to segregate the funds constituting such portions of such
Collections, or to segregate the respective allocable shares of RCC, RCC Program
Support Providers on the onehand, and Enterprise and the Enterprise Liquidity
Provider and the Enterprise Credit Support Provider on the other hand, as
applicable, prior to the remittance thereof in accordance with said Sections. If
instructed by any Agent, Servicer shall segregate and deposit with the
Administrative Agent such allocable shares of Collections of Pool Receivables,
set aside for the Purchasers, RCC Program Support Providers, the Enterprise
Liquidity Provider and Enterprise Credit Support Provider and any other assignee
from any Purchaser of any Undivided Interest, on the first Business Day
following receipt by Servicer of such Collections in immediately available
funds.
(c) Modification of Receivables. So long as no Termination Event or
Unmatured Termination Event shall have occurred and be continuing, Seller, while
it is Servicer, may, strictly in accordance with the Agent's Credit and
Collection Policy, (i) extend the maturity or adjust the Unpaid Balance of any
Defaulted Receivable as it may determine to be appropriate to maximize
Collections thereof; PROVIDED THAT, after giving effect to such extension of
maturity, the Aggregate Required Allocations will
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not exceed the Required Allocations Limit, and (ii) adjust the Unpaid Balance of
any Receivable to reflect the reductions or cancellations described in the first
sentence of SECTION 3.03(a).
(d) DOCUMENTS AND RECORDS. Seller shall, and shall cause each Originator,
to deliver to Servicer, and Servicer shall hold in trust for Seller, each
Originator and the Purchasers in accordance with their respective interests, all
documents,instruments and records (including, without limitation, computer tapes
or disks) that evidence or relate to Pool Receivables.
(e) CERTAIN DUTIES TO SELLER. Servicer shall, as soon as practicable
following receipt, turn over to Seller (i) that portion of Collections of Pool
Receivables representing its undivided interest therein, less, in the event
Seller is no longer Servicer, all reasonable and appropriate out-of-pocket costs
and expenses of Servicer of servicing, General. Each of Seller, each Purchaser
and each Agent hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in and
under the Pool Receivables, the Related collecting and administering the Pool
Receivables to the extent not covered by the Servicer's Fee received by it, and
(ii) the Collections of any Receivable which is not a Pool Receivable.
Servicer, if other than Seller, shall, as soon as practicable upon
demand,deliver to Seller all documents, instruments and records in its
possession that evidence or relate to Receivables of Seller other than Pool
Receivables, and copies of documents, instruments and records in its possession
that evidence or relate to Pool Receivables.
(f) Upon the occurrence of any Lock-Box Control Event (as such term is
defined in the Letter Agreement (Segregation of Funds) of even date herewith
among Wackenhut, BofA and NationsBank), Servicer shall deliver to the
Administrative Agent,in its capacity as Lock-Box Segregation Agent thereunder, a
list,referred to in such Letter Agreement as the Identification List,setting
forth those Collections held by Servicer and by each Lock-Box Bank and received
prior to said Business Day, and designating such Collections as Collections in
respect of Pool Receivables or as Collections not subject to this Agreement.
The Segregation Agent's duties shall be governed solely by the terms of such
Letter Agreement and no other duties or terms shall be implied therein.
SECTION 8.03. RIGHTS OF THE AGENTS. (a) NOTICE TO OBLIGORS. At any
time the Administrative Agent upon request by a Managing Agent or otherwise
(after notice to Seller or Servicer)may notify the Obligors of Pool Receivables,
or any of them, of the ownership of Undivided Interests by the Purchasers.
(b) NOTICE TO LOCK-BOX BANKS. At any time following the earliest to occur
of (i) the occurrence of a Termination Event,(ii) any of the Conditions
Precedent shall not be satisfied and any Agent shall have requested
implementation of the Settlement procedures set forth in SECTION 3.02, and (iii)
the warranty in SECTION 6.01(i) shall no longer be true, the Administrative
Agent is hereby authorized to give notice to the Lock-Box Banks, as provided in
the Lock-Box Agreements, of the transfer to the
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Administrative Agent of dominion and control over the lock-box accounts to which
the Obligors of Pool Receivables make payments. Seller hereby transfers to the
Administrative Agent, effective when the Administrative Agent shall give notice
to the Lock-Box Banks as provided in the Lock-Box Agreements, the exclusive
dominion and control over such lock-box accounts, and shall take any further
action that the Administrative Agent (whether upon request of any Managing Agent
or otherwise) may reasonably request to effect such transfer.
(c) RIGHTS ON SERVICER TRANSFER EVENT. At any time following the
designation of a Servicer other than Seller pursuant to SECTION 8.01:
(i) The Administrative Agent (with the written consent of the
Managing Agents) may direct the Obligors of Pool Receivables, or any of
them, to pay all amounts payable under any Pool Receivable directly to the
Administrative Agent or its designee.
(ii) Seller shall, and shall direct each Originator to, at the
Administrative Agent's request (with the written consent of the Managing
Agents) and at Seller's expense, give notice of such ownership to each said
Obligor and direct that payments be made directly to the Administrative
Agent or its designee.
(iii) Seller shall, and shall direct each Originator to, at the
Administrative Agent's request (with the written consent of the Managing
Agents), (A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks) which
evidence the Pool Receivables, and the related Contracts and Related
Security, or which are otherwise necessary or desirable to collect such
Pool Receivables, and shall make the same available to the Administrative
Agent at a place selected by the Administrative Agent or its designee, and
(B) segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Pool Receivables in a manner
acceptable to the Administrative Agent and shall, promptly upon receipt,
remit all such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to the Administrative Agent or its
designee.
(iv) Each of Seller and the Purchasers hereby authorizes the
Administrative Agent to take any and all steps in Seller's name and on
behalf of Seller and the Purchasers which are necessary or desirable, in
the determination of the Administrative Agent, to collect all amounts due
under any and all Pool Receivables, including, without limitation,
endorsing Seller's name on checks and other instruments representing
Collections and enforcing such Pool Receivables and the related Contracts.
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SECTION 8.04. RESPONSIBILITIES OF SELLER. Anything herein to the
contrary notwithstanding:
(a) Seller shall, and shall cause each Originator to, (i) perform all
of its obligations under the Contracts related to the Pool Receivables and
under the related purchase orders and other agreements to the same extent
as if Undivided Interests had not been sold hereunder and the exercise by
any Agent of its rights hereunder shall not relieve Seller from such
obligations and (ii) pay all taxes as and when due.
(b) Neither any Agent nor any Purchaser shall have any obligation or
liability with respect to any Pool Receivables, Contracts related thereto
or any other related purchase orders or other agreements, nor shall any of
them be obligated to perform any of the obligations of Seller or any
Originator thereunder.
(c) Seller hereby grants to the Administrative Agent, for the benefit
of the Managing Agents and the Purchasers, and the Administrative Agent
grants to Servicer an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of Seller all
steps which are necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted by
Seller or transmitted or received by any Purchaser (whether or not from
Seller) in connection with any Receivable.
SECTION 8.05. FURTHER ACTION EVIDENCING PURCHASES. (a) Seller will,
and will cause each Originator to, from time to time, at its expense, promptly
execute and deliver all further instruments and documents, and take all further
action that any Agent may reasonably request in order to perfect, protect or
more fully evidence the Purchases hereunder and the resulting Undivided
Interests, or to enable the Purchasers or the Agents to exercise or enforce any
of their respective rights hereunder or under the Certificate of Assignments.
Without limiting the generality of the foregoing, Seller will upon the request
of any Agent: execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate and will maintain such procedures as
are necessary to permit daily identification of Pool Receivables and Eligible
Receivables;
(b) Seller hereby authorizes the Administrative Agent to file one or more
financing or continuation statements on behalf of and for the benefit of the
Purchasers, and amendments thereto and assignments thereof, relative to all or
any of the Pool Receivables and the Related Security now existing or hereafter
arising in the name of Seller. If Seller fails to perform any of its agreements
or obligations under this Agreement, the Administrative Agent may (but shall not
be required to) itself
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perform, or cause performance of, such agreement or obligation,and the expenses
of the Administrative Agent incurred in connection therewith shall be payable by
Seller as provided in SECTION 13.01.
(c) Without limiting the generality of SUBSECTION (a), Seller will, not
earlier than six (6) months and not later than three (3) months from the fifth
anniversary of the date of filing of the financing statement referred to in
SECTION 5.01 (f) or any other financing statement filed pursuant to this
Agreement or in connection with any Purchase hereunder, unless the Commitment
Termination Date shall have occurred and all Undivided Interests shall have been
reduced to zero
(i) execute and deliver and file or cause to be filed an appropriate
continuation statement with respect to such financing statement; and
(ii) deliver or cause to be delivered to the Agents an opinion of the
counsel for Seller referred to in SECTION 5.01(i) (or other counsel for
Seller reasonably satisfactory to the Agents), in form and substance
reasonably satisfactory to the Agents, confirming and updating the opinion
delivered pursuant to SECTION 5.01(i) with respect to the matters set forth
in paragraph no. 7 of EXHIBIT 5.01(i) and otherwise to the effect that all
of the Undivided Interests hereunder continue to be first and prior
perfected security interests.
SECTION 8.06. APPLICATION OF COLLECTIONS. Any payment by an
Obligor in respect of any indebtedness owed by it to Seller shall, except as
otherwise specified by such Obligor or otherwise required by contract or law
and unless the Agent instructs otherwise, be applied as a Collection of any
Pool Receivable or Receivables of such Obligor to the extent of any amounts
then due and payable thereunder before such payment is applied to any other
indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. GRANT OF SECURITY INTEREST. To secure all obligations
of Seller arising in connection with this Agreement, the Certificate of
Assignments and each other Agreement Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
Indemnified Amounts, payments on account of Collections received or deemed to be
received, fees and Earned Discount, in each case PRO RATA according to the
respective amounts thereof, Seller hereby ratably (in proportion to their
respective Aggregate Purchaser's Investments) assigns and grants to each
Purchaser a security interest in all of Seller's (i) right, title and interest
(including specifically any undivided interest retained
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by Seller hereunder) now or hereafter existing in, to and under all the Pool
Receivables, the Related Security and all Collections with regard thereto and
(ii) rights, remedies, powers and privileges under and in respect of the
Purchase and Sale Agreement.
SECTION 9.02. FURTHER ASSURANCES. The provisions of SECTION 8.05
shall apply to the security interest granted under SECTION 9.01 as well as to
the Purchases and all Undivided Interests hereunder.
SECTION 9.03. REMEDIES. Upon the occurrence of a Termination Event,
Purchaser shall have, with respect to the collateral granted pursuant to SECTION
9.01, and in addition to all other rights and remedies available to the
Purchasers or the Agents under this Agreement or other applicable law, all the
rights and remedies of a secured party upon default under the UCC.
ARTICLE X
TERMINATION EVENTS
SECTION 10.01. TERMINATION EVENTS. If any of the following events
("TERMINATION EVENTS") shall occur:
(a) (i) Servicer (if Seller) shall fail to perform or observe any
term, covenant or agreement hereunder (other than as referred to in CLAUSE
(ii) next following) and such failure shall remain unremedied for five
Business Days or (ii) Servicer (if Seller) or Seller (if not Servicer)
shall fail to make any payment or deposit to be made by it hereunder when
due; or
(b) Any representation or warranty made or deemed to be made by
Seller, Servicer or any Originator (or any of their respective officers)
under or in connection with this Agreement, any other Transaction Document
or any Periodic Report or other information or report delivered pursuant
hereto shall prove to have been false or incorrect in any material respect
when made and, if such condition shall be amenable to remedy, such
condition shall continue unremedied for a period of ten Business Days after
(i) written notice thereof by any Agent or (ii) Seller, Servicer or such
Originator has actual knowledge thereof.
(c) Seller, Servicer or any Originator shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement
or any other Transaction Document on their respective parts to be performed
or observed and any such failure shall remain unremedied for five Business
Days after the date on which the Seller, Servicer or such Originator knew
or should have known of such failure; or
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(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the issuance
of indebtedness for borrowed money in excess of $5,000,000 of, or
guaranteed by, Seller, Servicer, any Originator or of any Affiliate of
either thereof, which default if unremedied, uncured, or unwaived (with or
without the passage of time or the giving of notice or both) would permit
acceleration of the maturity of such indebtedness and such default shall
have continued unremedied, uncured or unwaived for a period long enough to
permit such acceleration and any notice of default required to permit
acceleration shall have been given; or any default under any agreement or
instrument relating to the purchase of receivables of Seller, any
Originator or of any Affiliate of either thereof, or any other event, shall
occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such default is
to terminate, or permit the termination of, the commitment of any party to
such agreement or instrument to purchase receivables or the right of Seller
to reinvest in receivables the principal amount paid by any party to such
agreement or instrument for interest in receivables; or
(e) An Event of Bankruptcy shall have occurred and remained
continuing with respect to Seller, Servicer, any Originator or any
Affiliate of any thereof; or
(f) (i) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not disclosed
in writing by Seller to each Agent and Purchaser prior to the date of
execution and delivery of this Agreement is pending against Seller,
Servicer, any Originator or any Affiliate of any thereof, or (ii) any
material development not so disclosed has occurred in any litigation
(including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed, which, in the case of
CLAUSE (i) or (ii), in the opinion of any Agent, is likely to materially
adversely affect the financial position or business of Seller, Servicer,
any Originator or any Affiliate of any thereof or impair the ability of
Seller or Servicer to perform its obligations under this Agreement; or
(g) After any Settlement Date, the Aggregate Required Allocations
shall exceed the Required Allocations Limit; or
(h) The Losses to Liquidations Ratio exceeds 2%; or
(i) Three-Month Default Ratio at any time exceeds 6%; or
(j) Three-Month Dilution Ratio at any time exceeds 4% (it being
understood and agreed that the Managing Agents may modify such percentage
after the expiration of six months
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from the date hereof based upon the actual dilution experience during such
six months period); or
(k) There shall have occurred any event which materially adversely
affects the collectibility of the Pool Receivables or there shall have
occurred any other event which materially adversely affects the ability of
Seller, any Originator or Servicer to collect Pool Receivables or the
ability of Seller or Servicer to perform hereunder or the warranty in
Section 6.01(i) (y) shall not be true at any time; or
(l) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any of the
assets of Seller, Servicer, any Originator or any Affiliate and such lien
shall not have been released within 30 days, or the Pension Benefit
Guaranty Corporation shall, or shall indicate its intention to, file notice
of a lien pursuant to Section 4068 of the Employee Retirement Income
Security Act of 1974 with regard to any of the assets of Seller, Servicer
or any Originator; or
(m) A Purchase and Sale Termination Event shall have occurred; or
(n) The Wackenhut Family shall at any time, directly or indirectly,
control less than 33 1/3% of the voting securities of Seller, Servicer or
any Originator.
(o) Purchasers fail for any reason to have a perfected first priority
security interest as described in Section 9.01; or
(p) The Required Allocations shall at any time exceed the Required
Allocations Limit.
SECTION 10.02. REMEDIES. (a) OPTIONAL TERMINATION. Upon the
occurrence of a Termination Event (other than a Termination Event described in
SUBSECTION (a), (e), (f), or (p) of SECTION 10.01), either Managing Agent shall,
at the request, or may with the consent, of its related Purchaser, by notice to
Seller declare the Commitment Termination Date to have occurred.
(b) AUTOMATIC TERMINATION. Upon the occurrence of a Termination Event
described in SUBSECTION (a), (e), (f) or (p) of SECTION 10.01, the Commitment
Termination Date shall be deemed to have occurred automatically upon the
occurrence of such event; PROVIDED HOWEVER, that with respect to any proceeding
instituted against Seller pursuant to 11 U.S.C. Section 303 (an "INVOLUNTARY
FEDERAL PROCEEDING"), the settlement procedures described in SECTION 3.02 shall
become applicable upon the commencement of such Proceeding and no further
Purchases or Reinvestments of Collections shall be made; and provided, further,
that if such Involuntary Federal Proceeding is dismissed within 60 days after
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its commencement, and if no other Termination Event has occurred, then following
such dismissal, the Commitment shall be reinstated as if the Commitment
Termination Date had not occurred upon the commencement of such Involuntary
Federal Proceeding.
(c) ADDITIONAL REMEDIES. Upon any termination of the Facility pursuant to
this SECTION 10.02, the Agents and the Purchasers shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative. Without limiting the
foregoing or the general applicability of ARTICLE XII hereof, (i) the occurrence
of a Termination Event shall not deny to any Purchaser any remedy in addition to
termination of the Commitment to which such Purchaser may be otherwise
appropriately entitled, whether at law or in equity, and (ii) following the
occurrence of any Termination Event a Purchaser may (without the Seller's
consent) elect to assign to any Person any Undivided Interest owned by such
Purchaser.
ARTICLE XI
THE AGENTS
SECTION 11.01. AUTHORIZATION AND ACTION. Each Purchaser hereby
appoints and authorizes its related Managing Agent and the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to such Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. The Managing Agents hereby
appoint and authorize the Administrative Agent to take such action as agent on
their respective behalfs and to exercise such powers under this Agreement as are
delegated to the Administrative Agent hereunder, together with such powers as
are reasonably incidental thereto. The provisions of this ARTICLE XI are solely
for the benefit of appropriate Agents and the Purchasers and Seller shall not
have any rights as a third-party beneficiary or otherwise under any of the
provisions hereof. In performing their functions and duties hereunder, the
Managing Agents and the Administrative Agent, respectively, shall act solely as
the agent, in the case of the Managing Agents, for its respective Purchaser and,
in the case of the Administrative Agent, for the Managing Agents, and do not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Seller or any Originator or any of their
respective successors and assigns. The Administrative Agent shall distribute all
Collections and other amounts received or acquired by it hereunder on behalf of
the Purchasers or their respective Managing Agents to such Purchasers or
Managing Agents in accordance with SECTIONS 3.01 and 3.02. Enterprise has
separately appointed NationsBank as its Managing Agent.
SECTION 11.02. AGENTS' RELIANCE, ETC. Neither any Agent nor any of
its directors, officers, agents or employees
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shall be liable for any action taken or omitted to be taken by it or such Agent
under or in connection with this Agreement (including, without limitation, the
servicing, administering or collecting Pool Receivables as Servicer pursuant to
SECTION 8.01), except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, each Agent: (a)
may consult with legal counsel (including counsel for Seller), independent
certified public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Purchaser or any other holder of any interest
in Pool Receivables and shall not be responsible to any Purchaser or any such
other holder for any statements, warranties or representations made in or in
connection with this Agreement; (c) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of Seller or to inspect the property
(including the books and records) of Seller; (d) shall not be responsible to any
Purchaser or any other holder of any interest in Pool Receivables for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, the Certificate of Assignments or any Agreement Document; and
(e) shall incur no liability under or in respect of this Agreement by acting
upon any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by facsimile or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 11.03. AGENTS AND AFFILIATES. BofA and NationsBank and their
respective Affiliates may generally engage in any kind of business with Seller,
Servicer, any Originator or any Obligor, any of their respective Affiliates and
any Person who may do business with or own securities of Seller or any Obligor
or any of their respective Affiliates, all as if BofA and NationsBank were not
Agents and without any duty to account therefor to any Purchaser or any other
holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. RESTRICTIONS ON ASSIGNMENTS. (a) Neither Seller nor
any Purchaser may assign its rights hereunder or any interest herein without the
prior written consent of the Agents, and no Purchaser may assign any Undivided
Interest (or portion thereof) to any Person without the prior written consent
of Seller; PROVIDED, HOWEVER, that
(i) RCC may assign, or grant a security interest in, any Undivided
Interest (or portion thereof) owned by it to BofA, any RCC Program Support
Provider (or any successor of
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any thereof by merger, consolidation or otherwise), any Affiliate of BofA,
any RCC Program Support Provider (which may then assign any such Undivided
Interest (or portion thereof) so assigned or any interest therein to such
party or parties as it may choose);
(ii) Enterprise may assign or grant a security interest in, any
Undivided Interest (or portion thereof) owned by it to NationsBank, the
Enterprise Liquidity Provider or the Enterprise Credit Support Provider (or
any successor thereof by merger, consolidation or otherwise), any Affiliate
of Enterprise (including any securitization vehicle managed by NationsBank)
or such Enterprise Liquidity Provider or Enterprise Credit Support Provider
(which may then assign any such Undivided Interest (or portion thereof) so
assigned or any interest therein to such party or parties as it may
choose); and
(iii) Each Purchaser may assign and grant a security interest in any
interest in, to and under any Undivided Interest owned by it, this
Agreement and the other Agreement Documents to BofA or NationsBank, as
applicable, as collateral agent or collateral trustee, and any successor in
such capacity, to secure each such Purchaser's obligations under or in
connection with its Commercial Paper Notes, in the case of RCC, any RCC
Program Support Agreement, and in the case of Enterprise, the Enterprise
Liquidity Agreement, the Enterprise Credit Support Agreement and certain
other obligations of any Purchaser incurred in connection with the funding
of the Purchases and Reinvestments hereunder, which assignment and grant of
a security interest shall not be considered an "assignment" for purposes of
SECTION 12.01(b), SECTION 12.03 or 12.04 or, prior to the enforcement of
such security interest, for purposes of any other provision of this
Agreement.
(b) Seller agrees to advise the Agents within five Business Days after
notice to Seller of any proposed assignment by a Purchaser of any Undivided
Interest (or portion thereof), not otherwise permitted under SUBSECTION (a), of
Seller's consent or non-consent to such assignment. If Seller does not consent
to such assignment, such Purchaser may immediately assign such Undivided
Interest (or portion thereof), in the case of RCC, to BofA, the RCC Program
Support Providers or any Affiliate of BofA or the RCC Program Support Providers
and in the case of Enterprise, to NationsBank, the Enterprise Liquidity Provider
or the Enterprise Credit Support Provider or any Affiliate of NationsBank, the
Enterprise Liquidity Provider or the Enterprise Credit Support Provider. All of
the aforementioned assignments shall be upon such terms and conditions as such
Purchaser and the assignee may mutually agree.
SECTION 12.02. RIGHTS OF ASSIGNEE. Upon the assignment by the
Purchaser of any Undivided Interest (or portion thereof) owned by it in
accordance with this ARTICLE XII, (a) the
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assignee receiving such assignment shall have all of the rights of such
Purchaser hereunder with respect to such Undivided Interest (or such parties
thereof) and (b) all references to such Purchaser in SECTION 4.02 shall be
deemed to apply to such assignee to the extent of its interest the related
Purchaser's Investment and the related Collections.
SECTION 12.03 AUTHORIZATION OF MANAGING AGENT. Each Purchaser
authorizes its Managing Agent to, and the Managing Agent agrees that it shall,
endorse the Certificate(s) of such Purchaser to reflect any assignments made
pursuant to this Article XII or otherwise.
SECTION 12.04. NOTICE OF ASSIGNMENT. Each Purchaser shall provide
notice to Seller and the Agents of any assignment of any Undivided Interest (or
portion thereof) by such Purchaser to any assignee.
SECTION 12.05. EVIDENCE OF ASSIGNMENT; ENDORSEMENT OF CERTIFICATE.
Any assignment of any Undivided Interest (or portion thereof) to any Person may
be evidenced by an instrument of assignment in the form of EXHIBIT 12.05 or by
such other instrument(s) or document(s) as may be satisfactory to the selling
Purchaser, the Agents and the assignee. Each Purchaser authorizes its related
Managing Agent to, and such Managing Agent agrees that it shall, endorse its
Certificate of Assignments to reflect any assignments made pursuant to this
ARTICLE XII or otherwise.
SECTION 12.06. RIGHTS OF SUPPORT PROVIDERS. Seller hereby agrees
that, upon notice to Seller, any RCC Program Support Provider, the Enterprise
Liquidity Provider, the Enterprise Credit Support Provider and the collateral
agent or collateral trustee referred to in SECTION 12.01 (collectively, the
"ASSIGNEE PARTIES", each an "ASSIGNEE PARTY"), or any of them, may exercise all
the respective rights of BofA and NationsBank (or RCC or Enterprise, as
applicable) respectively hereunder, with respect to Undivided Interests, and
Collections with respect thereto, which have been assigned (or in which a
security interest has been granted) to such Assignee Party, with respect to all
Undivided Interests (or portions thereof), and Collections with respect thereto,
which are owned by RCC or Enterprise, as applicable (and not subject to an
assignment or a separate security interest in favor of such RCC Program Support
Provider under an RCC Program Support Agreement with such RCC Program Support
Provider or the Enterprise Liquidity Provider or Enterprise Credit Support
Provider), and all other rights and interests of RCC or Enterprise, as
applicable in, to or under this Agreement or any other Agreement Document.
Without limiting the foregoing, upon such notice such Assignee Party may request
Servicer to segregate its allocable shares of Collections, in accordance with
SECTION 8.02(a), may give a Successor Notice pursuant to SECTION 8.01(a), may
give or require the Administrative Agent to give notice to the Lock-Box Banks as
referred to in SECTION 8.03(a), and may direct the Obligors of
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Pool Receivables to make payments in respect thereof directly to an account
designated by them (provided that such Assignee Party shall designate a single
account for the making of such payments with respect to any Pool Receivable), in
each case, to the same extent as BofA or NationsBank (or RCC or Enterprise, as
the case may be) might have done.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNITIES BY SELLER. (a) GENERAL INDEMNITY. Without
limiting any other rights which any such Person may have hereunder or under
applicable law, Seller hereby agrees to indemnify each of the Agents, the
Purchasers, each RCC Program Support Provider, the Enterprise Liquidity Support
Provider, the Enterprise Credit Support Provider, BofA, NationsBank, each of
BofA's and NationsBank's Affiliates, their respective successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each an "Indemnified
Party"), forthwith on demand from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys fees and disbursements (all of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them
arising out of or relating to this Agreement or the ownership or funding of any
Undivided Interest or in respect of any Receivable or any Contract, EXCLUDING,
HOWEVER, (a) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of such Indemnified Party or (b) recourse
(except as otherwise specifically provided in this Agreement) for Defaulted
Receivables. Without limiting the foregoing, Seller shall indemnify each
Indemnified Party for Indemnified Amounts arising out of or relating to:
(i) the transfer by Seller of any interest in any Receivable other
than the transfer of an Undivided Interest to a Purchaser pursuant to this
Agreement and the grant of a security interest to the Purchasers pursuant
to SECTION 9.01;
(ii) the breach of any representation or warranty made by Seller (or
any of its officers) under or in connection with this Agreement, any other
Transaction Document, any Periodic Report or any other information or
report delivered by Seller pursuant hereto, which shall have been false or
incorrect in any material respect when made or deemed made and any losses,
if any, relating to Receivables included in the Receivables Pool as
Eligible Receivables that were 60 days or more past due on the date of
their inclusion and any amounts relating to dilutions on Eligible
Receivables included in the Receivables Pool;
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(iii) the failure by Seller to comply with any applicable law, rule
or regulation with respect to any Pool Receivable or the related Contract,
or the nonconformity of any Pool Receivable or the related Contract with
any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in any Purchaser an
undivided percentage ownership interest, to the extent of each Undivided
Interest owned by it hereunder, in the Receivables in, or purporting to be
in, the Receivables Pool, free and clear of any Adverse Claim, other than
an Adverse Claim arising solely as a result of an act of any such
Purchaser, any assignee from any such Purchaser or any Agent (when used in
this CLAUSE (iv), an Adverse Claim shall include any lien for taxes whether
accrued and payable or not), whether existing at the time of any Purchase
or Reinvestment of Undivided Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables in,
or purporting to be in, the Receivables Pool, whether at the time of any
Purchase or Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including, without limitation, a
defense based on such Receivable's or the related Contract's not being a
legal, valid and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting from the sale
of the merchandise or services related to such Receivable or the furnishing
or failure to furnish such merchandise or services;
(vii) any failure of Seller, as Servicer or otherwise, to perform its
duties or obligations in accordance with the provisions of ARTICLE VIII;
(viii) any products liability claim or personal injury or property
damage suit or other similar or related action arising out of or in
connection with merchandise or services that are the subject of any Pool
Receivable; or
(ix) any tax or governmental fee or charge (including, without
limitation, all intangibles and similar taxes and all other taxes, but not
including taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and expenses,
including the reasonable fees and expenses of counsel in defending against
the same, which may arise by reason of the purchase or ownership of any
Undivided
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Interest, or any other interest in the Pool Receivables or in any goods
which secure any such Pool Receivables.
(b) CONTEST OF TAX CLAIM; AFTER-TAX BASIS. If any Indemnified Party shall
have notice of any attempt to impose or collect any tax or governmental fee or
charge for which indemnification will be sought from Seller under SECTION
13.01(a) (ix), such Indemnified Party shall give prompt and timely notice of
such attempt to Seller and Seller shall have the right, at its expense, to
conduct or participate in any proceedings resisting or objecting to the
imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the payment of any of the aforesaid taxes and the receipt
of the indemnity provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax or refund on the amount
of tax measured by net income or profits which is or was payable by the
Indemnified Party.
(c) CONTRIBUTION. If for any reason the indemnification provided above in
this SECTION 13.01 is unavailable to an Indemnified Party or is insufficient to
hold an Indemnified Party harmless, then Seller shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Party on the one hand and Seller
on the other hand but also the relative fault of such Indemnified Party as well
as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Seller therefrom
shall in any event be effective unless the same shall be in writing and signed
by (a) Seller, each Agent and each Purchaser (with respect to an amendment) or
(b) each Agent and each Purchaser (with respect to a waiver or consent by them)
or Seller (with respect to a waiver or consent by it), as the case may be, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 14.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including Telex and facsimile communication) and shall be personally delivered
or sent by certified mail, postage prepaid, or by Telex, or by facsimile, to the
intended party at the address or Telex or facsimile number of such party set
forth under its name on the signature pages hereof or at such other address or
Telex or facsimile number as shall be
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designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, (a) if personally delivered,
when received, (b) if sent by certified mail, three Business Days after having
been deposited in the mail, postage prepaid, (c) if sent by overnight courier,
one Business Day after having been given to such courier, (d) if transmitted by
Telex, when sent, answer back confirmed, and (e) if transmitted by facsimile,
when sent, receipt confirmed by telephone or electronic means, except that
notices and communications pursuant to ARTICLE I shall not be effective until
received.
SECTION 14.03. NO WAIVER; REMEDIES. No failure on the part of any
Agent, BofA, NationsBank, any Affected Party, any Indemnified Party, any
Purchaser or any other holder of any Undivided Interest to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law. Without limiting the foregoing, each of BofA, NationsBank, each RCC Program
Support Provider and any Enterprise Liquidity Provider or Enterprise Credit
Support Provider is hereby authorized by Seller at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by BofA, NationsBank, any RCC
Program Support Provider, Enterprise Liquidity Provider or Enterprise Credit
Support Provider to or for the credit or the account of Seller, now or hereafter
existing under this Agreement, to the payment of any amounts owed by the Seller
hereunder to any Agent, any Affected Party, any Indemnified Party or any
Purchaser, or their respective successors and assigns; PROVIDED, HOWEVER, that
none of BofA, NationsBank, each RCC Program Support Provider, Enterprise
Liquidity Provider or Enterprise Credit Support Provider shall, through the
exercise of such setoff or otherwise, obtain payment with respect to any amounts
due to it (or their respective successors and assigns) which results in its or
their receiving more than their PRO RATA share of the aggregate of such amounts
due hereunder.
SECTION 14.04. BINDING EFFECT; SURVIVAL. This Agreement shall be
binding upon and inure to the benefit of Seller, the Agents, the Purchasers and
their respective successors and assigns, and the provisions of SECTION 4.02 and
ARTICLE XIII shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
PROVIDED, HOWEVER, nothing in the foregoing shall be deemed to authorize any
assignment not permitted by SECTION 12.01. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until such time, after the
Commitment Termination Date, as all Undivided Interests shall have been reduced
to zero. The
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rights and remedies with respect to any breach of any representation and
warranty made by Seller pursuant to ARTICLE VI and the indemnification and
payment provisions of ARTICLE XIII and SECTIONS 4.02, 14.05 and 14.07 shall be
continuing and shall survive any termination of this Agreement.
SECTION 14.05. COSTS, EXPENSES AND TAXES. In addition to its
obligations under ARTICLE XIII, Seller agrees to pay on demand:
(a) all costs and expenses incurred by each Agent, each Purchaser,
BofA, NationsBank, each RCC Program Support Provider, the Enterprise
Liquidity Provider, the Enterprise Credit Support Provider and their
respective Affiliates in connection with the negotiation, preparation,
execution and delivery, the administration (including periodic auditing) or
the enforcement of, or any actual or claimed breach of, or any amendment to
or waiver of any provision contained in this Agreement, the Certificate of
Assignments and the other Agreement Documents, including, without
limitation (i) the reasonable fees and expenses of counsel to any of such
Persons incurred in connection with any of the foregoing or in advising
such Persons as to their respective rights and remedies under any of the
Agreement Documents, and (ii) all reasonable out-of-pocket expenses
(including reasonable fees and expenses of independent accountants)
incurred in connection with any review of Seller's books and records either
prior to the execution and delivery hereof or pursuant to SECTION 7.01(c);
and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement, the Certificate of Assignments or the other Agreement
Documents, and agrees to indemnify each Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
SECTION 14.06. NO PROCEEDINGS. Seller, BofA and NationsBank,
individually and as Agents, each hereby agrees that it will not institute
against any Purchaser, or join any other Person in instituting against any
Purchaser, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of Event of Bankruptcy) so long as any Commercial
Paper Notes issued by such Purchaser shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any such
Commercial Paper Notes shall have been outstanding. The foregoing shall not
limit Seller's right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any Person other
than Seller.
SECTION 14.07A. BOFA PROGRAM CONFIDENTIALITY. (a) Each party hereto
(other than BofA) acknowledges that BofA regards the structure of the
transactions contemplated by this
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Agreement, and by each RCC Program Support Agreement, and the other Program
Documents referred to therein, to be proprietary, and each such party severally
agrees that:
(i) unless BofA shall otherwise agree in writing, and except as
provided in SUBSECTION (b), such party will not disclose to any other
person or entity:
(A) any information regarding, or copies of, this Agreement or
any transaction contemplated hereby,
(B) any information regarding the organization or business of
RCC generally, or
(C) any information regarding BofA which is designated by BofA
to such party in writing or otherwise as confidential or not otherwise
available to the general public
(the information referred to in CLAUSES (A), (B) and (C) above, whether
furnished by RCC, BofA, NationsBank, any RCC Program Support Provider, the
Enterprise Liquidity Agreement and Enterprise Credit Support Agreement, any
assignee of or participant in any rights or obligations of RCC, any RCC Program
Support Provider, the Enterprise Liquidity Provider and Enterprise Credit
Support Provider, or any attorney for or other representative of any of the
foregoing (each an "INFORMATION PROVIDER"), is collectively referred to as the
"INFORMATION"; PROVIDED, HOWEVER, "INFORMATION" shall not include any
information which is or becomes generally available to the general public or to
such party on a nonconfidential basis from a source other than BofA or any other
Information Provider, or which was known to such party on a nonconfidential
basis prior to its disclosure by BofA or any other Information Provider);
(ii) such party will make the Information available to only such of
its officers, directors, employees and agents who (A) in the good faith
belief of such party, have a need to know such Information, (B) are
informed by such party of the confidential nature of the Information and
the terms of this SECTION 14.07A, and (C) are subject to confidentiality
restrictions consistent with this SECTION 14.07A;
(iii) such party will use the Information solely for the purposes of
evaluating, administering and enforcing the transactions contemplated by
this Agreement and making any necessary business judgments with respect
thereto; and
(iv) such party will, upon demand, return (and cause each of its
officers, directors, employees, agents, attorneys, consultants or auditors
(collectively, "REPRESENTATIVES") to return) to BofA, or to such other
Information Provider as shall have furnished it with any Information, all
documents or other written material
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received from BofA or such other Information Provider which constitute or
contain any Information described in SUBCLAUSE (B) or (C) of CLAUSE (i)
above and all copies of such documents or other material in its possession
or in the possession of any of its representatives, and will not retain any
copy, summary or extract thereof on any storage medium whatsoever.
(b) Notwithstanding CLAUSE (i) of SUBSECTION (a), each party may disclose
any Information:
(i) to its attorneys, consultants and auditors who (A) in the good
faith belief of such party, have a need to know such Information, (B) are
informed by such party of the confidential nature of the Information and
the terms of this SECTION 14.07A, and (C) are subject to confidentiality
restrictions consistent with this SECTION 14.07A,
(ii) to any other party to this Agreement, for the purposes
contemplated hereby or to any rating agency rating the Commercial Paper
Notes,
(iii) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such party, in
order to comply with any law, order, regulation, regulatory request or
ruling applicable to such party, or
(iv) subject to SUBSECTION (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose such
Information.
(c) In the event that any party hereto (other than BofA) or any one to
whom such party or its representatives transmits the Information is requested or
becomes legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any of the Information, such party will (or will cause its representatives to)
(i) provide BofA with prompt written notice so that (A) RCC, BofA, or
any other Information Provider may seek a protective order or other
appropriate remedy, or (B) BofA may, if it so chooses, agree that such
party (or its representatives) may disclose such Information pursuant to
such request or legal compulsion;
(ii) unless BofA agrees that such Information may be disclosed, make
a timely objection to the request or compulsion to provide such Information
on the basis that such Information is confidential and subject to the
agreements contained in this SECTION 14.07A;
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(iii) take any action as BofA or any other Information Provider may
reasonably request to seek a protective order or other appropriate remedy,
PROVIDED that, in connection therewith, such party shall have first
received such assurances as it may reasonably request that BofA or such
other Information Provider shall reimburse such party's or its
representatives' reasonable costs and expenses or provide such other
assistance as such party or its representatives may reasonably require; and
(iv) in the event that such protective order or other remedy is not
obtained, or BofA agrees that such Information may be disclosed, furnish
only that portion of the Information which is legally required to be
furnished, and, provided such party (or its representative) is reimbursed
or assisted as referred to in CLAUSE (iii) above, exercise best efforts to
obtain reliable assurance that confidential treatment will be accorded the
Information.
(d) This SECTION 14.07A shall survive termination of this Agreement.
SECTION 14.07B. NATIONSBANK PROGRAM CONFIDENTIALITY. (a) Each party
hereto (other than NationsBank) acknowledges that NationsBank regards the
structure of the transactions contemplated by this Agreement, and by the
Enterprise Liquidity Agreement and Enterprise Credit Support Agreement and its
other program documents referred to therein, to be proprietary, and each such
party severally agrees that:
(i) unless NationsBank shall otherwise agree in writing, and except
as provided in SUBSECTION (b), such party will not disclose to any other
person or entity:
(A) any information regarding, or copies of, this Agreement or
any transaction contemplated hereby,
(B) any information regarding the organization or business of
Enterprise generally, or
(C) any information regarding NationsBank which is designated by
NationsBank to such party in writing or otherwise as confidential or
not otherwise available to the general public;
(ii) such party will make the Information available to only such of
its officers, directors, employees and agents who (A) in the good faith
belief of such party, have a need to know such Information, (B) are
informed by such party of the confidential nature of the Information and
the terms of this SECTION 14.07B, and (C) are subject to confidentiality
restrictions consistent with this SECTION 14.07B;
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(iii) such party will use the Information solely for the purposes of
evaluating, administering and enforcing the transactions contemplated by
this Agreement and making any necessary business judgments with respect
thereto; and
(iv) such party will, upon demand, return (and cause its
representatives to return) to NationsBank, or to such other Information
Provider as shall have furnished it with any Information, all documents or
other written material received from NationsBank or such other Information
Provider which constitute or contain any Information described in SUBCLAUSE
(B) or (C) of CLAUSE (i) above and all copies of such documents or other
material in its possession or in the possession of any of its
representatives, and will not retain any copy, summary or extract thereof
on any storage medium whatsoever.
(b) Notwithstanding CLAUSE (i) of SUBSECTION (a), each party may disclose
any Information:
(i) to its attorneys, consultants and auditors who (A) in the good
faith belief of such party, have a need to know such Information, (B) are
informed by such party of the confidential nature of the Information and
the terms of this SECTION 14.07B, and (C) are subject to confidentiality
restrictions consistent with this Section 14.07B,
(ii) to any other party to this Agreement, for the purposes
contemplated hereby or to any rating agency then rating the Commercial
Paper Notes,
(iii) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such party, in
order to comply with any law, order, regulation, regulatory request or
ruling applicable to such party, or
(iv) subject to SUBSECTION (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose such
Information.
(c) In the event that any party hereto or any one to whom such party
or its representatives transmits the Information is requested or becomes
legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to
disclose any of the Information, such party will (or will cause its
representatives to)
(i) provide NationsBank with prompt written notice so that (A)
Enterprise, NationsBank, or any other Information Provider may seek a
protective order or other appropriate remedy, or (B) NationsBank may, if it
so chooses, agree that
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such party (or its representatives) may disclose such Information pursuant
to such request or legal compulsion;
(ii) unless NationsBank agrees that such Information may be
disclosed, make a timely objection to the request or compulsion to provide
such Information on the basis that such Information is confidential and
subject to the agreements contained in this SECTION 14.07B;
(iii) take any action as NationsBank or any other Information
Provider may reasonably request to seek a protective order or other
appropriate remedy, PROVIDED that, in connection therewith, such party
shall have first received such assurances as it may reasonably request that
NationsBank or such other Information Provider shall reimburse such party's
or its representatives' reasonable costs and expenses or provide such other
assistance as such party or its representatives may reasonably require; and
(iv) in the event that such protective order or other remedy is not
obtained, or NationsBank agrees that such Information may be disclosed,
furnish only that portion of the Information which is legally required to
be furnished, and, provided such party (or its representative) is
reimbursed or assisted as referred to in CLAUSE (iii) above, exercise best
efforts to obtain reliable assurance that confidential treatment will be
accorded the Information.
(d) This SECTION 14.07B shall survive termination of this
Agreement.
SECTION 14.08. CONFIDENTIALITY OF SELLER INFORMATION. (a) Each party
hereto (other than Seller) acknowledges that certain of the information
provided to such party by or on behalf of Seller in connection with this
Agreement and the transactions contemplated hereby is or may be
confidential, and each such party severally agrees that, unless Seller
shall otherwise agree in writing, and except as provided in SUBSECTION (b),
such party will not disclose to any other person or entity:
(i) any information regarding, or copies of, any Periodic Reports,
and any non-public financial statements, reports and other information,
furnished by Seller to any Purchaser or any Agent pursuant to Section 3.04,
5.01(m), 5.01(n), 6.01(i), 6.01(j), 7.01(c) or 7.02, or
(ii) any other information regarding Seller which is designated by
Seller to such party in writing or otherwise as confidential;
the information referred to in CLAUSES (i) and (ii), above, furnished
by Seller or any attorney for or other representative of Seller (each a
"SELLER INFORMATION PROVIDER"), is collectively referred to as the "SELLER
INFORMATION"; PROVIDED, HOWEVER, "SELLER INFORMATION" shall not include
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(A) any information which is or becomes generally available to the
general public or to such party on a nonconfidential basis from a source
other than Seller or any other Seller Information Provider, or which was
known to such party on a nonconfidential basis prior to its disclosure by
Seller or any other Seller Information Provider), or
(B) general information regarding the nature of this Agreement, the
basic terms hereof (including without limitation the amount and nature of
each Purchaser's commitment and Purchaser's Investments hereunder and of
the recourse or other credit enhancement provided by Seller hereunder), the
nature, amount and status of the Pool Receivables, and the current and/or
historical ratios of losses to liquidations and/or outstandings with
respect to the Receivables Pool, and the identity of Seller.
(b) Notwithstanding SUBSECTION (a), each party may disclose any Seller
Information:
(i) to any of such party's attorneys, consultants and auditors, and
to such of RCC Program Support Provider, the Enterprise Liquidity Provider,
Enterprise Credit Support Provider, assignee, any dealer or placement agent
for any Purchaser's commercial paper, and any actual or potential assignees
of, or participants in, any of the rights or obligations of any Purchaser,
RCC Program Support Provider, Enterprise Liquidity Provider or Enterprise
Credit Support Provider, NationsBank or BofA under or in connection with
this Agreement, who (A) in the good faith belief of such party, have a need
to know such Seller Information, (B) are informed by such party of the
confidential nature of the Seller Information and the terms of this Section
14.08, and (C) are subject to confidentiality restrictions generally
consistent with this Section 14.08,
(ii) to any rating agency that maintains a rating for any Purchaser's
commercial paper or is considering the issuance of such a rating, for the
purposes of reviewing the credit of any Purchaser in connection with such
rating,
(iii) to any other party to this Agreement, for the purposes
contemplated hereby,
(iv) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such party, in
order to comply with any law, order, regulation, regulatory request or
ruling applicable to such party, or
(v) subject to SUBSECTION (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose such
Seller Information.
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(c) In the event that any party hereto (other than Seller) or any of its
representatives is requested or becomes legally compelled (by interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Seller Information, such party will (or
will cause its representatives to)
(i) provide Seller with prompt written notice so that (A) Seller or
any other Seller Information Provider may seek a protective order or other
appropriate remedy, or (B) Seller may, if it so chooses, agree that such
party (or its representatives) may disclose such Seller Information
pursuant to such request or legal compulsion;
(ii) unless Seller agrees that such Seller Information may be
disclosed, make a timely objection to the request or compulsion to provide
such Seller Information on the basis that such Seller Information is
confidential and subject to the agreements contained in this SECTION 14.08;
(iii) take any action as Seller or any other Seller Information
Provider may reasonably request to seek a protective order or other
appropriate remedy, PROVIDED that, in connection therewith, such party
shall have first received such assurances as it may reasonably request that
Seller or such other Seller Information Provider shall reimburse such
party's or its representatives' reasonable costs and expenses or provide
such other assistance as such party or its representatives may reasonably
require; and
(iv) in the event that such protective order or other remedy is not
obtained, or Seller agrees that such Seller Information may be disclosed,
furnish only that portion of the Seller Information which is legally
required to be furnished, and, provided such party (or its representative)
is reimbursed or assisted as referred to in CLAUSE (iii) above, exercise
best efforts to obtain reliable assurance that confidential treatment will
be accorded the Seller Information.
(d) This SECTION 14.08 shall survive termination of this Agreement.
SECTION 14.09. CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
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SECTION 14.10. INTEGRATION. This Agreement contains a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire Agreement among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 14.11. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF THE PURCHASERS IN THE RECEIVABLES IS GOVERNED BY
THE LAWS OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. WAIVER OF JURY TRIAL. SELLER HEREBY EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, THE CERTIFICATE OF ASSIGNMENTS, ANY OTHER AGREEMENT
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE
CERTIFICATE OF ASSIGNMENTS OR ANY OTHER AGREEMENT DOCUMENT AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY TRIAL.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH OF
SELLER AND EACH PURCHASER AND AGENT HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY
UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT
AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK
CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR
FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
SECTION 14.14. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all
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of which when taken together shall constitute one and the same Agreement.
SECTION 14.15 PURCHASERS' LIABILITIES. The obligations of each
Purchaser hereunder are solely the corporate obligations of each such Purchaser
and no personal liability shall attach to or be incurred by MLMMI or any
stockholder, employee, officer, director or incorporator of either Purchaser,
and the Seller and Servicer expressly waive any claim based on such personal
liability. No recourse shall be had for an obligation or claim arising out of or
based upon this Agreement against MLMMI or against any stockholder, employee,
officer, director or incorporator of either Purchaser. For purposes of this
paragraph "MLMMI" shall mean and include Merrill Lynch Money Markets Inc. and
all Affiliates thereof and any employee, officer, director, incorporator,
shareholder or beneficial owner of any of them; provided, however, that no
Purchaser shall be considered to be an Affiliate of MLMMI; and, provided,
further, that this SECTION 14.15 shall not relieve any such Person of any
liability it might otherwise have for its own gross negligence or willful
misconduct.
SECTION 14.16 AGENTS' LIABILITIES. The obligations of each Agent
hereunder are solely the corporate obligations of each such Agent and no
personal liability shall attach to or be incurred by any such Agent or any
stockholder, employee, officer, director or incorporator of any Agent, and the
Seller and Servicer expressly waive any claim based on such personal liability.
No recourse shall be had for an obligation or claim arising out of or based upon
this Agreement against BofA or NationsBank or against any stockholder, employee,
officer, director or incorporator of either of them; provided that, this SECTION
14.16 shall not relieve any such Person of any liability it might otherwise have
for its own gross negligence or willful misconduct.
SECTION 14.17. CHARACTERIZATION OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. It is the intention of the parties hereto that the transactions
contemplated hereby constitute the sale of the Undivided Interests, conveying
good title thereto free and clear of any Liens to the Purchasers and that the
Undivided Interests not be part of the Seller's estate in an Event of
Bankruptcy. If, notwithstanding the foregoing, the transactions contemplated
hereby are deemed a financing, the parties intend that the Seller shall be
deemed to have granted to the Purchasers, and the Seller hereby grants to the
Purchasers, a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under the Receivables, together with
Related Security and Collections with respect thereto, and that this Agreement
shall constitute a security agreement under applicable law.
- SIGNATURE PAGES FOLLOW -
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
THE WACKENHUT CORPORATION
as Seller and initial Servicer
By _________________________________
Title _________________________
1500 San Remo Avenue
Coral Gables, Florida 33146
Facsimile: (305) 662-7366
Attention: Treasury Operations
Terry P. Mayotte
Telephone: (305) 662-7373
RECEIVABLES CAPITAL CORPORATION,
as a Purchaser
By _________________________________
Title ______________________________
c/o Merrill Lynch Money Markets Inc.
World Financial Center - South Tower
225 Liberty Street - 8th Floor
New York, New York 10080
Attention: Mr. Gary Carlin
Telephone: (212) 236-7200
Facsimile: (212) 236-7584
ENTERPRISE FUNDING CORPORATION,
as a Purchaser
By _________________________________
Title _________________________
c/o Merrill Lynch Money Markets Inc.
World Financial Center - South Tower
225 Liberty Street - 8th Floor
New York, New York 10080
Attention: Mr. Gary Carlin
Telephone: (212) 236-7200
Facsimile: (212) 236-7584
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Managing Agent and as the
Administrative Agent
By _________________________________
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Facsimile No.: (312) 828-7855
Attention: Securitized Products Group
Eurodollar Office:
231 South LaSalle Street
Chicago, Illinois 60697
NATIONSBANK OF NORTH CAROLINA, N.A.,
as a Managing Agent
By _________________________________
Vice President
100 North Tryon Street, 7th Floor
Charlotte, North Carolina 28255
Facsimile: (704) 388-9169
Attention: Structured Finance Group
Michelle M. Heath
Telephone: (704) 386-7922
Eurodollar Office:
100 North Tryon Street, 10th Floor
Charlotte, North Carolina 28255
Facsimile: (704) 388-9211
Attention: Camille Zerbinos
Telephone: (704) 386-8361
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APPENDIX A
DEFINITIONS
This is APPENDIX A to the Receivables Purchase Agreement dated as of
January 5, 1995 among The Wackenhut Corporation, Receivables Capital Corporation
and Enterprise Funding Corporation, NationsBank of North Carolina, N.A., as a
Managing Agent, Bank of America National Trust and Savings Association, as a
Managing Agent and as the Administrative Agent (as amended, supplemented or
otherwise modified from time to time, this "Agreement"). Each reference in this
APPENDIX A to any Section, Appendix or Exhibit refers to such Section of or
Appendix or Exhibit to this Agreement.
INDEX
Page No.
A. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
B. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
C. Computations of Time Periods . . . . . . . . . . . . . . . . . . A-25
A. DEFINED TERMS. As used in this Agreement, unless the context requires
a different meaning, the following terms have the meanings indicated
hereinbelow:
"ADJUSTED AVERAGE MATURITY" has the meaning set forth in APPENDIX B.
"ADMINISTRATIVE AGENT" and "ADMINISTRATIVE AGENTS" has the meaning set
forth in the preamble.
"ADVERSE CLAIM" means a lien, security interest, charge, or encumbrance, or
other right or claim of any Person other than (a) a potential claim or right
(that has not yet been asserted) of a trustee appointed for an Obligor in
connection with any Event of Bankruptcy or (b) an unfiled lien for taxes accrued
but not yet payable.
"AFFECTED PARTY" means each of each Purchaser, each RCC Program Support
Provider, the Enterprise Liquidity Provider, the Enterprise Credit Support
Provider, any other Person providing credit or liquidity support to any
Purchaser, any permitted assignee of any Purchaser, RCC Program Support
Provider, Enterprise Liquidity Provider, Enterprise Credit Support Provider or
such other Person, any assignee of any of either Purchaser's obligations to any
Enterprise Liquidity Provider, any Enterprise Credit Support Provider, any RCC
Program Support Provider, any other Person providing credit or liquidity support
in respect of
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any Funding, any holder of a participation interest in the rights and
obligations of any Enterprise Liquidity Provider or Enterprise Credit Support
Provider, any RCC Program Support Provider or any other Person providing credit
or liquidity enhancement under any RCC Program Support Agreement and in respect
of any Funding or in the commitment or facility of such other Person, the
Administrative Agent, each Managing Agent, BofA, NationsBank, and any holding
company of BofA or NationsBank.
"AFFILIATE" when used with respect to a Person, means any other Person
controlling, controlled by, or under common control with, such Person.
"AGENT" means the Administrative Agent and the Managing Agents.
"AGENT'S CREDIT AND COLLECTION POLICY" means those credit and collection
policies and practices relating to Contracts and Receivables required by the
Administrative Agent to be used in the servicing of the Receivables Pool in
accordance with Section 8.02(a) and described in Schedule A-1, as modified
without violating Section 7.03(c).
"AGREEMENT DOCUMENTS" means this Agreement, the Certificate of Assignments
and the other documents to be executed and delivered in connection herewith.
"AGGREGATE PURCHASER'S INVESTMENTS" means, at any time, with respect to a
Purchaser, the sum of the Dollar amount of all of such Purchaser's Investments.
"AGGREGATE PURCHASER'S SHARE" shall have the meaning set forth in SECTION
2.05.
"AGGREGATE REQUIRED ALLOCATIONS" at any time means the sum of all Required
Allocations of all Undivided Interests.
"AGGREGATE TOTAL INVESTMENTS" means, at any time, the then sum of the
dollar amount of the Aggregate Purchaser's Investments for both Purchasers.
"AGGREGATE UNPAID BALANCE" has the meaning set forth in SECTION 2.1 of the
Purchase and Sale Agreement.
"ALTERNATE REFERENCE RATE" has the meaning set forth in APPENDIX B.
"AVERAGE MATURITY" has the meaning set forth in APPENDIX B.
"BAI" means Bank of America Illinois, an Illinois state bank.
"BANK RATE" has the meaning set forth in APPENDIX B.
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"BOFA" has the meaning set forth in the preamble.
"BUSINESS DAY" means a day on which both (a) BofA at its office in Chicago,
Illinois and NationsBank at its office in Charlotte, North Carolina is open for
business and (b) commercial banks in Dallas, Texas and New York City are not
authorized or required to be closed for business.
"CAPITALIZED LEASE" means any lease for which Rentals must be capitalized
on a consolidated balance sheet of the lessee and its subsidiaries in accordance
with generally accepted accounting principles.
"CAPITALIZED RENTALS" of any Person and as of the date of any determination
thereof means the amount at which the aggregate Rentals due and to become due
under all Capitalized Leases under which such Person is lessee would be
reflected as a liability on a consolidated balance sheet of such Person.
"CCFM" has the meaning set forth in the preamble.
"CERTIFICATE OF ASSIGNMENTS" means each certificate of assignment, by
Seller to a Purchaser, in the form of EXHIBIT 5.01(a), evidencing an Undivided
Interest.
"COLLECTION ACCOUNT" shall have the meaning set forth in Section 3.03(e).
"COLLECTIONS" means, with respect to any Receivable, all funds which either
(a) are received by Seller, any Originator or Servicer from or on behalf of the
related Obligors in payment of any amounts owed (including, without limitation,
purchase prices, finance charges, interest and all other charges) in respect of
such Receivable, or applied to such amounts owed by such Obligors (including,
without limitation, insurance payments that Seller, each Originator or Servicer
applies in the ordinary course of its business to amounts owed in respect of
such Receivable and net proceeds of sale or other disposition repossessed goods
or other collateral or property of the Obligor or any other party directly or
indirectly liable for payment of such Receivable and available to be applied
thereon), or (b) are deemed to have been received by Seller, any Originator or
any other Person as a Collection pursuant to SECTION 3.03; PROVIDED THAT, prior
to such time as Seller shall cease to be Servicer, late payment charges,
collection fees and extension fees shall not be deemed to be Collections.
"COMMERCIAL PAPER NOTES" means short-term promissory notes issued or to be
issued by a Purchaser to fund its investments in accounts receivable or other
financial assets.
"COMMERCIAL PAPER RATE" has the meaning set forth in APPENDIX B.
"COMMITMENT" has the meaning set forth in SECTION 1.01.
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"COMMITMENT TERMINATION DATE" has the meaning set forth in SECTION 1.05(a).
"CONCENTRATION LIMIT" has the meaning set forth in Section 2.03(b).
"CONDITIONS PRECEDENT" has the meaning set forth in Section 5.02.
"CONSOLIDATED FUNDED DEBT" means all Funded Debt of the Seller and its
Subsidiaries, determined on a consolidated basis eliminating intercompany items.
For the purposes of determining Consolidated Funded Debt, any corporation which
becomes a Subsidiary after the date hereof shall be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary, all Indebtedness of
such corporation existing immediately after it becomes a Subsidiary.
"CONSOLIDATED NET INCOME" for any period means the gross revenues of Seller
and its Subsidiaries for such period less all expenses and other proper charges
(including taxes on income and Interest Charges), determined on a consolidated
basis after eliminating earnings attributable to outstanding Minority Interests,
but excluding in any event:
(a) any gains on the sale or other disposition of Investments or
fixed or capital assets, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy except for proceeds
received during such period with respect to deferred compensation plans to
the extent that Seller or any Subsidiary recognized any expenses during
such period with respect to such plans;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in
any manner by Seller or any Subsidiary, realized by such corporation prior
to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which Seller or a Subsidiary shall have consolidated or
which shall have merged into or with Seller or a Subsidiary prior to the
date of such consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which Seller or any Subsidiary has an ownership interest unless such net
earnings shall have
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actually been received by Seller or such Subsidiary in the form of cash
distributions;
(g) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to Seller or any other
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of Seller
or any Subsidiary; and
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such period.
"CONSOLIDATED NET WORTH" means at any time as of which the amount
thereof is to be determined, the sum of the following in respect of the Seller
and its Subsidiaries (on a consolidated basis and excluding intercompany items):
(i) the amount of issued and outstanding share capital, PLUS (ii) the amount of
additional paid-in capital and retained income (or, in the case of a deficit,
minus the amount of such deficit), MINUS (iii) the sum of the following (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings): (A) all reserves, except legal reserves and
other contingency reserves (i.e., reserves not allocated to specific purposes
and not deducted from assets), which are properly treated as appropriations of
surplus or retained earnings; (B) any treasury stock, capital stock subscribed
and unissued and other contra-equity accounts; and (C) the cumulative amount of
any net write-up of asset values after the date of the audit immediately
preceding the date of revolver, plus or minus, as the case may be (iv) the
cumulative effect of foreign exchange valuations.
"CONSOLIDATED TOTAL ASSETS" means as of the date of any determination
thereof the total amount of all assets of Seller and its Subsidiaries determined
on a consolidated basis in accordance with generally accepted accounting
principles.
"CONTRACT" means any writing evidencing a Receivable.
"CURRENT DEBT" of any Person as of the date of any determination thereof
means (i) all Indebtedness of such Person for borrowed money other than Funded
Debt of such Person and (ii) Guaranties by such Person of Current Debt of
others.
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"DEFAULTED RECEIVABLE" means, without duplication, a Receivable: (a) as to
which any payment, or part thereof, remains unpaid for 120 days from the
original invoice date for such Receivable, (b) with regard to which an Event of
Bankruptcy has occurred and remains continuing, (c) as to which payments have
been extended, or the terms of payment thereof rewritten, or (d) which
consistent with the Agent's Credit and Collection Policy, would be fully
reserved against or required to be sent to attorneys or collection agencies or
would be charged-off Seller's or Servicer's books as uncollectible.
"DELINQUENT RECEIVABLE" means a Receivable that is not a Defaulted
Receivable and: (a) as to which any payment, or part thereof, remains unpaid for
60 days or more from the original invoice date for such Receivable; or (b)
which, consistent with the Agent's Credit and Collection Policy, would be
classified as delinquent by Seller.
"DESIGNATED OBLIGOR" means, at any time, all Obligors of Seller except any
such Obligor as to which any Agent has, at least three Business Days prior to
the date of determination, given notice to Seller that such Obligor shall not be
considered a Designated Obligor.
"DISCOUNT FACTOR" has the meaning set forth in Appendix B.
"DOLLARS" means dollars in lawful money of the United States of America.
"DOMESTIC CD RATE (ADJUSTED)" has the meaning set forth in Appendix B.
"EARNED DISCOUNT" has the meaning set forth in Appendix B.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable:
(a) with regard to which the related service has been rendered and all
other obligations performed by the Seller or an Originator (except as permitted
by Schedule 2.03(b)), as applicable, and which is generated by Seller and the
applicable Originator in the ordinary course of their respective business of
providing Services and is required to be paid in full by the related Obligor
within 30 days of the billing thereof;
(b) which, (i) if the perfection of Purchaser's undivided ownership
interest therein is governed by the laws of a jurisdiction where the Uniform
Commercial Code - - Secured Transactions is in force, constitutes an account or
general intangible as defined in the Uniform Commercial Code as in effect in
such jurisdiction, and (ii) if the perfection of Purchaser's undivided ownership
interest therein is governed by the law of any jurisdiction where the Uniform
Commercial Code - - Secured Transactions is not in force. Seller has furnished
to the Agents such opinions of counsel and other evidence as has reasonably been
requested, establishing to the reasonable satisfaction of
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the related Agent that the related Purchaser's undivided ownership interest and
other rights with respect thereto are not significantly less protected and
favorable than such rights under the Uniform Commercial code;
(c) which is a domestic Receivable, the Obligor of which is a United
States resident, and is not an Affiliate of any of the parties hereto;
(d) the Obligor of which is a Designated Obligor;
(e) the Obligor of which is not the private sector Obligor of Defaulted
Receivables aggregating more than 15% of such Obligor's total obligations to
Seller and each Originator;
(f) which is not a Defaulted Receivable;
(g) with regard to which the warranty of Seller in SECTION 6.01(l) is true
and correct;
(h) (x) the sale of an undivided interest in which does not require the
consent of or notice to the related Obligor under the related Contract and does
not contravene or conflict with any law, and (y) in the case of Receivables
generated by an Originator, the sale of which to Seller does not contravene or
conflict with any law;
(i) which is an account receivable representing all or part of the sales
price of merchandise, insurance and services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended;
(j) which arises out of a current transaction, or the proceeds of which
have been or are to be used for current transactions, within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
(k) which is denominated and payable only in Dollars in the United States;
(l) which arises under a Contract that has been duly authorized and that,
together with such Receivable, is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such Receivable
enforceable against such Obligor in accordance with its terms and is not subject
to any dispute, offset, counterclaim or defense whatsoever (except the discharge
in bankruptcy of such Obligor);
(m) which, together with the Contract related thereto, does not contravene
in any material respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to usury,
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to the Contract related thereto is in
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violation of any such law, rule or regulation in any material respect if such
violation would impair the collectibility of such Receivable;
(n) which (i) satisfies all applicable requirements of the Agent's Credit
and Collection Policy and (ii) complies with such other criteria and
requirements (other than those relating to the collectibility of such
Receivable) as the Agents may from time to time specify to Seller following
thirty days' notice;
(o) as to which no Agent has notified Seller that such Agent has
determined, in its sole discretion, that such Receivable (or class of
Receivables) is not acceptable for purchase hereunder;
(p) which, if originated by Seller, was originated in its divisions
referred to as Company 1 and Company 21;
(q) which does not include any amount payable for sales taxes, payroll
taxes or any other tax; and
(r) the related Obligor of which is not, directly or indirectly, an
Affiliate of Seller or any Originator.
"ENTERPRISE CREDIT SUPPORT AGREEMENT" means any agreement between
Enterprise and the Enterprise Credit Support Provider evidencing the obligation
of the Enterprise Credit Support Provider to provide credit support to
Enterprise in connection with the issuance by Enterprise of Commercial Paper.
"ENTERPRISE CREDIT SUPPORT PROVIDER" means any Person or Persons who are
providing or will provide credit support to Enterprise in connection with the
issuance by Enterprise of Commercial Paper Notes, together with the successors
and assigns of any such Person or Persons.
"ENTERPRISE LIQUIDITY AGREEMENT" means any agreement between Enterprise and
the Enterprise Liquidity Provider evidencing the obligation of the Liquidity
Provider to provide liquidity support to Enterprise in connection with the
issuance by Enterprise of Commercial Paper Notes, as such agreement may be
modified, amended, supplemented or restated from time to time.
"ENTERPRISE LIQUIDITY PROVIDER" means any Person or Persons who are
providing or will provide liquidity support to Enterprise in connection with the
issuance by Enterprise of Commercial Paper Notes, together with the successors
and assigns of any such Person or Persons.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EURODOLLAR RATE (RESERVE ADJUSTED)" has the meaning set forth in APPENDIX
B.
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"EVENT OF BANKRUPTCY" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or all or substantially all of its assets, or any
similar action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in
an involuntary case under the federal bankruptcy laws or other similar laws
now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for, such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in writing its inability to, pay its Debts generally as
they become due, or, if a corporation or similar entity, its board of
directors shall vote to implement any of the foregoing.
"EXISTING CREDIT AGREEMENT" means and includes the Credit Agreement dated
as of December 1, 1989 among RCC, BofA (as assignee from BAI) and Credit
Lyonnais New York Branch and Credit Lyonnais Cayman Island Branch, as amended,
supplemented or otherwise modified from time to time.
"EXISTING LIQUIDITY AGREEMENT" means and includes the Secondary Purchase
Agreement dated as of December 1, 1989 among RCC, BofA (as assignee of BAI), as
Servicing Agent for RCC, and BofA (as assignee from BAI), Credit Lyonnais New
York Branch and Credit Lyonnais Cayman Island Branch, as purchasers (and
lenders), as amended, supplemented or otherwise modified from time to time.
"FACILITY" has the meaning set forth in Section 1.1 of the Purchase and
Sale Agreement.
"FACILITY FEE" has the meaning set forth in SECTION 4.01(b).
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"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve
System, or any successor thereto or to the functions thereof.
"FEE LETTER" has the meaning set forth in SECTION 4.01(a).
"FIXED CHARGES" for any period means on a consolidated basis the sum of (i)
100% of Rentals (other than Rentals on Capitalized Leases) payable during such
period by Seller and its Subsidiaries (other than WCC) and (ii) all Interest
Charges on all Indebtedness (including, without duplication, the interest
component of Rentals on Capitalized Leases and the Earned Discount and fees and
expenses payable under this Agreement) of Seller and its Subsidiaries (other
than WCC) payable during said period by Seller and its Subsidiaries (other than
WCC).
"FIXED CHARGE COVERAGE RATIO" has the meaning set forth in Section 7.03(f).
"FOUR-QUARTER PERIOD" means a period of four full consecutive quarter-
annual periods, taken together as one accounting period.
"FUNDED DEBT" of any Person shall mean (i) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the acquisition
of assets, including all payments in respect thereof that are required to be
made within one year from the date of any determination of Funded Debt, whether
or not the obligation to make such payments shall constitute a current liability
of the obligor under GAAP, (ii) all Capitalized Rentals of such Person (iii) all
Guaranties by such Person of Funded Debt of others, (iv) with respect to Funded
Debt of the Seller, the product of (x) the aggregate amounts available for
drawing under all outstanding Letters of Credit, and (y).50; and (v) to the
extent not otherwise included in clauses (i) through (iv) above, the Aggregate
Total Investments.
"FUNDING" means a drawing under a letter of credit, surety bond or other
instrument issued pursuant to an RCC Program Support Agreement, a drawing on a
cash collateral account funded pursuant to an RCC Program Support Agreement, a
purchase, loan or other extension of credit made by an RCC Program Support
Provider to RCC under an RCC Program Support Agreement, or any other advance or
disbursement of funds from or to RCC or for RCC's account or for which RCC is
obligated to reimburse an RCC Program Support Provider pursuant to an RCC
Program Support Agreement.
"GAAP" means generally accepted accounting principles at the time.
"GOVERNMENT OBLIGOR" means a department, agency, bureau, division or
instrumentality of the United States of America or any state thereof or the
District of Columbia or any county or municipal government chartered or
otherwise existing by authority
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of any of the foregoing, or any department, agency, bureau, division or
instrumentality thereof obligated to make payments with respect to a Receivable.
"GROSS REVENUES" for any period means the gross revenues, determined in
accordance with generally accepted accounting principles, of Seller and its
Subsidiaries for such period, determined on a consolidated basis after
eliminating revenues attributable to outstanding Minority Interests.
"GUARANTIES" by any Person means all obligations (other than endorsements
in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or, in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (iii) to lease property or to purchase Securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"HEADQUARTERS" shall mean Seller's building located at 1500 San Remo
Avenue, Coral Gables, Florida.
"INDEBTEDNESS" of any Person means and includes all obligations of such
Person which in accordance with generally accepted accounting principles shall
be classified upon a balance sheet of such Person as liabilities of such Person,
and in any event shall include all (i) obligations of such Person for borrowed
money or which has been incurred in connection with the acquisition of property
or assets, (ii) obligations secured by any Lien upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or
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lessor under such agreement in the event of default are limited to repossession
or sale of property, (iv) Capitalized Rentals under any Capitalized Lease, (v)
Guaranties of Indebtedness of others and (vi) reimbursement obligations arising
under any Letter of Credit.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 13.01.
"INDEMNIFIED PARTY" has the meaning set forth in Section 13.01.
"INITIAL CLOSING DATE" means, with regard to any Originator, the date on
which the first purchase of Conveyed Property, including the related
Receivables, from such Originator under the Purchase and Sale Agreement shall
occur.
"INITIAL PURCHASER" means the Seller as Initial Purchaser under the
Purchase and Sale Agreement.
"INFORMATION" has the meaning set forth in SECTION 14.07A.
"INFORMATION PROVIDER" has the meaning set forth in SECTION 14.07A.
"INTEREST CHARGES" for any period means all interest, and all amortization
of debt discount and expense on any particular Indebtedness and all Earned
Discount and fees and expenses payable under this Agreement for which such
calculations are being made. Computations of Interest Charges on a pro forma
basis for Indebtedness having a variable interest rate shall be calculated at
the rate in effect on the date of any determination.
"INVESTMENTS" means all investments, in cash or by delivery of Property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or Security or by loan,
advance, capital contribution or otherwise; PROVIDED, HOWEVER, that
"Investments" shall not mean or include routine investments in Property to be
used or consumed in the ordinary course of business or investments in accounts
receivable or notes receivable arising in the ordinary course of business.
"INVOLUNTARY FEDERAL PROCEEDING" has the meaning set forth in SECTION
10.02(b).
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means a letter of credit issued
by a Letter of Credit Issuer for the account of the Seller or the Seller and
Titania in favor of a Person advancing credit, providing insurance or securing
obligations on behalf of the Seller or the Seller and Titania, and shall
include, without limitation, all such letters of credit issued prior to January
5, 1995 and remaining outstanding as of such date.
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"LETTER OF CREDIT ISSUER" means NationsBank or BofA, as the case may be, as
issuer of a Letter of Credit.
"LIEN" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
Agreement, the Seller or a Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to the Property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"LOCK-BOX AGREEMENT" means a letter agreement, in substantially the form of
EXHIBIT 5.01(h), between Seller and any Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks holding one or more lock-box
accounts for receiving Collections from Pool Receivables.
"LOSSES" means, at any time, with respect to the Receivables Pool, the sum
of (x) all Receivables theretofore fully reserved against by Seller or Servicer
plus (y), without duplication, all Receivables theretofore sent to attorneys or
collection agencies to be collected plus (z), without duplication, all
Receivables theretofore charged-off Seller's or Servicer's books as
uncollectible.
"LOSSES TO LIQUIDATIONS RATIO" means the percentage that (x) Losses during
the three fiscal month period ending on the most recent Month End Date on all
Pool Receivables owned by Seller was of (y) Collections of such Pool Receivables
during such period.
"LOSS RESERVE DISCOUNT" has the meaning set forth in SECTION 2.1 of the
Purchase and Sale Agreement.
"MANAGING AGENT" and "MANAGING AGENTS" has the meaning set forth in the
preamble.
"MAXIMUM PURCHASE LIMIT" has the meaning set forth in clause (x) of SECTION
1.02(a).
"MINORITY INTERESTS" means any shares of stock of any class of a Subsidiary
(other than directors' qualifying shares as
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required by law) that are not owned by Seller and/or one or more of its
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in preferred stock.
"MONTH END DATE" means the last day of each fiscal month.
"NEGATIVE SPREAD FEE" has the meaning set forth in APPENDIX B.
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period means the sum of
(i) Consolidated Net Income during such period (excluding, for the purpose of
determining Net Income Available for Fixed Charges, revenues, expenses and other
appropriate charges or adjustments attributable to WCC) PLUS (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Seller and its Subsidiaries
(other than WCC) during such period, (iii) Fixed Charges of the Seller and its
Subsidiaries (other than WCC) during such period and (iv) for each of the last
fiscal quarter of the fiscal year of the Seller ending January 1, 1995 and the
first three fiscal quarters in the succeeding fiscal year, the amount of the
reserve, which is not to exceed $5,000,000, if any, established by the Seller in
connection with the anticipated sale of its Headquarters.
"NET POOL BALANCE" has the meaning set forth in SECTION 2.03(a).
"NOTE FEE" has the meaning set forth in SECTION 4.01(e).
"OBLIGOR" means a Person (including any Affiliate of such Person) obligated
to make payments with respect to a Receivable.
"ORIGINATOR" means, at any time, each Subsidiary of Seller at such time a
signatory to the Purchase and Sale Agreement.
"PERCENTAGE" means with respect to RCC, 50% and with respect to Enterprise,
50%; PROVIDED THAT, at such time as the Aggregate Purchaser's Investments of a
Purchaser shall have been reduced to zero, Percentage shall mean, as to the
remaining Purchaser, 100%.
"PERIODIC REPORT" means a report in substantially the form
of EXHIBIT 3.04(a).
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability
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company or limited liability partnership, government or any agency or political
subdivision thereof or any other entity.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PROGRAM FEE" has the meaning set forth in SECTION 4.01(c).
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"PURCHASE" has the meaning set forth in SECTION 1.01(a).
"PURCHASE AND SALE AGREEMENT" means that certain Purchase and Sale
Agreement dated as of January 5, 1995 between the Seller as Initial Purchaser
and Wackenhut Airline Services, Inc. and each other Affiliate of Seller from
time to time a party thereto, as the same may be amended and otherwise modified
from time to time.
"PURCHASE AND SALE INDEMNIFIED AMOUNTS" has the meaning set forth in
SECTION 9.1 of the Purchase and Sale Agreement.
"PURCHASE AND SALE INDEMNIFIED PARTIES" has the meaning set forth in
SECTION 9.1 of the Purchase and Sale Agreement.
"PURCHASE AND SALE TERMINATION DATE" has the meaning set forth in SECTION
1.4 of the Purchase and Sale Agreement.
"PURCHASE AND SALE TERMINATION EVENT" has the meaning set forth in SECTION
8.1 of the Purchase and Sale Agreement.
"PURCHASE LIMIT" has the meaning set forth in SECTION 1.02(a).
"PURCHASE PRICE" has the meaning set forth in SECTION 2.1 of the Purchase
and Sale Agreement.
"PURCHASE TERMINATION DATE" has the meaning set forth in SECTION 1.06.
"PURCHASER" AND "PURCHASERS" has the meaning set forth in the preamble.
"PURCHASER RATE" has the meaning set forth in APPENDIX B.
"PURCHASER'S INVESTMENT" has the meaning set forth in SECTION 2.02.
"PURCHASER'S SHARE" has the meaning set forth in SECTION 2.04.
"RATE VARIANCE FACTOR" has the meaning set forth in APPENDIX B.
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"RCC" has the meaning set forth in the Preamble.
"RCC PROGRAM SUPPORT AGREEMENT" means and includes (a) the Existing Credit
Agreement and any letter of credit issued thereunder, (b) the Existing Liquidity
Agreement and (c) any other agreement hereafter entered into by any RCC Program
Support Provider providing for the issuance of one or more letters of credit for
the account of RCC, the issuance of one or more surety bonds for which RCC is
obligated to reimburse the applicable RCC Program Support Provider for any
drawings thereunder, the sale by RCC to any RCC Program Support Provider of
Undivided Interests (or portions thereof) and/or the making of loans and/or
other extensions of credit to RCC in connection with RCC's securitization
program, together with any letter of credit, surety bond or other instrument
issued thereunder (but excluding any discretionary advance facility provided by
the Administrative Agent).
"RCC PROGRAM SUPPORT PROVIDER" means and includes BofA and any other or
additional Person (other than any customer of RCC) now or hereafter extending
credit or having a purchase commitment or a commitment to extend credit to or
for the account of RCC or issuing a letter of credit, surety bond or other
instrument to support any obligations arising under or in connection with RCC's
securitization program.
"RECEIVABLE" means any right to payment from a Person, whether constituting
an account, chattel paper, instrument or general intangible, to Seller or any
Originator arising in the divisions of Seller referred to as Company 1 and
Company 21 or in any Originator and includes the right to payment of any
interest or finance charges and other obligations of such Person with respect
thereto.
"RECEIVABLES POOL" means at any time all then outstanding Receivables which
(a) arose from or relate to a Contract, and (b) as to which the Obligors
thereunder are Designated Obligors. If a Receivable is a Pool Receivable on the
day immediately preceding the Commitment Termination Date, such Receivable shall
continue to be considered a Pool Receivable at all times thereafter.
"REGULATION D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"REGULATORY CHANGE" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, phase-in or
commencement of effectiveness of) any
(i) United States federal or state law or foreign law applicable
to such Affected Party;
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(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such
Affected Party of (A) any court, government authority charged with the
interpretation' or administration of any law referred in CLAUSE (a)(i)
or of (B) any fiscal, monetary or other authority having jurisdiction
over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and affecting
the application to such Affected Party of any law, regulation,
interpretation, CLAUSE (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request
or accounting principles referred to in CLAUSE (a)(i), (a)(ii) or (a)(iii)
above.
"REINVESTMENT" has the meaning set forth in SECTION 1.01(b).
"RELATED SECURITY" means, with respect to any Receivable: (a) all of
Seller's right, title and interest in and to all Contracts or other agreements
that relate to such Receivable; (b) all of Seller's interest in the merchandise
(including returned merchandise), if any, relating to the sale which gave rise
to such Receivable; (c) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise; (d) the assignment to any Agent, for the benefit of Purchaser and any
assignee, of all UCC financing statements covering any collateral securing
payment of such Receivable (but such assignment is made only to the extent of
the interest of its related Purchaser in the respective Receivable); and (e) all
guarantees and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Receivable whether pursuant to
the Contract related to such Receivable or otherwise. The interest of a
Purchaser in any Related Security is only to the extent of such Purchaser's
Undivided interest, as more fully described in the definition of an Undivided
Interest.
"REMAINING COLLECTIONS" has the meaning set forth in SECTION 3.01(a)(ii).
"RENTALS", with respect to any lease, means and includes as of the date of
any determination thereof, all fixed payments (including as such all payments
which the lessee is obligated to make to the lessor on termination of the lease
or surrender of the Property) payable by Seller or a Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive of
any amounts required to be paid by Seller or a Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes and
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similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"REQUIRED ALLOCATIONS" has the meaning set forth in SECTION 2.01.
"REQUIRED ALLOCATIONS LIMIT" has the meaning set forth in SECTION 1.02(b).
"RESERVE PERCENTAGE" has the meaning set forth in APPENDIX B.
"RESTRICTED INVESTMENTS" means all Investments in any Person, other than:
(a) Investments by Seller and its Subsidiaries in and to
Subsidiaries, including any investment in a corporation which, after giving
effect to such Investments, will become a Subsidiary;
(b) Investments in (i) commercial paper maturing in 270 days or less
from the date of issuance and which, at the time of acquisition by Seller
or any Subsidiary, is accorded one of the two highest ratings by Standard &
Poor's Corporation or Moody's Investors Service, Inc.; (ii) Variable Rate
Demand Notes of issuers whose commercial paper, at the time of acquisition,
is accorded one of the two highest ratings by Standard & Poor's Corporation
or Moody's Investors Service, Inc.; or (iii) Direct obligations of any
State of the United States of America or of any political subdivision
thereof located in the United States of America and which, at the time of
acquisition, is accorded one of the two highest ratings by Standard &
Poor's Corporation or Moody's Investors Service, Inc., maturing in twelve
months or less from the date of acquisition;
(c) Investments in direct obligations of the United States of
America, or investments in any Person, which Investments are guaranteed by
the full faith and credit of the United States of America, in either case
maturing in twelve months or less from the date of acquisition thereof by
Seller or any Subsidiary;
(d) Investments in certificates of deposit maturing within one year
from the date of issuance thereof, issued by a bank or trust company
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $100,000,000
and whose long-term certificates of deposit are, at the time of acquisition
thereof by Seller or any Subsidiary, rated A by Standard & Poor's
Corporation or A by Moody's Investors Service, Inc.;
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(e) Loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of Seller or
any Subsidiary; PROVIDED, HOWEVER that Seller may make up with aggregate at
any one time outstanding, up to $300,000 of such loans or advances which
are not incidental to carrying on the business of Seller or any Subsidiary;
(f) receivables arising from the sale of goods and services in the
ordinary course of business of Seller and its Subsidiaries; and
(g) provided, however, that with respect to investments made by or on
behalf of Titania Insurance Company of America, a Vermont Corporation, the
following shall not be Restricted Investments;
(1) Certificates of deposit, time deposits and banker's
acceptance maturing within one year from the date of
acquisition, issued by a bank or trust company organized
under the laws of the United States or any state thereof, or
any foreign bank whose branch is organized under the laws of
the United States or any state thereof, having capital,
surplus and undivided profits aggregating at least
$100,000,000 and whose long-term certificates of deposit
are, at the time of acquisition, rated at least A by
Standard & Poor's Corporation or Moody's Investors Service,
Inc.;
(2) Repurchase Agreements with any domestic bank with debt rated
'AA' or better by Standard & Poor's Corporation, or any
foreign bank rated at least 'AA' by Standard & Poor's
Corporation and 'Aa' by Moody's Investors Service, Inc.; or
repurchase agreements with such other Persons on such terms
as Seller and Agent shall agree in writing; provided the
term of all such repurchase agreements is for one year or
less;
(3) Direct obligations of the United States of America, or
Investments in any Person, which Investments are guaranteed
by the full faith and credit of the United States of
America;
(4) Mortgage-backed securities issued by the United States
Government or any agency or instrumentality thereof, having
at the time of acquisition, a credit rating of at least AA
by a nationally recognized rating service;
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(5) Bonds, notes and other direct obligations (other than those
referred to in clause (b), above) of any corporation
domiciled in the United States of America, or a State of the
United State of America, or of any sovereign or
supranational institution whose obligations are denominated
in United States dollars, at the time of acquisition rated
at least A by a nationally recognized rating service.
Obligations of sovereign or supranational institutions at
the time of acquisition, shall be rated at least AA by a
nationally recognized rating service;
(6) Preferred stock obligations of any corporation domiciled in
the United States of America, whose obligations at the time
of acquisition are rated at least A by a nationally
recognized rating service;
(7) Shares in mutual funds that invest solely in investments of
the types described in clause (b)(i), clause (b)(iii),
clause (3), clause (4), clause (5) and/or clause (6) above
and have assets in excess of $100,000,000;
(8) Any Investments (other than the Investments set forth in
clause (b) and clause (1) through clause (7) inclusive,
above), provided that the aggregate fair value for all such
investments shall not, at any time, exceed five percent (5%)
of the aggregate fair value of all Investments set forth in
clause (1) through (8) inclusive, above. For the purposes of
this subsection (8) only, fair value shall mean the greater
of book value or fair market value.
In valuing any investments for the purpose of applying the limitations set
forth in this Agreement, such investments, loans and advances shall be taken at
the original cost thereof, without allowance for any subsequent write-offs or
appreciation or depreciation therein, but less any amount repaid or recovered on
account of capital or principal.
For purposes of this Agreement, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
"RUN OFF DAY" for any Undivided Interest means any of (a) each day which
occurs on or after the date designated by any Agent to Seller to be the "Run Off
Commencement Date", provided such date is designated on at least one Business
Day's notice during a time when any of the conditions set forth in SECTION
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5.02 are not satisfied, and on or before the date, if any, designated by such
Agent in its sole discretion on at least one Business Day's notice to Seller as
the "Run Off Termination Date", and (b) each day which occurs on or after the
Termination Date for such Undivided Interest.
"RUN OFF DISCOUNT" has the meaning set forth in APPENDIX B.
"RUN OFF PERIOD" means one or more successive Run Off Days.
"RUN OFF SERVICER'S FEE" has the meaning set forth in APPENDIX B.
"SCHEDULED COMMITMENT TERMINATION DATE" has the meaning set forth in
SECTION 1.02(a).
"SECURITY" shall have the same meaning as in SECTION 2(l) of the Securities
Act of 1933, as amended.
"SELLER" has the meaning set forth in the PREAMBLE.
"SELLER INFORMATION" has the meaning set forth in SECTION 14.08.
"SELLER INFORMATION PROVIDER" has the meaning set forth in SECTION 14.08.
"SERVICER" initially means The Wackenhut Corporation, and thereafter the
Person determined pursuant to SECTION 8.01(a).
"SERVICER TRANSFER EVENT" has the meaning set forth in SECTION 8.01(b).
"SERVICER'S FEE" has the meaning set forth in APPENDIX B.
"SERVICER'S FEE RESERVE" has the meaning set forth in APPENDIX B.
"SERVICES" means (i) security related services (including, without
limitation, physical security, investigations, transit security, nuclear site
security, emergency protection and similar services) and (ii) corrections
related services (including, without limitation, correctional facility guard,
food and similar services).
"SETTLEMENT DATE" means the last day of each Settlement Period.
"Settlement Period" for any Undivided Interest means
(a) each period commencing on the first day of each Yield Period for
such Undivided Interest and ending on the last day of such Yield Period;
and
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(b) on and after the Termination Date for such Undivided Interest,
such period (including, without limitation, a daily period) as shall be
selected from time to time by the Agent or, in absence of any such
selection, each period of thirty days from the next preceding Settlement
Date;
PROVIDED, HOWEVER, that
(i) with respect to any Yield Period of one day (as described in
CLAUSE (ii) of the PROVISO of the definition of "Yield Period"), the
related Settlement Period shall be the first day following such Yield
Period;
(ii) any Settlement Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding Business
Day; and
(iii) the last Settlement Period shall end on the date on which all
Undivided Interests have been reduced to zero.
"SOLVENT" shall mean, when used with respect to any Person, that at the
time of determination: (i) the fair value of its assets (both at fair valuation
and present fair saleable value) is in excess of the total amount of its
liabilities, including, without limitation, contingent liabilities; (ii) it is
then able and expects to be able to pay its debts as they mature; and (iii) it
has capital sufficient to carry on its business as conducted and as proposed to
be conducted.
"SPECIAL CONCENTRATION LIMIT" has the meaning set forth in SECTION 2.03(c).
"SUBSIDIARY" means, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation. The term "Subsidiary"
shall mean a subsidiary of Seller and The Atrium At Coral Gables, Ltd., a
Florida limited partnership.
"SUCCESSOR NOTICE" has the meaning set forth in SECTION 8.01(b).
"TERMINATION DATE" for any Undivided Interest means the Commitment
Termination Date.
"TERMINATION EVENT" has the meaning set forth in SECTION 10.01.
"THREE-MONTH DEFAULT RATIO" means the ratio (expressed as a percentage)
computed as of any Month End Date by dividing (x) the aggregate Unpaid Balance
of all Defaulted Receivables calculated as at each of the three most recent
Month End Dates less Losses
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(without giving effect to CLAUSE (z) of the definition thereof) during the three
preceding fiscal months by (y) the aggregate Unpaid Balance of all Pool
Receivables calculated as at each of the three most recent Month End Dates less
Losses (without giving effect to CLAUSE (z) of the definition thereof) during
the three most recent fiscal months.
"THREE-MONTH DILUTION RATIO" means the ratio (expressed as a percentage)
computed as of each Month End Date by dividing (x) the aggregate reduction in
the Unpaid Balance of all Pool Receivables arising from dilutive credits during
the three immediately preceding fiscal months by (y) Collections of Pool
Receivables received during such period; PROVIDED THAT, for each calendar month
preceding December, 1994 (or for December, 1994, if actual dilutive credits are
not known as of the date of calculation of the ratio for such month), dilutive
credits shall be estimated at .0065 times Collections of Pool Receivables during
each such month.
"TITANIA" means Titania Insurance Company of America, a corporation
organized under the laws of Vermont and a wholly-owned Subsidiary of the Seller.
"TOTAL CAPITALIZATION" means the sum of (i) Consolidated Funded Debt PLUS
(ii) Consolidated Net Worth.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"UNDIVIDED INTEREST" has the meaning set forth in SECTION 2.01.
"UNMATURED PURCHASE AND SALE TERMINATION EVENT" means any event which, with
the giving of notice or lapse of time, or both, would become a Purchase and Sale
Termination Event.
"UNMATURED TERMINATION EVENT" means any event which, with the giving of
notice or lapse of time, or both, would become a Termination Event.
"UNPAID BALANCE" of any Receivable means at any time the SUM of (x) the
unpaid principal amount thereof, PLUS (y) the unpaid amount of all finance
charges, interest payments and other amounts actually accrued thereon at such
time, but EXCLUDING, in the case of CLAUSE (y) next above, all late payment
charges, delinquency charges, and extension or collection fees.
"VOTING STOCK" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"WACKENHUT" has the meaning set forth in the preamble.
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"WACKENHUT FAMILY" means (i) George R. Wackenhut, Ruth J. Wackenhut,
Richard R. Wackenhut and other lineal descendants of George R. Wackenhut, the
founder of Wackenhut; (ii) the spouses and lineal descendants of the persons
named in clause (i); and (iii) the estates or legal representatives of the
persons named in clause (i).
"WCC" means Wackenhut Corrections Corporation, a Florida corporation.
"YIELD PERIOD" means with respect to any Undivided Interest (or portion
thereof):
(a) the period commencing on the date of the initial Purchase of such
Undivided Interest (or such portion) and ending such number of days
thereafter (not to exceed 100 days) as the applicable Managing Agent shall
select, after consultation with the Seller, pursuant to SECTIONS 1.03 or
2.01(b); and
(b) thereafter, each period commencing on the last day of the
immediately preceding Yield Period for such Undivided Interest (or such
portion) and ending such number of days thereafter (not to exceed 100 days)
as the Agent shall select, after consultation with the Seller;
PROVIDED, HOWEVER, that
(i) any such Yield Period (other than a Yield Period consisting of
one day) which would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day (unless the related
Undivided Interest shall be accruing Earned Discount at a rate determined
by reference to the Eurodollar Rate (Reserve Adjusted), in which case if
such succeeding Business Day is in a different fiscal month, such Yield
Period shall instead be shortened to the next preceding Business Day);
(ii) in the case of Yield periods of one day for any Undivided
Interest, (A) the Initial Yield Period shall be the day of the related
Purchase; and (B) any subsequently occurring Yield Period which is one day
shall, if the immediately preceding Yield Period is more than one day, be
the last day of such immediately preceding Yield Period, and if the
immediately preceding Yield Period is one day, shall be the next day
following such immediately preceding Yield Period.
The "RELATED" Yield Period for any Undivided Interest at any time means the
Yield Period pursuant to which Earned Discount is then accruing for such
Undivided Interest.
B. OTHER TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles.
All terms used in Article 9 of
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<PAGE>
the UCC in the State of Illinois, and not specifically defined herein, are used
herein as defined in such Article 9.
C. COMPUTATION OF TIME PERIODS. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
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<PAGE>
APPENDIX B
CALCULATION OF DISCOUNT AND RESERVE
This is APPENDIX B to the Receivables Purchase Agreement dated as of
January 5, 1995 among The Wackenhut Corporation, Receivables Capital
Corporation, Enterprise Funding Corporation, BofA, NationsBank of North
Carolina, N.A., and BofA as Administrative Agent (as amended, supplemented or
otherwise modified from time to time, the "Agreement"). Capitalized terms used
in this APPENDIX B without definition have the meanings assigned to such terms
in APPENDIX A to the Agreement. Each reference in this APPENDIX B to any Section
refers to such Section of the Agreement. Each reference in this APPENDIX B to
any Part refers to the part of this APPENDIX B so designated.
INDEX
PART I
DISCOUNT FACTOR
Sub-
Part Term Page No.
- ---- ---- --------
A. Discount Factor. . . . . . . . . . . . . . . . . . . . . . . B-2
B. Earned Discount. . . . . . . . . . . . . . . . . . . . . . . B-2
C. Negative Spread Fee. . . . . . . . . . . . . . . . . . . . . B-3
D. Run Off Discount . . . . . . . . . . . . . . . . . . . . . . B-3
E. Rate Definitions . . . . . . . . . . . . . . . . . . . . . . B-4
Alternate Reference Rate . . . . . . . . . . . . . . . . . B-4
Bank Rate . . . . . . . . . . . . . . . . . . . . . . . B-5
Commercial Paper Rate. . . . . . . . . . . . . . . . . . . B-5
Domestic CD Rate (Adjusted). . . . . . . . . . . . . . . . B-5
Domestic CD Rate . . . . . . . . . . . . . . . . . . . . . B-6
Assessment Rate. . . . . . . . . . . . . . . . . . . . . . B-6
Reserve Requirement. . . . . . . . . . . . . . . . . . . . B-6
Eurodollar Rate (Reserve Adjusted) . . . . . . . . . . . . B-8
Purchaser Rate . . . . . . . . . . . . . . . . . . . . . . B-9
F. Rate Variance Factor . . . . . . . . . . . . . . . . . . . . B-10
PART II
LOSS RESERVE; DILUTION RESERVE
Sub-
Part Term Page No.
- ---- ---- --------
A. Loss Reserve . . . . . . . . . . . . . . . . . . . . . . . . B-10
B. Reserve Percentage . . . . . . . . . . . . . . . . . . . . . B-10
C. Dilution Reserve . . . . . . . . . . . . . . . . . . . . . . B-10
B-1
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PART III
SERVICER'S FEE RESERVE
A. Servicer's Fee Reserve . . . . . . . . . . . . . . . . . . . B-11
B. Servicer's Fee . . . . . . . . . . . . . . . . . . . . . . . B-11
C. Run Off Servicer's Fee . . . . . . . . . . . . . . . . . . . B-10
PART IV
ADJUSTED AVERAGE MATURITY
A. Adjusted Average Maturity. . . . . . . . . . . . . . . . . . B-12
B. Average Maturity . . . . . . . . . . . . . . . . . . . . . . B-12
-----------------------
PART I
DISCOUNT FACTOR
A. DISCOUNT FACTOR. The "DISCOUNT FACTOR" for a related Undivided
Interest at any time in a Yield Period means an amount determined as follows:
DF = ED + ROD
WHERE:
DF = the Discount Factor of such Undivided Interest at such time;
ED = Earned Discount of such Undivided Interest accrued and unpaid at
such time, as determined pursuant to PART I.B;
ROD = Run Off Discount of such Undivided Interest at such time, as
determined pursuant to PART I.D.
B. EARNED DISCOUNT. The "EARNED DISCOUNT" for any Undivided Interest for
each day in a related Yield Period means an amount determined as follows:
ED = [PI x (PR + FR) x 1/360] + NSF (if any);
PROVIDED, HOWEVER, that if, such Undivided Interest is owned by RCC and
Enterprise and pursuant to the definition of "Purchaser Rate" in PART I.E.,
different Purchaser Rates would apply to different portions of an Undivided
Interest, then Earned Discount shall be calculated separately with respect to
each such portion, and the Earned Discount shall be the sum of the Earned
Discount so calculated for such portions;
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<PAGE>
WHERE:
ED = Earned Discount of such Undivided Interest (or such portion)
accrued on such day;
PI = the Purchaser's Investment of such Undivided Interest (or such
portion) on such day, as determined pursuant to SECTION 2.02;
PR = the Purchaser Rate for such Undivided Interest (or such portion)
on such day, as defined in PART IE.;
FR = the Program Fee Rate consisting of the rate set forth in CLAUSE
(y) of SECTION 4.01(c); and
NSF = the Negative Spread Fee for such Undivided Interest or such
portion thereof) on such day, as defined in PART C.
No provision of the Agreement shall require the payment or permit the collection
of Earned Discount in excess of the maximum permitted by applicable law. Earned
Discount for any Undivided Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
C. NEGATIVE SPREAD FEE. The "NEGATIVE SPREAD FEE" means, for each
Undivided Interest (or portion thereof) for each day in any Yield Period during
which any Run Off Day or Termination Date for such Undivided Interest occurs,
the amount, if any, by which;
(i) the additional Earned Discount (calculated without taking into
account any Negative Spread Fee) which would have accrued on the reductions
of the related Purchaser's Investment of such Undivided Interest (or such
portion) during such Yield Period (as so computed) if such reductions had
remained as Purchaser's Investment exceeds,
(ii) the income, if any, received by the owner of such Undivided
Interest (or such portion) from such owner's investing the proceeds of such
reductions of Purchaser's Investment.
D. RUN OFF DISCOUNT. The "RUN OFF DISCOUNT" for the related Undivided
Interest at any time means an amount determined as follows:
ROD = PI x (PR + RVF) x AAM
---------------------
360
WHERE:
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<PAGE>
ROD = The Run Off Discount for such Undivided Interest at such
time;
PI = the Purchaser's Investment of such Undivided Interest at
such time;
PR = the Purchaser Rate for such Undivided Interest for a Yield
Period deemed to commence at such time pursuant to PART I.E;
AAM = the Adjusted Average Maturity of the Receivables Pool
related to such Undivided Interest, as determined pursuant
to PART V; and
RVF = the Rate Variance Factor deemed to be in effect at such
time, as determined pursuant to PART I.F.
E. RATE DEFINITIONS. The "ALTERNATE REFERENCE RATE" means, on any date,
a fluctuating rate of interest PER ANNUM equal to the higher of
(a) the higher of the rates of interest most recently announced by
BofA at its office in Chicago, Illinois and NationsBank at its office in
Charlotte, North Carolina as their respective reference rates from time to
time, changing when and as said reference rates change (such reference
rates are not necessarily the lowest or best rate charged by BofA or
NationsBank) and
(b) the Federal Funds Rate (as defined below) most recently
determined by BofA plus 1.0% PER ANNUM.
For purposes of this definition, "FEDERAL FUNDS RATE" means, for any period, a
fluctuating interest rate PER ANNUM equal (for each day during such period) to
(i) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York; or
(ii) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by BofA from three federal funds brokers of recognized standing
selected by it.
The Alternate Reference Rate is not necessarily intended to be the lowest rate
of interest determined by BofA or NationsBank in connection with extensions of
credit.
B-4
<PAGE>
"BANK RATE" for any Yield Period for the related Undivided Interest of any
Purchaser means an interest rate PER ANNUM equal to the sum of (a) 0.50% PER
ANNUM, PLUS (b) if the Fixed Charge Coverage Ratio is at such time less than
2.25:1, .375% PER ANNUM, plus (c) the Eurodollar Rate (Reserve Adjusted) of such
Purchaser for such Yield Period; PROVIDED, HOWEVER, that if (i) it shall become
unlawful for any Managing Agent, any RCC Program Support Provider, Enterprise
Liquidity Provider or Enterprise Credit Support Provider to obtain funds in the
London interbank eurodollar market in order to fund any Purchase or to maintain
any Undivided Interest, or if such funds shall not be reasonably available to
any Managing Agent, any RCC Program Support Provider, Enterprise Liquidity
Provider or Enterprise Credit Support Provider or (ii) there shall not be time
prior to the commencement of an applicable Yield Period to determine a
Eurodollar Rate for any Purchaser in accordance with its terms, then the "BANK
RATE" for any Yield Period for such Undivided Interest shall be equal to a rate
of (x) 0.50% PER ANNUM, PLUS (y) the Domestic CD Rate (Adjusted) of such
Purchaser for such Yield Period PLUS (z) if the Fixed Charge Coverage Ratio is
at such time less than 2.25:1, .375% PER ANNUM ("DEALER FEE").
"COMMERCIAL PAPER RATE" for any Yield Period for the related Undivided
Interest for any Purchaser means a rate PER ANNUM equal to the sum of (i) the
rate or, if more than one rate, the weighted average of the rates, determined by
converting to an interest-bearing equivalent rate PER ANNUM the discount rate
(or rates) at which Commercial Paper Notes having a term equal to such Yield
Period and to be issued to fund the Purchase of or to maintain such Undivided
Interest by the Purchaser purchasing such Undivided Interest (including, without
limitation, Purchaser's Investment and accrued and unpaid Earned Discount) may
be sold by any placement agent or commercial paper dealer selected by the
related Managing Agent, as agreed between each such agent or dealer and the
related Managing Agent, PLUS (ii) the greater of (A) the commissions and charges
charged by such placement agent or commercial paper dealer with respect to such
Commercial Paper Notes and (B) .05% times the face amount of such Commercial
Paper Notes, expressed as a percentage of such face amount and converted to an
interest-bearing equivalent rate PER ANNUM.
"DOMESTIC CD RATE (ADJUSTED)" means, with respect to Undivided Interests
owned or otherwise funded by BofA, RCC or any RCC Program Support Provider and
with respect to any Yield Period, a rate PER ANNUM (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Domestic CD Rate = DOMESTIC CD RATE + Assessment
----------------
(Adjusted) 1-Reserve Rate
Requirement
WHERE, for purposes of this definition:
B-5
<PAGE>
"DOMESTIC CD RATE" means, with respect to any Yield Period for any
related Undivided Interest (or portion thereof), owned or otherwise
funded by BofA, RCC, or any other RCC Program Support Provider, a rate
of interest equal to the average of the secondary market morning
offering rates in the United States for time certificates of deposit
of major United States money market banks for a period approximately
equal to such Yield Period in an amount substantially equal to the
Purchaser's Investment of the related Undivided Interest (or such
portion), as such offering rate is quoted to BofA by the Federal
Reserve Bank of New York during the morning of the first day of such
Yield Period; PROVIDED, HOWEVER, that if BofA shall not receive any
such quote by the Federal Reserve Bank of New York by 11:00 a.m., New
York time, on the morning of the first day of any Yield Period, then
"DOMESTIC CD RATE" for the purposes of this definition shall mean,
with respect to such Yield Period, the rate of interest determined by
BofA to be the average (rounded upwards, if necessary, to the nearest
1/100 of 1%) of the bid rates quoted to BofA in the secondary market
at approximately 11:00 a.m., New York time (or as soon thereafter as
practicable), on the first day of such Yield Period by two certificate
of deposit dealers in New York or Chicago of recognized standing
selected by BofA in its sole discretion for the purchase from BofA at
face value of certificates of deposit issued by BofA in an amount
approximately equal or comparable to the amount of the Purchaser's
Investment and having a maturity equal to such Yield Period.
"ASSESSMENT RATE" for purposes of this definition and for any Yield
Period means the annual assessment rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) applicable to BofA on its
insured deposits, on the Business Day immediately preceding the first
day of such Yield Period, under the Federal Deposit Insurance Act,
determined by annualizing the most recent assessment levied on BofA by
the Federal Deposit Insurance Corporation (together with any
successor, the "FDIC" with respect to such deposits after giving
effect to the most recent rebate granted to such Managing Agent by the
FDIC with respect to deposit insurance as well as the loss to BofA
(determined in the good faith judgment of BofA) of the use of such
rebate prior to the date a credit is taken by BofA with respect to
such rebate.
"RESERVE REQUIREMENT" means, for purposes of this definition and with
respect to any Yield Period, a percentage (expressed as a decimal)
equal to the daily average during such Yield Period of the aggregate
reserve requirement (including all basic, supplemental, marginal and
other reserves and taking into account any
B-6
<PAGE>
transitional adjustments or other scheduled changes in reserve
requirements during such period) specified under Regulation D, as
applicable to the class of banks of which BofA is a member, at
deposits of the types used as a reference in determining the Domestic
CD Rate and having a maturity approximately equal to such Yield
Period.
"DOMESTIC CD RATE (ADJUSTED)" means, with respect to Undivided Interests
owned or otherwise funded by NationsBank, Enterprise, any Enterprise Liquidity
Provider or any Enterprise Credit Support Provider and with respect to any Yield
Period, a rate PER ANNUM equal to the sum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) of (A) the rate obtained by dividing (x) the Enterprise CD
Rate for such Yield Period by (y) a percentage equal to 100% minus the stated
maximum rate for all reserve requirements as specified in Regulation D
(including without limitation any marginal, emergency, supplemental, special or
other reserves) that would be applicable during such Yield Period to a
negotiable certificate of deposit in excess of $100,000, with a maturity
approximately equal to such Yield Period, of any member bank of the Federal
Reserve System plus (B) the then daily net annual assessment rate (rounded
upward, if necessary, to the nearest 1/100 of 1%) as estimated by NationsBank,
the Enterprise Liquidity Provider or the Enterprise Credit Support Provider, as
applicable, for determining the current annual assessment payable by it to the
FDIC for insuring such certificates of deposit;
WHERE, for purposes of this definition:
"ENTERPRISE CD RATE" means, with respect to any Yield Period for any
related Undivided Interest owned or otherwise funded by NationsBank,
Enterprise, any Enterprise Liquidity Provider or any Enterprise Credit
Support Provider, the average of the bid rates determined by
NationsBank, the Enterprise Liquidity Provider or the Enterprise
Credit Support Provider, as applicable, per annum, at approximately
10:00 a.m. (New York City time) on the Business Day before the first
day of such Yield Period for which such Domestic CD Rate (Adjusted) is
to be applicable, of two or more New York certificate of deposit
dealers of recognized standing selected by NationsBank, the Enterprise
Liquidity Provider or the Enterprise Credit Support Provider, as
applicable, for the purchase in New York from the Enterprise Liquidity
Provider or the Enterprise Credit Support Provider, as applicable, at
face value of certificates of deposit of the Enterprise Liquidity
Provider or the Enterprise Credit Support Provider, as applicable, in
an aggregate amount approximately comparable to the amount of
Enterprise's Purchaser's Investment for the related Undivided Interest
(or portion thereof) to which such Domestic CD
B-7
<PAGE>
Rate (Adjusted) is to be applicable and with a maturity approximately
equal to the applicable Yield Period.
"EURODOLLAR RATE (RESERVE ADJUSTED)" means, with respect to Undivided
Interests owned or otherwise funded by BofA, RCC or any RCC Program Support
Provider, and with respect to any Yield Period for any related Undivided
Interest (or portion thereof), a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
WHERE for purposes of this definition:
"EURODOLLAR RATE" means, with respect to any Yield Period for any
related Undivided Interest (or portion thereof), the rate per annum at
which Dollar deposits in immediately available funds are offered to
the Eurodollar Offices of BofA two Eurodollar Business Days prior to
the beginning of such period by prime banks in the interbank
eurodollar market at or about 11:00 a.m., New York time for delivery
on the first day of such Yield Period, for the number of days
comprised therein and in an amount equal or comparable to the amount
of the related Purchaser's Investment of such Undivided Interest (or
such portion) for such Yield Period.
"EURODOLLAR BUSINESS DAY" means a day of the year on which dealings
are carried on in the London eurodollar interbank market and banks are
open for business in London and are not required or authorized to
close in New York City and Chicago, Illinois.
"EURODOLLAR OFFICE" shall mean the office of BofA through which BofA
determines the Eurodollar Rate. A Eurodollar Office of BofA may be,
at the option of BofA, either a domestic or foreign office.
"EURODOLLAR RESERVE PERCENTAGE" means, with respect to any Yield
Period, the then applicable percentage (expressed as a decimal)
prescribed by the Federal Reserve Board for determining reserve
requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D.
"EURODOLLAR RATE (RESERVE ADJUSTED)" means, with respect to Undivided
Interests owned or otherwise funded by NationsBank, Enterprise, any Enterprise
Liquidity Provider or any Enterprise Credit Support Provider and with respect to
any Yield Period for any related Undivided Interest (or portion thereof), a rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) of (A) the
rate obtained by dividing (i) the applicable LIBO Rate by (ii) a percentage
equal to 100% minus the reserve percentage
B-8
<PAGE>
used for determining the maximum reserve requirement as specified in Regulation
D (including without limitation any marginal, emergency, supplemental, special
or other reserves) that is applicable to the Enterprise Liquidity Provider
during such Yield Period in respect of eurocurrency or eurodollar funding,
lending or liabilities (or, if more than one percentage shall be so applicable,
the daily average of such percentage for those days in such Yield Period during
which any such percentage shall be applicable) plus (B) the then daily net
annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of
1%) as estimated by the Enterprise Liquidity Provider for determining the
current annual assessment payable by the Liquidity Provider to the FDIC in
respect of eurocurrency or eurodollar funding, lending or liabilities;
WHERE:
"LIBO RATE" means, with respect to any Yield Period, the rate at which
deposits in dollars are offered to NationsBank, the Enterprise
Liquidity Provider or the Enterprise Credit Support Provider in the
London interbank market at approximately 11:00 a.m. (London time) two
Enterprise Eurodollar Business Days before the first day of such Yield
Period in an amount approximately equal to the Purchaser's Investment
for a related Undivided Interest to which the Eurodollar Rate (Reserve
Adjusted) is to apply and for a period of time approximately equal to
the applicable Yield Period.
"ENTERPRISE EURODOLLAR BUSINESS DAY" means any Business Day which is
also a day for trading by and between banks in United States dollar
deposits in the London interbank market.
"PURCHASER RATE" for any Yield Period for any related Undivided Interest
(or portion thereof) of any Purchaser means:
(a) in the case of an Undivided Interest (or portion thereof) of
any Purchaser other than one referred to in CLAUSE (b) of this
definition, the Commercial Paper Rate of such Purchaser for such
Undivided Interest (or such portion) for such Yield Period; and
(b) in the case of an Undivided Interest (or portion thereof)
(i) (A) owned by an RCC Program Support Provider or any other assignee
(other than RCC), or otherwise funded pursuant to an RCC Program
Support Agreement, or (B) funded by a Funding or (ii) owned or funded
by an Enterprise Liquidity Provider or an Enterprise Credit Support
Provider, the Bank Rate of such Purchaser for such Undivided Interest
(or such portion) for such Yield Period;
B-9
<PAGE>
PROVIDED, HOWEVER, that on any day when any Termination Event or Unmatured
Termination Event shall have occurred and be continuing, the Purchaser Rate
shall mean a rate PER ANNUM equal to the Alternate Reference Rate in effect on
such day plus 2% PER ANNUM.
F. RATE VARIANCE FACTOR. The "RATE VARIANCE FACTOR" means, during any
Yield Period, such percentage PER ANNUM not exceeding 2% as the Managing Agents
may designate from time to time in their sole discretion.
PART II
LOSS RESERVE
A. LOSS RESERVE. The "LOSS RESERVE" of any Undivided Interest on any day
means the greater of (x) $2,000,000 and (y) an amount determined as follows:
LR = RP x (PI + DF)
WHERE:
LR = the Loss Reserve of such Undivided Interest on such day;
RP = the Reserve Percentage at the close of business of Purchaser
on such day, as determined pursuant to PART II.B;
PI = the related Purchaser's Investment of such Undivided
Interest at the opening of business of Purchaser on such
day, as determined pursuant to SECTION 1.03; and
DF = the Discount Factor of such Undivided Interest at the close
of business of Purchaser on such day, as determined pursuant
to PART I.A.
B. RESERVE PERCENTAGE. The "RESERVE PERCENTAGE" means, for the related
Undivided Interest on any day, the greatest of (i) three times the most recent
Three-Month Default Ratio, (ii) 1.5 times the percentage that the largest
Special Concentration Limit set forth on SCHEDULE 2.03 (c) bears to the then
Aggregate Unpaid Balance of Eligible Receivables and (iii) 10%.
C. DILUTION RESERVE. The "DILUTION RESERVE" for the related Undivided
Interest on any day means an amount equal to the product of (x) the sum of the
related Purchaser's Investment of such Undivided Interest at the close of
business of Purchaser on such day, as determined pursuant to SECTION 1.03 and
(y) the greater of (i) 2% and (ii) 2 times the highest Three-Month Dilutions
Ratio calculated on the Month End Date for each of the
B-10
<PAGE>
six fiscal months preceding or ending on such day. It shall be understood and
agreed that the Managing Agents may modify the percentages and calculations set
forth in CLAUSES (y)(i) and (y)(ii) above, after the expiration of six months
from the date hereof based upon the actual dilution experience during the first
six-month period after the closing.
PART III
SERVICER'S FEE RESERVE
A. SERVICER'S FEE RESERVE. The "SERVICER'S FEE RESERVE" for the related
Undivided Interest at any time means an amount determined as follows:
SFR = SF + ROSF
WHERE:
SFR = the Servicer's Fee Reserve for such Undivided Interest at
any time;
SF = the unpaid Servicer's Fee relating to such Undivided
Interest accrued to such time and unpaid as determined
pursuant to PART III.B; and
ROSF = the Run Off Servicer's Fee for such Undivided Interest at
such time, as determined pursuant to PART III.C.
B. SERVICER'S FEE. The "SERVICER'S FEE" relating to any Undivided
Interest accrued for any day means
(i) an amount equal to (x) .50% PER ANNUM, TIMES (y) the amount
of the related Purchaser's Investment at the close of business on such
day, TIMES (z) 1/360; or
(ii) on and after Servicer's reasonable request made at any time
when Seller shall no longer be Servicer, an alternative amount
specified by Servicer not exceeding (x) 110% of Servicer's cost and
expenses of performing its obligations under the Agreement during the
Yield Period when such day occurs, divided by (y) the number of days
in such Yield Period.
C. RUN OFF SERVICER'S FEE. The "RUN OFF SERVICER'S FEE" for any
Undivided Interest at any time means an amount equal to
(x) the related Purchaser's Investment at such time, TIMES
(y) (A) the percentage PER ANNUM set forth in clause (i) (x) of
the definition of "Servicer's Fee", or (B) if Servicer's Fee is
calculated pursuant to
B-11
<PAGE>
CLAUSE (ii) of such definition, the percentage PER ANNUM determined
for each day by dividing the amount of the Servicer's Fee accrued for
such day by the related Purchaser's Investment at the close of
business on such day, multiplying the quotient by 360 and expressing
the product as a percentage, TIMES
(z) a fraction, the numerator of which is the number of days
equal to the then Adjusted Average Maturity, and the denominator of
which is 360 days.
PART IV
ADJUSTED AVERAGE MATURITY
"ADJUSTED AVERAGE MATURITY" means, on any day, the product of (i) 2 times
(ii) the Average Maturity for such day.
"AVERAGE MATURITY" means, on any day, that time period (expressed in days)
equal to the weighted average maturity of the Pool Receivables as shall be
calculated by Servicer, as set forth in the most recent Periodic Report in
accordance with the provisions thereof. If a Managing Agent shall disagree with
any such calculation, such Agent may recalculate the Average Maturity for such
day, which calculation shall, absent manifest error, be binding upon Servicer,
Seller and Purchaser.
B-12
_
<PAGE>
U.S. $15,000,000
CREDIT AGREEMENT
Dated as of December 12, 1994
between
WACKENHUT CORRECTIONS CORPORATION
AS BORROWER
and
BARNETT BANK OF SOUTH FLORIDA, N.A.
AS LENDER
<PAGE>
Table of Contents
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . 19
1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . 19
1.4 Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II AMOUNTS AND TERMS OF THE LOANS. . . . . . . . . . . . . . . . 19
2.1 Revolving Credit Loans. . . . . . . . . . . . . . . . . . . . . 19
2.2 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Making the Loans. . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.5 Reduction and Termination of the Commitments. . . . . . . . . . 21
2.6 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.8 Conversion/Continuation Option. . . . . . . . . . . . . . . . . 22
2.9 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.10 Interest Rate Determination . . . . . . . . . . . . . . . . . . 24
2.11 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . 24
2.12 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.13 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . 25
2.14 Payments and Computations . . . . . . . . . . . . . . . . . . . 25
2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.16 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . 27
ARTICLE III CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF
CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 Conditions Precedent to Initial Loans and Letters of
Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 Additional Conditions Precedent to Initial Loans and
Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 31
3.3 Conditions Precedent to Each Loan and Letter of Credit. . . . . 32
ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 33
4.1 Corporate Existence; Compliance with Law. . . . . . . . . . . . 33
4.2 Corporate Power; Authorization; Enforceable Obligations . . . . 33
4.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.4 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 35
4.5 Financial Matters . . . . . . . . . . . . . . . . . . . . . . . 35
4.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.7 Margin Regulations. . . . . . . . . . . . . . . . . . . . . . . 36
4.8 Ownership of Borrower; Subsidiaries . . . . . . . . . . . . . . 36
4.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.10 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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<PAGE>
4.11 No Burdensome Restrictions; No Defaults . . . . . . . . . . . . 39
4.12 No Other Ventures . . . . . . . . . . . . . . . . . . . . . . . 39
4.13 Investment Company Act. . . . . . . . . . . . . . . . . . . . . 39
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.16 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.17 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 41
4.18 Environmental Protection. . . . . . . . . . . . . . . . . . . . 41
4.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 42
4.20 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.21 Certain Indebtedness. . . . . . . . . . . . . . . . . . . . . . 42
4.22 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE V FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . 43
5.1 Maximum Leverage Ratio. . . . . . . . . . . . . . . . . . . . . 43
5.2 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . 44
5.3 Maintenance of Tangible Net Worth . . . . . . . . . . . . . . . 44
5.4 Working Capital Ratio . . . . . . . . . . . . . . . . . . . . . 44
5.5 Minimum Interest Charge Coverage Ratio. . . . . . . . . . . . . 44
ARTICLE VI ADDITIONAL AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . 45
6.1 Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . 45
6.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 45
6.3 Payment of Taxes, Etc . . . . . . . . . . . . . . . . . . . . . 45
6.4 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . 45
6.5 Preservation of Corporate Existence, Etc. . . . . . . . . . . . 46
6.6 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.7 Keeping of Books. . . . . . . . . . . . . . . . . . . . . . . . 46
6.8 Maintenance of Properties, Etc. . . . . . . . . . . . . . . . . 46
6.9 Performance and Compliance with Material Agreements . . . . . . 46
6.10 Application of Proceeds . . . . . . . . . . . . . . . . . . . . 46
6.11 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 47
6.12 Reporting Requirements. . . . . . . . . . . . . . . . . . . . . 48
6.13 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.14 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . 51
6.15 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.16 Borrowing Base Determination. . . . . . . . . . . . . . . . . . 52
6.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 53
7.1 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.3 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 54
7.4 Mergers, Stock Issuances, Sale of Assets, Etc . . . . . . . . . 55
7.5 Investments in Other Persons. . . . . . . . . . . . . . . . . . 55
7.6 Maintenance of Ownership of Subsidiaries. . . . . . . . . . . . 56
7.7 Change in Nature of Business. . . . . . . . . . . . . . . . . . 57
7.8 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 57
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<PAGE>
7.9 Modification of Material Agreements . . . . . . . . . . . . . . 57
7.10 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . 58
7.11 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . 58
7.12 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 58
7.13 Adverse Transactions. . . . . . . . . . . . . . . . . . . . . . 58
7.14 Cancellation of Indebtedness Owed to It . . . . . . . . . . . . 59
7.15 No New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 59
7.16 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 59
7.17 No Speculative Transactions . . . . . . . . . . . . . . . . . . 59
7.18 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 59
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 59
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.3 Actions in Respect of Letters of Credit . . . . . . . . . . . . 62
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1 Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . 64
9.4 Costs; Expenses; Indemnities. . . . . . . . . . . . . . . . . . 65
9.5 Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . . 67
9.6 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 67
9.7 Assignments and Participations. . . . . . . . . . . . . . . . . 67
9.8 Governing Law; Severability . . . . . . . . . . . . . . . . . . 70
9.9 Submission to Jurisdiction; Jury Trial. . . . . . . . . . . . . 70
9.10 Section Titles. . . . . . . . . . . . . . . . . . . . . . . . . 70
9.11 Execution in Counterparts . . . . . . . . . . . . . . . . . . . 70
9.12 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 70
9.13 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 71
EXHIBITS
Exhibit A - Notice of Borrowing
Exhibit B - Notice of Conversion or Continuation
Exhibit C - Revolving Credit Note
Exhibit D - Term Note
Exhibit E - Support Agreement
Exhibit F - Subsidiary Guaranty
Exhibit G - Letter of Credit Request
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<PAGE>
Exhibit H - Letter of Credit Reimbursement Agreement
Exhibit I - Opinion of Counsel for Borrower
Exhibit J - Form of Borrowing Base Certificate
SCHEDULES
Schedule 4.8 - Subsidiaries
Schedule 4.9 - List of Plans
Schedule 4.18 - Environmental Matters
Schedule 4.21 - Certain Indebtedness
Schedule 7.1 - Existing Liens
Schedule 7.5 - Existing Investments
iv
<PAGE>
CREDIT AGREEMENT, dated as of December 12, 1994, between WACKENHUT
CORRECTIONS CORPORATION, a Florida corporation ("Borrower"), and BARNETT BANK OF
SOUTH FLORIDA, N.A. ("Lender").
W I T N E S S E T H :
WHEREAS, Borrower has requested that Lender finance start-up expenses
associated with new correctional facility development and management contracts
and ongoing working capital requirements of Borrower and its Subsidiaries; and
WHEREAS, Lender is willing to make funds available for such purposes upon
the terms and subject to the conditions set forth herein; and
WHEREAS, Borrower has requested that Lender provide Borrower and its
Subsidiaries with letters of credit and Lender is willing to issue letters of
credit for such purpose upon the terms and subject to the conditions contained
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms de fined):
"ACCOUNTS" means all accounts, accounts receivable, contract rights and
other obligations at any time owing to Borrower, or any Subsidiary of Borrower
which has issued a Subsidiary Guaranty, under its Prison Contracts.
"AFFILIATE" means, as to any Person, any Subsidiary of such Person and
any other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each officer or director or
general partner of such Person, and each Person who is the beneficial owner of
5% or more of any class of voting Stock of such Person or, with respect to
Borrower, of Parent. For the purposes of this definition, "control" means the
possession of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
<PAGE>
"AGREEMENT" means this Credit Agreement, together with all Exhibits and
Schedules hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"APPLICABLE MARGIN" means Seventy-Five basis points (0.75%).
"AVAILABLE CREDIT" means, at any time, an amount equal to (i) the lower
of (a) the Revolving Credit Commitment, and (b) the Borrowing Base at such time
minus (ii) the aggregate of the outstanding principal amount of the Revolving
Credit Loans at such time and the Letter of Credit Obligations at such time.
"BANKRUPTCY CODE" means title 11, United States Code, as amended from
time to time, and any successor statute thereto.
"BORROWING BASE" means, at any time, the sum of Seventy Percent (70%)
of the amount by which (i) Eligible Receivables at such time exceeds (ii)
amounts withheld at such time by customers which are Governmental Authorities
for "retainage", with such excess being reduced by such reserves as Lender, in
its reasonable discretion, may deem appropriate.
"BORROWING BASE CERTIFICATE" means a certificate of Borrower
substantially in the form of Exhibit J.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in Miami, Florida and, if the applicable Business Day
relates to a Eurodollar Rate Loan, a day on which dealings are also carried on
in the London interbank market.
"CAPITALIZED LEASE" means any lease of property by Borrower or any of
its Subsidiaries as lessee which would be capitalized on a balance sheet
prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means the capitalized amount of all
obligations of Borrower or any of its Subsidiaries under Capitalized Leases, as
determined on a consolidated basis in accor dance with GAAP.
"CASH EQUIVALENTS" means (i) securities with maturities of one year or
less from the date of acquisition issued or fully guaran teed or insured by the
United States government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers' acceptances of
Lender having maturities of one year or less from the date of acquisition, and
(iii) commercial paper of an issuer rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's
2
<PAGE>
Investors Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of investments.
"CLOSING DATE" means the first date on which any Revolving credit Loan
is made or any Letter of Credit is issued pursuant to Article II.
"CODE" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
"COMMITMENTS" means the Revolving Credit Commitment and the Term Loan
Commitment.
"COMMITMENT FEE" has the meaning specified in Section 2.4.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of such substance or waste, including,
without limitation, any substance regulated under any Environmental Law.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement relating thereto will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected (in whole or in part)
against loss in respect thereof. Contingent Obligations of a Person include,
without limitation, (a) the direct or indirect guarantee, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an obligation
of another Person, and (b) any liability of such Person for an obligation of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or dis- charge of such obligation (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell
3
<PAGE>
services, primarily for the purpose of enabling the debtor to make payment of
such obligation or to assure the holder of such obligation against loss, or (v)
to supply funds to or in any other manner invest in such other Person
(including, without limitation, to pay for property or services irrespective of
whether such property is received or such services are rendered), if in the case
of any agreement described under clause (i), (ii), (iii), (iv) or (v) of this
sentence the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported.
"CONTRACTUAL OBLIGATION" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument to which such Person is a party or by which it or any of its
property is bound or to which any of its properties is subject.
"CURRENT ASSETS" means, at any date, the total consolidated current
assets of Borrower and its Subsidiaries at such date, deter mined in conformity
with GAAP.
"CURRENT LIABILITIES" means, at any date, the total consolidated
current liabilities of Borrower and its Subsidiaries at such date, determined in
conformity with GAAP, and in any event shall include all Revolving Credit Loans
outstanding at such date and the current portion of the Term Loan outstanding at
such date.
"DEFAULT" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"DOL" means the United States Department of Labor, or any successor
thereto.
"DOLLARS" and the sign "$" each mean the lawful money of the United
States of America.
"EBIT" means, for any period, the aggregate of net income (or loss)
from continuing operations of Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, PLUS (a) the sum of
the following amounts of Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP to the extent
included in the determination of such net income (loss): (i) Net Interest
Expense, (ii) income tax expense, and (iii) extraordinary losses; LESS (b) the
sum of the following amounts of Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP to the extent included in the
determination of such net
4
<PAGE>
income (loss): (i) extraordinary gains, (ii) the net income (loss) of any other
Person that is accounted for by the equity method of accounting EXCEPT to the
extent of the amount of dividends or distributions paid to Borrower, and (iii)
the net income (loss) of any other Person acquired by Borrower or a Subsidiary
of Borrower in a transaction accounted for as a pooling of interests for any
period prior to the date of such acquisition.
"ELIGIBLE RECEIVABLES" means those Accounts and Unearned Receivables of
Borrower or any of its wholly-owned Subsidiaries arising out of sales of
merchandise or goods or the rendition of services in the ordinary course of
business, made by Borrower or any wholly-owned Subsidiary of Borrower which is a
Guarantor to a Person which is not an Affiliate or Subsidiary of Borrower, which
are not in dispute; PROVIDED, HOWEVER, that an Account or Unearned Receivable,
as the case may be, shall not be an Eligible Receivable if:
(A) such Account is more than (i) 90 days past due, according to
the original terms of sale if no invoice is rendered, or (ii) 90 days past
the original invoice date thereof;
(B) any warranty contained in this Agreement with respect either
to Accounts, Unearned Receivables or Eligible Receivables in general or to such
specific Account or Unearned Receivable is not true and correct with respect to
such Account;
(C) the account debtor on such Account or Unearned Receivable has
disputed liability or made any claim with respect to any other Account due from
such account debtor to Borrower or any of its Subsidiaries;
(D) the account debtor on such Account or Unearned Receivable has
filed a petition for bankruptcy or any other relief under the Bankruptcy Code or
any other law relating to bankruptcy, insolvency, reorganization or relief of
debtors; made an assignment for the benefit of creditors; had filed against it
any petition or other application for relief under the Bankruptcy Code or any
such other law; has failed, suspended business operations, become insolvent,
called a meeting of its creditors for the purpose of obtaining any financial
concession or accommodation, or had or suffered a receiver or a trustee to
be appointed for all or a significant portion of its assets or affairs;
(E) the account debtor on such Account or Unearned Receivable is
also a supplier to or creditor of Borrower or
5
<PAGE>
any of its Subsidiaries unless such supplier or creditor has executed a no-
offset letter satisfactory to Lender;
(F) the sale made or services rendered to such account debtor on
such Account or Unearned Receivable is on a bill-on-hold, guaranteed sale, sale-
and-return, sale-on-approval or consignment basis;
(G) such Account or Unearned Receivable is subject to a Lien in
favor of any Person;
(H) such Account or Unearned Receivable is subject to any
deduction, offset, counterclaim, return privilege or other conditions;
(I) the account debtor on such Account or Unearned Receivable is
located in New Jersey or Minnesota, unless Borrower or such Subsidiary (i) has
received a certificate of authority to do business and is in good standing in
such state or (ii) has filed a Notice of Business Activities Report with the
appropriate office or agency of such state for the current year;
(J) Lender, in accordance with its customary criteria, deems such
Account or Unearned Receivable ineligible;
(K) the sale or services represented by such Account is on terms
longer than 120 days; or
(L) Borrower or any of its Subsidiaries, in order to be entitled
to collect the Account or Unearned Receivable, is required to perform any
additional service for, or perform or incur any additional obligation to, the
Person to whom or to which it was made.
Lender shall have discretion to classify Accounts into any of the
foregoing categories or such other categories as Lender, in its reasonable
discretion, deems appropriate in determining the eligibility of Accounts and
Unearned Receivables.
"ENVIRONMENTAL LAW" means all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any judicial or
administrative order, consent decree or judgment relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface
6
<PAGE>
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include but are not limited
to the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. SECTION 9601 et seq.) ("CERCLA"); the Hazardous
Material Transportation Act, as amended (49 U.S.C. SECTION 180 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
SECTION 136 et seq.); the Resource Conservation and Recovery Act, as amended
(42 U.S.C. SECTION 6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as
amended (42 U.S.C. SECTION 7401 et seq.); the Clean Air Act, as amended (42
U.S.C. SECTION 740 et seq.); the Federal Water Pollution Control Act, as amended
(33 U.S.C. SECTION 1251 et seq.); the Occupational Safety and Health Act, as
amended (29 U.S.C. SECTION 651 et seq.); and the Safe Drinking Water Act, as
amended (42 U.S.C. SECTION 300f et seq.), and their state and local counterparts
or equivalents and any transfer of ownership notification or approval statutes
such as the New Jersey Environmental Cleanup Responsibility Act (N.J. Stat. Ann.
SECTION 13:1K-6 et seq.) ("ECRA").
"ENVIRONMENTAL LIABILITIES AND COSTS" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including, without
limitation, any thereof arising under any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, and which relate to
any environmental, health or safety condition, or a Release or threatened
Release, and result from the past, present or future operations of such Person
or any of its Subsidiaries.
"ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with Borrower, or any of its Subsidiaries
within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA EVENT" means (i) a Reportable Event with respect to a Title IV
Plan or a Multiemployer Plan; (ii) the withdrawal of
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Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (iii) the
complete or partial withdrawal of Borrower, any of its Subsidiaries or any ERISA
Affiliate from any Multiemployer Plan; (iv) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (v) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make
required contributions to a Qualified Plan; or (vii) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE" means, for any Interest Period, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate of interest
determined by Lender to be the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the
rate per annum at which deposits in immediately available and freely
transferable Dollars are offered by first class banks in the London interbank
market to the Miami, Florida offices of Lender at 10:00 A.M. Eastern Standard
Time or Eastern Daylight Time, as applicable, two (2) Business Days before the
first day of such Interest Period in an amount substantially equal to the
Eurodollar Rate Loan of Lender during such Interest Period and for a period
equal to such Interest Period by (b) a percentage equal to 100% (expressed as
a decimal) MINUS the Eurodollar Rate Reserve Percentage for such Interest
Period. Each calculation by Lender of the applicable Eurodollar Rate shall be
conclusive and binding for all purposes, absent manifest error.
"EURODOLLAR RATE LOAN" means any outstanding principal amount of the
Loans that, for an Interest Period, bears interest at a rate determined with
reference to the Eurodollar Rate.
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period means the
reserve percentage applicable two (2) Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any emergency, supple-
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mental or other marginal reserve requirement) for a member bank of the Federal
Reserve System in Miami, Florida with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities which includes deposits by reference to which the
Eurodollar Rate is determined) having a term equal to such Interest Period.
"EVENT OF DEFAULT" has the meaning specified in SECTION 8.1.
"FISCAL QUARTER" means each fiscal quarterly period in a Fiscal Year.
"FISCAL YEAR" means the 52- or 53-week period ending on the Sunday
closest to calendar year-end.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that, for purposes of Article V, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the most recent audited financial statements
referred to in the Registration Statement.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTOR" means each Subsidiary of Borrower which has executed a
Subsidiary Guaranty.
"INDEBTEDNESS" of any Person means (i) all indebtedness of such Person
for borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured) or for the deferred purchase price of
property or services, (ii) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (iii) all indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to
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repossession or sale of such property), (iv) all Capitalized Lease Obligations
of such Person, (v) all Contingent Obligations of such Person, (vi) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any Stock or Stock Equivalents of such Person, (vii) all
obligations of such Person under Interest Rate Contracts, and (viii) all
Indebtedness referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and general intangibles, as such terms
are defined in Article 9 of the UCC) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
(ix) in the case of Borrower and the Guarantor, the Obligations, (x) all
liabilities of such Person which would be shown on a balance sheet of such
Person prepared in accordance with GAAP and (xi) all liabilities of such Person
under Title IV of ERISA.
"INDEMNITEES" has the meaning specified in SECTION 9.4.
"INTEREST PERIOD" means, in the case of any Eurodollar Rate Loan, (i)
initially, the period commencing on the date such Eurodollar Rate Loan is made
or on the date of conversion of a Prime Rate Loan to such Eurodollar Rate Loan
and ending 30, 60 or 90 days thereafter, as selected by Borrower in its Notice
of Borrowing or Notice of Conversion or Continuation given to Lender pursuant
to SECTION 2.3 OR 2.8; PROVIDED, HOWEVER, that the foregoing provisions are
subject to the following:
(A) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to
extend such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding Business
Day;
(B) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;
(C) Borrower may not select any Interest Period which ends after
the date of a scheduled principal payment on the Term Loan as set forth in
Article II unless, after giving effect to such selection, the aggregate
unpaid principal amount of the Loans for which Interest Periods end after
such scheduled principal payment shall be equal to or less than
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the principal amount to which the Loans are required to be reduced after
such scheduled principal payment is made;
(D) Borrower may not select any Interest Period in respect of
Loans having an aggregate principal amount of less than $100,000; and
(E) there shall be outstanding at any one time no more than
three (3) Interest Periods in the aggregate.
"INTEREST RATE CONTRACTS" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"INVESTMENTS" has the meaning specified in SECTION 7.5.
"IRS" means the Internal Revenue Service, or any successor thereto.
"LEASES" means, with respect to Borrower or any of its Subsidiaries,
all of those leasehold estates in real property now owned by Borrower or such
Subsidiary as lessee or hereafter acquired by Borrower or such Subsidiary, as
lessee as such may be amended, supplemented or otherwise modified from time to
time to the extent permitted by this Agreement.
"LETTER OF CREDIT" means any letter of credit issued for the account of
Borrower or any of its Subsidiaries by Lender pursuant to SECTION 2.16.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, all liabilities at
such time of Borrower to Lender with respect to Letters of Credit, whether or
not any such liability is contingent, and includes the sum of (i) the
Reimbursement Obligations at such time and (ii) the Letter of Credit Undrawn
Amounts at such time.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" has the meaning specified in
SECTION 2.16(c).
"LETTER OF CREDIT REQUEST" has the meaning specified in SECTION
2.16(d).
"LETTER OF CREDIT UNDRAWN AMOUNTS" means, at any time, the aggregate
undrawn face amount of all Letters of Credit outstanding at such time.
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"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the UCC or comparable law of any jurisdiction, of any financing statement
naming the owner of the asset to which such Lien relates as debtor.
"LOAN" means a Revolving Credit Loan or Term Loan.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Revolving
Credit Note, the Term Note, the Subsidiary Guaranties and the Letter of Credit
Reimbursement Agreement.
"LOAN PARTY" means each of Borrower, Parent and each Subsidiary of
Borrower which executes and delivers a Loan Document.
"MATERIAL ADVERSE CHANGE" means a material adverse change in any of (i)
the condition (financial or otherwise), business, performance, prospects,
operations or properties of Borrower and its Subsidiaries taken as one
enterprise, (ii) the legality, validity or enforceability of any Loan Document;
(iii) the ability of Borrower to repay the Obligations or to perform its
obligations under any Loan Document, or (iv) the rights and remedies of Lender
under the Loan Documents.
"MATERIAL ADVERSE EFFECT" means an effect that has a reasonable
likelihood of resulting in or causing a Material Adverse Change.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, and to which Borrower, any of its Subsidiaries or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"NET INTEREST EXPENSE" means, for any period, gross interest expense of
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP, LESS the following for Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP: (a) the sum of (i)
interest capitalized during construction for such period, (ii) interest income
for such period, and (iii) gains for such
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period on Interest Rate Contracts (to the extent not included in interest income
above and to the extent not deducted in the calculation of such gross interest
expense), PLUS the following for Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP: (b) the sum of (i) losses for such
period on Interest Rate Contracts (to the extent not included in such gross
interest expense), and (ii) the expensing of upfront costs or fees for such
period associated with Interest Rate Contracts (to the extent not included in
gross interest expense).
"NET WORTH" means, at any date, the excess of the Total Assets at such
date over the Total Liabilities at such date.
"NOTES" shall mean the Revolving Credit Note or the Term Note.
"NOTICE OF BORROWING" has the meaning specified in SECTION 2.3(a).
"NOTICE OF CONVERSION OR CONTINUATION" means a notice in substantially
the form of EXHIBIT B.
"OBLIGATIONS" means the Loans, the Letter of Credit Obligations and all
other advances, debts, liabilities, obligations, covenants and duties owing
Borrower to Lender, any Affiliate of Lender or any Indemnitee, of every type and
description, present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement or under any other Loan
Document, whether or not for the payment of money, whether arising by reason of
an extension of credit, opening or amendment of a Letter of Credit or payment of
any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange
transaction or Interest Rate Contract or in any other manner, whether direct or
indirect (including, without limitation, those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term "Obligations" includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to Borrower under this Agreement or any other Loan
Document.
"OTHER TAXES" has the meaning specified in SECTION 2.15(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PARENT" means The Wackenhut Corporation, a Florida corporation.
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"PENSION PLAN" means an employee pension benefit plan, as defined in
Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which
Borrower, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"PERMIT" means any permit, approval, authorization,
license, variance or permission required from a Governmental Authority
under an applicable Requirement of Law.
"PERSON" means an individual, partnership, corporation
(including, without limitation, a business trust), joint stock
company, trust, unincorporated association, joint venture or other
entity, or a Governmental Authority.
"PLAN" means an employee benefit plan, as defined in
Section 3(3) of ERISA, which Borrower or any of its Subsidiaries
maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"PRIME RATE" shall mean the rate of interest announced
by Barnett Banks, Inc. as its prime rate of interest from time to
time, which is not necessarily the best or lowest rate charged by
Lender to its customers.
"PRIME RATE LOAN" means any outstanding principal amount of
the Loans that bears interest with reference to the Prime Rate.
"PRISON CONTRACT" means a Contractual Obligation (including, without
limitation, any lease or consulting agreement) of Borrower or any of its
Subsidiaries relating to the design, development, construction, ownership,
management and/or operation of a prison or other correctional facility, or any
part or department thereof, and includes without limitation all the Contractual
Obligations referred to in Exhibits to the Registration Statement numbered
10.6 through 10.105 and all similar Contractual Obligations entered
into after the date hereof by Borrower or any Subsidiary of Borrower.
"QUALIFIED PLAN" means an employee pension benefit plan,
as defined in Section 3(2) of ERISA, which is intended to be
tax-qualified under Section 401(a) of the Code, and which Borrower,
any of its Subsidiaries or any ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who
are or were employed by any of them.
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"REGISTRATION STATEMENT" means the Registration Statement
on Form S-1 (Registration No. 33-79264) filed by Borrower with the
SEC, as the same was declared effective by the SEC on July 26, 1994,
including, without limitation, the final Prospectus constituting a
part thereof which was used in connection with Borrower's initial
public offering.
"REIMBURSEMENT OBLIGATIONS" means all matured reimbursement
or repayment obligations of Borrower to Lender with respect to Letters
of Credit pursuant to Letter of Credit Reimbursement Agreements.
"RELEASE" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment or into or out of any property owned by such Person, including,
without limitation, the movement of Contaminants through or in the
air, soil, surface water, ground water or property.
"REMEDIAL ACTION" means all actions required to (i) clean
up, remove, treat or in any other way address Contaminants in the
indoor or outdoor environment, (ii) prevent the Release or threat of
Release or minimize the further Release of Contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment, or (iii) perform pre-remedial
studies and investigations and post-remedial monitoring and care.
"REPORTABLE EVENT" means any of the events described in
Section 4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"REQUIREMENT OF LAW" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and all federal, state and local laws, rules and regulations, including,
without limitation, Environmental Laws, ERISA and all orders, judgments, decrees
or other determinations of any Governmental Authority or arbitrator, applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER" means, with respect to any Person,
any of the principal executive officers of such Person.
"REVOLVING CREDIT COMMITMENT" means the commitment of
Lender to make Revolving Credit Loans to Borrower pursuant to SECTION
2.1 in the aggregate principal amount outstanding at any time not to
exceed Fifteen Million Dollars ($15,000,000).
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"REVOLVING CREDIT LOAN" means a Loan made by Lender to
Borrower pursuant to SECTION 2.1.
"REVOLVING CREDIT NOTE" means the Revolving Credit Note
substantially in the form of EXHIBIT C, executed by Borrower, as the
same may be amended, supplemented or otherwise modified from time to
time.
"REVOLVING CREDIT TERMINATION DATE" means the earlier of
(i) November 30, 1997 or (ii) the date of termination of Lender's
Revolving Credit Commitment pursuant to Section 2.5 or 8.1.
"SEC" means the United States Securities and Exchange
Commission or any other Governmental Authority which succeeds to its
functions after the date hereof.
"SIGNIFICANT SUBSIDIARY" means a "significant subsidiary"
as defined in the rules and regulations promulgated under the Securi
ties Act of 1933, as amended.
"SOLVENT" means, with respect to any Person, that the value
of the assets of such Person (both at fair value and present fair
saleable value) is, on the date of determination, greater than the
total amount of liabilities (including, without limitation, contingent
and unliquidated liabilities) of such Person as of such date and that,
as of such date, such Person is able to pay all liabilities of such
Person as such liabilities mature and does not have unreasonably small
capital. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"STOCK" means shares of capital stock, beneficial or
partnership interests, participations or other equivalents (regardless
of how designated) of or in a corporation or equivalent entity,
whether voting or non-voting, and includes, without limitation, common
stock and preferred stock.
"STOCK EQUIVALENTS" means all securities convertible into
or exchangeable for Stock and all warrants, options or other rights to
purchase or subscribe for any stock, whether or not presently convert
ible, exchangeable or exercisable.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership or other business entity of which an aggre
gate of greater than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of direc-
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tors, managers, trustees or other controlling persons, is, at the time, directly
or indirectly, owned by such Person and/or one or more Subsidiaries of such
Person (irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"SUBSIDIARY GUARANTY" means a guaranty, in substantially the form of
EXHIBIT F, executed by each Subsidiary of Borrower, as such guaranty may be
amended, supplemented or otherwise modified from time to time.
"SUPPORT AGREEMENT" means the letter agreement of the Parent addressed
to Lender dated the Closing Date, the form of which is attached to the Agreement
as EXHIBIT E.
"TANGIBLE NET WORTH" means, at any date, the Net Worth at such date,
EXCLUDING, HOWEVER, from the determination of the Total Assets at such date, (i)
all goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (ii) all reserves carried
and not deducted from assets, (iii) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary, (iv) securities which are not readily marketable, (v) cash
held in a sinking or other analogous fund established for the purpose of
redemption, retirement, defeasance or prepayment of any Stock or Indebtedness,
(vi) any write-up in the book value of any asset resulting from a revaluation
thereof and (vii) any items not included in clauses (i) through (vi) above
which are treated as intangibles in conformity with GAAP.
"TAX AFFILIATE" means, as to any Person, (i) any Subsidiary of such
Person, and (ii) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.
"TAX RETURN" has the meaning specified in SECTION 4.3.
"TAXES" has the meaning specified in SECTION 2.15(a).
"TERM LOAN" means the Loan made to Borrower pursuant to SECTION 2.2.
"TERM LOAN COMMITMENT" has the meaning specified in SECTION 2.2.
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"TERM LOAN TERMINATION DATE" means the earlier of (i) September 30,
2002, and (ii) the date of termination of the Term Loan Commitment pursuant to
SECTION 2.5 or 8.2.
"TERM NOTE" means the Term Note substantially in the form of EXHIBIT D,
executed by Borrower, as the same may be amended, supplemented or otherwise
modified from time to time.
"TITLE IV PLAN" means a Pension Plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA.
"TOTAL ASSETS" means, at any date, the total assets of Borrower and its
Subsidiaries at such date determined on a consolidated basis in accordance with
GAAP.
"Total Liabilities" means, at any date, all obligations which in
accordance with GAAP would be included in determining total liabilities as shown
on the liabilities side of a consolidated balance sheet of Borrower and its
Subsidiaries at such date, and in any event includes, without limitation, all
Indebtedness of Borrower or any of its Subsidiaries at such date whether or not
the same would be so shown.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time and enacted in the State of Florida and in any other jurisdiction, as
applicable.
"UNEARNED RECEIVABLES" means amounts payable to Borrower or a wholly-
owned Subsidiary of Borrower which is a Guarantor pursuant to Prison Contracts
under which the services have been rendered but not invoiced by Borrower or such
Subsidiary.
"UNITED STATES" means the United States of America and its territories
and possessions.
"UNFUNDED PENSION LIABILITY" means, as to Borrower, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the present
value of all accrued benefits under each Title IV Plan of Borrower, any of its
Subsidiaries or any ERISA Affiliate exceeds the fair market value of all assets
of such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions in effect under such Title IV Plan, and
(ii) for a period of five years following a transaction reasonably likely to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by Borrower, any of its Subsidiaries or any ERISA Affiliate as
a result of such transaction.
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"WELFARE BENEFIT PLAN" means an employee welfare benefit
plan, as defined in Section 3(1) of ERISA, to which Borrower or any of
its Subsidiaries maintains, contributes to, contributed to, or has an
obligation to contribute to, on behalf of its former or active
employees (or their beneficiaries).
"WITHDRAWAL LIABILITY" means, as to Borrower, the aggregate
amount of the liabilities of Borrower, any of its Subsidiaries or any
ERISA Affiliate pursuant to Section 4201 of ERISA, and any increase in
contributions required to be made pursuant to Section 4243 of ERISA,
with respect to all Multiemployer Plans.
1.2 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including".
1.3 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all
accounting determinations required to be made pursuant hereto shall,
unless expressly otherwise provided herein, be made in accordance with
GAAP.
1.4 CERTAIN TERMS. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement
as a whole, and not to any particular Article, Section, subsection or
clause in this Agreement. References herein to an Exhibit, Schedule,
Article, Section, subsection or clause refer to the appropriate
Exhibit or Schedule to, or Article, Section, subsection or clause in
this Agreement.
(b) The term "Lender" includes its successors and each
assignee of Lender who becomes a party hereto pursuant to SECTION 9.7.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1 REVOLVING CREDIT LOANS. On the terms and subject to the
conditions contained in this Agreement, Lender agrees to make loans
(each a "Revolving Credit Loan") to Borrower from time to time on any
Business Day during the period from the date hereof until the Revolv
ing Credit Termination Date in an aggregate amount not to exceed at
any time outstanding the lesser of (i) the Revolving Credit Commitment
or (ii) the Available Credit. Amounts
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prepaid pursuant to SECTION 2.7(a) may be reborrowed under this SECTION 2.1.
2.2 TERM LOAN. On the terms and subject to the conditions contained in
this Agreement, Lender agrees to make a loan ("Term Loan") to Borrower on
November 30, 1997, in an amount not to exceed the aggregate principal amount of
Revolving Credit Loans then out standing (the "Term Loan Commitment"). Amounts
prepaid pursuant to SECTION 2.7(b) may not be reborrowed under this SECTION 2.2.
2.3 MAKING THE LOANS. (a) Each Revolving Credit Loan shall be made on
notice, given by Borrower to Lender not later than 12:00 P.M. (Miami, Florida
time) on the second (2nd) Business Day prior to the date of the proposed
Revolving Credit Loan. Each such notice (a "Notice of Borrowing") shall be in
substantially the form of EXHIBIT A, specifying therein (i) the date of such
proposed Revolving Credit Loan, (ii) the aggregate amount of such proposed
Revolving Credit Loan, (iii) the amount thereof, if any, requested to be
Eurodollar Rate Loans, and (iv) the initial Interest Period or Periods for any
such Eurodollar Rate Loans. The Loans shall be made as Prime Rate Loans unless
(subject to SECTION 2.12) the Notice of Borrowing specifies that all or a pro
rata portion thereof shall be Eurodollar Rate Loans; PROVIDED, HOWEVER, that the
aggregate of the Eurodollar Rate Loans for each Interest Period must be in an
amount of not less than $100,000 or an integral multiple of $100,000 in excess
thereof.
(b) The Term Loan shall be made upon receipt of a Notice of Conversion
or Continuation, given by Borrower to Lender not later than 11:00 A.M. (Miami,
Florida time) on the third (3rd) Business Day prior to November 30, 1997. The
Notice of Conversion or Continuation shall specify therein (i) the aggregate
amount of the proposed Term Loan, which shall not in any event exceed the
aggregate principal amount of Revolving Credit Loans outstanding on the
Revolving Credit Termination Date, (ii) the amount thereof, if any, requested to
be a Eurodollar Rate Loan, and (iii) the initial Interest Period for such
Eurodollar Rate Loan. The Term Loan shall be made as a Prime Rate Loan unless
(subject to SECTION 2.12) the Notice of Conversion or Continuation specifies
that all or a pro rata portion thereof in an aggregate amount not less than
$100,000 or an integral multiple of $100,000 in excess thereof shall be
Eurodollar Rate Loans having the same Interest Period.
(c) Each Revolving Credit Loan shall be in an aggregate amount of not
less than $50,000 or an integral multiple of $50,000 in excess thereof.
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(d) Each Notice of Borrowing shall be irrevocable and
binding on Borrower. In the case of any proposed borrowing which the
related Notice of Borrowing specifies is to be comprised of a Eurodol
lar Rate Loan, Borrower shall indemnify Lender against any loss, cost
or expense incurred by Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such
proposed Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (including, without limita
tion, loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired
by Lender to fund any Eurodollar Rate Loan to be made by Lender as
part of such proposed Borrowing when such Eurodollar Rate Loan, as a
result of such failure, is not made on such date.
2.4 FEES. Borrower agrees to pay to Lender (i) a Closing fee
of $37,500, one-half of which has previously been paid to Lender and
the balance of which will be paid to Lender at the Closing, and (ii) a
commitment fee (the "Commitment Fee") on the average daily unused
portion of the Revolving Credit Commitment from the date hereof until
the Revolving Credit Termination Date at the rate of One Tenth of One
Percent (0.1%) per annum, payable on the 1st day of each Fiscal
Quarter during the term of the Revolving Credit Commitment, commencing
on the first day of the first Fiscal Quarter beginning after December
15, 1994.
2.5 REDUCTION AND TERMINATION OF THE COMMITMENTS. (a) Borrower
may, upon at least three Business Days' prior notice to Lender,
terminate in whole or reduce in part the unused portions of the
Revolving Credit Commitment; PROVIDED, HOWEVER, that each partial
reduction shall be in the aggregate amount of not less than $500,000
or an integral multiple of $500,000 in excess thereof.
(b) Upon the making of the Term Loan, the Term Loan
Commitment shall terminate.
2.6 REPAYMENT. (a) Borrower shall repay the entire unpaid
principal amount of the Revolving Credit Loans on the Revolving Credit
Termination Date. The amount of all Revolving Credit Loans outstand
ing from time to time shall be evidenced by the Revolving Credit Note.
(b) Borrower shall repay the Term Loan in equal monthly
installments, commencing on January 1, 1998 and ending on the Term
Loan Termination Date. The Term Loan shall be evidenced by the Term
Note.
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2.7 Prepayments. (a) Borrower may, upon at least two (2)
Business Days' prior notice to Lender, stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding
principal amount of the Revolving Credit Loans in whole or in part,
together with accrued interest to the date of such prepayment on the
principal amount prepaid; PROVIDED, HOWEVER, that each partial
prepayment shall be in an aggregate principal amount not less than
$10,000 or integral multiples of $10,000 in excess thereof. Upon the
giving of such notice of prepayment, the principal amount of the
Revolving Credit Loans specified to be prepaid shall become due and
payable on the date specified for such prepayment.
(b) Borrower may at any time, upon at least three
(3) Business Days' prior notice to Lender stating the proposed date
and aggregate principal amount of the prepayment, prepay the outstand
ing principal amount of the Term Loan, in whole or in part, together
with accrued interest to the date of such prepayment on the principal
amount prepaid; PROVIDED, HOWEVER, that each partial prepayment shall
be in an aggregate amount not less than $500,000 or integral multiples
of $500,000 in excess thereof and that any such partial prepayment
shall be applied to the remaining installments of such outstanding
principal amount of the Term Loan in the inverse order of their
maturities. Upon the giving of such notice of prepayment, the
principal amount of the Term Loan specified to be prepaid shall become
due and payable on the date specified for such prepayment.
2.8 CONVERSION/CONTINUATION OPTION. Borrower may elect (i) at
any time to convert Prime Rate Loans or any portion thereof to
Eurodollar Rate Loans, (ii) at the end of any Interest Period with
respect thereto, to convert Eurodollar Rate Loans or any portion
thereof into Prime Rate Loans, or to continue such Eurodollar Rate
Loans or any portion thereof for an additional Interest Period;
PROVIDED, HOWEVER, that the aggregate of the Eurodollar Rate Loans for
each Interest Period therefor must be in the amount of $100,000 or an
integral multiple of $100,000 in excess thereof. Each such election
shall be in substantially the form of EXHIBIT B and shall be made by
giving Lender at least two (2) Business Days' prior written notice
thereof specifying (A) the amount and type of conversion or continua
tion, (B) in the case of a conversion to or a continuation of a
Eurodollar Rate Loan, the Interest Period therefor, and (C) in the
case of a conversion, the date of conversion (which date shall be a
Business Day and, if a conversion from a Eurodollar Rate Loan, shall
also be the last day of the Interest Period therefor). Notwithstand
ing the foregoing, no conversion in whole or in part of a Prime Rate
Loan to a Eurodollar Rate Loan and no continuation in whole or in part
of a Eurodollar Rate Loan upon the expiration of any Interest Period
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therefor, shall be permitted at any time at which a Default or an Event of
Default shall have occurred and be continuing. If, within the time period
required under the terms of this SECTION 2.8, Lender does not receive a Notice
of Conversion or Continuation from Borrower containing a permitted election to
continue any Eurodollar Rate Loan for an additional Interest Period or to
convert any such Loan, then, upon the expiration of the Interest Period
therefor, such Loan will be automatically converted to a Prime Rate Loan. Each
Notice of Conversion or Continuation shall be irrevocable.
2.9 INTEREST. (a) Borrower shall pay interest on the unpaid principal
amount of each Loan from the date thereof until the principal amount thereof
shall be paid in full, at the following rates perannum:
(i) PRIME RATE LOANS. For Prime Rate Loans, at a
rate per annum equal at all times to the Applicable Margin PLUS
the Prime Rate in effect from time to time, payable monthly on
the fifth (5th) day of each month, on the Revolving Credit
Termination Date and the Term Loan Termination Date and on the
date any Prime Rate Loan is converted or paid in full; PROVIDED,
HOWEVER, that any amount of principal or interest thereon which
is not paid when due (whether at stated maturity, by accelera
tion or otherwise) shall bear interest from the date on which
such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 3.50% per
annum above the Prime Rate in effect from time to time.
(ii) Eurodollar Rate Loans. For Eurodollar Rate
Loans, at a rate per annum equal at all times during the appli
cable Interest Period for each Eurodollar Rate Loan to the sum
of the Eurodollar Rate for such Interest Period PLUS the
Applicable Margin in effect on the first day of such Interest Period,
payable on the last day of such Interest Period, on the Revolv
ing Credit Termination Date and the Term Loan Termination Date;
PROVIDED, HOWEVER, that any amount of principal which is not
paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 3.50% above
the Prime Rate in effect from time to time.
(b) MAXIMUM INTEREST. Nothing contained in this
Agreement, the Notes or any other Loan Document shall be construed to
entitle or permit Lender to receive, at any time or in any contingency
or event whatsoever, interest or other compensation in respect
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of any of the Loans in excess of the amount it is legally entitled to receive
under applicable law. If Lender shall charge, reserve, collect or receive any
amount from any source in connection with the Loans which results in Lender
obtaining compensation for the Loans (whether or not termed "interest") in
excess of the highest amount Lender may legally charge in respect to the Loans
under applicable law (the "Excess"), then the Excess shall be credited against
the amount for which Borrower is liable to Lender and the amount by which the
Excess exceeds the amount for which Borrower is liable to Lender shall be
promptly refunded to Borrower. The provisions of this SUBSECTION (b) shall be
deemed to be incorporated into every document or communication relating to the
Loans (including, without limitation, the Notes and each Subsidiary Guaranty)
which sets forth any loan, account, right or claim of Lender with respect to the
Loans, whether or not the provisions of this SUBSECTION (b) are referred to
therein. If and whenever the law of the State of Florida or other applicable
law is amended in the future to allow a greater rate of interest to be charged
under this Agreement than is presently allowed by applicable law, the limitation
of interest hereunder shall be increased to the maximum rate of interest allowed
by the applicable law as amended, which increase shall be effective hereunder on
the effective date of such amendment.
2.10 INTEREST RATE DETERMINATION. (a) The Eurodollar Rate for
each Interest Period for Eurodollar Rate Loans shall be determined by
Lender two Business Days before the first day of such Interest Period.
(b) Lender shall give prompt notice to Borrower of the
applicable interest rate determined by Lender for purposes of SECTION
2.9(a)(i) or (a)(ii).
2.11 INCREASED COSTS. If, due to either (i) the introduction of
or any change in or in the interpretation of any law or regulation
(other than any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate Reserve
Percentage) or (ii) compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to Lender
of agreeing to make or making, funding or maintaining any Eurodollar
Rate Loans, then, for so long as such increase shall be in effect,
Borrower shall from time to time, upon demand by Lender, pay to Lender
additional amounts sufficient to compensate Lender for such increased
cost. A certificate as to the amount of such increased cost, submit
ted to Borrower by Lender, shall be conclusive and binding for all
purposes, absent manifest error. If Borrower so notifies Lender
within five Business Days after Lender notifies Borrower of any
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increased cost pursuant to the foregoing provisions of this SECTION 2.11,
Borrower may either (A) prepay in full all Eurodollar Rate Loans, as the case
may be, then outstanding in accordance with SECTION 2.7 and, additionally,
reimburse Lender for such increased cost in accordance with this SECTION 2.11 or
(B) convert all Eurodollar Rate Loans then outstanding into Prime Rate Loans, in
accordance with SECTION 2.8 and, additionally, reimburse Lender for such
increased cost in accordance with this SECTION 2.11.
2.12 ILLEGALITY. Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for Lender to make Eurodollar Rate
Loans or to continue to fund or maintain Eurodollar Rate Loans, then, on notice
thereof and demand therefor by Lender to Borrower, (i) the obligation of Lender
to make or to continue Eurodollar Rate Loans and to convert Prime Rate Loans
into Eurodollar Rate Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all Eurodollar Rate Loans of Lender then outstanding, together
with interest accrued thereon, unless Borrower, within five Business Days of
such notice and demand, converts all Eurodollar Rate Loans then outstanding into
Prime Rate Loans.
2.13 CAPITAL ADEQUACY. If (i) the introduction of or any change in or in
the interpretation of any law or regulation, (ii) compliance with any law or
regulation, or (iii) compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected to be
maintained by Lender or any corporation controlling Lender and Lender determines
that such amount is based upon the existence of Lender's Commitments and the
Loans and other commitments and loans of this type including, without limita
tion, its commitments in respect of letters of credit (or similar contingent
obligations), then, upon demand by Lender, Borrower shall pay to Lender, from
time to time as specified by Lender, additional amounts sufficient to compensate
Lender in the light of such circumstances, to the extent that Lender determines
such increase in capital to be allocable to the existence of such Commitments or
Loans and its agreements herein with respect to the issuance or maintenance of
Letters of Credit. A certificate as to such amounts submitted to Borrower by
Lender shall be conclusive and binding for all purposes absent manifest error.
2.14 PAYMENTS AND COMPUTATIONS. (a) Borrower shall make each payment
hereunder not later than 2:00 P.M. (Miami, Florida time) on the day when due, in
Dollars, to Lender at its address referred to in SECTION 9.2 in immediately
available funds without
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set-off or counterclaim. Payment received by Lender after 2:00 P.M. (Miami,
Florida time) shall be deemed to be received on the next Business Day.
(b) Borrower hereby authorizes (A) Lender, if and to the
extent payment owed to Lender is not made when due hereunder, to
charge from time to time against any or all of Borrower's accounts
with Lender any amount so due and, (B) Lender, at its discretion, to
treat any amounts due hereunder as having been paid by the proceeds of
an additional Revolving Credit Loan.
(c) All computations of interest based on the Prime Rate
and of fees shall be made by Lender on the basis of a year of 360
days, in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such
interest and fees are payable. Each determination by Lender of an
interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder shall be stated to
be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of payment of interest or
fee, as the case may be; PROVIDED, HOWEVER, that if such extension
would cause payment of interest on or principal of any Eurodollar Rate
Loan to be made in the next calendar month, such payment shall be made
on the next preceding Business Day.
2.15 TAXES. (a) Any and all payments by Borrower hereunder
and under any Letter of Credit Reimbursement Agreements shall be made,
in accordance with SECTION 2.14, free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Lender, taxes measured by its net
income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which Lender is organized or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to Lender (i) the sum
payable shall be increased as may be necessary so that after making
all required deductions (including, without limitation, deductions
applicable to additional sums payable under this SECTION 2.15) Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions,
(iii) Borrower shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law,
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and (iv) Borrower shall deliver to Lender evidence of such payment to
the relevant taxation or other authority.
(b) In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies of the United States or any political
subdivision thereof or any applicable foreign jurisdiction which arise
from any payment made hereunder or under any Letter of Credit
Reimbursement Agreement or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any Letter of
Credit Reimbursement Agreement (hereinafter referred to as "Other
Taxes").
(c) Borrower will indemnify Lender for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
SECTION 2.15) paid by Lender and any liability (including, without
limitation, for penalties, interest and reasonable expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall
be made within 30 days from the date Lender makes written demand
therefor. Such written demand shall include Lender's calculation of
such Taxes or Other Taxes, in such detail as may be necessary to
illustrate Lender's reasonable calculation thereof; and such
calculations shall be conclusive and binding for all purposes absent
manifest error.
(d) Within 30 days after the date of any payment of Taxes
or Other Taxes, Borrower will furnish to Lender, at its address
referred to in SECTION 10.2, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this SECTION 2.15 shall survive the payment in
full of principal and interest hereunder and all Obligations in
respect of Letter of Credit Reimbursement Agreements.
(f) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this SECTION 2.15 shall survive the payment in
full of the Obligations hereunder and the termination of the Commit
ments.
2.16 Letter of Credit Facility. (a) On the terms and subject
to the conditions contained in this Agreement, Lender agrees to issue
one or more Letters of Credit at the request of Borrower for the
account of Borrower or Borrower and one or more of its wholly-owned
Subsidiaries from time to time during the period
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commencing on the date hereof and ending 30 days prior to the Revolving Credit
Termination Date; PROVIDED, HOWEVER, that Lender shall be under no obligation
to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or restrain
Lender from issuing such Letter of Credit or any Requirement of Law
applicable to Lender or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over Lender
shall prohibit, or request that Lender refrain from, the issuance ofletters
of credit generally or such Letter of Credit in particular or shall impose
upon Lender with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which Lender is not otherwise
compensated) not in effect on the date hereof or result in any unreimbursed
loss, cost or expense which was not applicable, in effect or known to
Lender as of the date hereof and which Lender in good faith deems material
to it;
(ii) on or prior to the Business Day prior to
the requested date of issuance of such Letter of Credit, that
one or more of the applicable conditions contained in Article
III is not then satisfied;
(iii) after giving effect to the issuance of such
Letter of Credit, the Letter of Credit Obligations would exceed
$2,000,000.
(iv) the amount of the Letter of Credit re-
quested exceeds the Available Credit; or
(v) fees due in connection with a requested
issuance have not been paid.
(b) In no event shall:
(i) the expiration date of any Letter of Credit
be more than one year after the date of issuance thereof;
PROVIDED, HOWEVER, that if Borrower requests Lender to issue a
Letter of Credit having an expiration date exceeding one year
from the date of issuance thereof (but in any event prior to the
Revolving Credit Termination Date), then such Letter of Credit
shall provide that if it is not replaced with another Letter of
Credit at least 60 days prior to its expiration (with such
replacement Letter of Credit having an expiration date of the
earlier of one year from the date of issuance or the Revolving
Credit Termination Date)
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that it may be drawn on upon at any time during such 60 day period; or
(ii) the expiration date of any Letter of Credit fall after
the Revolving Credit Termination Date; or
(iii) Lender issue any Letter of Credit for the purpose of
supporting the issuance of any letter of credit by
any other Person.
(c) Prior to the issuance of each Letter of Credit, and as a condition
of such issuance, Borrower shall have delivered to Lender thereof a letter of
credit reimbursement agreement, in substantially the form of EXHIBIT H (a
"Letter of Credit Reimbursement Agreement"), signed by Borrower, and such other
documents or items as may be required pursuant to the terms thereof. In the
event of any conflict between the terms of any Letter of Credit Reimbursement
Agreement and this Agreement, the terms of this Agreement shall govern.
(d) In connection with the issuance of each Letter of Credit, Borrower
shall give Lender at least two Business Days' prior written notice (a "Letter of
Credit Request"), in substantially the form of EXHIBIT G, of the requested
issuance of such Letter of Credit. Such notice shall be irrevocable and shall
specify the stated amount of the Letter of Credit requested, the date of
issuance of such requested Letter of Credit (which day shall be a Business Day),
the date on which such Letter of Credit is to expire (which date shall be a
Business Day and shall in no event be later than the Revolving Credit
Termination Date), and the Person for whose benefit the requested Letter of
Credit is to be issued. Such notice, to be effective, must be received by
Lender not later than 11:00 A.M. (Miami, Florida time) on the last Business Day
on which notice can be given under the immediately preceding sentence.
(e) Subject to the terms and conditions of this SECTION 2.16 and
provided that the applicable conditions set forth in Article III have been
satisfied, Lender shall, on the requested date, issue a Letter of Credit on
behalf of Borrower in accordance with Lender's usual and customary business
practices.
(f) Borrower agrees to pay to Lender the amount of all Reimbursement
Obligations owing to Lender under any Letter of Credit Reimbursement Agreement
immediately when due, irrespective of any claim, set-off, defense or other right
which Borrower may have at any time against Lender or any other Person.
Borrower agrees to reimburse Lender for all amounts which Lender pays under such
Letter of Credit no later than the time specified in such
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Letter of Credit Reimbursement Agreement. If Borrower does not pay (either from
the proceeds of a Revolving Credit Loan or otherwise) any such Reimbursement
Obligation when due, such Reimbursement Obligation shall immediately constitute,
without necessity of further act or evidence, a loan made by Lender to Borrower,
in an aggregate principal amount equal to such Reimbursement Obligation
remaining unpaid, payable on demand and computed from the date on which such
Reimbursement Obligation arose to the date of repayment in full thereof at the
rate of interest applicable to past due Revolving Credit Loans bearing interest
at a rate based on the Prime Rate during such period.
(g) Borrower agrees to pay the following amounts with respect to each
Letter of Credit issued by Lender:
(i) Ninety basis points (0.90%) per annum of the maximum
amount available from time to time to be drawn under such Letter of Credit,
payable in advance on the date of issuance and on the termination of such
Letter of Credit, and calculated on the basis of a 360-day year and the
actual number of days elapsed;
(ii) with respect to the issuance, amendment
or transfer of each Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance
with Lender's standard schedule for such charges in effect at
the time of issuance, amendment, transfer or drawing, as the
case may be.
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of Lender to make the initial Revolving Credit Loan and
to issue any initial Letter of Credit is subject to satisfaction of the
conditions precedent that Lender shall have received, on the Closing Date, the
following, each dated the Closing Date unless otherwise indicated, in form and
substance satisfactory to Lender:
(a) Certified copies of (i) the resolutions of the Board of Directors
of each Loan Party approving each Loan Document to which it is a party, and (ii)
all documents evidencing other necessary corporate action and required
governmental and third-party approvals, licenses and consents with respect to
each Loan Document and the transactions contemplated thereby.
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(b) A copy of the articles or certificate of incorporation of each
Loan Party certified as of the most recent practicable date by the Secretary of
State of the state of incorporation of such Loan Party, together with
certificates of such official attesting to the good standing of each such Loan
Party, and a copy of the By-Laws of each such Loan Party certified as of the
Closing Date by the Secretary or an Assistant Secretary of Borrower or such
Subsidiary, as the case may be.
(c) A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying the names and true signatures of each officer who has been
authorized to execute and deliver any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of such Loan Party.
(d) A copy of the Registration Statement, certified as being complete
and correct by a Responsible Officer of Borrower.
(e) The Revolving Credit Note, duly executed by Borrower.
(f) Each of the Subsidiary Guaranties, duly executed by the Guarantor
party thereto.
(g) A favorable opinion of Akerman, Senterfitt & Eidson, P.A., counsel
to the Loan Parties, in substantially the form of EXHIBIT I, and as to such
other matters as Lender may request.
(h) A certificate of the chief financial officer of Borrower and each
Guarantor, stating that Borrower and each Guarantor is Solvent after giving
effect to the initial Revolving Credit Loans, the application of the proceeds
thereof in accordance with SECTION 6.10 and the payment of all estimated legal
and other fees related thereto.
(i) A certificate, signed by a Responsible Officer of Borrower,
stating that the conditions specified in SECTIONS 3.2 AND 3.3 have been met.
(j) Such additional documents, information and materials as Lender may
request.
3.2 ADDITIONAL CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF CREDIT.
The obligation of Lender to make the initial Revolving Credit Loan and to issue
any initial Letter of Credit is subject to the further conditions precedent
that:
(a) All costs and accrued and unpaid fees and expenses (including,
without limitation, legal fees and expenses) required
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to be paid to Lender on or before the Closing Date, including, without
limitation, those referred to in SECTIONS 2.4, 2.16 AND 9.4, to the extent then
due and payable, shall have been paid.
(b) Lender in its sole judgment exercised reasonably shall not have
determined (i) that there has been any Material Adverse Change since July 3,
1994, or (ii) that anything shall have occurred since July 3, 1994 which, in the
judgment of Lender, has had a Material Adverse Effect.
(c) There shall not be any claim, action, suit, investigation,
litigation or proceeding (including, without limitation, shareholder or
derivative litigation) pending or threatened in any court or before any
arbitrator or Governmental Authority which, if adversely determined, would have
a Material Adverse Effect.
3.3 CONDITIONS PRECEDENT TO EACH LOAN AND LETTER OF CREDIT. The obligation
of Lender to make any Loan (including the Revolving Credit Loan being made by
Lender on the Closing Date) and to issue any Letter of Credit shall be subject
to the further conditions precedent that:
(a) The following statements shall be true on the date of
such Loan or issuance, before and after giving effect thereto and to
the application of the proceeds therefrom and to such issuance (and
the acceptance by Borrower of the proceeds of such Loan or such Letter
of Credit shall constitute a representation and warranty by Borrower
that on the date of such Loan or issuance such statements are true):
(i) The representations and warranties of
Borrower contained in Article IV and of each Loan Party are
correct on and as of such date as though made on and as of such
date; and
(ii) No Default or Event of Default is con-
tinuing or would result from the Loans being made or Letter of
Credit being issued on such date.
(b) The making of the Loans or the issuance of such Letter
of Credit on such date does not violate any Requirement of Law and is
not enjoined, temporarily, preliminarily or permanently.
(c) Borrower shall have executed the Term Note, sub-
stantially in the form set forth as EXHIBIT D hereto, prior to the
making by Lender of the Term Loan.
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(d) Lender shall have received such additional documents,
information and materials as Lender may request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, Borrower
represents and warrants to Lender that:
4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Loan Party
and each of its Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction,
except for failures which in the aggregate would have no Material
Adverse Effect; (iii) has all requisite corporate power and authority
and the legal right to own, pledge, mortgage and operate its properties,
to lease the property it operates under lease and to conduct its
business as now or currently proposed to be conducted; (iv) is in
compliance with its articles or certificate of incorporation and by-
laws; (v) is in compliance with all other applicable Requirements of
Law except for such non-compliances as in the aggregate would have no
Material Adverse Effect; and (vi) has all necessary licenses, permits,
consents or approvals from or by, has made all necessary filings with,
and has given all necessary notices to, each Governmental Authority
having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to
secure the grant or transfer thereof or failures which in the aggre
gate would have no Material Adverse Effect.
4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
(a) The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party and the consummation of the
transactions related to the financing contemplated hereby:
(i) are within such Loan Party's corporate
powers;
(ii) have been duly authorized by all necessary
corporate action, including, without limitation, the consent of
shareholders where required;
(iii) do not and will not (A) contravene any Loan
Party's or any of its Subsidiaries' respective articles or
certificate of incorporation or by-laws or other compara-
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ble governing documents, (B) violate any other applicable Requirement of
Law, or any order or decree of any Governmental Authority or arbitrator,
(C) conflict with or result in the breach of, or constitute a default
under, or result in or permit the termination or acceleration of, any
Contractual Obligation of any Loan Party or any of its Subsidiaries, or (D)
result in the creation or imposition of any Lien upon any of the property
of any Loan Party or any of its Subsidiaries; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any Governmental
Authority or any other Person, other than those which have been or will be,
prior to the Closing Date, obtained or made, each of which on the Closing
Date will be in full force and effect.
(b) This Agreement has been and each of the other Loan Documents will
have been upon delivery thereof pursuant to SECTION 3.1, duly executed and
delivered by each Loan Party thereto. This Agreement is, and the other Loan
Documents will be, when delivered hereunder, the legal, valid and binding
obligation of each Loan Party thereto, enforceable against it in accordance with
its terms.
4.3 TAXES. All federal, state, local and foreign tax returns, reports and
statements (collectively, the "Tax Returns") required to be filed by Borrower or
any of its Tax Affiliates have been filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns, are required to be
filed, all such Tax Returns are true and correct in all material respects, and
all taxes, charges and other impositions due and payable have been timely paid
prior to the date on which any fine, penalty, interest, late charge or loss may
be added thereto for non-payment thereof, except where contested in good faith
and by appropriate proceedings if (i) adequate reserves therefor have been
established on the books of or Borrower or such Tax Affiliate in accordance with
GAAP and (ii) all such non-payments in the aggregate would have no Material
Adverse Effect. Proper and accurate amounts have been withheld by Borrower and
each of its Tax Affiliates from their respective employees for all periods in
full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective Governmental
Authorities. None of Borrower or any of its Tax Affiliates has (i) executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any charges; (ii) agreed or been
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<PAGE>
requested to make any adjustment under SECTION 481(a) of the Code by reason of a
change in accounting method or otherwise; or (iii) any obligation under any
written tax sharing agreement other than that to which Lender has consented.
4.4 FULL DISCLOSURE. (a) No written statement prepared or furnished by or
on behalf of any Loan Party or any of its Affiliates in connection with any of
the Loan Documents or the consummation of the transactions contemplated thereby,
and no financial statement delivered pursuant hereto or thereto, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. All facts
known to Borrower which are material to an understanding of the financial
condition, business, properties or prospects of Borrower and its Subsidiaries
taken as one enterprise have been disclosed to Lender.
(b) Borrower has delivered to Lender a true, complete and correct copy
of the Registration Statement. The Registration Statement, as of the date it
was declared effective by the SEC and at all times thereafter that Stock of
Borrower was offered or sold pursuant thereto, did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
4.5 FINANCIAL MATTERS. (a) The unaudited consolidated balance sheet of
Borrower and its Subsidiaries as at July 3, 1994, and the related consolidated
statements of income, shareholders' equity and cash flows of Borrower and its
Subsidiaries for the Fiscal Quarter then ended, certified by the chief financial
officer of Borrower, copies of which have been furnished to Lender, fairly
present, subject to year-end audit adjustments, the consolidated financial
condition of Borrower and its Subsidiaries as at such dates and the consolidated
results of the operations and cash flows of Borrower and its Subsidiaries for
the period ended on such dates, all in conformity with GAAP.
(b) Since July 3, 1994, there has been no Material Adverse Change and
there have been no events or developments that in the aggregate have had a
Material Adverse Effect.
(c) Neither Borrower any of its Subsidiaries had at July 3, 1994 any
material obligation, contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitment which is not reflected in the
balance sheet at such date referred to in SUBSECTION (a) above or in the notes
thereto.
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<PAGE>
(d) Each of Borrower and its Subsidiaries is Solvent.
4.6 LITIGATION. There are no pending or, to the knowledge of
Borrower, threatened actions, investigations or proceedings affecting
Borrower or any of its Subsidiaries before any court, Governmental
Authority or arbitrator, other than those that in the aggregate, if
adversely determined, would have no Material Adverse Effect. The
performance of any action by any Loan Party required or contemplated
by any of the Loan Documents is not restrained or enjoined (either
temporarily, preliminarily or permanently), and no material adverse
condition has been imposed by any Governmental Authority or arbitrator
upon any of the foregoing transactions or the exercise of control by
Parent over Borrower or any of its Subsidiaries.
4.7 MARGIN REGULATIONS. None of the transactions contemplated
by this Agreement (including, without limitation thereof, the use of
the proceeds of the Loans) will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto. Borrower does not own or intend
to carry or purchase directly or indirectly any "margin securities" as
that term is defined in Regulations G and U of the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"), and the
proceeds of the Loans made pursuant to this Agreement will be used
only for the purposes contemplated hereunder. None of the proceeds of
the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a "purpose credit"
within the meaning of Regulations G, T, U or X of the Federal Reserve
Board. Borrower will neither take nor permit any Person acting on its
behalf to take any action which might cause this Agreement or any
document or instrument delivered pursuant hereto to violate any
regulation of the Federal Reserve Board.
4.8 OWNERSHIP OF BORROWER; SUBSIDIARIES. (a) The authorized
capital stock of Borrower is as set forth in the Registration State
ment. All of the outstanding capital stock of Borrower has been
validly issued, is fully paid and non-assessable. Parent owns,
beneficially and of record, 6,000,000 shares of Common Stock, $.01 par
value, of Borrower, free and clear of all Liens. Except as disclosed
in the Registration Statement, no authorized but unissued shares, no
treasury shares and, to the best knowledge of Borrower, no other
outstanding shares of capital stock of Borrower are subject to any
option, warrant, right of conversion or purchase or any similar right.
Except as disclosed in the Registration Statement, there are no
agreements or understandings
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<PAGE>
with respect to the voting, sale or transfer of any shares of capital stock of
Borrower or to the best knowledge of Borrower, any agreement restricting the
transfer or hypothecation of any such shares.
(b) Set forth on SCHEDULE 4.8 hereto is a complete and
accurate list showing all Subsidiaries of Borrower and, as to each
such Subsidiary, the jurisdiction of its incorporation, the number of
shares of each class of Stock authorized, the number outstanding on
the date hereof and the percentage of the outstanding shares of each
such class owned (directly or indirectly) by Borrower. Except as set
forth in the Registration Statement or on SCHEDULE 4.8, no Stock of
any Subsidiary of Borrower is subject to any outstanding option,
warrant, right of conversion or purchase or any similar right. All of
the outstanding capital Stock of each such Subsidiary has been validly
issued, is fully paid and non-assessable and is owned by Borrower,
free and clear of all Liens. Except as set forth in the Registration
Statement or on SCHEDULE 4.8, neither Borrower nor any such Subsidiary
is a party to, or has knowledge of, any agreement restricting the
transfer or hypothecation of any shares of Stock of any such Subsidiary,
other than the Loan Documents. Borrower does not own or hold,
directly or indirectly, any capital stock or equity security of, or
any equity interest in, any Person other than such Subsidiaries.
4.9 ERISA. (a) SCHEDULE 4.9 separately identifies all Plans,
all Qualified Plans, all Title IV Plans, all Multiemployer Plans, all
unfunded Pension Plans and all Welfare Benefit Plans that provide
retiree benefits.
(b) Each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the Code, and the trusts created thereunder
have been determined to be exempt from tax under the provisions of
Section 501 of the Code, and to the best knowledge of Borrower nothing
has occurred which would cause the loss of such qualification or tax-
exempt status.
(c) Each Plan is in compliance in all material respects
with applicable provisions of ERISA and the Code, including, without
limitation, the filing of reports required under the Code or ERISA
which are true and correct in all material respects as of the date
filed, and with respect to each Plan, other than a Qualified Plan, all
required contributions and benefits have been paid in accordance with
the provisions of each such Plan.
(d) None of Borrower, any of its Subsidiaries or any ERISA
Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section
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<PAGE>
412 of the Code or Section 302 of ERISA or the terms of any such Qualified Plan.
(e) Except as set forth on SCHEDULE 4.9, no Plan is a
Title IV Plan.
(f) Except as set forth on SCHEDULE 4.9, there has been
no, nor is there reasonably expected to occur any ERISA Event or event
described in Section 4068 of ERISA with respect to any Title IV Plan.
(g) There are no pending or, to the knowledge of Borrower,
threatened claims, actions or lawsuits (other than claims for benefits
in the normal course), asserted or instituted against (i) any Plan or
its assets, (ii) any fiduciary with respect to any Plan or
(iii) Borrower, any of its Subsidiaries or any ERISA Affiliate with
respect to any Plan.
(h) Except as set forth on SCHEDULE 4.9, none of Borrower,
any of Borrower's Subsidiaries or any ERISA Affiliate has incurred or
has any reasonable likelihood of incurring any Withdrawal Liability
under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
any such liability).
(i) Except as set forth on SCHEDULE 4.9, within the last
five years none of Borrower, any of its Subsidiaries or any ERISA
Affiliate has engaged in a transaction which resulted in a Title IV
Plan with Unfunded Liabilities being transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of
ERISA) of any such entity.
(j) Except as set forth on Schedule 4.9, no Plan which is
a Welfare Benefit Plan provides for continuing benefits or coverage
for any participant or any beneficiary of a participant after such
participant's termination of employment (except as may be required by
Section 4980B of the Code and at the sole expense of the participant
or the beneficiary of the participant) which would result in a
liability in an amount which would have a Material Adverse Effect.
Borrower, each of its Subsidiaries and each ERISA Affiliate has
complied with the notice and continuation coverage requirements of
Section 4980B of the Code and the regulations thereunder, except for
non-compliances which in the aggregate would have no Material Adverse
Effect.
(k) Neither Borrower nor any of its Subsidiaries has
engaged in a prohibited transaction, as defined in Section 4975 of
the Code or Section 406 of ERISA, in connection with any Plan,
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<PAGE>
which would subject or has any reasonable likelihood of subjecting Borrower
or any of its Subsidiaries (after giving effect to any exemption) to a
material tax on prohibited transactions imposed by Section 4975 of the
Code or any other material liability.
(l) Neither Borrower nor any of its Subsidiaries or any
ERISA Affiliate has any liability under any terminated "employee
benefit plan", as defined in Section 3(2) of ERISA, of any related or
unrelated entity.
4.10 LIENS. There are no Liens of any nature whatsoever on any
properties of any Loan Party or any of its Subsidiaries other than
those permitted by SECTION 7.1.
4.11 NO BURDENSOME RESTRICTIONS; NO DEFAULTS. (a) No Loan
Party nor any of its Subsidiaries (i) is a party to any Contractual
Obligation the compliance with which would have a Material Adverse
Effect or the performance of which by any thereof, either unconditionally
or upon the happening of an event, will result in the creation of
a Lien on the property or assets of any thereof, or (ii) is subject to
any charter or corporate restriction which would have a Material
Adverse Effect.
(b) No Loan Party, none of their respective Subsidiaries
and, to the knowledge of Borrower, no other party is in default under
or with respect to any Contractual Obligation other than those
defaults which in the aggregate would have no Material Adverse Effect.
(c) No Event of Default or Default has occurred and is
continuing.
(d) There is no Requirement of Law the compliance with
which by any Loan Party would have a Material Adverse Effect.
(e) Neither Borrower nor any of its Subsidiaries is
subject to any restriction or limitation on its ability to declare
or make any dividend payment or other distribution on account of any
shares of any class of its Stock or on its ability to purchase,
redeem, or otherwise acquire for value or make any payment in respect
of any such shares or any shareholder rights, except pursuant hereto.
4.12 NO OTHER VENTURES. Except as disclosed in the Registration
Statement, no Loan Party is engaged in any joint venture or partnership
with any other Person.
4.13 INVESTMENT COMPANY ACT. Borrower is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal
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underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended. The making of the Loans by Lender,
the application of the proceeds and repayment thereof by Borrower and the
consummation of the transactions contemplated by the Loan Documents will not
violate any provision of such Act or any rule, regulation or order issued by the
SEC thereunder.
4.14 INSURANCE. All policies of insurance of any kind or nature
owned by or issued to any Loan Party, including, without limitation,
policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation
and employee health and welfare insurance, are in full force and
effect and are of a nature and provide such coverage as is sufficient
and as is customarily carried by companies of the size and character
of such Person. No Loan Party has been refused insurance for which it
applied or had any policy of insurance terminated (other than at its
request).
4.15 LABOR MATTERS. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving any
Loan Party, other than those which in the aggregate would have no
Material Adverse Effect.
(b) There are no arbitrations or grievances pending
against or involving any Loan Party, nor are there any arbitrations or
grievances threatened involving any Loan Party other than those which,
in the aggregate, if resolved adversely to such Loan Party, would have
no Material Adverse Effect.
(c) Except as set forth in the Registration Statement,
as of the Closing Date, no Loan Party is a party to, or has any
obligations under, any collective bargaining agreement.
(d) There is no organizing activity involving any Loan
Party pending or threatened by any labor union or group of employees.
There are no representation proceedings pending or threatened with the
National Labor Relations Board, and no labor organization or group of
employees of any Loan Party have made a pending demand for recognition,
other than those which in the aggregate would have no Material
Adverse Effect.
(e) There are no unfair labor practices charges, grievances
or complaints pending or in process or threatened by or on behalf of any
employee or group of employees of any Loan Party, other than those which
in the aggregate, if adversely determined, would have no Material Adverse
Effect.
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<PAGE>
(f) There are no complaints or charges against any Loan
Party pending or threatened to be filed with any federal, state or
local court, governmental agency or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment by any
Loan Party, other than those which in the aggregate, if resolved
adversely, would have no Material Adverse Effect.
(g) Each Loan Party is in compliance with all laws, and
all orders of any court, Governmental Authority or arbitrator,
relating to the employment of labor including all such laws relating
to wages, hours, collective bargaining, discrimination, civil rights,
and the payment of withholding and/or social security and similar
taxes which in the aggregate would have no Material Adverse Effect.
4.16 FORCE MAJEURE. Neither the business nor the properties of
any Loan Party are currently suffering from the effects of any fire,
explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), other than those
the consequences of which in the aggregate would have no Material
Adverse Effect.
4.17 USE OF PROCEEDS. The proceeds of the Loans and the Letters
of Credit are being used by Borrower solely as follows: (a) for the
payment of expenses associated with the development of new correctional
facilities and Prison Contracts; and (b) for general working
capital and corporate purposes.
4.18 ENVIRONMENTAL PROTECTION. (a) The operations of each Loan
Party comply with all Environmental Laws other than such non-compliance
the consequences of which in the aggregate would have no Material
Adverse Effect;
(b) Each Loan Party has obtained all environmental, health
and safety Permits necessary for its operations, and all such Permits
are in good standing, and each Loan Party is in compliance with the
terms and conditions of such Permits other than such non-compliance
the consequences of which in the aggregate would have no Material
Adverse Effect;
(c) No currently or previously owned or leased property or
operations of any Loan Party is subject to any threatened or outstanding
order from or agreement with any Governmental Authority or other
Person or is subject to any judicial or docketed administrative
proceeding respecting (i) Environmental Laws, (ii) Remedial Action or
(iii) any Environmental Liabilities and Costs arising from a Release
or threatened Release, other than
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those the consequences of which in the aggregate would have no
Material Adverse Effect;
(d) Except as set forth on SCHEDULE 4.18, there are no
conditions or circumstances associated with the currently or previously
owned or leased properties or operations of any Loan Party which
may give rise to any Environmental Liabilities and Costs other than
those the consequences of which in the aggregate would have no
Material Adverse Effect;
(e) No Loan Party is a treatment, storage or disposal
facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C. SECTION 6901 et seq., the regulations thereunder
or any state analog. Each Loan Party is in compliance with all
applicable financial responsibility requirements of all Environmental
Laws, including, without limitation, those contained in 40 C.F.R.,
parts 264 and 265, subpart H, and any state equivalents;
(f) Except as set forth on SCHEDULE 4.18, there is not now
on or in the property owned, leased or operated by any Loan Party
(i) any underground storage tanks or surface impoundments, (ii) any
asbestos-containing material, or (iii) any polychlorinated biphenyls
("PCBs") used in electrical or other equipment.
4.19 INTELLECTUAL PROPERTY. The Loan Parties own or license
or otherwise have the right to use all material licenses, permits,
patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights
that are necessary for the operations of their respective businesses,
without infringement upon or conflict with the rights of any other
Person with respect thereto, including, without limitation, the name
"Wackenhut". To the best knowledge of Borrower, no slogan or other
advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by any Loan
Party infringes upon or conflicts with any rights owned by any other
Person, and no claim or litigation regarding any of the foregoing is
pending or threatened.
4.20 TITLE. Each Loan Party owns fee simple absolute title to
all of the real estate purported to be owned by it, and good title to,
or valid leasehold interests in, all other properties and assets
purported to be owned by any Loan Party, including, without limitation, valid
leasehold interests pursuant to the Leases and all property reflected in the
balance sheet referred to in SECTION 4.5(a), and none of such properties and
assets is subject to any Lien, except Liens permitted hereunder.
4.21 CERTAIN INDEBTEDNESS. SCHEDULE 4.21 separately identifies
all Indebtedness (other than trade payables) of each Loan
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Party (a) which is either (i) for borrowed money, (ii) incurred
outside of the ordinary course of the business or in a manner which is
not consistent with past practice, or (iii) material to the financial
condition, business, operations or prospects of such Loan Party, and
(b) which is (i) to remain outstanding after the Closing or (ii) to be
satisfied upon the Closing.
4.22 RESTRICTED PAYMENTS. Since the date of the balance sheet
referred to in SECTION 4.5(a), Borrower has not, (a) declared or made
any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any shares of
any class of its Stock, (b) made any payment or distribution on
account of any Indebtedness for or in respect of borrowed money (other
than the making of regularly scheduled interest payments) including,
without limitation, to secure any waiver or consent in respect of any
such Indebtedness, (c) purchased, redeemed, or otherwise acquired for
value or made any payment in respect of any of its Stock or Stock
Equivalents or (d) purchased, redeemed, prepaid, defeased or otherwise
acquired for value any Indebtedness for or in respect of borrowed
money, except in each case as contemplated under the "Use of Proceeds"
section of the Registration Statement.
ARTICLE V
FINANCIAL COVENANTS
From and after the Closing Date and as long as any of the
Obligations or the Commitments remain outstanding, unless Lender
otherwise consents in writing:
5.1 MAXIMUM LEVERAGE RATIO. Borrower shall maintain at the
end of each Fiscal Quarter on a consolidated basis a ratio of
(a) Total Liabilities to (b) Tangible Net Worth, of not in excess
of the ratios shown below during the periods indicated:
Period Ratio
------ -----
Through December 31, 1995 1.60 to 1.0
After December 31, 1995 and through
December 31, 1996 1.50 to 1.0
After December 31, 1996 and through
December 31, 1997 1.30 to 1.0
After December 31, 1997 1.25 to 1.0
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<PAGE>
5.2 DEBT SERVICE COVERAGE RATIO. As of the last day of each
Fiscal Quarter following the Revolving Credit Termination Date, permit
the ratio of (i) EBIT for the four (4) Fiscal Quarters ended on such
day to (ii) all amounts paid or payable during such four Fiscal
Quarters in respect of all debt (whether or not for borrowed money) of
Borrower and its consolidated subsidiaries to be less than the ratios
shown below during the periods indicated:
Period Ratio
------ -----
Fiscal Year 1998 2.25 to 1.0
Fiscal Year 1999 and thereafter 2.50 to 1.0
5.3 MAINTENANCE OF TANGIBLE NET WORTH. Borrower shall maintain
Tangible Net Worth of not less than the minimum amount set forth
below:
<TABLE>
<CAPTION>
For each Fiscal Quarter in the
Fiscal Year Beginning In Minimum Tangible Net Worth
- -------------------------------- ---------------------------
<S> <C>
1994 $15,500,000
1995 20,000,000
1996 24,000,000
1997 27,000,000
1998 31,500,000
1999 36,500,000
2000 42,000,000
2001 and thereafter 49,000,000
</TABLE>
5.4 WORKING CAPITAL RATIO. Borrower shall maintain a ratio of
Current Assets to Current Liabilities of not less than 1.50 to 1.00.
5.5 MINIMUM INTEREST CHARGE COVERAGE RATIO. As of the last day
of each Fiscal Quarter and until the Revolving Credit Termination
Date, permit the ratio of (i) EBIT for the four (4) Fiscal Quarters
ended on such day to (ii) all interest paid or payable (including, but
not limited to, interest payable on all Revolving Credit Loans) on all
debt (whether or not for borrowed money) by Borrower and its consolidated
subsidiaries during such four Fiscal Quarters to be less than
5.0 to 1.0.
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ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless Lender otherwise consents in writing:
6.1 COMPLIANCE WITH LAWS, ETC. Borrower shall comply and shall
cause each of its Subsidiaries to comply, in all material respects
with all Requirements of Law, Contractual Obligations, commitments,
instruments, licenses, permits and franchises, including, without
limitation, all Permits, other than such non-compliances the consequences
of which in the aggregate would have no Material Adverse
Effect.
6.2 CONDUCT OF BUSINESS. Borrower shall (a) conduct, and shall
cause each of its Subsidiaries to conduct, its business in a regular
manner; (b) use, and cause each of its Subsidiaries to use, its
reasonable efforts, in the ordinary course and consistent with past
practice, to (i) preserve its business and the goodwill and business
of the customers, advertisers, suppliers and others having business
relations with Borrower or any of its Subsidiaries, and (ii) keep
available the services and goodwill of its present employees;
(c) preserve, and cause each of its Subsidiaries to preserve, all
registered patents, trademarks, trade names, copyrights and service
marks with respect to its business; and (d) perform and observe, and
cause each of its Subsidiaries to perform and observe, all the terms,
covenants and conditions required to be performed and observed by it
under its Contractual Obligations (including, without limitation, to
pay all rent and other charges payable under any lease), and do, and
cause its Subsidiaries to do, all things necessary to preserve and to
keep unimpaired its rights under such Contractual Obligations, other
than such failures the consequences of which in the aggregate would
have no Material Adverse Effect.
6.3 PAYMENT OF TAXES, ETC. Borrower shall pay and discharge,
and shall cause each of its Subsidiaries to pay and discharge, before
the same shall become delinquent, all lawful claims, taxes, assessments
and governmental charges or levies, except where contested in
good faith, by proper proceedings, if adequate reserves therefor have
been established on the books of Borrower or such Subsidiary in
conformity with GAAP, or where the consequence of all such non-
payments in the aggregate would have no Material Adverse Effect.
6.4 MAINTENANCE OF INSURANCE. Borrower shall maintain, and
shall cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations in
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<PAGE>
such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the
same general areas in which Borrower or such Subsidiary operates.
6.5 PRESERVATION OF CORPORATE EXISTENCE, ETC. Borrower shall
preserve and maintain, and shall cause each of its Subsidiaries to
preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises.
6.6 ACCESS. Borrower shall, at any reasonable time and from
time to time, permit Lender, or any agents or representatives of
Lender, to (a) examine and make copies of and abstracts from the
records and books of account of Borrower and each of its Subsidiaries,
(b) visit the properties of Borrower and each of its Subsidiaries,
(c) discuss the affairs, finances and accounts of Borrower and each of
its Subsidiaries with any of their respective officers or directors,
and (d) communicate directly with Borrower's independent certified
public accountants. Borrower shall authorize its independent certified
public accountants to disclose to Lender any and all financial
statements and other information of any kind, including, without
limitation, copies of any management letter that such accountants may
have with respect to the business, financial condition, results of
operations or other affairs of Borrower or any of its Subsidiaries.
6.7 KEEPING OF BOOKS. Borrower shall keep, and shall cause
each of its Subsidiaries to keep, proper books of record and account,
in which full and correct entries shall be made of all financial
transactions and the assets and business of Borrower and each such
Subsidiary in conformity with GAAP.
6.8 MAINTENANCE OF PROPERTIES, ETC. Borrower shall maintain
and preserve, and shall cause each of its Subsidiaries to maintain
and preserve, (i) all of its properties which are used or useful or
necessary in the conduct of its business in good working order and
condition, and (ii) all rights, permits, licenses, approvals and
privileges (including, without limitation, all Permits) which are used
or useful or necessary in the conduct of its business.
6.9 PERFORMANCE AND COMPLIANCE WITH MATERIAL AGREEMENTS. Borrower shall
perform and comply with, and shall cause each of its Subsidiaries to perform and
comply with, each of the covenants and agreements set forth in each material
agreement to which it or any of its Subsidiaries is a party.
6.10 APPLICATION OF PROCEEDS. Borrower shall use the entire amount of the
proceeds of the Loans as provided in SECTION 4.17.
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6.11 FINANCIAL STATEMENTS. Borrower shall furnish to Lender:
(a) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year, consolidated and consolidating balance sheets of Borrower
and its Subsidiaries as of the end of such quarter and consolidated
and consolidating statements of income, shareholders' equity and cash
flows of Borrower and its Subsidiaries for the periods commencing at
the end of the previous Fiscal Year and ending with the end of such
Fiscal Quarter and for such Fiscal Quarter, all prepared in accordance
with GAAP and certified by the chief financial officer of Borrower as
fairly presenting the financial condition and results of operations
and cash flows of Borrower and its Subsidiaries at such date and for
such periods, together with (i) a certificate of said officer stating
that no Default or Event of Default has occurred and is continuing or,
if a Default or an Event of Default has occurred and is continuing, a
statement as to the nature thereof and the action which Borrower
proposes to take with respect thereto, and (ii) a schedule in form
satisfactory to Lender of the computations used by Borrower in
determining compliance with all financial covenants contained herein;
(b) as soon as available and in any event within 120 days
after the end of each Fiscal Year, consolidated and consolidating
balance sheets of Borrower and its Subsidiaries as of the end of such
year and consolidated and consolidating statements of income, shareholders'
equity and cash flows of Borrower and its Subsidiaries for
the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Year, certified in the case of such
consolidated financial statements without qualification as to the
scope of the audit or as to Borrower being a going concern by Arthur
Andersen LLP or other independent public accountants of recognized
national standing acceptable to Lender, together with (i) a certificate
of such accounting firm stating that in the course of the regular
audit of the business of Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally
accepted auditing standards, such accounting firm has obtained no
knowledge that a Default or Event of Default has occurred and is
continuing, or, if in the opinion of such accounting firm, a Default
or Event of Default has occurred and is continuing, a statement as to
the nature thereof, and (ii) a schedule in form satisfactory to Lender
of the computations used by such accountants in determining, as of the
end of such Fiscal Year, Borrower's compliance with all financial
covenants contained herein;
(c) promptly after the same are received by Borrower, a
copy of each management letter provided to Borrower by its inde-
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pendent certified public accountants which refers in whole or in part to any
inadequacy, defect, problem, qualification or other lack of fully satisfactory
accounting controls utilized by Borrower or any of its Subsidiaries;
(d) within 15 days after the end of each Fiscal Quarter, a
Borrowing Base Certificate as of the end of such Fiscal Quarter;
(e) within 15 days after the end of each Fiscal Quarter,
an Aging of Accounts and Unearned Receivables as of the end of such
Fiscal Quarter and containing such other information regarding
Accounts and Unearned Receivables as Lender may request from time to
time; and
(f) a report showing the status (i.e., percentage of
completion and period remaining to expiration and all renewal options)
of all Prison Contracts.
6.12 REPORTING REQUIREMENTS. Borrower shall furnish to Lender:
(a) as soon as available and in any event within 30 days
subsequent to the end of each Fiscal Year, an annual budget of
Borrower and its Subsidiaries for the succeeding Fiscal Year, displaying
on a monthly and quarterly basis anticipated balance sheets,
forecasted revenues, net income and cash flows, all on a consolidated
basis;
(b) (i) promptly and in any event within 30 days after
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or
has reason to know that any ERISA Event has occurred, and
(ii) promptly and in any event within 10 days after Borrower, any
of its Subsidiaries or any ERISA Affiliate knows or has reason to know
that a request for a minimum funding waiver under SECTION 412 of the
Code has been filed with respect to any Qualified Plan, a written
statement of the chief financial officer or other appropriate officer
of Borrower describing such ERISA Event or waiver request and the
action, if any, which Borrower, its Subsidiaries and ERISA Affiliates
propose to take with respect thereto and a copy of any notice filed
with the PBGC or the IRS pertaining thereto;
(c) promptly and in any event within 30 days after the
filing thereof by Borrower, any of its Subsidiaries or any ERISA
Affiliate, a copy of each annual report (Form 5500 Series, including
Schedule B thereto) filed with respect to a Pension Plan, and upon
request by Lender, with respect to any other Plan;
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(d) promptly and in any event within 10 days after receipt
thereof, a copy of any adverse notice, determination letter, ruling or
opinion Borrower, any of its Subsidiaries or any ERISA Affiliate
receives from the PBGC, DOL or IRS with respect to any Qualified Plan
and, at the request of Lender, a copy of any favorable notice,
determination letter, ruling or opinion with respect thereto from any
such Governmental Authority;
(e) promptly and in any event within 10 days after receipt
thereof, a copy of any correspondence Borrower, any of its Subsidiaries
or any ERISA Affiliate receives from the plan sponsor (as defined
by Section 4001 (a)(10) of ERISA) of any Multiemployer Plan concerning
potential withdrawal liability of Borrower, any of its Subsidiaries or
any ERISA Affiliate, or notice of any reorganization with respect to
any Multiemployer Plan, together with a written statement of the chief
financial officer or other appropriate officer of Borrower of the
action which Borrower, its Subsidiaries and ERISA Affiliates propose
to take with respect thereto;
(f) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting Borrower or any of its Subsidiaries,
except those which in the aggregate, if adversely determined, would have
no Material Adverse Effect;
(g) promptly and in any event within two Business Days
after Borrower becomes aware of the existence of (i) any Default or
Event of Default, (ii) any breach or non-performance of, or any
default under, any Prison Contract or any other Contractual Obligation
which is material to the business, prospects, operations or financial
condition of Borrower and its Subsidiaries taken as one enterprise, or
(iii) any Material Adverse Change or any event or development or other
circumstance which has any reasonable likelihood of causing or
resulting in a Material Adverse Change, telephonic or telegraphic
notice in reasonable detail specifying the nature of the Event of
Default, Default, development or information, including, without
limitation, the anticipated effect thereof, which notice shall be
promptly confirmed in writing within five days;
(h) promptly and in any event within 15 days after the
sending or filing thereof, copies of all reports which Borrower sends
to its security holders generally, and copies of all reports and
registration statements which Borrower or any of its Subsidiaries
files with the SEC or any national securities exchange or the National
Association of Securities Dealers, Inc.;
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(i) upon the request of Lender, copies of all federal,
state and local tax returns and reports filed by Borrower or any of
its Subsidiaries in respect of taxes measured by income (excluding
sales, use and like taxes);
(j) promptly and in any event within 30 days of Borrower
or any Subsidiary learning of any of the following, written notice to
Lender of any of the following:
(i) Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of a Release or threat-
ened Release which could reasonably be expected to subject
Borrower or any of its Subsidiaries to Environmental Liabilities
and Costs of $250,000 or more;
(ii) the receipt by Borrower or any of its
Subsidiaries of notification that any real or personal property
of Borrower or any of its Subsidiaries is subject to any Envi-
ronmental Lien;
(iii) the receipt by Borrower or any of its
Subsidiaries of any notice of violation of, or knowledge by
Borrower or any of its Subsidiaries that there exists a condition
which might reasonably result in a violation by Borrower or
any of its Subsidiaries of, any Requirement of Law involving
environmental, health or safety matters, except for violation
the consequence of which in the aggregate would have no reasonable
likelihood of subjecting Borrower and its Subsidiaries
collectively to Environmental Liabilities and Costs of $250,000
or more;
(iv) the commencement of any judicial or
administrative proceeding or investigation alleging a violation
of any Requirement of Law involving environmental, health or
safety matters other than those the consequences of which in the
aggregate would have no reasonable likelihood of subjecting
Borrower and its Subsidiaries collectively to Environmental
Liabilities and Costs of $250,000 or more;
(k) upon written request by Lender, a report providing
an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or
report required pursuant to this SECTION 6.12 and any other envi-
ronmental, health or safety compliance obligation, remedial obligation
or liability, other than those which in the aggregate have no reasonable
likelihood of subjecting Borrower and its Subsidiaries to Environmental
Liabilities and Costs of $250,000 or more;
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(l) promptly and in any event within 15 days after
Borrower learns of the cancellation, by a Governmental Authority or by
Borrower or a Subsidiary, of any Prison Contract, irrespective of
whether Borrower believes that such cancellation will not have a
Material Adverse Effect.
(m) such other information respecting the business,
properties, condition, financial or otherwise, or operations of
Borrower or any of its Subsidiaries as Lender may from time to time
reasonably request.
6.13 LEASES. Borrower shall, and shall cause each of its
Subsidiaries to, (i) comply in all material respects with all of their
respective obligations under all of their respective Leases now or
hereafter held respectively by them with respect to real property;
(ii) not modify, amend, cancel, extend or otherwise change in any
materially adverse manner any of the terms, covenants or conditions of
any such Leases; (iii) not assign any Leases or sublet any portion of
the premises or assign or sublet any other Lease if such assignment or
sublet would have a Material Adverse Effect; (iv) provide Lender with
a copy of each notice of default under any Lease received by Borrower
or any Subsidiary of Borrower immediately upon receipt thereof and
deliver to Lender a copy of each notice of default sent by Borrower or
any Subsidiary of Borrower under any Lease simultaneously with its
delivery of such notice under such Lease; and (v) notify Lender, not
later than 30 days prior to the date of the expiration of the term of
any Lease, of Borrower's or any Subsidiary of Borrower's intention
either to renew or to not renew any such Lease, and, if Borrower or
any Subsidiary of Borrower intends to renew such Lease, the terms and
conditions of such renewal.
6.14 EMPLOYEE PLANS. (a) With respect to other than a Multi-
employer Plan, for each Qualified Plan hereafter adopted or maintained
by Borrower, any of its Subsidiaries or any ERISA Affiliate, Borrower
shall (i) seek, and cause such of its Subsidiaries and ERISA Affiliates
to seek, and receive determination letters from the IRS to the
effect that such Qualified Plan is qualified within the meaning of
Section 401(a) of the Code; and (ii) from and after the adoption of
any such Qualified Plan, cause such plan to be qualified within the
meaning of Section 401(a) of the Code and to be administered in all
material respects in accordance with the requirements of ERISA and
Section 401(a) of the Code.
(b) With respect to each Welfare Benefit Plan hereafter
adopted or maintained by Borrower, any of its Subsidiaries or any
ERISA Affiliate, Borrower shall comply, and cause such of its Subsidiaries
and ERISA Affiliates to comply, with the notice and
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continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder.
6.15 FISCAL YEAR. Borrower shall maintain as its Fiscal Year the 52- or 53-
week period ending on the Sunday closest to calendar year-end.
6.16 BORROWING BASE DETERMINATION.
(a) Borrower shall conduct, or shall cause to be conducted, at its
expense, and upon request of Lender, and present to Lender for approval, such
investigations or reviews as Lender shall request for the purpose of determining
the Borrowing Base, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be requested. Borrower shall
furnish to Lender any information which Lender may request regarding the
determination and calculation of the Borrowing Base including, without
limitation, correct and complete copies of any invoices, underlying agreements,
instruments or other documents and the identity of all obligors.
(b) Borrower shall promptly notify Lender in writing in the event that
at any time Borrower or any of its Subsidiaries receives or otherwise gains
knowledge that (i) the Borrowing Base is less than five percent (5%) of the
Borrowing Base reflected in the most recent Borrowing Base Certificate delivered
pursuant to SECTION 6.11(d) or that (ii) the Revolving Credit Loans borrowed
under SECTION 2.1 outstanding at such time exceed the Available Credit as a
result of any decrease in the Borrowing Base, and the amount of such excess.
6.17 ENVIRONMENTAL. Borrower shall, at its cost, upon receipt of any
notification or otherwise obtaining knowledge of any Release at any of its or
its Subsidiaries' operations or properties or other event that could result in
Borrower and its Subsidiaries incurring Environmental Liabilities and costs in
excess of $250,000, engage and pay for consultants to conduct tests or
assessments of environmental conditions at such operations or properties,
including, without limitation, the investigation and testing of subsurface
conditions, and shall take such remedial, investigational or other action as any
Governmental Authority requires or as is appropriate and consistent with good
business practice.
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ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or either of the Commitments remain
outstanding, without the written consent of Lender:
7.1 LIENS, ETC. Borrower shall not create or suffer to exist, and shall
not permit any of its Subsidiaries to create or suffer to exist, any Lien upon
or with respect to any of its or such Subsidiary's properties, whether now owned
or hereafter acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, except for:
(a) Purchase money Liens or purchase money security interests upon or
in any property acquired or held by Borrower or any Subsidiary of Borrower
in the ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of
financing the acquisition of such property; PROVIDED, HOWEVER, that the
aggregate principal amount of the Indebtedness secured by the Liens
referred to in this clause (a) shall not exceed $3,000,000 at any time
outstanding;
(b) Any Lien securing the renewal, extension or refunding of any
Indebtedness or other Obligation secured by any Lien permitted by
SUBSECTIONS (a) and (i) of this SECTION 7.1 without any increase in the
amount secured thereby or in the assets subject to such Lien;
(c) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons
incurred by Borrower or any of its Subsidiaries in the ordinary course of
business which secure its obligations to such Person; PROVIDED, HOWEVER,
that (i) Borrower or such Subsidiary is not in default with respect to such
payment obligation to such Person, (ii) is in good faith and by appropriate
proceedings diligently contesting such obligation and adequate provision is
made for the payment thereof or (iii) the consequences of all such failures
in the aggregate would have no Material Adverse Effect;
(d) Liens (excluding Environmental Liens) securing Taxes, assessments
or governmental charges or levies; PROVIDED, HOWEVER, that (i) neither
Borrower nor any of its Subsidiaries is in default in respect of any
payment obligation with respect thereto unless Borrower or such Subsidiary
is in good faith and by appropriate proceedings diligently contesting such
obligation and adequate provision is made for the
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payment thereof and (ii) the consequence of all such failures in the
aggregate would have no Material Adverse Effect;
(e) Liens incurred or pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits;
(f) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other obligations of like nature,
incurred as an incident to and in the ordinary course of business, and
judgment liens; PROVIDED, HOWEVER, that all such Liens (i) in the aggregate
have no Material Adverse Effect and (ii) do not secure directly or
indirectly judgments in excess of $1,000,000;
(g) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or
use of the property or assets of Borrower or any of its Subsidiaries or
impair, in any material manner, the use of such property for the purposes
for which such property is held by Borrower or any such Subsidiary;
(h) Liens in favor of landlords securing operating leases permitted
by SECTION 7.3; and
(i) Liens existing on the date of this Agreement and disclosed on
SCHEDULE 7.1;
7.2 INDEBTEDNESS. Borrower shall not create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any Indebtedness
(including, but not limited to the existing $3,500,000 credit facility extended
by Credit Lyonnais Australia Limited to Wackenhut Corrections Corporation
Australia Pty Limited) unless, after giving effect to such Indebtedness,
Borrower is in compliance with SECTION 5.1.
7.3 RESTRICTED PAYMENTS. Borrower shall not (i) declare or
make, and shall not permit any of its Subsidiaries to declare or make,
any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account or in respect of
any of its Stock or Stock Equivalents and except dividends paid to
Borrower or any wholly-owned Subsidiary of Borrower by any wholly-
owned Subsidiary of Borrower or (ii) purchase, redeem, prepay, defease
or otherwise acquire for value or make any payment (other than
required payments) on account or in respect of
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(or permit any of its Subsidiaries to do so) any principal amount of
Indebtedness for borrowed money, now or hereafter outstanding, except
the Loans and, in the case of a Subsidiary, payments may be made to
Borrower on account of any Indebtedness owing to Borrower by such Subsidiary;
PROVIDED, HOWEVER, that following the Revolving Credit Termination Date,
Borrower shall be permitted in any Fiscal Year (a "Payment Year") to
pay cash dividends on its outstanding Stock and Borrower and its
Subsidiaries shall be permitted in any Payment Year to prepay the
principal amount of Indebtedness for borrowed money in an aggregate
amount not to exceed Twenty-Five percent (25%) of the amount by which
(x) EBIT for the immediately preceding Fiscal Year (a "Measuring
Year") exceeds (y) the sum of (A) all Taxes for such Measuring Year
which are not deducted in determining EBIT for such Measuring Year and
(B) all debt service on Indebtedness for borrowed money (including the
Obligations) required to be paid during such Payment Year, but such
dividend or prepayment shall only be permitted if no Default or Event
of Default exists at the time of payment thereof or would result from
such payment.
7.4 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC. Borrower
shall not and shall not permit any of its Subsidiaries to (i) merge
with any Person, (ii) consolidate with any Person, (iii) acquire all
or substantially all of the Stock or Stock Equivalents of any Person,
(iv) acquire all or substantially all of the assets of any Person or
all or substantially all of the assets constituting the business of a
division, branch or other unit operation of any Person, or (v) sell,
lease, transfer or otherwise dispose of, whether in one transaction or
in a series of transactions, any substantial part of its assets;
PROVIDED, HOWEVER, that this SECTION 7.4 shall not restrict Borrower's
sale of its INS Detention Facility in Aurora, Colorado in connection
with a sale-and-leaseback transaction in which such Facility is leased
back by Borrower for a term of no less than five years; and PROVIDED,
FURTHER, that this SECTION 7.4 shall not restrict an acquisition by
Borrower otherwise prohibited by clause (iii) if such acquisition
would not constitute the acquisition of a Significant Subsidiary; and,
PROVIDED, FURTHER, that the foregoing shall not restrict redemptions
of Stock by Borrower for aggregate consideration of no more than
$500,000 upon the exercise by Borrower of rights of first refusal to
acquire Stock upon the exercise of outstanding options issued under
Borrower's existing stock option plans.
7.5 INVESTMENTS IN OTHER PERSONS. Borrower shall not, directly
or indirectly, make or maintain, or permit any of its Subsidiaries to
make or maintain, any loan or advance to any Person or own, purchase
or otherwise acquire, or permit any of its Subsidiaries to own,
purchase or otherwise acquire, any Stock,
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Stock Equivalents, other equity interest, obligations or other securities of, or
any assets constituting the purchase of a business or line of business, or make
or maintain, or permit any of its Subsidiaries to make or maintain, any capital
contribution to, or otherwise invest in, any Person (any such transaction being
an "Investment"), except:
(i) Investments in accounts, contract rights
and chattel paper (each as defined in the UCC), notes receivable
and similar items arising or acquired in the ordinary course of
business consistent with the past practice of Borrower and its
Subsidiaries;
(ii) Investments in Subsidiaries of Borrower
in the ordinary course of business of Borrower and its Sub-
sidiaries, provided that (a) EACH SUCH Subsidiary is or becomes
a Guarantor at or prior to the time of such Investment by
executing and delivering to Lender a Subsidiary Guaranty and (b)
at least twenty (20) days prior to such Investment, Borrower
shall have delivered to Lender each of the following items with
respect to the new Subsidiary, in form and substance reasonably
satisfactory to Lender: (x) copies of its articles or certifi-
cate of incorporation and bylaws (or comparable organization
documents in the jurisdiction of incorporation of the Subsid-
iary), (y) certified copies of all documents evidencing the
corporate action of such Subsidiary and copies of all permits,
licenses and third-party consents obtained by the new Subsidiary
which are required in order for the Subsidiary Guaranty to be
legally enforceable in the jurisdiction of incorporation of the
new Subsidiary, and (z) such other documents (other than legal
opinions) as Lender shall reasonably require;
(iii) loans or advances to employees of Borrower
or any of its Subsidiaries, which loans and advances shall not
in the aggregate exceed $100,000 outstanding at any time;
(iv) Investments in Cash Equivalents;
(v) Investments existing on the date hereof
and set forth on SCHEDULE 7.5; or
(vi) Investments during any Fiscal Year of
Borrower not otherwise permitted hereby not to exceed $4,000,000 in the
aggregate.
7.6 MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Borrower shall not sell or
otherwise dispose of any shares of Stock or any
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Stock Equivalent of any Subsidiary or permit any Subsidiary to issue, sell
or otherwise dispose of any shares of its Stock or any Stock Equivalent or the
Stock or any Stock Equivalent of any other Subsidiary, except to Borrower or if
otherwise permitted herein to a wholly-owned Subsidiary of Borrower; PROVIDED,
HOWEVER, that this Section 7.6 shall not restrict the sale or other disposition
of any outstanding Stock or Stock Equivalents in a Subsidiary that is not a
Significant Subsidiary at the time of such sale or disposition.
7.7 CHANGE IN NATURE OF BUSINESS. Borrower shall not, directly
or indirectly, make nor permit any of its Subsidiaries to make, any
material change in the nature or conduct of its business as carried on
at the date hereof.
7.8 COMPLIANCE WITH ERISA. Borrower shall not, directly or
indirectly, and shall not permit any of its Subsidiaries or any ERISA
Affiliate to, directly or indirectly, by reason of an amendment or
amendments to, or the adoption of, one or more Title IV Plans, permit
the present value of all benefit liabilities, as defined in Title IV
of ERISA (using the actuarial assumptions utilized by the PBGC upon
termination of a plan), to increase by more than $500,000; PROVIDED,
HOWEVER, that this limitation shall not be applicable to the extent
that the fair market value of assets allocable to such benefits, all
determined as of the most recent valuation date for each such Title IV
Plan, is in excess of the benefit liabilities. Neither Borrower nor
any of its Subsidiaries shall establish or become obligated with
respect to any new Welfare Benefit Plan, or modify any existing
Welfare Benefit Plan, which would result in the present value of
future liabilities under all such plans to increase by more than
$500,000. Neither Borrower nor any of its Subsidiaries shall establish
or become obligated to contribute to any new unfunded Pension Plan, or
modify any existing unfunded Pension Plan, which would result in the
present value of future liabilities under all such plans to increase by
more than $500,000.
7.9 MODIFICATION OF MATERIAL AGREEMENTS. Borrower shall not,
and shall not permit any of its Subsidiaries to, alter, amend, modify,
rescind, terminate or waive any of their respective rights under, or
fail to comply in all material respects with all of its material
Contractual Obligations; PROVIDED, HOWEVER, that, with respect to any
Contractual Obligations other than the Loan Documents, Borrower and
its Subsidiaries may do so if the consequences thereof would not have
a Material Adverse Effect; and PROVIDED, FURTHER, that in the event of
any breach or event of default by a Person other than Borrower or any
of its Subsidiaries, Borrower shall promptly notify Lender of any such
breach or event of default and take all such action as may be reasonably
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necessary in order to endeavor to cause such breach or event of default to be
cured.
7.10 ACCOUNTING CHANGES. Borrower shall not make, nor permit any of its
Subsidiaries to make, any change in accounting treatment and reporting practices
or tax reporting treatment, except as required by GAAP or law and disclosed to
Lender.
7.11 CONTINGENT OBLIGATIONS. Borrower shall not, and shall not permit any
of its Subsidiaries to, incur, assume, endorse, be or become liable for, or
guarantee, directly or indirectly, or permit or suffer to exist, any Contingent
Obligation, except for:
(i) Contingent Obligations evidenced by a Loan Document;
(ii) guarantees by Borrower of Indebtedness of any of its
Subsidiaries, to the extent such underlying Indebtedness is permitted
hereunder; and
(iii) guarantees by Subsidiaries of Indebtedness
of Borrower or other Subsidiaries of Borrower, to the extent
such underlying Indebtedness is permitted by SECTION 7.2.
7.12 TRANSACTIONS WITH AFFILIATES. Borrower shall not, and
shall not permit any of its Subsidiaries, except as otherwise ex-
pressly permitted herein, to do any of the following: (i) transfer,
sell, lease, assign or otherwise dispose of any asset to any Affiliate
of Borrower or any Subsidiary of Borrower which Affiliate is not a
Guarantor; (ii) merge into or consolidate with or purchase or acquire
assets from any Affiliate of Borrower or of any Subsidiary of Bor-
rower, other than a Guarantor; or (iii) enter into any other transac
tion directly or indirectly with or for the benefit of any Affiliate
of Borrower or of any Subsidiary of Borrower (including, without
limitation, guaranties and assumptions of obligations of any such
Affiliate) except for (A) transactions in the ordinary course of busi-
ness on a basis no less favorable to Borrower or such Subsidiary as
would be obtained in a comparable arm's length transaction with a
Person not an Affiliate, (B) salaries and other employee compensation
to officers or directors of Borrower or any of its Subsidiaries
commensurate with current compensation levels, and (C) any transaction
permitted or required pursuant to the Services Agreement with the
Parent and other arrangements described under "Certain Transactions"
in the Registration Statement.
7.13 ADVERSE TRANSACTIONS. Borrower shall not enter into or be
a party to, or permit any of its Subsidiaries to enter into or
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be a party to, any transaction the performance of which in the future would
be inconsistent with or has any reasonable likelihood of resulting in
a breach of any covenant contained herein or give rise to a Default or
Event of Default.
7.14 CANCELLATION OF INDEBTEDNESS OWED TO IT. Borrower shall
not cancel, or permit any of its Subsidiaries to cancel, any claim or
Indebtedness owed to it except for adequate consideration and in the
ordinary course of business.
7.15 NO NEW SUBSIDIARIES. Borrower shall not, and shall not
permit any of the Subsidiaries to, incorporate or otherwise organize
any Subsidiary which was not in existence on the Closing Date unless
such Subsidiary executes and delivers to Lender a Subsidiary Guaranty.
7.16 CAPITAL STRUCTURE. Borrower shall not make, and shall not
permit any of its Subsidiaries to make, any change in its capital
structure (including, without limitation, in the terms of its out-
standing Stock), amend its articles or certificate of incorporation or
by-laws, or make and shall not permit any of its Subsidiaries to make
any change in any of its business objectives, purposes or operations
which might in any way adversely affect the ability of any Loan Party
to effect repayment of the Obligations or which would have a Material
Adverse Effect.
7.17 NO SPECULATIVE TRANSACTIONS. Borrower shall not and shall
not permit any of its Subsidiaries to engage in any speculative
transaction or in any transaction involving commodity options or
futures contracts or other "derivative" securities except for the sole
purpose of hedging in the normal course of business and consistent
with industry practices.
7.18 ENVIRONMENTAL. Borrower shall not, and shall not permit
any of its Subsidiaries, any lessee or any other person to, dispose of
any Contaminant by placing it in or on the ground or waters of any
property owned or leased by Borrower or any of its Subsidiaries if, as
the consequence of all such disposals, Borrower and its Subsidiaries
would incur Environmental Liabilities and Costs in excess of $250,000.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. Each of the following events shall be
an Event of Default:
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(a) Borrower shall fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of, or
interest on, any Loan, any fee, any other amount due hereunder
or under the other Loan Documents or other of the Obligations
when the same becomes due and payable; or
(b) Any representation or warranty made or deemed made
by any Loan Party in any Loan Document or by any Loan Party (or
any of its officers) in connection with any Loan Document shall
prove to have been incorrect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe (i)
any term, covenant or agreement contained in Articles V, VI or
VII, or (ii) any other term, covenant or agreement contained in
this Agreement or in any other Loan Document if such failure
under this clause (ii) shall remain unremedied for five (5) days
after the earlier of the date on which (A) a Responsible Officer
of Borrower becomes aware of such failure or (B) written notice
thereof shall have been given to Borrower by Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail
to pay any principal of or premium or interest on any Indebted-
ness of such Loan Party or Subsidiary (excluding Indebtedness
incurred hereunder), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, accelera-
tion, demand or otherwise); or any other event shall occur or
condition shall exist under any agreement or instrument relating
to any such Indebtedness, if the effect of such event or condi-
tion is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or any such Indebtedness shall be
declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(e) Any Loan Party or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against any Loan Party
or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other
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similar official for it or for any substantial part of its property and, in
the case of any such proceedings instituted against any Loan Party or any
of its Subsidiaries (but not instituted by it), either such proceedings
shall remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceedings shall occur; or any Loan Party or any
of its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this SUBSECTION (e); or
(f) Any judgment or order for the payment of money in excess of
$250,000 to the extent not fully covered by insurance shall be rendered
against any Loan Party or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order, or (ii) there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect; or
(g) (i) With respect to any Plan, a prohibited transaction within
the meaning of Section 4975 of the Code or Section 406 of ERISA shall occur
which in the determination of Lender has a reasonable likelihood of
resulting in direct or indirect liability to Borrower or any of its
Subsidiaries, (ii) with respect to any Title IV Plan, the filing of a
notice to voluntarily terminate any such plan in a distress termination,
(iii) with respect to any Multiemployer Plan, Borrower, any of it
Subsidiaries or any ERISA Affiliate shall incur any Withdrawal Liability,
(iv) with respect to any Qualified Plan, Borrower, any of its Subsidiaries
or any ERISA Affiliate shall incur an accumulated funding deficiency or
request a funding waiver from the IRS, or (v) with respect to any Title IV
Plan or Multiemployer Plan which has an ERISA Event not described in
clauses (i) through (v) hereof, in the determination of Lender there is a
reasonable likelihood for termination of any such plan by the PBGC;
PROVIDED, HOWEVER, that the events listed in clauses (i) through (v) hereof
shall constitute Events of Default only if the liability, deficiency or
waiver request of Borrower, any of its Subsidiaries or any ERISA Affiliate,
whether or not assessed, exceeds $250,000 in any case set forth in (i)
through (v) above, or exceeds $250,000 in the aggregate for all such cases;
or
(h) Any provision of any Subsidiary Guaranty after delivery thereof
under SECTION 3.1 shall for any reason cease to be valid and binding on any
Loan Party thereto, or any such Loan Party shall so state in writing; or
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(i) The Parent or its wholly-owned Subsidiaries shall
fail to own of record and beneficially at least fifty percent
(50%) of the outstanding Common Stock and Stock Equivalents of
Borrower free and clear of all Liens; or
(j) There shall occur a Material Adverse Change or an
event which would have a Material Adverse Effect; or
(k) Borrower or any of its Subsidiaries shall have entered
into any consent or settlement decree or agreement or similar
arrangement with an Governmental Authority or any judgment,
order, decree or similar action shall have been entered against
Borrower or any of its Subsidiaries, in either case based on or
arising from the violation of or pursuant to any Environmental
Law, or the generation, storage, transportation, treatment,
disposal or Release of any Contaminant and, in connection with
all the foregoing, Borrower and its Subsidiaries are likely to
incur Environmental Liabilities and Costs in excess of $250,000.
8.2 REMEDIES. If there shall occur and be continuing any Event
of Default, Lender (i) shall have the right, by notice to Borrower, to
declare its obligation to make Loans and issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and
(ii) shall have the right by notice to Borrower, to declare the Loans,
all interest thereon and all other amounts and Obligations payable
under this Agreement to be forthwith due and payable, whereupon all
Loans, all such interest and all such amounts and Obligations shall
become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby
expressly waived by Borrower; PROVIDED, HOWEVER, that upon the
occurrence of the Event of Default specified in subparagraph (e)
above, (A) the obligation of Lender to make Loans and to issue Letters
of Credit shall automatically be terminated and (B) the Loans, all
such interest and all such amounts and Obligations shall automatically
become and be due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by
Borrower. In addition to the remedies set forth above, Lender may
exercise any remedies provided for by any of the other Loan Documents
in accordance with the terms thereof or any other remedies provided by
applicable law.
8.3 ACTIONS IN RESPECT OF LETTERS OF CREDIT. (a) Upon the
giving of notice to Borrower pursuant to clause (i) or (ii) of the
first sentence of SECTION 8.2, Borrower shall pay to Lender in same
day funds at Lender's office, for deposit in a special non-interest-
bearing cash collateral account (the "L/C Cash Collateral
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Account") to be maintained in the name of Lender an amount equal to all
outstanding Letter of Credit Obligations.
(b) Borrower hereby pledges, and grants to Lender a Lien
on and security interest in, all of its right, title and interest in
and to all funds held in the L/C Cash Collateral Account from time to
time and all proceeds thereof, as security for the payment of all
amounts due and to become due from Borrower to Lender under the Loan
Documents.
(c) Lender may, from time to time after funds are deposited
in the L/C Cash Collateral Account, apply funds then held in the L/C Cash
Collateral Account to the payment of any amounts, in such order as Lender
may elect, as shall have become or shall become due and payable by Borrower
to Lender in respect of the Letter of Credit Obligations.
(d) Neither Borrower nor any Person claiming on behalf of
or through Borrower shall have any right to withdraw any of the funds
held in the L/C Cash Collateral Account.
(e) Borrower agrees that it will not (i) sell or otherwise
dispose of any interest in the L/C Cash Collateral Account or any
funds held therein or (ii) create or permit to exist any Lien upon or
with respect to the L/C Cash Collateral Account or any funds held
therein, except as provided in or contemplated by this Agreement.
(f) Lender may also exercise, in its sole discretion, in
respect of the L/C Cash Collateral Account, in addition to the other
rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the
UCC in effect in the State of Florida at that time, and Lender may,
without notice except as specified below, sell the L/C Cash Collateral
Account or any part thereof in one or more parcels at public or
private sale, at any of Lender's offices or elsewhere, for cash, or
credit or for future delivery, and upon such other terms as Lender may
deem commercially reasonable. Borrower agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to
Borrower of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Lender shall not be obligated to make any sale of the
L/C Cash Collateral Account, regardless of notice of sale having been
given. Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
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(g) Any cash held in the L/C Cash Collateral Account, and
all cash proceeds received by Lender in respect of any sale of,
collection from or other realization upon all or any part of the L/C
Cash Collateral Account, may, in the discretion of Lender, then or at
any time thereafter be applied (after all payments provided for in
SECTION 8.3(c), the expiration of all outstanding Letters of Credit
and the payment of any amounts payable pursuant to SECTION 9.4) in
whole or in part by Lender against all or any part of the other
Obligations in such order as Lender shall elect. Any surplus of such
cash or cash proceeds held by Lender and remaining after the indefea
sible cash payment in full of all of the Obligations shall be paid
over to Borrower or to whomsoever may be lawfully entitled to receive
such surplus.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Borrower therefrom
shall in any event be effective unless the same shall be in writing
and signed by Lender, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
9.2 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including, without
limitation, telecopy communication) and mailed, telecopied or delivered
by hand, (i) if to Borrower, at its address at 1500 San Remo Avenue,
Coral Gables, Florida 33149 (telecopy number: (305) 662-7305) (telephone
number: (305) 662-7396), Attention: Chief Financial Officer; (ii) if to
Lender, at its address at 701 Brickell Avenue, Miami, Florida 33131
(telecopy number: (305) 350-7005) (telephone number: (305) 789-3083),
Attention: Corporate Lending Department/Andrew Hahn, Vice President;
or, (iii) as to Borrower or Lender, at such other address as shall be
designated by such party in a written notice to the other party. All
such notices and communications shall, when mailed, telecopied or delivered,
be effective three (3) days after being deposited in the mails, when telecopied
with confirmation of receipt or when delivered by hand to the addressee or its
agent, respectively, except that notices and communications to Lender pursuant
to Article II shall not be effective until received by Lender.
9.3 NO WAIVER; REMEDIES. No failure on the part of Lender to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any other or further exercise
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thereof or the exercise of any other right. The remedies herein provided to
Lender are cumulative and not exclusive of any remedies provided by law.
9.4 COSTS; EXPENSES; INDEMNITIES. (a) Borrower agrees to pay
on demand (i) all costs and expenses of Lender in connection with the
preparation, execution, delivery, administration, modification and
amendment of this Agreement, each of the other Loan Documents and each
of the other documents to be delivered hereunder and thereunder,
including, without limitation, the fees and out-of-pocket expenses of
counsel to Lender with respect thereto and with respect to advising
Lender as to its rights and responsibilities under this Agreement and
the other Loan Documents, and (ii) all costs and expenses of Lender
(including, without limitation, counsel fees and expenses) in connec
tion with the enforcement (whether through negotiation, legal proceed
ings or otherwise) of this Agreement, the other Loan Documents and the
other documents to be delivered hereunder or thereunder; PROVIDED,
HOWEVER, that Borrower shall not be required to pay legal fees of
Lender's counsel for services rendered through the Closing Date in
excess of $12,500; and PROVIDED, FURTHER, that Borrower shall not be
required to pay any costs or expenses incurred by or on behalf of
Lender in reviewing documents and information provided to Lender under
SECTION 7.5(ii)(b) hereof.
(b) Borrower agrees to defend, protect, indemnify and hold
harmless Lender and its Affiliates, and the directors, officers,
employees, agents, attorneys, consultants and advisors of or to any of
the foregoing (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of
the conditions set forth in Article III) (each of the foregoing being
an "Indemnitee") from and against any and all claims, damages, lia-
bilities, obligations, losses, penalties, actions, judgments, suits,
costs, disbursements and expenses of any kind or nature (including,
without limitation, fees and disbursements of counsel to any such
Indemnitee) which may be imposed on, incurred by or asserted against
any such Indemnitee in connection with or arising out of any investi
gation, litigation or proceeding, whether or not any such Indemnitee
is a party thereto, whether direct, indirect, or consequential and
whether based on any federal, state or local law or other statutory
regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any
manner relating to or arising out of this Agreement, any other Loan
Document, any Obligation, any Letter of Credit, or any act, event or
transaction related or attendant to any thereof, including, without
limitation, (i) all Environmental Liabilities and Costs arising from
or connected with the past, present or future operations of Borrower
or any of its Subsidiaries involving any property, or
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damage to real or personal property or natural resources or harm or injury
alleged to have resulted from any Release of Contaminants on, upon or into such
property or any contiguous real estate; (ii) any costs or liabilities incurred
in connection with the investigation, removal, cleanup and/or remediation of any
Contaminant present or arising out of the operations of any facility of Borrower
or any of its Subsidiaries; (iii) any costs or liabilities incurred in
connection with any Environmental Lien; (iv) the making of any assignments of or
participations in the Loans or Letters of Credit and the management of such
Loans and Letters of Credit; or (v) the use or intended use of the proceeds of
the Loans or Letters of Credit or in connection with any investigation of any
potential matter covered hereby (collectively, the "Indemnified Matters");
PROVIDED, HOWEVER, that Borrower shall not have any obligation under this
SECTION 9.4(b) to an Indemnitee with respect to any Indemnified Matter caused by
or resulting from the gross negligence or willful misconduct of that Indemnitee,
as determined by a court of competent jurisdiction in a final non-appealable
judgment or order.
(c) If Lender receives any payment of principal of, or is subject to a
conversion of, Eurodollar Rate Loan other than on the last day of an Interest
Period relating to such Loan, as a result of any payment or conversion made by
Borrower or acceleration of the maturity of the Loans pursuant to Section 8.2 or
for any other reason, Borrower shall, upon demand by Lender, pay to Lender all
amounts required to compensate Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or
conversion, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
Lender to fund or maintain such Loan.
(d) Borrower shall indemnify Lender for, and hold Lender harmless from and
against, any and all claims for brokerage commissions, fees and other
compensation made against Lender by any broker, finder or consultant with
respect to any agreement, arrangement or understanding made by or on behalf of
any Loan party or its Subsidiaries in connection with the transactions
contemplated by this Agreement.
(e) Lender agrees that in the event that any such investigation,
litigation or proceeding set forth in subparagraph (b) above is asserted or
threatened in writing or instituted against it or any other Indemnitee, or any
remedial, removal or response action is requested of it or any of its officers,
directors, agents and employees, for which any Indemnitee may desire indemnity
or defense hereunder, such Indemnitee shall promptly notify Borrower in writing.
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(f) Borrower, at the request of any Indemnitee, shall have
the obligation to defend against such investigation, litigation or
proceeding or requested remedial, removal or response action, and
Borrower, in any event, may participate in the defense thereof with
legal counsel of Borrower's choice. In the event that such Indemnitee
requests Borrower to defend against such investigation, litigation or
proceeding or requested remedial, removal or response action, Borrower
shall promptly do so and such Indemnitee shall have the right to have
legal counsel of its choice participate in such defense. No action
taken by legal counsel chosen by such Indemnitee in defending against
any such investigation, litigation or proceeding or requested remedial,
removal or response action shall vitiate or in any way impair Borrower's
obligation and duty hereunder to indemnify and hold harmless such Indemnitee.
(g) The obligations of Borrower under this SECTION 9.4
shall survive repayment of the Loans and termination of the Commitments.
9.5 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender to or for the credit or the
account of Borrower against any and all of the Obligations now or
hereafter existing irrespective of whether or not Lender shall have
made any demand under this Agreement or any Letter of Credit Reim-
bursement Agreement or any other Loan Document and although such
Obligations may be unmatured. Lender agrees promptly to notify
Borrower after any such set-off and application made by Lender;
PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of
Lender under this Section are in addition to the other rights and
remedies (including, without limitation, other rights of set-off)
which Lender may have.
9.6 BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by Borrower and Lender and thereafter
shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns, except that Borrower
shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of Lender.
9.7 ASSIGNMENTS AND PARTICIPATIONS. (a) Lender may sell,
transfer, negotiate or assign to one or more other financial institu
tions all or a portion of its Commitments, and the Loans
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and Letter of Credit Obligations owing to it and a commensurate portion of its
rights and obligations hereunder and under the other Loan Documents; PROVIDED,
HOWEVER, that each such assignment shall be of a constant, and not a varying,
percentage of all of Lender's rights and obligations under this Agreement. The
parties to each assignment shall execute and deliver to Lender, for its
acceptance and recording, an agreement of assignment and acceptance. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such assignment and acceptance, (A) the assignee thereunder shall
become a party hereto and, to the extent that rights and obligations under the
Loan Documents have been assigned to such assignee pursuant to such assignment
and acceptance, have the rights and obligations of Lender hereunder and
thereunder, and (B) Lender shall, to the extent that its rights and obligations
under this Agreement have been assigned by it pursuant to such assignment and
acceptance, relinquish its rights and be released from its obligations
under the Loan Documents (and, in the case of such assignment and
acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under the Loan Documents, Lender shall cease to be a party
hereto).
(b) By executing and delivering such assignment and acceptance,
Lender, as assignor thereunder, and the assignee thereunder confirm to and agree
with each other and Borrower as follows: (i) other than as provided in such
assignment and acceptance, Lender makes no representation or warranty and
assumes no responsibility with respect to any of the statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Document furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished pursuant hereto or
thereto; (ii) Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document or of any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of this Agreement and each of the Loan Documents together with a
copy of each of the financial statements referred to in SECTION 4.5 of this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such assignment and
acceptance; (iv) such assignee will, independently and without reliance upon
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes Lender to
take such action as agent on
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its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Lender by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as Lender.
(c) Lender shall maintain at its address referred to in SECTION 9.2 a
copy of each assignment and acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the assignees and the
Commitments of and principal amount of the Loans owing to each assignee from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Loan Parties,
Lender may treat each Person whose name is recorded in the Register as Lender
for all purposes of this Agreement. The Register shall be available for
inspection by Borrower or Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of an assignment and acceptance executed by
Lender and an assignee, Lender shall, if such assignment and acceptance has been
completed, (i) accept such assignment and acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to Borrower.
(e) Lender may sell participations to one or more banks or other
Persons in or to all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Commitments
and the Loans owing to it). The terms of such participation shall not, in any
event, require the participant's consent to any amendments, waivers or other
modifications of any provision of any Loan Documents, the consent to any
departure by any Loan Party therefrom, or to the exercising or refraining from
exercising any powers or rights which Lender may have under or in respect of
the Loan Documents (including, without limitation, the right to enforce the
obligations of the Loan Parties), except if any such amendment, waiver or other
modification or consent would reduce the amount, or postpone any date fixed for,
any amount (whether of principal, interest or fees) payable to such participant
under the Loan Documents, to which such participant would otherwise be entitled
under such participation. In the event of the sale of any participation by
Lender, (i) Lender's obligations under the Loan Documents (including, without
limitation, its Commitment(s)) shall remain unchanged, (ii) Lender shall remain
solely responsible to Borrower for the performance of such obligations, (iii)
all Obligations and Loans owing to Lender shall remain payable to Lender
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for all purposes of this Agreement, and (iv) Borrower shall continue to deal
solely and directly with Lender in connection with Lender's rights and obliga
tions under this Agreement.
9.8 GOVERNING LAW; SEVERABILITY. This Agreement and the rights and
obligations of the parties hereto and thereto shall be governed by, and
construed and interpreted in accordance with, the internal law of the State of
Florida.
9.9 SUBMISSION TO JURISDICTION; JURY TRIAL. (a) Any legal action or
proceeding with respect to this Agreement or any document related thereto may be
brought in the courts of the State of Florida or of the United States of America
for the Southern District of Florida, and, by execution and delivery of this
Agreement, Borrower hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which any of them may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) Borrower irrevocably consents to the service of process of any of
the aforesaid courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Borrower at its
address provided herein.
(c) Nothing contained in this SECTION 9.9 shall affect the right of
Lender to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against Borrower in any other jurisdiction.
9.10 SECTION TITLES. The section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
9.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
9.12 ENTIRE AGREEMENT. This Agreement, together with all of the other Loan
Documents and all certificates and documents delivered hereunder or thereunder,
embodies the entire agreement of the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof.
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9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION
OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ENTER
INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
WACKENHUT CORRECTIONS CORPORATION
By:
----------------------------------------------
Name:
----------------------------------------
Title: Assistant Tresurer
-------------------------------------
BARNETT BANK OF SOUTH FLORIDA, N.A.
By: /s/ Andrew Hann
--------------------------------------------
Name: Andrew Hann
---------------------------------------
Title: Vice President
-------------------------------------
71
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
[Date]
Barnett Bank of South Florida, N.A.,
701 Brickell Avenue
Miami, Florida 33131
Attention: Corporate Lending Department/Andrew Hahn
Re: Wackenhut Corrections Corporation
Gentlemen:
The undersigned, Wackenhut Correction Corporations, refers to the
Credit Agreement, dated as of December 12, 1994, between the undersigned and
Barnett Bank of South Florida, N.A. (said Agreement, as it may be amended or
otherwise modified from time to time, being the "Credit Agreement" and
capitalized terms not defined herein but defined therein being used herein as
therein defined), and hereby gives you notice, irrevocably, pursuant to Section
2.3 of the Credit Agreement that the undersigned hereby requests a Revolving
Credit Loan under the Credit Agreement, and in that connection sets forth below
the information relating to such Loan (the "Proposed Loan") as required by
Section 2.3 of the Credit Agreement;
(i) The Business Day of the Proposed Loan is _______, 199__.
(ii) The aggregate amount of the Revolving Credit Loans
constituting the Proposed Loan is $_____________________, [of which
amount $________ consists of [Prime Rate Loans] [$__________ consists
of Eurodollar Rate Loans having an initial Interest Period of _______
days].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Loan,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(A) the representations and warranties contained in Article IV of
the Credit Agreement and in each of the other Loan Documents are true
and correct as though made on and as of such date; and
<PAGE>
(B) no Default or Event of Default is continuing, or would result
from such Proposed Loan.
Very truly yours,
WACKENHUT CORRECTIONS CORPORATION
By
-------------------------------
Name:
Title:
-2-
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION OR CONTINUATION
[Date]
Barnett Bank of South Florida, N.A.,
701 Brickell Avenue
Miami, Florida 33131
Attention: Corporate Lending Department/Andrew Hahn
Re: Wackenhut Corrections Corporation
Gentlemen:
The undersigned, Wackenhut Corrections Corporation (the "Borrower"),
refers to the Credit Agreement, dated as of December 12, 1994, between the
Borrower and Barnett Bank of South Florida, N.A. (said Agreement, as it may be
amended or otherwise modified from time to time, being the "Credit Agreement",
and capitalized terms not defined herein but defined therein being wed herein
as defined therein), and hereby gives you notice pursuant to Section [2.3] [2.8]
of the Credit Agreement that the undersigned hereby requests a [conversion]
[continuation] on _____________ ___, 19__ of $________ in principal amount of
presently outstanding [Revolving Credit Loans] [Term Loans] that are [Prime Rate
Loans] [Eurodollar Rate Loans having an Interest Period ending on ______ __,
19__] [to] [as] [Prime Rate] [Eurodollar Rate] [Term] Loans. The interest
Period for such amount requested to be converted to or continued as Eurodollar
Rate Loans is [30] [60] [90] days.
In connection with herewith, the undersigned hereby certifies that no
default or Event of Default is continuing on the date hereof.
Very truly yours,
WACKENHUT CORRECTIONS CORPORATION
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT C
REVOLVING CREDIT NOTE
$15,000,000.00 December 12, 1994
FOR VALUE RECEIVED, the undersigned, Wackenhut Corrections
Corporation, a Florida corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Barnett Bank of South Florida, N.A. (the "Lender") the principal
sum of Fifteen Million and No/100 United States Dollars ($15,000,000.00), or,
if less, the aggregate unpaid principal amount of all Revolving Credit Loans
(as defined in the Great Agreement referred to below) made by the Lender to
the Borrower pursuant to the Credit Agreement, payable at such times, and in
such amounts, as are specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Revolving Credit Loans from the date made until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Barnett Bank of South Florida, N.A. at 701 Brickell
Avenue, Miami, Florida 33131, in immediately available funds. The Revolving
Credit Loans made by the Lender to the Borrower, and all payments made on
account of principal thereof, shall be recorded by the Lender on its books which
shall be prima facie evidence of thereof.
This Note is the Revolving Credit Note referred to in, and is entitled
to the benefits of, the Credit Agreement, dated as of December 12, 1994 (said
Agreement, as it may be amended or otherwise modified from time to time, being
the "Credit Agreement"), between the Borrower and the Lender, and the other
Loan Documents referred to therein and entered into pursuant thereto, The Credit
Agreement, among other things, (i) provides for the making of Revolving Credit
Loans by the Lender to the Borrower in an aggregate amount not to exceed at any
time outstanding the United States dollar amount first above mentioned and the
indebtedness of the Borrower resulting from such Revolving Credit
Loans being evidenced by this Note, and (ii) contained provisions for
acceleration of the maturity of the unpaid principal amount of this Note upon
the happening of certain stated events and also prepayments on account of the
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
This Note is entitled to the benefits of certain guaranties as
provided in the Loan Documents (as defined in the Credit Agreement).
<PAGE>
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
This Note shall be governed by, and construed and enforced in
accordance with, the internal laws (as opposed to conflicts of law provisions)
of the State of Florida.
In the event that this Note shall at any time after maturity be placed with
an attorney for collection, Borrower agrees to pay, in addition to the entire
unpaid principal balance and interest due hereunder, all collection costs,
including reasonable attorneys' fees, incurred by Lender in collecting the
indebtedness due hereunder.
BORROWER AND LENDER (BY ACCEPTANCE OF THIS INSTRUMENT) HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS
NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BORROWER AND LENDER ENTERING INTO THE
SUBJECT LOAN TRANSACTION.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer on the day and year first above written.
WACKENHUT CORRECTIONS CORPORATION
By:
-------------------------------
Title:
-2-
<PAGE>
NASSAU )
)
COMMONWEALTH OF THE BAHAMAS )
Executed before me this ____ day of December, 1994.
------------------------------------
Notary Public
-3-
<PAGE>
EXHIBIT D
TERM NOTE
$______________ _______________, 1997
FOR VALUE RECEIVED, the undersigned, Wackenhut Corrections
Corporation, a Florida corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Barnett Bank of South Florida, N.A. (the "Lender") the principal
sum of _____________ United States Dollars ($______________), or, if less, the
unpaid principal amount of the Term Loan (as defineds in tge Crdit Agreement
referred to below) made by the Lender, payable at such times, and in such
amounts, as are specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Term Loans from the date hereof until such principal amount is
paid in full, at such interest rate, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Barnett Bank of South Florida, N.A., at 701 Brickell
Avenue, Miami, Florida 33131, in immediately available funds.
This Note is the Term Note referred to in, and is entitled
to the benefits of, the Credit Agreement, dated as of December 12, 1994 (said
Agreement, as it may be amended or otherwise modified from time to time, being
the "Credit Agreement"), between the Borrower and the Lender and the other
Loan Documents referred to therein and entered into pursuant thereto. The Credit
Agreement, among other things, (i) provides for the making of Revolving Credit
Loan by the Lender to the Borrower in an amount not to exceed the United States
Dollar amount first above mentioned, the indebtedness of the Borrower resulting
from such Term Loan being evidenced by this Note, and (ii) contain provisions
for acceleration of the maturity of the unpaid principal amount of this Note
upon the happening of certain stated events and also for prepayments on account
of the principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
This Note is entitled to the benefits of certain guaranties as
provided in the Loan Documents (as defined in the Credit Agreement).
Demand, presentment, protest and notice of non payment and protest are
hereby waived by the Borrower.
This Note shall be governed by, and construed and enforced in
accordance with, the internal laws (as opposed to conflicts of law provisions)
of the State of Florida.
<PAGE>
In the event that this Note shall at any time after maturity be placed with
an attorney for collection, Borrower agrees to pay, in addition to the entire
unpaid principal balance and interest due hereunder, all collection costs,
including reasonable attorneys' fees, incurred by Lender in collecting the
indebtedness due hereunder.
BORROWER AND LENDER (BY ACCEPTANCE OF THIS INSTRUMENT) HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS
NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BORROWER AND LENDER ENTERING INTO THE
SUBJECT LOAN TRANSACTION.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer on the day and year first above written.
WACKENHUT CORRECTIONS CORPORATION
By:
-------------------------------
Title:
<PAGE>
STATE OF )
)SS
COUNTY OF )
The foregoing instrument was acknowledged before me this _____day of
___________, 1994 by ___________________, as ________________ of Wackenhut
Corrections Corporation, a Florida corporation, on behalf of the corporation.
He/she is personally known to me or has
produced a driver's license as identification and did not take an oath.
---------------------------------------
Signing as Notary Public and not as a
maker or endorser of this Note
Print or Stamp Name:
-------------------
Notary Public, State of _________ at
Large
Commission No.:
My Commission Expires:
<PAGE>
EXHIBIT E
December 12, 1994
Barnett Bank of South Florida, N.A.
701 Brickell Avenue
Miami, Florida 33131
Ladies and Gentlemen:
We understand that you have agreed to extend credit to our subsidiary,
Wackenhut Corrections Corporation, a Florida corporation ("Wackenhut
Corrections"), pursuant to a Credit Agreement (the "Credit Agreement"), dated as
of the date hereof. We concur with the transactions contemplated by the Credit
Agreement, and acknowledge that your extension of credit to Wackenhut
Corrections under the Credit Agreement will benefit us as we own a controlling
interest in Wackenhut Corrections.
Accordingly, we wish to assure you that we will continue to cause the
continued prudent management of Wackenhut Corrections, particularly as it
relates to the repayment of Wackenhut Corrections' obligations to you. In order
to ensure the repayment of all of Wackenhut Corrections' obligations to you, we
will also (i) provide such support, managerial and otherwise, to Wackenhut
Corrections, as may be necessary and (ii) act in all respects, as a shareholder
of Wackenhut Corrections, in a manner consistent therewith.
Very truly yours,
THE WACKENHUT CORPORATION
By:
-----------------------------------
------------------, ---------------
<PAGE>
EXHIBIT F
[FORM OF SUBSIDIARY GUARANTY]
GUARANTY, dated December 12, 1994, made by __________, a ____________
corporation ("Guarantor"), in favor of BARNETT BANK OF SOUTH FLORIDA, N.A.
("Lender").
W I T N E S S E T H:
WHEREAS, Wackenhut Corrections Corporation, a Florida corporation
("Borrower"), has entered into a Credit Agreement, dated as of December 12, 1994
(said Agreement, as it may be amended or otherwise modified from time to time,
being the "Credit Agreement", and capitalized terms not defined herein but
defined therein being used herein as therein defined); and
WHEREAS, Borrower owns beneficially and of record 100% of the capital
stock of Guarantor, and Borrower and Guarantor are members of the same
consolidated group of companies and are engaged in related businesses, and
Guarantor will derive direct and indirect economic benefit from the Loans and
Letters of Credit; and
WHEREAS, it is a condition precedent under the Credit Agreement to the
making of Loans and the issuance of Letters of Credit that Guarantor shall have
executed and delivered this Guaranty.
NOW THEREFORE, in consideration of the premises and to induce Lender
to make Loans and issue Letters of Credit, Guarantor hereby agrees as follows:
SECTION 1. GUARANTY. Guarantor hereby unconditionally and
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise, of, and the performance of, the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, and any and all expenses (including,
without limitation, counsel fees and expenses) incurred by Lender in enforcing
any rights under this Guaranty. This Guaranty is an absolute guaranty of
payment and performance and not a guaranty of collection.
SECTION 2. GUARANTY ABSOLUTE. Guarantor guarantees that the
Obligations will be paid and performed strictly in accordance with the terms of
the Credit Agreement, the Notes and the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Lender with respect thereto. The
liability of Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:
<PAGE>
(i) any lack of validity or enforceability of any provision of the
Credit Agreement, the Notes or any other Loan Document or any other agreement or
instrument relating to any Loan Document, or avoidance or subordination of any
of the Obligations;
(ii) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Obligations,
or any other amendment or waiver of any term of, or any consent to departure
from any requirement of, the Credit Agreement, the Notes or any of the other
Loan Documents;
(iii) any exchange, release or non-perfection of any Lien on any
collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Obligations;
(iv) The absence of any attempt to collect any of the Obligations from
Borrower or any other guarantor or any other action to enforce the same or the
election of any remedy by Lender;
(v) any waiver, consent, extension, forbearance or granting of any
indulgence by Lender with respect to any provision of the Credit Agreement, the
Notes or any other Loan Document;
(vi) the election by Lender in any proceeding under chapter 11 of the
Bankruptcy Code of the application of section 1111(b)(2) of the Bankruptcy Code;
(vii) any borrowing or grant of a security interest by Borrower, as
debtor-in-possession, under section 364 of the Bankruptcy Code;
(viii) the disallowance, under section 502 of the Bankruptcy Code, of
all or any portion of the claims of Lender for payment of any of the
Obligations; or
(ix) any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of a borrower or a guarantor.
SECTION 3. WAIVER. (a) Guarantor hereby (i) waives (A) promptness,
diligence, notice of acceptance and any and all other notices with respect to
any of the Obligations or this Guaranty, (B) any requirement that Lender
protect, secure, perfect or insure any security interest in or other Lien on any
property subject thereto or exhaust any right or take any action against
Borrower or any other Person or any collateral, (C) the filing of any claim with
a court in the event of receivership or bankruptcy of Borrower, (D) protest or
notice with respect to nonpayment of all or any of the Obligations, (E) the
benefit of any statute of
F-2
<PAGE>
limitation, (F) all demands whatsoever (and any requirement that same be made on
Borrower as a condition precedent to Guarantor's obligations hereunder); and
(ii) covenants and agrees that this Guaranty will not be discharged except by
complete payment and performance of the Obligations and any other obligations of
Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies, Lender
shall forfeit any of its rights or remedies, including, without limitation, its
right to enter a deficiency judgment against Borrower or any other Person,
whether because of any applicable law pertaining to "election of remedies" or
the like, Guarantor hereby consents to such action by Lender and waives any
claim based upon such action. Any election of remedies which results in the
denial or impairment of the right of Lender to seek a deficiency judgment
against Borrower shall not impair the obligation of Guarantor to pay the full
amount of the Obligations or any other obligation of Guarantor contained herein.
(c) In the event Lender shall bid at any foreclosure or trustee's
sale or at any private sale permitted by law or under any of the Loan Documents,
Lender may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Lender
or any other Person is the successful bidder, shall be conclusively deemed to be
the fair market value of the collateral being sold at such sale, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Guaranty, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Lender might otherwise be entitled by reason of such bidding at
any such sale.
(d) Guarantor agrees that notwithstanding the foregoing and without
limiting the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, Lender is prevented by applicable law from
exercising its right to accelerate the maturity of the Obligations, to collect
interest on the Obligations, or to enforce or exercise any other right or remedy
with respect to the Obligations, Guarantor agrees to pay to Lender, upon demand
therefor, the amount that would otherwise have been due and payable had such
rights and remedies been permitted to be exercised by Lender.
(e) Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of Borrower and of each other guarantor of
all or any part of the Obligations, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations or any part thereof, that diligent
inquiry would reveal. Guarantor hereby agrees that Lender shall have no duty to
F-3
<PAGE>
advise Guarantor of information known to Lender regarding such condition or any
such circumstance. In the event that Lender in its sole discretion undertakes
at any time or from time to time to provide any such information to Guarantor,
Lender shall be under no obligation (i) to undertake any investigation not a
part of its regular business routine, (ii) to disclose any information which,
pursuant to accepted or reasonable banking or commercial finance practices,
Lender wishes to maintain confidential or (iii) to make any other or future
disclosures of such information or any other information to Guarantor.
(f) Guarantor consents and agrees that Lender shall be under no
obligation to marshall any assets in favor of Guarantor or otherwise in
connection with obtaining payment of any or all of the Obligations from any
Person or source.
SECTION 4. NO SUBROGATION ETC. Guarantor will not exercise any
rights which it may acquire by way of subrogation, contribution or reimbursement
by reason of this Guaranty, or by any payment made hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby
represents and warrants to Lender as follows:
(a) Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of its state or other jurisdiction of its
incorporation; (ii) is duly qualified as a foreign corporation and is in good
standing under the laws of each jurisdiction, except for failures which in the
aggregate would have no Material Adverse Effect; (iii) has all requisite
corporate power and authority and the legal right to own, pledge, mortgage and
operate its properties, to lease the property it operates under lease and to
conduct its business as now or currently proposed to be conducted; (iv) is in
compliance with its certificate of incorporation and by-laws; (v) is in
compliance with all other applicable Requirements of Law except for such
noncompliances as in the aggregate would have no Material Adverse Effect; and
(vi) has all necessary licenses, permits, consents or approvals from or by, has
made all necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, operation and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant of transfer thereof or failures which in the aggregate would have no
Material Adverse Effect.
(b) The execution, delivery and performance by Guarantor of this
Guaranty and the other Loan Documents to which it is a party:
(i) are within its corporate powers;
F-4
<PAGE>
(ii) have been duly authorized by all necessary corporate action,
including, without limitation, the consent of shareholders where required;
and
(iii) do not and will not (A) contravene its certificate of
incorporation or by-laws or other comparable governing documents, (B)
violate any other applicable Requirement of Law (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System), or any order or decree of any Governmental
Authority or arbitrator, (C) conflict with or result in the breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any of its Contractual Obligations, (D) result in the
creation or imposition of any Lien upon any of its property, or (E) require
the consent, authorization by, or approval of, or notice to, or filing or
registration with, any Governmental Authority or any other Person, other
than those which have been obtained and copies of which have been delivered
to Lender pursuant to Section 3.1 of the Credit Agreement, each of which is
in full force and effect.
(c) This Guaranty has been duly executed and delivered by Guarantor
and is the legal, valid and binding obligation of Guarantor enforceable against
it in accordance with its terms.
(d) There are no pending or, to the knowledge of Guarantor,
threatened actions, investigations or proceedings affecting Guarantor or any of
its subsidiaries before any Governmental Authority or arbitrator other than
those that in the aggregate, if adversely determined, would have no Material
Adverse Effect. The performance by Guarantor under this Guaranty and under each
of the other Loan Documents to which it is a party is not restrained or enjoined
(either temporarily, preliminarily or permanently) and no conditions have been
imposed by any Governmental Authority or arbitrator that in the aggregate would
have a Material Adverse Effect.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by Guarantor herefrom shall in any
event be effective unless the same shall be in writing, approved and signed by
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED HOWEVER, that no
amendment, waiver or consent shall, unless in writing and signed by Lender,
limit the liability of Guarantor (other than as expressly provided herein) or
postpone any date fixed for payment hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered
F-5
<PAGE>
by hand, if to Guarantor, addressed to it at the address of Guarantor specified
on the signature pages hereof, if to Lender, addressed to it at the address of
Lender specified in the Credit Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, telegraphed, telexed, telecopied,
cabled or delivered, be effective when deposited in the mails, delivered to the
telegraph company, confirmed by telex answerback, telecopied with confirmation
of receipt, delivered to the cable company or delivered by hand to the addressee
or its agent, respectively.
SECTION 8. NO WAIVER; REMEDIES. (a) No failure on the part of Lender
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any of the other Loan Documents.
(b) Failure by Lender at any time or times hereafter to require
strict performance by Borrower, Guarantor or any other Person of any of the
provisions, warranties, terms or conditions contained in any of the Loan
Documents now or at any time or times hereafter executed by Borrower, Guarantor
or such other Person and delivered to Lender shall not waive, affect or diminish
any right of Lender at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of Lender or any agent, officer, employee of
Lender.
(c) No waiver by Lender of any default shall operate as a waiver of
any other default or the same default on a future occasion, and no action by
Lender permitted hereunder shall in way affect or impair any of the rights
of Lender or the obligations of Guarantor under this Guaranty or under any of
the other Loan Documents. Any determination by a court of competent
jurisdiction of the amount of any principal and/or interest or other amount
constituting any of the Obligations shall be conclusive and binding on Guarantor
irrespective of whether Guarantor was a party to the suit or action in which
such determination was made.
SECTION 9. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Lender to or for
the credit or the account of Guarantor against any and all of the obligations of
Guarantor now or hereafter existing under this Guaranty, irrespective of whether
or not Lender shall have made
F-6
<PAGE>
any demand under this Guaranty and although such obligations may be contingent
and unmatured. Lender agrees promptly to notify Guarantor after any such set-
off and application made by Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which Lender may have.
SECTION 10. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is
a continuing guaranty and shall (i) remain in full force and effect until
indefeasible payment in full of the Obligations and all other amounts payable
under this Guaranty, (ii) be binding upon Guarantor, its successors and assigns,
and (iii) inure to the benefit of and be enforceable by Lender and its
successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (iii), Lender may assign or otherwise transfer any Note held by
it or Obligations owing to it to any other Person, and such other Person shall
thereupon become vested with all the rights in respect thereof granted to Lender
herein or otherwise with respect to such Note and Obligations so transferred or
assigned, subject, however, to compliance with the provisions of Section 9.7 of
the Credit Agreement in respect of assignments.
SECTION 11. LIMITATION OF GUARANTY. Anything to the contrary in this
Guaranty notwithstanding, the maximum liability hereunder of Guarantor shall not
at any time exceed the greater of (a) the amount of the economic benefit
received by Guarantor from the Loans and (b) the highest of (i) 95% of the
Adjusted Net Worth of Guarantor at the date hereof, (ii) 95% of Adjusted Net
Worth of Guarantor at the date of the commencement of a case under
title 11 of the United States Code involving Borrower or Guarantor, and (iii)
95% of the Adjusted Net Worth of Guarantor at the date enforcement hereunder is
sought; PROVIDED, HOWEVER, that, if by reason of the foregoing, the Adjusted Net
Worth of Guarantor at the date hereof would be the maximum liability of
Guarantor hereunder and the outstanding principal amount of and unpaid interest
on the Term Loan is less than such maximum liability, Guarantor's maximum
liability hereunder shall be equal to (A) the outstanding principal amount of
and unpaid interest on the Term Loan plus (B) the excess, if any, of (x) the
greatest of the Adjusted Net Worth of Guarantor at the date the last Revolving
Credit Loan was made, the Adjusted Net Worth of Guarantor at the date of the
commencement of a case under title 11 of the United States Code involving
Borrower or Guarantor and the Adjusted Net Worth of Guarantor at the date
enforcement hereunder is sought over (Y) the outstanding principal amount of and
unpaid interest on the Term Loan. "Adjusted Net Worth" of Guarantor, as of any
date of determination thereof, means the excess of (x) the aggregate fair
saleable value of the assets of Guarantor as of such date determined in
accordance with applicable federal and state laws governing determina-
F-7
<PAGE>
tions of the insolvency of debtors and (y) the amount of all liabilities of
Guarantor, contingent or otherwise, as of such date, determined on the basis
provided in clause (x) above (but excluding all potential liabilities under this
Guaranty).
SECTION 12. JOINT AND SEVERAL LIABILITY WITH OTHER GUARANTORS;
CONTRIBUTION. The obligations of the Guarantor hereunder shall be joint and
several with all Other Guarantors (as hereinafter defined), each one being
liable for the payment and performance of all the Obligations, and it shall not
be necessary or required that the Lender commence proceedings against, or
enforce any of the provisions of the Loan Documents against, the Guarantor and
one or more of the Other Guarantors in order to charge the Guarantor with
liability hereunder. To the extent that any Other Guarantor (a "Paying
Guarantor") makes a payment of a portion of the Obligations which exceeds the
greater of (i) the amount of economic benefit actually received by the Paying
Guarantor from the Loan and the Letters of Credit and (ii) the amount which the
Paying Guarantor would otherwise have paid if the Paying Guarantor had paid the
aggregate amount of the Obligations in the same proportion as the Paying
Guarantor's net worth at the date of enforcement of the Obligations against the
Paying Guarantor is sought bears to the aggregate net worth of the Guarantor and
all the Other Guarantors (including the Paying Guarantor) at such date, THEN,
subject to the limitations of Section 11, the Guarantor shall reimburse the
Paying Guarantor for the amount of such excess, PRO RATA based on the respective
net worths of the Guarantor and all Other Guarantors (including the Paying
Guarantor). As used herein, the term "Other Guarantors" shall mean all other
guarantors of the Obligations whose guarantees contain a provision in substance
the same as this section.
SECTION 13. REINSTATEMENT. This Guaranty shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Loan Party for liquidation or reorganization, should any Loan Party
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Loan
Party's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations or such part thereof, whether as a "voidable
preference", "fraudulent transfer", or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
F-8
<PAGE>
SECTION 14. GOVERNING LAW. This Guaranty shall be governed by, and
construed and interpreted in accordance with, the law of the State of Florida,
without regard to conflict of laws principles thereof. Wherever possible, each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity and without
invalidating the remaining provisions of this Guaranty.
SECTION 15. SUBMISSION TO JURISDICTION; JURY TRIAL.
(a) Any legal action or proceeding with respect to this Guaranty or any
document related thereto may be brought in the courts of the State of Florida or
the United States of America for the Southern District of Florida, and, by
execution and delivery of this Guaranty, Guarantor hereby accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Guarantor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions and
consents to the granting of such legal or equitable relief as is deemed
appropriate by the court.
(b) Guarantor irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to Guarantor at
its address provided herein, such service to become effective 30 days after such
mailing.
(c) Nothing contained in this Section 15 shall affect the right of
Lender to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against Guarantor or any of Guarantor's
property in any other jurisdiction.
SECTION 16. WAIVER OF RIGHT TO JURY TRIAL. GUARANTOR WAIVES, AND BY
ITS ACCEPTANCE OF THIS GUARANTY LENDER WAIVES, ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF ANY
LOAN PARTY.
SECTION 17. SECTION TITLES. The Section titles contained in this
Guaranty are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty.
F-9
<PAGE>
SECTION 18. EXECUTION IN COUNTERPARTS. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Guaranty.
SECTION 19. MISCELLANEOUS. All references herein to Borrower or to
Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for
Borrower or Guarantor. All references to the singular shall be deemed to
include the plural where the context so requires.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
[GUARANTOR]
By:
--------------------------------
Title:
F-10
<PAGE>
EXHIBIT G
FORM OF REQUEST OF ISSUANCE OF
LETTER OF CREDIT
[Date]
Barnett Bank of South Florida, N.A.
701 Brickell Avenue
Miami, Florida 33131
Attention: Corporate Lending Department/Andrew Hahn
Re: Credit Agreement dated as of December 12, 1994 (the "Credit
Agreement"), between Wackenhut Corrections Corporation (the
"Borrower") and Barnett Bank of South Florida, N.A. (the "Issuer")
Dear Sirs:
Pursuant to Section 2.16 of the Credit Agreement, this writing
represents notice of the undersigned's requested issuance by the Issuer of a
Letter of Credit on behalf of the Borrower in the form of a standby letter of
credit, for the benefit of [1] , in the amount of $
[2] , with an effective date of
[3] , 19 (the "Effective Date") and an expiry date of
[4] , 19 .
The undersigned hereby certifies that (i) the representations and
warranties of the undersigned contained in the Credit Agreement are and shall be
true and correct in all material respects on and as of the date hereof and on
and as of the date of issuance of such Letter of Credit; (ii) no Default or
Event of Default has occurred and is continuing on the date hereof or on the
date of issuance of such Letter of Credit or will result from the issuance of
such Letter of Credit; and (iii) the conditions set forth in Article III of the
Credit Agreement have been satisfied.
[CONTINUED ON NEXT PAGE]
<PAGE>
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this notice.
WACKENHUT CORRECTIONS CORPORATION
By:
------------------------------
Name:
Title
- -----------------------------------
[1] Insert name and address of beneficiary.
[2] Aggregate maximum stated amount of Letter of Credit.
[3] Insert effective date.
[4] Insert last date upon which drafts may be presented, which date shall be no
later than the 30 days prior to Revolving Credit Termination Date
<PAGE>
EXHIBIT H
[LOGO] NOTIFICATION AND AGREEMENT FOR
STANDBY LETTER OF CREDIT
Please issue an irrevocable standby ------------------------------
letter of credit for our account and FOR BANK USE ONLY
deliver by / / Teletransmission / / Mail Int'l Approval________________
/ / Courier, to / / Applicant Date__________________________
/ / Beneficiary / / Advising Bank Credit No.____________________
/ / Other ___________________ ------------------------------
- --------------------------------------------------------------------------------
APPLICANT BENEFICIARY
- --------------------------------------------------------------------------------
NAME NAME
- --------------------------------------------------------------------------------
ADDRESS ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDIVIDUALS AUTHORIZED TO ACT ON
APPLICANT'S BEHALF ADVISING BANK
- --------------------------------------------------------------------------------
NAME NAME
- --------------------------------------------------------------------------------
TITLE ADDRESS
- --------------------------------------------------------------------------------
NAME
- --------------------------------------------------------------------------------
TITLE
- --------------------------------------------------------------------------------
Expiry Date _________________ In the amount of _______________________
(Numerals)
- --------------------------------------------------------------------------------
(Amount in Words)
Partial Drawings / / Permitted / / Prohibited.
Available by drafts at sight at your option on you or any of your agents or
correspondents accompanied by the following documents.
Special Instructions:___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Debit our account number _______________________ for all payments and charges.
The applicant hereby acknowledges and agrees that the Application shall not be
deemed to have been accepted by the Bank nor shall it be binding upon the Bank
until the requested letter of credit has been issued by the Bank. By its
execution of this Application, Applicant acknowledges that Applicant has read
the attached "Terms and Conditions" and agrees to be bound by them. Unless
otherwise stated, the Letter of Credit is to be issued subject to the Uniform
Customs and Practice for Documentary Credits as most recently published by the
International Chamber of Commerce.
Signature Verification__________ Barnett Bank of _____________________
Applicant ______________________________ By _____________________ Date________
Authorized Officer
By _______________________ Date ________
Title___________________________ Title_______________________
Address___________________________ Address_______________________
___________________________ _______________________
___________________________ _______________________
Telephone___________________________ Telephone_______________________
White--Original * Canary--Bank * Pink/Terms and Conditions--Customer
<PAGE>
TERMS AND CONDITIONS FOR STANDBY LETTER OF CREDIT
IF APPLICANT AND BANK HAVE EXECUTED AND DELIVERED A CONTINUING AGREEMENT FOR
FINANCIAL ACCOMODATION, THE TERMS AND CONDITIONS THEREOF SHALL APPLY TO THE
CREDIT REQUESTED IN THE APPLICATION. IF NO SUCH AGREEMENT HAS BEEN EXECUTED AND
DELIVERED, THE FOLLOWING TERMS AND CONDITIONS SHALL APPLY.
1. The following capitalized terms shall have the meanings in this Application
as set forth below.
"Accepted Draft" means any draft accepted by Bank under the Credit.
"Business Day" means a day which is not a Saturday, Sunday or a day on
which Bank is not open for business in the ordinary course.
"Code" means the Uniform Commercial Code as in effect under the law
governing this Application.
"Collateral" means (i) all funds and Property (a) left with, or otherwise
in possession of, Bank (for safekeeping or otherwise), and (b) from time to
time payable or deliverable with respect to funds or Property held by Bank,
and (c) any and all proceeds and products of the foregoing.
"Credit" means any letter of credit requested and issued under the
Application, and any extension, modification or renewal thereof.
"Draft" means any draft or other request for payment drawn under any Credit
or otherwise.
"Event of Default" means (i) the nonpayment of any of the Liabilities
(under this Application or otherwise), when due, (ii) the failure of
Applicant to perform or observe any of the terms of this Application or any
other agreement between Bank and Applicant, (iii) the dissolution or
termination of existence of Applicant, (iv) the institution by or against
Applicant of any proceeding seeking to adjudicate Applicant as bankrupt or
insolvent, or seeking liquidation, reorganization, protection, or relief,
of Applicant or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian, or other
similar official for Applicant or for any substantial part of its property,
(v) any seizure, vesting or intervention by or under authority of a
government by which the management of Applicant is displaced or its
authority in the control of its business is curtailed, (vi) the attachment
of or restraint as to any funds or other property which may be in, or come
into, the possession or control of Bank (or of any third party acting on
Bank's behalf) for the account or benefit of Applicant, or the issuance of
any order of court or other legal process against the same, or (vii) the
occurrence of any of the above events with respect to any person or entity
which has guaranteed any Liabilities (whether under this Application or
otherwise).
"Liabilities" means and includes any and all liabilities or obligations,
however created, now existing or hereafter arising, whether joint or
several, absolute or contingent, however evidenced and acquired, of
Applicant to Bank.
"Property" means and includes inventory, equipment, farm products and other
goods, documents and instruments, including documents of title, policies
and certificates of insurance, securities and chattel paper, accounts,
general intangibles, and any and all other types of property, including
deposit accounts, together with all proceeds and products thereof, all
rights of Applicant thereto and all records and documents relative thereto.
"Regulatory Change" means any change in any law, regulation or
interpretation which either (i) imposes or modifies any reserve, special
deposit or similar requirement against letters of credit issued, or drafts
accepted, by Bank or (ii) imposes on Bank any other condition relating,
directly or indirectly, to this Application, Credits or Accepted Drafts,
the effect of which shall be to increase the cost to Bank of issuing or
maintaining Credits or Accepted Drafts.
"Stated Rate" shall mean that annual rate of interest agreed to in writing
by Bank and Applicant or, if there is no written agreement, that annual
rate of interest equal to 3% per annum above that rate of interest as is
announced by Barnett Banks, Inc., as its prime rate of interest from time
to time, which is not necessarily Bank's best or lowest rate, with changes
to the rate to be effective on the date on which any change is announced
(in each case computed on the basis of a 360 day year and the actual number
of days elapsed). Notwithstanding the foregoing or anything contained
herein to the contrary, no provision of this Application shall require the
payment or permit the collection of interest in excess of the maximum rate
permitted by applicable law.
"Taxes" means any present or future taxes, levies, imposts, deductions,
charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on net income and all income and franchise taxes of
the United States and any political subdivision thereof.
"UCP" means the Uniform Customs and Practice for Documentary Credits as
most recently published by the International Chamber of Commerce.
2. If the Expiry Date is not a Business Day, then the Expiry Date shall be the
first Business Day following the Expiry Date.
3. Bank may, with the prior approval of Applicant, (i) correct errors in this
Application or the Credit or (ii) waive discrepancies on the documents
presented under the Credit. Authorization may be given by any means of
communication. Any correction or waiver authorized by Applicant shall be
noted in the records of Bank and shall constitute prima facie evidence of
Applicant's authorization.
4. Bank reserves the right, in its sole discretion, to reject or use any or
all of any proposed form of letter of credit, documentation or language
submitted by Applicant.
5. Applicant shall pay on demand to Bank (in immediately available funds) (i)
the amount of each Draft or Accepted Draft, (ii) commissions in respect of
the Credit, and if applicable, Accepted Drafts, computed on such amounts
and at such rates as Applicant and Bank may agree, and in the absence of
such agreement, on such amounts and at such rates as Bank may customarily
charge, (iii) all costs, expenses and liabilities which Bank may pay or
incur in accordance with or as a result of the Credit or any Accepted
Draft, including, without limitation, all costs, expenses and liabilities
set forth in Section 13, and (iv) interest on all amounts remaining unpaid
from time to time hereunder from the earlier of the due date or demand for
payment thereof at the Stated Rate. With respect to time Drafts and
Accepted Drafts, Bank may advise Applicant of the amount and the maturity
date. If so advised, Applicant shall pay Bank (if Bank has not made demand
for payment) sufficiently in advance of maturity to enable Bank to make
payment in same day funds no later than one business day prior to maturity.
All payments to Bank shall be made free and clear of, and without deduction
for, Taxes.
6. If any Draft or Accepted Draft is drawn in a currency other than United
States currency, Applicant shall pay the equivalent amount in United States
currency at Bank's applicable exchange rate or, at Bank's option, in the
currency drawn in a place, form and manner acceptable to Bank.
7. Bank is authorized to appoint another bank as Bank's agent to issue any
letter of credit. In that case, all Drafts drawn under or purporting to be
drawn under the Credit may be presented to the agent bank. The agent bank
may, at its option, either accept and honor the draft or other demand for
payment, or forward the draft and accompanying documents to Bank to be
accepted and honored. All agreements applicable to transactions of
Applicant with Bank involving acceptances and/or letters of credit are
also applicable to transactions involving the agent bank.
8. This Application shall constitute a security agreement within the meaning
of the Code and Application hereby grants Bank a security interest in, and
authorizes Bank to receive, hold, possess, apply and dispose of, all
Collateral as security for the repayment, of all Liabilities. Bank shall
at all times have the right to require, upon demand, Applicant to deliver
to Bank additional Collateral in form and amount satisfactory to Bank.
Applicant shall, upon Bank's request, sign such instruments, documents or
other papers, and take such other action as Bank may require to perfect the
security interest granted hereby. Bank is hereby authorized at Bank's
option at any time and with or without notice to Applicant, to (i) transfer
to or register in the name of any of Bank's nominees all or any part of the
Collateral and (ii) file (at Applicant's expense) financing statements
without the signature of Applicant with respect to all or any part of the
Collateral and, in furtherance thereof, Applicant hereby appoints Bank as
its attorney in fact for such purpose, which appointment is hereby
deemed to be coupled with an interest and irrevocable. Bank shall be
subrogated to the rights of Applicant in respect of any transaction to
which the Credit relates.
9. Upon the occurrence of an Event of Default, then, the amount of the Credit,
as well as any and all other Liabilities of Applicant to Bank under this
Application or otherwise, shall, at Bank's option, become due and payable
immediately without demand upon or notice to Applicant.
<PAGE>
EXHIBIT I
[Form of Opinion of Messrs.
Akerman Senterfitt & Eidson, P.A.]
[Closing Date]
Barnett Bank of South Florida, N.A.
701 Brickell Avenue
Miami, Florida 33131
Re: Wackenhut Corrections Corporation
---------------------------------
Gentlemen:
This opinion is furnished to you pursuant to Section 3.1(g) of the
Credit Agreement, dated as of _______________, 1994 (the "Credit Agreement")
between Wackenhut Corrections Corporation (the "Borrower") and Barnett Bank of
South Florida, N.A., as Lender. Terms defined in the Credit Agreement are used
herein as therein defined.
We have acted as counsel for the Borrower, The Wackenhut Corporation,
a Florida corporation ("Parent") and [names of other Loan Parties] (collectively
the "Loan Parties" and individually a "Loan Party") in connection with the
preparation, authorization, execution and delivery of, and the consummation of
the transactions contemplated by, the Loan Documents and in connection with the
Loans made [and Letters of Credit issued] on the Closing Date under the Credit
Agreement.
In that connection we have examined:
(i) an executed copy of the Credit Agreement;
(ii) an executed copy of the Revolving Credit Note and the Term Note;
(iii) an executed copy of each Subsidiary Guaranty;
(iv) the Registration Statement;
(v) the articles or certificates of incorporation of each Loan Party
as in effect on the date hereof (collectively the "Charters");
(vi) the by-laws of each Loan Party as in effect on the date hereof
(collectively the "By-laws");
(vii) the Letter of Credit Reimbursement Agreement;
<PAGE>
Barnett Bank of South Florida, N.A.
____________, 1994
Page 2
(viii) certificates of the Secretary of State of the State of Florida,
dated ________________, 1994, attesting to the continued corporate
existence and good standing of the Borrower and the Parent in that State;
and
(ix) [add references to local counsel opinions and comparable good
standing certificates of Parent and each Subsidiary Guarantor].
We have also examined the originals, or copies certified or otherwise
identified to our satisfaction, of such corporate records of the Loan Parties,
certificates of public officials and of officers of the Loan Parties, and
agreements, instruments and documents, as we have deemed necessary as a basis
for the opinions hereinafter expressed. As to questions of fact material to the
opinion rendered herein, we have, when relevant facts were not independently
established by us, relied upon representations and warranties as to facts (but
not legal conclusions) of the Loan Parties contained in the Loan Documents and
certificates of the Loan Parties or their respective officers or public
officials. We have assumed the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Lender.
This opinion has been prepared and is to be construed in accordance with
the Report on Standards For Florida Opinions dated April 8, 1991 issued by the
Business Law Section of The Florida Bar (the "Report"). The Report is
incorporated by reference into this opinion.
We do not express any opinion concerning any law other than the law of the
State of Florida and the Federal law of the United States.
Base on the foregoing, and subject to the qualifications and limitations
stated in this opinion letter and in the Report, we are of the opinion that:
1. Borrower (i) is a corporation duly organized and validly existing
under the laws of its state of incorporation and its status is active; (ii) is
duly qualified as a foreign corporation and is in good standing under the laws
of each jurisdiction where the character of its activities requires such
qualification; and (iii) has all requisite corporate power and authority to
conduct its business and to execute and deliver each Loan Document to which it
is a party and to perform its obligations thereunder. Each Subsidiary Guarantor
(i) is a corporation duly organized and
<PAGE>
Barnett Bank of South Florida, N.A.
____________, 1994
Page 3
validly existing under the laws of its state of incorporation and its status is
active and (ii) has all requisite corporate power and authority to conduct its
business and to execute and deliver each Loan Document to which it is a party
and to perform its obligations thereunder.
2. The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party, and the consummation of the transaction
contemplated therein, have been duly authorized by all necessary corporate
action and do not and will not (i) contravene its Charter or By-laws, (ii)
conflict with, constitute a default under or violate any Requirement of Law
(including, without limitation, Regulations G, T, U and X of the Federal Reserve
Board), or any judgment, writ, injunction, decree, order or ruling of any
Governmental Authority of which we have knowledge, (iii) to our knowledge,
conflict with or result in the breach of, or constitute a default under, or
result in the termination of, any Contractual Obligation or require the consent
or approval of any Person that has not been obtained, or (iv) to our knowledge,
result in the creation or imposition of any Lien upon any of the property of
such Loan Party. The Loan Documents have been duly executed and delivered by
each Loan Party which is a party thereto.
3. No authorization, license, consent, permit, waiver, approval, or
other action by, and no notice to or filing or registration with, any
governmental body, agency, authority, regulatory body or any other Person, is
required for the due execution, delivery and performance by each Loan Party of
any Loan Document to which it is a party.
4. Each Loan Document to which a Loan Party is a party is the legal,
valid and binding obligation of such Loan Party, enforceable against such Loan
Party, as the case may be, in accordance with its terms.
5. To our knowledge, there is no pending or threatened action or
proceeding against or affecting any Loan Party before any Governmental Authority
which, if adversely determined, is likely to have a Material Adverse Effect or
which purports to affect the legality, validity or enforceability of any Loan
Document.
6. To our knowledge, there are no Liens of any nature whatsoever on
any properties of the Borrower other than those permitted by Section 7.1 of the
Credit Agreement. To our knowledge, neither the Borrower nor any of its
Subsidiaries is a party
<PAGE>
Barnett Bank of South Florida, N.A.
____________, 1994
Page 4
to any Contractual Obligation the performance of which by the Borrower or any
such Subsidiary, either unconditionally or upon the happening of an event, will
result in the creation of any Lien on the property or assets of the Borrower or
any of its Subsidiaries.
7. Neither the Borrower nor any of its Subsidiaries is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended. The making of the Loans by the Lender, the
application of the proceeds and repayment thereof and the consummation of the
transactions contemplated by the Loan Documents will not violate any provision
of such Act or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder.
LIMITATIONS AND QUALIFICATIONS
A. Our opinion No. 4 above concerning the validity, binding effect
and enforceability of the Loan Documents means that (i) each of the Loan
Documents constitutes an effective contract under applicable law, (ii) none of
the Loan Documents is invalid in its entirety because of a specific statutory
prohibition or public policy nor is any of them subject in its entirety to a
contractual defense, and (iii) subject to the last sentence of this paragraph,
some remedy is available if a Loan Party is in material default under any of the
Loan Documents. This opinion does not mean that (a) any particular remedy is
available upon a material default, or (b) every provision of the Loan Documents
will be upheld or enforced in any or each circumstance by a court. Furthermore,
the validity, binding effect and enforceability of the Loan Documents may be
limited or otherwise affected by (a) bankruptcy, insolvency, reorganization,
moratorium, or other similar statues, rules, regulations or other laws affecting
the enforcement of creditors' rights and remedies generally and (b) the
unavailability of, or limitation on the availability of, a particular right or
remedy (whether in a proceeding in equity or at law) because of an equitable
principle or a requirement at to commercial reasonableness, conscienability or
good faith.
<PAGE>
Barnett Bank of South Florida, N.A.
____________, 1994
Page 5
B. We express no opinion as to Section 9.5 of the Credit Agreement
insofar as it authorizes the Lender to set off and apply any deposits at any
time held, and any other indebtedness at any time owing, by such Lender to or
for the account of the Borrower.
Very truly yours,
<PAGE>
EXHIBIT J
FORM OF BORROWING BASE CERTIFICATE
TO: Barnett Bank of South Florida, N.A.
FROM: Wackenhut Corrections Corporation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pursuant to the provisions of the Credit Agreement, dated December
___, 1994, between Barnett Bank of South Florida, N.A., and Wackenhut
Corrections Corporation (as amended or modified from time to time, the "Credit
Agreement"), the undersigned hereby certifies that the following information is
true, complete and accurate as of the close of business on _______________,
199__.
<TABLE>
<CAPTION>
(All amounts in thousands)
Accounts Receivable and Unearned Receivables:
<C> <S> <C> <C> <C>
(1) Ending Balance from prior
Borrowing Base Certificate, dated
__________________________, 199__. $__________
(2) Sales for period __________
(3) Other additions to A/R and U/R __________
(4) Cash receipts __________
(5) Credits, claims and collections __________
(6) Debit memos, adjustments and
chargebacks __________
(7) Ending balance $__________
Less: Ineligible accounts and past dues:
(8) 90+ days past due __________
(9) Adjustments (standard reserve) __________
(10) Contras __________
(11) Other adjustments __________
(12) 120+ days terms __________
(13) "Retainage" by Governmental Authorities __________
(14) Total ineligibles and past dues __________
(15) Eligible Receivables __________
(16) Total Availability
(Eligible Receivables 70%) $__________
Capitalized terms used herein are intended to have the meanings ascribed thereto in the Credit Agreement.
</TABLE>
WACKENHUT CORRECTIONS CORPORATION
By:_____________________________________
Name:________________________________
Title: Chief Financial Officer
<PAGE>
SCHEDULE 4.8
Set forth below is a list of Borrower's subsidiaries, the jurisdiction of
incorporation or formation of each such subsidiary and the percentage owned by
Borrower, directly or indirectly.
a) Wackenhut Corrections Corporation Australia Pty Limited, an Australian
corporation
(i) 100 percent
b) Wackenhut Corrections (UK), Limited, an English limited liability company
(i) 100 percent
c) Australasian Correctional Management Pty Limited, an Australian corporation
(i) 100 percent
d) Australasian Correctional Services Pty Limited, an Australian corporation
(i) 66.66 percent
<PAGE>
+ SCHEDULE 4.9
Set forth below is a list of all Plans, Qualified Plans, Title IV Plans, Multi-
Employer Plans and Welfare Benefit Plans of Borrower.
a) The 401(k) Plan for Employees of The Wackenhut Corporation
b) The Wackenhut Corporation Salaried Employees 401(k) Retirement Plan
c) Godwins Master Superannuation Trust
<PAGE>
SCHEDULE 4.18
Set forth below is a list of underground storage tanks and surface impoundments
in or on the property owned, leased or operated by any Loan Party.
FACILITY SIZE ABOVE/BELOW
- -------- ---- -----------
Allen Correctional Center 2-6,000 gallon/gas Below
Kinder, LA 1-6,000 gallon/diesel
2-10,000 gallon/diesel
Bridgeport Pre-Release
Center 1,000 gallons/diesel Below
Bridgeport, TX
Kyle Pre-Release Center
Kyle, TX 500 gallons/diesel Above
Lockhart Work Program*
Facility 500 gallons/diesel Below
Lockhart, TX
*An Exxon Fuel line
easement runs through the
property.
WCC's other locations have diesel storage tanks above ground which have a
capacity of 50 to 500 gallons which are utilized as emergency fuel supply for
the site generator.
<PAGE>
SCHEDULE 4.21
Set forth below is a list of Indebtedness for money borrowed by Loan Parties.
CREDIT LYONNAIS AUSTRALIA LTD--AUSTRALIAN DOLLAR)
9401121IS895 WCC- 01/14/95 3,500,000
AUSTRALIA PTY-
ACQUISITION - (A$)
920611IS55 WCC- 06/20/97 500,000
AUSTRALIA PTY-
WACOL - (A$)
930990I5S06 ACC AUSTRALIA 06/15/97 1,000,000
PTY-JUNEE -
(A$)
LETTER OF CREDIT BALANCE 5,000,000
CREDIT LYONNAIS AUSTRALIA LTD - (Australian Dollar)
WCC-AUSTRALIA PTY TOTAL CREDIT LINE (A$) 3,500,000
(500,000 FOR 90 DAYS @ 7.82 MATURING 2/20/95) 500,000
(1,000,000 FOR 364 DAYS @ 5.90% MATURING 02/23/9 1,000,000
TOTAL CREDIT LINE OUTSTANDING (A$) 1,500,000
<PAGE>
SCHEDULE 7.1
None
<PAGE>
SCHEDULE 7.5
a) Premier Prison Services Ltd. ("PPS"), an English Corporation, a joint
venture with Serco Limited
b) Premier Custodial Development ("PCD"), as a joint venture with a wholly-
owned subsidiary of Trafalgar House Limited.
<PAGE>
NATIONSBANK
CORPORATE BANKING TEL 305 577-5780
P. O. BOX 010831 ?????? FAX 305 577-5745
MIAMI, FL. 33101-0831
EXHIBIT 10(f)
NATIONSBANK
March 7, 1995
Mr. Terry Mayotte
Assistant Treasurer
The Wackenhut Corp.
1500 San Remo Avenue
Coral Gables, FL 33146-3009
Re: Revolving Credit and Reimbursement Agreement Dated July 1, 1993.
Dear Mr. Mayotte:
NationsBank agrees to amend Section 7.10 of the above referenced agreement
so that the fixed charge coverage ratio requirement for the period ending
January 1, 1995 only will be 1.15:1.00 rather than the 1.75:1.00 indicated
in the credit agreement.
Sincerely,
/s/ John A. Miller
----------------------------
John A. Miller
Vice President
(305) 577-5422
<PAGE>
FINANCIAL REVIEW
- -------------------------------------------------------------------------------
THE WACKENHUT CORPORATION AND SUBSIDIARIES
MARKET FOR THE CORPORATION'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On October 29, 1994, the corporation declared a 25% stock dividend, effected in
the form of a stock split (the 25% stock dividend), paid on January 9, 1995 to
stockholders of record at the close of business on December 22, 1994. The 25%
stock dividend was paid in series B common stock to holders of the corporation's
series A and B shares. The accompanying consolidated financial statements have
been retroactively restated to reflect the 25% stock dividend.
Regular quarterly dividends of $.072 per share (adjusted for the 25% stock
dividend) on both its outstanding series A and B common stock were declared and
paid for each of the four quarters of fiscal 1994 and 1993. The corporation
intends to declare future quarterly dividends on series A and B common stock,
depending on its earnings, financial condition, capital requirements and other
relevant factors.
The ensuing table shows the high and low prices for the corporation's series A
and B common stock, as reported on the New York Stock Exchange, for each
quarterly period during fiscal 1994 and 1993. The prices shown in the table have
been rounded to the nearest 1/8th and reflect the 25% stock dividend. The
approximate number of record holders of series A and B common stock, as of
February 15, 1995, was 915 and 963, respectively.
<TABLE>
<CAPTION>
Fiscal 1994 Fiscal 1993
- ------------------------------------------------------------------------------------------------------------------------
Series A Series B Series A Series B
- ------------------------------------------------------------------------------------------------------------------------
Quarter High Low High Low High Low High Low
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $ 11-1/2 $ 9-7/8 $ 9-1/4 $ 8 $ 13-1/4 $ 10-3/4 $ 11-3/4 $ 10-1/4
Second 12-1/8 10-1/8 9-3/8 7-1/2 11-3/4 8-7/8 11-3/8 8-5/8
Third 13 11 11-1/4 8-1/4 11-3/8 9-0/0 10-1/2 8-1/4
Fourth 12-7/8 9-1/8 11-1/8 8-1/2 11-5/8 9-1/4 9-5/8 7-5/8
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 21 -
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)
The selected consolidated financial data should be read in conjunction with the
corporation's consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED: (a) 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS:
<S> <C> <C>
Revenues $ 747,666 $ 664,160
Operating income 15,292 4,496
Income before income taxes 3,002 3,371
Income (loss) before extraordinary charge and cumulative effect of accounting change 2,272 3,609
Extraordinary charge - early extinguishment of debt, net of income taxes (887) (1,444)
Cumulative effect of accounting change for income taxes -- --
Net income (loss) 1,385 2,165
- -----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE: (b)
Income (loss) before extraordinary charge and cumulative effect of accounting change $ .24 $ .37
Extraordinary charge - early extinguishment of debt, net of income taxes (.10) (.15)
Cumulative effect of accounting change for income taxes -- --
Net income (loss) $ .14 $ .22
- -----------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE OF COMMON STOCK: (b)
Regular quarterly dividends $ .29 $ .29
Special dividend -- --
Total dividends $ .29 $ .29
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL CONDITION:
Working capital $ 72,075 $ 56,163
Total assets 212,757 211,297
Long-term debt 38,991 57,484
Total debt 42,756 67,940
Shareholders' equity 57,459 47,362
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Fiscal years 1992 and 1987 included 53 weeks.
(b) Restated to reflect a 25% stock dividend declared during fiscal 1994 and to
reflect a 100% stock dividend, effected in the form of a stock split,
declared during fiscal 1992.
</TABLE>
- 22 -
<PAGE>
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986 1985 1984
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 630,320 $ 572,527 $ 521,191 $ 462,181 $ 400,996 $ 381,972 $ 328,795 $ 308,219 $ 282,269
3,367 13,859 12,097 10,225 5,334 6,032 1,680 7,536 8,638
1,588 11,867 10,664 8,524 7,382 7,915 3,247 10,026 302
1,137 7,721 6,963 5,874 5,195 5,660 2,418 6,779 (1,804)
-- -- -- -- -- -- -- -- --
7,370 -- -- -- -- -- -- -- --
8,507 7,721 6,963 5,874 5,195 5,660 2,418 6,779 (1,804)
- ---------------------------------------------------------------------------------------------------------------------------------
$ .12 $ .80 $ .72 $ .61 $ .54 $ .58 $ .25 $ .70 $ (.18)
-- -- -- -- -- -- -- -- --
.76 -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
$ .88 $ .80 $ .72 $ .61 $ .54 $ .58 $ .25 $ .70 $ (.18)
- ---------------------------------------------------------------------------------------------------------------------------------
$ .25 $ .24 $ .24 $ .24 $ .24 $ .24 $ .24 $ .24 $ .24
-- -- -- -- 1.20 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
$ .25 $ .24 $ .24 $ .24 $ 1.44 $ .24 $ .24 $ .24 $ .24
- ---------------------------------------------------------------------------------------------------------------------------------
$ 56,932 $ 48,599 $ 42,413 $ 40,635 $ 38,461 $ 35,588 $ 31,572 $ 21,904 $ 8,007
192,236 172,093 164,085 157,681 150,318 130,439 115,930 111,314 103,734
63,260 46,920 46,850 48,500 45,558 10,600 8,400 14,150 9,500
63,990 47,650 46,850 51,325 47,058 10,600 18,400 24,150 19,500
47,587 42,847 37,865 33,616 30,528 39,653 36,191 36,129 31,682
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 23 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(TABULAR INFORMATION: IN THOUSANDS)
FINANCIAL CONDITION
CAPITAL RESOURCES AND LIQUIDITY
Cash and cash equivalents amounted to $13.8 million at January 1, 1995, or an
increase of $6 million from the end of 1993. Net cash generated by operating
activities was $13 million in 1994 and exceeded 1993 by $7.4 million. Generally,
the corporation has generated sufficient cash from operations to finance normal
growth.
Cash provided by investing activities amounted to $24.6 million and included
$14.0 million as a result of the reduction in marketable securities of the
captive reinsurance subsidiary and the $17.6 million proceeds from the sale of a
minority ownership (27%) in Wackenhut Corrections Corporation (WCC), a
subsidiary of the corporation. Capital expenditures of $5.1 million partially
offset these increases.
Funds generated by operating and investing activities were used principally by
the corporation to payoff the senior notes and to reduce bank borrowings. Cash
dividends paid amounted to $2.8 million.
Current cash requirements consist of amounts needed for capital assets, working
capital related to increased revenue from corporate growth, the renovation or
construction of correctional facilities, possible acquisitions and the payment
of dividends. Cash requirements will be met from internally generated funds and
additional borrowings as necessary.
Management continues to pursue major contracts, to expand core business, and
pursue major contracts to provide security to detention centers and construct
detention facilities. These contracts may require substantial initial cash
outlays, which are partially or fully recoverable over the original term of the
contract.
As described in more detail in the Notes to Financial Statements, the
corporation and WCC entered into new credit agreements with banks that provide
$75 million for borrowings and the issuance of letters of credit. In addition,
subsequent to year end, the corporation entered into accounts receivable
securitization agreements with two financial institutions to sell an undivided
interest in a defined pool of trade accounts receivable up to a maximum of $40
million. In January 1995, the corporation prepaid the outstanding balance on the
first mortgage note on the headquarters building with proceeds from the
securitization of accounts receivable.
As a result of the debt restructuring and the initial public offering of WCC,
the corporation significantly increased its borrowing capacity and reduced the
ratio of total debt to total capital to 42% as of year-end 1994.
Management is unaware of any trends or events that are likely to result in
material changes in the liquidity of the corporation other than those factors
mentioned above.
RESULTS OF OPERATIONS
SIGNIFICANT TRENDS
During 1994, operating income increased by $10.8 million, in spite of increased
competitive pressures and reduced profit margins in the traditional guard
business. Strategic decisions made in previous years to diversify into the
corrections business and to pursue national security service contracts were
major contributing factors to the increase in operating income. In addition, the
unprofitable businesses that were discontinued in 1993 contributed to this
turnaround. The downsizing of defense business continued to impact revenue, but
to date has not affected profit margins. The effort to diversify government
business will continue in 1995.
Competitive pressures on billing rates of security services and reductions in
Department of Energy business are expected to continue. Increases in the cost of
workers' compensation, liability and health insurance have continued. In
addition, since the majority of the corporation's business is labor-intensive,
increases in state and federal wage requirements could have an impact on the
corporation's results of operations.
WCC increased revenues to $105.5 million and operating profits to $4.4 million
in 1994. The growth in the corrections business has been significant and should
continue to be a major factor in the overall performance of the corporation in
the future. In 1994, WCC won ten major contracts that will result in annual
operating revenues of $105 million and one-time construction and consulting fees
of $80 million in 1995 and 1996.
The restructuring of the corporation's debt was started in 1994 and finalized
early in 1995. This restructuring increased the corporation's debt capacity and
is expected to reduce interest expense in 1995. Management's decision to sell
the corporation's headquarters building in Coral Gables and move to a more
efficient building in a less expensive location should result in reduced annual
operating costs. Proceeds from the sale of the headquarters building will make
it possible for the corporation to further reduce debt and interest expense.
PERIOD-TO-PERIOD COMPARISONS (1994 VERSUS 1993)
<TABLE>
<CAPTION>
Change Change
1994 (vs. 1993) 1993 (vs. 1992)
----------------------------------------
<S> <C> <C>
REVENUES $ 747,666 13% $ 664,160 5%
----------------------------------------
</TABLE>
Consolidated revenues increased $83.5 million (13%) in 1994 over the prior year,
compared with revenue growth of 5% in 1993. The revenue growth of the
corporation for 1994 includes $42.7 million of WCC and $37.6 million of the
Security Services Division. Revenues from contracts with the Department of
Energy (DOE) decreased $11.0 million, while the International Group recorded an
increase in revenues of $11.0 million over the previous year, due principally to
growth in Central and South America.
- 24 -
<PAGE>
The growth in 1994 revenues of WCC reflected the consolidation of Australasian
Correctional Management Pty., Ltd., (ACM), with revenues of $23.1 million. WCC
recorded a total increase in facility management revenues of $24.0 million,
including ACM. In addition, construction and design revenues increased fourfold
to $23.2 million during fiscal 1994 with revenues from the construction of three
facilities.
The increase in Security Services Division revenues, which represent the more
traditional line of business of the corporation, was largely due to the success
in obtaining national contracts with major corporations in the second half of
1993 and in 1994. In addition, the division was awarded a $34.7 million contract
by the State of Hawaii to supply security at eight airports in August 1994.
Revenues of Wackenhut Services were $8.1 million lower in 1994 than in 1993 as a
result of reductions in manpower requirements by the Department of Energy.
Contracts with the Department of Energy are typically cost reimbursable
contracts for which the division can earn award fees, based on performance
factors. Although award fees have not been reduced significantly, further
reductions in revenues could impact profit contribution from these contracts. In
order to compensate for the decreased DOE revenues, the division has expanded
the scope of its services and is actively pursuing contracts from other
governmental authorities and departments.
<TABLE>
<CAPTION>
Change Change
1994 (vs. 1993) 1993 (vs. 1992)
----------------------------------------
<S> <C> <C>
PAYROLL AND RELATED
TAXES $538,297 10% $491,408 5%
----------------------------------------
% of Revenues 72% 74%
----------------------------------------
OTHER OPERATING
EXPENSES $194,077 17% $166,530 5%
----------------------------------------
% of Revenues 26% 25%
----------------------------------------
NON-RECURRING
CHARGES -- -- $1,726 --
----------------------------------------
% of Revenues -- .3%
----------------------------------------
</TABLE>
The increase in labor costs of $46.9 million (10%) and other operating expenses
of $27.6 million (17%) reflected the growth in business in Security Services and
WCC facility management. Furthermore, pass-through construction costs of WCC
increased $17.5 million in 1994 compared to 1993. The total increase in other
operating expenses was partially offset by a decrease in underwriting losses of
the casualty reinsurance subsidiary of $4.0 million.
<TABLE>
<CAPTION>
Change Change
1994 (vs. 1993) 1993 (vs. 1992)
----------------------------------------
<S> <C> <C>
OPERATING INCOME $15,292 240% $4,496 34%
----------------------------------------
% of Revenues 2% .7%
</TABLE>
Operating income was $15.3 million, or 2% of revenues in 1994, compared to $4.5
million, or 0.7% of revenues in 1993. Several factors contributed to this
significant increase. First, the increase in Security Services revenues made a
major contribution to operating income, in spite of reduced profit margins.
Second, excellent ratings at DOE facilities increased operating income due to
higher award fees. The Wackenhut Monitoring Systems and Wackenhut Applied
Technologies Center Divisions, which were sold or discontinued in 1993, had
combined operating losses of approximately $2 million in that year, and
underwriting losses of the casualty reinsurance subsidiary decreased $4 million
in fiscal 1994. And in 1993, the corporation also recorded a $1.7 million non-
recurring charge to operating income. In addition, in 1994 WCC reported
operating income of $4.4 million, including the effect of the consolidation of
ACM, which represented $2.3 million.
Total other expense (net) of $12.3 million in 1994 resulted mainly from three
factors. First, interest expense amounted to $5.1 million and exceeded the
previous year by $874,000. Second, the liquidation of investments of the captive
reinsurance subsidiary resulted in lower interest and investment income ($1.6
million); however, the positive effect of this transaction on earnings was not
fully realized in 1994, but should be a factor in 1995. Finally, in the fourth
quarter of 1994, the carrying value of the headquarters building was written
down to estimated realizable value and a charge of $8.7 million was recognized
as a result of management's decision to sell the facility and relocate its
corporate headquarters.
<TABLE>
<CAPTION>
Change Change
1994 (vs. 1993) 1993 (vs. 1992)
----------------------------------------
<S> <C> <C>
INCOME BEFORE INCOME
TAXES $3,002 (11)% $3,371 112%
----------------------------------------
% of Revenues .4% .5%
----------------------------------------
NET INCOME $1,385 (36)% $2,165 (75)%
----------------------------------------
% of Revenues .2% .3%
----------------------------------------
</TABLE>
Income before income taxes and extraordinary charge was $3 million for fiscal
1994, compared with $3.4 million in 1993. The provision for income taxes was
$17,000, due to partial utilization of capital loss carryforwards, targeted jobs
tax credits and tax exempt interest income of the captive reinsurance
subsidiary. The effective income tax rate was 14% in 1993 due to similar
factors, and a favorable federal income tax adjustment of $637,000 that resulted
from a revenue agent's examination for the years 1980 to 1986.
Minority interest expense (net of income taxes) increased $637,000 reflecting
the sale of a minority interest (27%) in WCC. Equity income of foreign
affiliates (net of income taxes) decreased $799,000 mainly as a result of the
consolidation of ACM in 1994.
Income before extraordinary charge was $2.3 million in 1994 versus $3.6 million
the year before. In 1994, the corporation prepaid the second senior note to an
insurance company and recognized an extraordinary charge for the early
extinguishment of debt in the amount of $887,000 (net of income taxes). The
corporation also recognized a $1.4 million extraordinary charge (net of income
taxes) for the early extinguishment of the first senior note in 1993.
Net income was $1.4 million in 1994, compared with $2.2 million in 1993.
- 25 -
<PAGE>
MANAGEMENT'S SISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PERIOD-TO-PERIOD COMPARISONS (1993 VERSUS 1992)
Consolidated revenues increased $33.8 million (5.4%) in 1993 versus 1992. This
increase is attributed principally to the Domestic Operations Group which
reported an increase of $31.7 million. The increases in revenues of the Domestic
Operations and International Operations Groups offset a decrease of
approximately $5.8 million in revenues of the Government Services Group.
For the most part the increase in revenues of the Domestic Operations Group was
in traditional security services. The Security Services Division, which was
successful in obtaining contracts with several major national clients and
providing emergency strike security services to American Airlines, reported an
increase of $24.4 million in revenues over 1992. In addition, the Food Services
Division reported an increase in revenues of $5.6 million, primarily from
contracts acquired in the third quarter of 1992.
International Group revenues increased $9.1 million, principally in South
America, but the group is experiencing increased competition on all continents.
The group continues to expand into Eastern Europe, the Far East and Africa and
to diversify into other security-related businesses.
Revenues of the Government Group were down as a result of the decline of
Department of Energy (DOE) business. It is believed that DOE has contracted as
much as it is expected to, so revenues should stabilize for 1994. Revenues of
the Corrections and Education Divisions were stable, in total, when compared to
1992; however, 1992 included $14.4 million in pass-through construction revenues
of the Corrections Division. Both the Corrections and Education Divisions
continued to actively pursue additional contracts in 1993.
The increases in labor costs and other operating expenses reflected the growth
in business which resulted from new security services contracts. In addition,
pass-through expenses associated with emergency security services in connection
with the American Airlines strike and the increase in operating expenses of food
service contracts represented approximately $4.8 million of the increase in
other operating expenses. Other operating expenses of the Monitoring Division
amounted to $2.3 million in 1993 and exceeded the same costs in 1992 by $1.5
million.
Underwriting losses of the casualty reinsurance subsidiary, included in other
operating expenses, amounted to $4.6 million in 1993, or an increase of
approximately $456,000 over 1992. Underwriting losses for both 1993 and 1992
have been high due to increases in workers' compensation and general liability
claims and an increase in loss reserves based on actuarial computations. In
response to the increase in insurance claims, management has instituted new
programs to control the severity and frequency of these claims.
In the fourth quarter of 1993 the corporation recognized non-recurring charges
of $1.7 million. A significant portion of these charges was due to a $791,000
decrease in the value of guard contracts acquired in 1991.
Operating income was $4.5 million in 1993, or 0.7% of revenues, after non-
recurring charges of $1.7 million and insurance underwriting losses of $4.6
million. In addition, combined operating losses of Wackenhut Applied
Technologies Center, Inc. and Wackenhut Monitoring Systems, Inc. amounted to
approximately $2 million in 1993. Similarly, operating income was $3.4 million,
or 0.5% of revenues in 1992 due to insurance underwriting losses and legal
reserves along with increases in the allowance for doubtful accounts and other
factors mentioned in the discussion for 1992.
Total other expense (net) of $1.1 million in 1993 resulted from two principal
factors. Interest expense for 1993 was $4.2 million due to an increase in the
level of bank borrowings and was $101,000 higher than in 1992 in spite of lower
interest rates. Interest and investment income amounted to $3.1 million and
increased $755,000 over 1993.
Income before income taxes was $3.4 million in 1993, compared with $1.6 million
in 1992. A favorable federal income tax adjustment of $637,000, which resulted
from a revenue agent's examination for the years 1980 to 1986, partial
utilization of capital loss carryforwards and targeted jobs tax credits reduced
the effective income tax rate to 14% for 1993.
Equity income of foreign affiliates (net of income taxes) included income of the
Australian joint venture of Wackenhut Corrections Corporation.
Income before extraordinary charge was $3.6 million in 1993 versus $1.1 million
the year before. In January 1994, the corporation prepaid $12.5 million of its
senior notes to insurance companies. This prepayment resulted in an
extraordinary charge for early extinguishment of debt in the amount of $1.4
million (net of applicable income taxes), which was reflected in the financial
statements for 1993.
Net income was $2.2 million in 1993, compared to $8.5 million in 1992, which
included a benefit of $7.4 million resulting from the adoption of Statement of
Financial Accounting Standards (SFAS) No. 109.
- 26 -
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
FISCAL YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 and JANUARY 3, 1993
<TABLE>
<CAPTION>
1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $ 747,666 $ 664,160 $ 630,320
OPERATING EXPENSES
--------------------------------------------------------------------------------
Payroll and related taxes 538,297 491,408 467,934
Other operating expenses 194,077 166,530 159,019
Non-recurring charges -- 1,726 --
--------------------------------------------
732,374 659,664 626,953
--------------------------------------------------------------------------------
OPERATING INCOME 15,292 4,496 3,367
--------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (5,104) (4,230) (4,129)
Interest and investment income 1,514 3,105 2,350
Write-down of headquarters building (8,700) -- --
--------------------------------------------
(12,290) (1,125) (1,779)
--------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 3,002 3,371 1,588
PROVISION FOR INCOME TAXES 17 485 834
MINORITY INTEREST, NET OF INCOME TAXES 999 362 --
EQUITY INCOME OF FOREIGN AFFILIATES, NET OF INCOME TAXES (286) (1,085) (383)
--------------------------------------------
INCOME BEFORE EXTRAORDINARY CHARGE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 2,272 3,609 1,137
EXTRAORDINARY CHARGE - EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME TAXES (887) (1,444) --
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
INCOME TAXES -- -- 7,370
--------------------------------------------
NET INCOME $ 1,385 $ 2,165 $ 8,507
- --------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE:
Income before extraordinary charge and
cumulative effect of accounting change $ 0.24 $ 0.37 $ 0.12
Extraordinary charge - early extinguishment
of debt, net of income taxes (0.10) (0.15) --
Cumulative effect of accounting change for
income taxes -- -- 0.76
--------------------------------------------
Net income $ 0.14 $ 0.22 $ 0.88
- --------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
- 27 -
<PAGE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY 1, 1995 and JANUARY 2, 1994
1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13,808 $ 7,821
Accounts receivable, less allowance for doubtful
accounts of $1,056 in 1994 and $687 in 1993 100,425 94,937
Inventories 7,179 6,243
Other 16,233 14,760
----------------------------
137,645 123,761
------------------------------------------------------------------------------------------
NOTES RECEIVABLE 1,646 2,085
------------------------------------------------------------------------------------------
MARKETABLE SECURITIES AND
CERTIFICATES OF DEPOSIT - casualty reinsurance subsidiary 11,495 24,843
------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, at cost 45,928 51,497
Accumulated depreciation (15,102) (13,374)
------------------------------------------------------------------------------------------
30,826 38,123
------------------------------------------------------------------------------------------
DEFERRED TAX ASSET, NET 11,021 6,374
------------------------------------------------------------------------------------------
OTHER ASSETS Investment in and advances to foreign affiliates, at
cost, including equity in undistributed earnings
of $2,066 in 1994 and $2,370 in 1993 6,165 5,742
Other 13,959 10,369
-----------------------------
20,124 16,111
-----------------------------
$ 212,757 $ 211,297
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES Current portion of long-term debt $ -- $ 10,456
Notes payable 3,765 --
Accounts payable 14,839 15,995
Accrued payroll and related taxes 25,761 22,444
Accrued expenses 20,609 18,703
Deferred tax liability, net 596 --
----------------------------
65,570 67,598
------------------------------------------------------------------------------------------
RESERVES FOR LOSSES - casualty reinsurance subsidiary 38,450 33,500
------------------------------------------------------------------------------------------
LONG-TERM DEBT 38,991 57,484
------------------------------------------------------------------------------------------
OTHER 4,029 3,421
------------------------------------------------------------------------------------------
COMMITMENTS AND
CONTINGENCIES (notes 6, 12 and 14) -- --
------------------------------------------------------------------------------------------
MINORITY INTEREST 8,258 1,932
------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY Preferred stock, 10,000,000 shares authorized
Common stock, $.10 par value, 20,000,000
shares authorized
Series A, 3,858,885 issued and outstanding in 1994 and 1993 386 386
Series B, 5,794,539 issued and outstanding in 1994 and
3,858,885 in 1993 579 386
Additional paid-in capital 38,919 26,234
Retained earnings 21,681 23,268
Cumulative translation adjustment (3,552) (3,058)
Unrealized (loss) gain on marketable securities (554) 146
----------------------------
57,459 47,362
------------------------------------------------------------------------------------------
$ 212,757 $ 211,297
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE CONSOLIDATED BALANCE SHEETS.
- 28 -
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FISCAL YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 and JANUARY 3, 1993
<TABLE>
<CAPTION>
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN):
OPERATING Net Income $ 1,385 $ 2,165 $ 8,507
ACTIVITIES Adjustments -
Depreciation expense 4,374 4,354 3,864
Amortization expense 7,544 6,787 4,173
Provision for bad debts 508 735 1,193
Equity income, net of dividends (202) (1,487) (367)
Minority interests in net income 1,514 548 --
Write-down of headquarters building 8,700 -- --
Extraordinary loss on early extinguishment of debt 1,344 2,348 --
Write-down of note receivable related to Stellar Systems, Inc. -- -- 1,900
Other (495) (75) (48)
Cumulative effect of accounting change -- -- (7,370)
Changes in assets and liabilities, net of acquisitions and divestitures-
(Increase) Decrease in assets:
Accounts receivable (5,745) (9,607) (10,030)
Inventories (5,137) (4,985) (3,018)
Other current assets (1,154) (3,006) (2,291)
Marketable securities and certificates of deposit (1,352) (3,116) 1,193
Other assets (3,567) (2,947) (3,570)
Deferred tax asset (4,647) 624 --
Increase (Decrease) in liabilities:
Accounts payable and accrued expenses 533 234 1,775
Accrued payroll and related taxes 3,280 5,482 (316)
Deferred tax liability - current 596 (545) --
Reserves for losses of casualty reinsurance subsidiary 4,950 7,573 4,736
Other 608 534 534
Deferred income taxes -- -- (4,346)
---------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 13,037 5,616 (3,481)
- ------------------------------------------------------------------------------------------------------------------------------
INVESTING Net proceeds from initial public offering of subsidiary's
ACTIVITIES common stock 17,626 -- --
Payments on notes receivable 438 852 20
Payment for acquisitions, net of cash acquired (935) -- --
Investment in and advances to foreign affiliates (732) (1,310) (1,913)
Capital expenditures (5,091) (3,409) (8,579)
Proceeds from sale of marketable securities of casualty
reinsurance subsidiary 14,000 -- --
Deferred charge expenditures (701) -- --
Sale of non-parental insurance business -- -- 1,168
---------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 24,605 (3,867) (9,304)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING Proceeds from issuance of debt 196,411 113,270 77,523
ACTIVITIES Payments on debt (225,287) (109,320) (61,183)
Dividends paid (2,779) (2,777) (2,314)
-----------------------------------
Net Cash (Used In) Provided By Financing Activities (31,655) 1,173 14,026
---------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,987 2,922 1,241
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 7,821 4,899 3,658
---------------------------------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 13,808 $ 7,821 $ 4,899
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest $ 4,209 $ 4,172 $ 4,733
Income taxes $ 1,119 $ 1,545 $ 3,921
Non-cash financing and investing activities:
25% and 100% stock dividends declared during 1994 and 1992 $ 193 -- $ 386
Note received related to sale of subsidiary -- $ 1,250 --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS
- 29 -
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)
FISCAL YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 and JANUARY 3, 1993
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK
Series A Balance, beginning and end of year $ 386 $ 386 $ 386
Number of shares, all years,
beginning and end, 3,858,885
-------------------------------------------
Series B Balance, beginning of year 386 386 --
25% and 100% stock dividends effected in the
form of stock splits in 1994 and 1992 193 -- 386
-------------------------------------------
Balance, end of year 579 386 386
Number of shares, end of year, 5,794,539 in
1994 and 3,858,885 in 1993 and 1992
--------------------------------------------------------------------------------------------
ADDITIONAL PAID-IN
CAPITAL Balance, beginning of year 26,234 26,234 26,620
100% stock dividend effected in the form of a
stock split declared during 1992 -- -- (386)
Increase due to initial public offering of
subsidiary's common stock 12,685 -- --
-------------------------------------------
Balance, end of year 38,919 26,234 26,234
--------------------------------------------------------------------------------------------
RETAINED EARNINGS Balance, beginning of year 23,268 23,880 17,804
Net income 1,385 2,165 8,507
Dividends (2,779) (2,777) (2,431)
25% stock dividend effected in the form of a
stock split (193) -- --
Balance, end of year 21,681 23,268 23,880
CUMULATIVE
TRANSLATION Balance, beginning of year (3,058) (3,395) (1,963)
ADJUSTMENT Translation adjustment (494) 337 (1,432)
Balance, end of year (3,552) (3,058) (3,395)
---------------------------------------------------------------------------------------------
UNREALIZED (LOSS) GAIN
ON MARKETABLE Balance, beginning of year 146 96 --
SECURITIES Net unrealized (losses) gains for the year (700) 50 96
-------------------------------------------
Balance, end of year (554) 146 96
--------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS'
EQUITY $ 57,459 $ 47,362 $ 47,587
-----------------------------------------------------------------------------------------
DIVIDENDS PER SHARE Restated for the effects of the 25% and 100%
stock dividends effected in the form of
stock splits declared in 1994 and 1992 $ 0.29 $ 0.29 $ 0.25
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
- 30 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR INFORMATION IN THOUSANDS EXCEPT SHARE DATA)
FOR THE FISCAL YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 AND JANUARY 3, 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The corporation's fiscal year ends on the Sunday closest to the calendar year
end. Fiscal years 1994 and 1993 each included 52 weeks. Fiscal year 1992
included 53 weeks.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements include the accounts of the corporation
and its subsidiaries, including its casualty reinsurance subsidiary. All
significant intercompany transactions and balances have been eliminated in
consolidation. Certain prior year amounts have been reclassified to conform with
current year presentation.
MINORITY INTEREST
The minority interest expense represents principally the separate public
ownership (approximately 27%) in Wackenhut Corrections Corporation and the
ownership by foreign investors in several subsidiaries of Wackenhut
International, Incorporated.
INCOME TAXES
As discussed in Note 10, the corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes" during 1992.
SFAS No. 109 utilizes the liability method and deferred taxes are determined
based on the estimated future tax effects of differences between the financial
statement and tax bases of assets and liabilities given the provisions of
enacted tax laws.
EARNINGS PER SHARE
Earnings per share are computed using the average number of common shares
outstanding, including common stock equivalents and reflects the declaration of
the 25% and 100% stock dividends effected in the form of stock splits in 1994
and 1992. Prior year's earnings per share have been restated to give effect to
the stock splits. The average number of shares outstanding was 9,653,424 for
1994 and 9,646,672 for 1993.
INVENTORIES
Alarm systems and electronics inventories are carried at the lower of cost or
market, on a first-in first-out basis. Uniform inventories are carried at
amortized cost.
REVENUES
Revenue is recognized as services are provided. During fiscal years 1994, 1993
and 1992, the largest client of the corporation was the U.S. Department of
Energy, accounting for approximately 20%, 24% and 26% respectively, of the
corporation's consolidated revenues.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The corporation considers highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts receivable, other
receivables, notes receivable, notes payable and accounts payable approximates
fair value. The fair value of marketable securities and certificates of deposit
is presented under "wholly-owned casualty reinsurance subsidiary" in Note 6 of
these financial statements. The carrying value of long-term debt (including
current portion) approximates fair value.
(2) BUSINESS SEGMENTS
WACKENHUT CORRECTIONS CORPORATION
The corporation's principal business consists of security guard services to
commercial and governmental clients. A subsidiary of the corporation, Wackenhut
Corrections Corporation (WCC),
provides facility management and construction services to detention and
correctional facilities. WCC operates in a different industry segment than other
divisions of the corporation. A summary of financial data of WCC is presented
below:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Revenues
Facility management $ 82,301 $ 58,289 $ 46,426
Construction and design 23,185 4,523 15,751
--------------------------------------
105,486 62,812 62,177
Operating income before
Corporate G&A 5,682 4,695 4,646
Assets 30,333 19,148 19,898
Depreciation expense 769 654 433
Capital expenditures 598 326 4,584
Equity income (loss)
of affiliates (331) 261 29
Identifiable assets of equity
affiliates 3,420 3,315 2,035
- -----------------------------------------------------------------------
</TABLE>
NON-U.S. OPERATIONS
A summary of financial data for foreign operations is shown below. Non-U.S.
operations of the corporation and its subsidiaries are conducted primarily in
South America and Australia. Profit is before the allocation of corporate office
general and administrative expenses and income taxes.
<TABLE>
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 111,026 $ 83,523 $ 73,982
Income before Corporate
G&A and income taxes 5,285 4,436 3,747
Assets 48,893 26,557 22,929
- ----------------------------------------------------------------------------
</TABLE>
The corporation carries its investment in affiliates (20% to 50% owned) on the
equity method. U.S. income taxes which would be payable upon remittance of
affiliates' earnings to the corporation are provided currently.
Minority interest in consolidated foreign subsidiaries have been reflected net
of applicable income taxes on the accompanying financial statements for 1994 and
1993. The amounts for 1992 were not material.
(3) ACCOUNTS RECEIVABLE SECURITIZATION
Subsequent to year end, the corporation entered into agreements expiring January
1998, with two financial institutions to sell, on an ongoing basis, an undivided
interest in a defined pool of trade accounts receivable up to a maximum of $40
million. Under terms of the agreement, the ongoing costs pertaining to this
program are based on the purchasers' level of investment and cost of issuing
commercial paper plus predetermined fees. The corporation will retain
substantially the same risk of credit loss as if the receivables had not been
sold. As discussed in Note 7, the corporation, subsequent to year end, prepaid
the outstanding balance of the first mortgage note on the headquarters building
with proceeds from the sale of eligible trade accounts receivable.
(4) PROPERTY AND EQUIPMENT AND DEPRECIATION METHODS
The corporation uses principally the straight-line method of depreciation for
property and equipment. The components of property and equipment and their
estimated lives are as follows on page 32:
- 31 -
<PAGE>
<TABLE>
<CAPTION>
Years 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Land -- $ 4,444 $ 4,211
Buildings and improvements 20 to 33-1/3 24,722 31,854
Furniture and fixtures 5 to 20 3,608 3,527
Equipment 5 to 20 9,026 8,463
Automobiles and trucks 3 4,128 3,442
---------------------
$ 45,928 $ 51,497
- ----------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1994, the decision was made to sell the headquarters
building located in Coral Gables, Florida. The building has been listed for sale
and has been written down by $8,700,000 to reflect the estimated realizable
value, as determined by an independent third party.
(5) NOTES PAYABLE
At January 1, 1995 the corporation had outstanding notes payable which
represented short-term borrowings of international subsidiaries incurred for
working capital, bearing interest at rates between 14.4% and 27%, with
maturities in 1995.
(6) WHOLLY-OWNED CASUALTY REINSURANCE SUBSIDIARY
In April 1992, the corporation transferred its parental insurance business and
investment portfolio, after the sale of the non-parental insurance business, to
a new domestic subsidiary. The subsidiary reinsures a portion of the
corporation's workers' compensation and general and automobile liability
insurance.
Incurred losses are recorded as reported. Provision is made to cover losses
incurred but not reported. Loss reserves are computed based on actuarial studies
and, in the opinion of management, are adequate. Future adjustments of the
amounts recorded as of January 1, 1995, resulting from a continuous review
process as well as differences between estimates and ultimate payments, will be
reflected in the corporation's consolidated statements of income as such
adjustments become determinable.
A summary of operations for the last three fiscal years is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Premiums recognized $ 17,900 $ 16,282 $ 14,521
Loss expense (18,499) (20,863) (18,646)
---------------------------------------------
Underwriting loss (599) (4,581) (4,125)
Investment income 1,486 2,033 1,845
---------------------------------------------
$ 887 $ (2,548) $ (2,280)
- -----------------------------------------------------------------------------
</TABLE>
Premiums paid by the corporation to the reinsurance subsidiary of $17,900,000,
$16,282,000 and $14,464,000, for the fiscal years ended 1994, 1993 and 1992,
respectively, have been eliminated in consolidation.
Marketable securities and certificates of deposit, carried at quoted market
value, consisted of the following at January 1, 1995 and January 2, 1994:
<TABLE>
<CAPTION>
1994 1993
- ------------------------------------------------------------
<S> <C> <C>
Municipal Bonds $ 7,332 $ 17,927
Government Bonds 968 2,235
Preferred Stock 1,713 3,010
Other 1,482 1,671
----------------------------
Aggregate market value $ 11,495 $ 24,843
----------------------------
Aggregate cost $ 12,396 $ 24,605
- ------------------------------------------------------------
</TABLE>
The unrealized (loss) gain on marketable securities of ($901,000) and $238,000
at January 1, 1995 and January 2, 1994, respectively, have been reflected in the
accompanying financial statements net of applicable income taxes.
The corporation has placed in trust, in favor of certain insurance companies,
$1,345,292 in time deposits and has issued irrevocable standby letters of credit
for $37,597,000.
(7) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Senior notes payable- 10.2% $ -- $25,000
Revolving loan - 7.0% in 1994 and
4.2% in 1993 20,450 26,150
First mortgage note on headquarters
building - 7.1% in 1994 and 4.3%
in 1993 16,060 16,790
Mortgage notes on buildings of
international subsidiaries, varying
interest rates from 11.0% to 11.4%,
due in 2002 947 --
Secured credit lines and other debt,
principally of Australasian Correctional
Management Pty., Ltd., varying
interest rates from 5.9% to 8.0%,
due 1997 to 2009 1,412 --
Other 122 --
38,991 67,940
Less - Current portion of long-term debt -- 10,456
------------------------
$ 38,991 $ 57,484
- ---------------------------------------------------------------------------
</TABLE>
In August 1994, the corporation prepaid the remaining $12,500,000 of senior
notes to an insurance company with proceeds from WCC's initial public offering
(IPO) (see Note 11). In January 1994, the corporation used short-term borrowings
to prepay the first $12,500,000 of its senior notes. The prepayments resulted in
extraordinary charges of $887,000 ($1,344,000 before tax), or $.10 per share in
1994, and $1,444,444 ($2,348,000 before tax) or $.15 per share in 1993.
At year end, the corporation had in place a credit agreement with a bank, which
provided a $40,000,000 revolving line of credit facility. The unused portion of
the revolving line of credit was $7,943,000 at January 1, 1995 after deducting
$11,607,000 in outstanding letters of credit. On January 5, 1995, the
corporation entered into a new revolving credit agreement with two banks under
which the corporation may borrow up to $60,000,000. The interest payable is, at
the corporation's option, a function of the prime rate or the applicable LIBOR
or certificate of deposit rates. The agreement requires among other things the
corporation maintain a minimum consolidated net worth, as defined, and limits
certain payments and distributions.
In December 1994, WCC entered into a revolving credit agreement with a bank
under which the subsidiary may borrow up to $15,000,000 until September 30,
2002. The corporation is not a guarantor of the revolving credit agreement which
requires, among other things, that WCC maintain a minimum consolidated tangible
net worth, as defined, and limits certain payments and distributions.
In January 1995, the corporation prepaid the outstanding balance on the first
mortgage note with proceeds from borrowings from the accounts receivable
securitization (see Note 3).
- 32 -
<PAGE>
Aggregate annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Annual Maturity
- ----------------------------------------------
<S> <C>
1996 1,273
1997 14
1998 36,510
1999 --
2000 1,194
-------
$ 38,991
</TABLE>
Gains and losses on hedges of existing assets or liabilities are included in the
carrying amount of those assets or liabilities and are ultimately recognized in
income as part of those carrying amounts. Gains and losses on interest rate
swaps that do not qualify as hedges are recognized as an adjustment to interest
expense. The corporation has entered into interest rate swap agreements in order
to manage interest costs. Under the terms of the interest rate swaps, the
corporation agrees with counterparties to exchange at specific intervals, the
difference between fixed rate and floating rate interest amounts calculated in
reference to an agreed upon notional principal amount.
The corporation was a party to two offsetting interest rate swaps with Union
Bank of Switzerland and Bank of America Illinois at year end. The notional
principal amount under both agreements was $81,200,000 and the agreements expire
in December 1998. While the corporation is exposed to loss on the interest
differential in the event of nonperformance by the counterparties, no loss is
anticipated.
(8) PREFERRED AND COMMON STOCK
The board of directors has authorized 10,000,000 shares of preferred stock. In
October 1994, the board of directors declared a 25% stock dividend, effected in
the form of a stock split, payable on January 9, 1995 to stockholders of record
at the close of business on December 22, 1994. The stock dividend was paid in
series B common stock to holders of the corporation's series A and B shares.
Prior periods per share data have been restated. Series B common stock has all
the rights and privileges of the series A common stock with the exception of
voting privileges. In October 1992, the board of directors declared a 100% stock
dividend effected in the form of a stock split, through the issuance of one
share of series B common stock for each share of series A common stock.
(9) RETIREMENT AND DEFERRED COMPENSATION PLANS
The corporation has a noncontributory defined benefit pension plan covering
certain of its executives. Retirement benefits are based on years of service,
employees' average compensation for the last five years prior to retirement and
social security benefits. The plan currently is not funded. The corporation
purchases and is the beneficiary of life insurance policies for each participant
enrolled in the plan.
The assumptions for the discount rate and the average increase in compensation
used in determining the pension expense and funded status information are 8.5%
and 4.0%, respectively.
Total pension expense for 1994, 1993 and 1992 was $267,000, $236,000 and
$224,000, respectively. The present value of accumulated pension benefits at
year end 1994 and 1993 was $1,400,000 and $1,161,000, respectively and is
included in other liabilities in the accompanying consolidated balance sheets.
The corporation has established nonqualified deferred compensation agreements
with certain senior executives providing for fixed annual benefits ranging from
$100,000 to $175,000 payable in event of death or upon retirement at age 60 over
a period of 20 years. Benefits are funded by life insurance contracts purchased
by the corporation. The cost of these agreements is being charged to expense and
accrued using a present value method over the expected terms of employment. The
charge to expense for fiscal 1994, 1993 and 1992 was $444,000, $403,000 and
$394,000, respectively. The liability for deferred compensation was $2,629,000
and $2,260,000 at year-end 1994 and 1993, respectively and is included in other
liabilities in the accompanying consolidated balance sheets.
(10) INCOME TAXES
The corporation adopted SFAS No. 109 in 1992 and recognized the cumulative
benefit of the change in accounting principle of $7,370,000, which increased
earnings per share by $.76.
The provision (credit) for income taxes consists of the following:
<TABLE>
<CAPTION>
Fiscal year ended 1994 1993 1992
<S> <C> <C> <C>
Federal income taxes:
Current $ 3,014 $ 669 $ 3,851
Deferred (3,112) (385) (3,249)
---------------------------------------
(98) 284 602
State income taxes:
Current 527 252 882
Deferred (412) (51) (650)
---------------------------------------
115 201 232
---------------------------------------
Total $ 17 $ 485 $ 834
- ---------------------------------------------------------------
</TABLE>
Deferred income taxes resulted from timing differences in the recognition of
revenues and expenses for tax and financial reporting purposes. The tax effects
of the principal timing differences are as follows:
<TABLE>
<CAPTION>
Fiscal year ended 1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Senior note prepayment
premium $ 904 $ (904) $ --
Income of foreign subsidiaries
and affiliates 1,186 972 740
Reserve for losses of reinsurance
subsidiary (8) (462) (1,579)
Reserve for claims of employee
health trust (1,191) (148) (1,366)
Accrued expenses (326) (349) (909)
Building write-down (3,350) -- --
Allowance for doubtful accounts (15) 434 (582)
Deferred compensation (398) (268) (277)
Depreciation (486) 106 122
Amortization of deferred charges 205 173 86
Other, net (45) 10 (134)
-------------------------------------
$ (3,524) $(436) $(3,899)
- ------------------------------------------------------------------------------
</TABLE>
A reconciliation of the statutory U.S. federal and state income tax rates
(38.5%) and the effective income tax rate is as follows:
<TABLE>
<CAPTION>
Fiscal year ended 1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Provision using statutory
federal tax rate $ 1,021 $ 1,146 $ 540
Capital loss carryforward (use) (814) (228) 486
Targeted jobs tax credits (235) (109) (368)
Tax exempt interest (295) (321) (187)
Other, net, including 1993
RAR settlement 225 (204) 131
-----------------------------------
(98) 284 602
State income taxes 115 201 232
-----------------------------------
$ 17 $ 485 $ 834
- -----------------------------------------------------------------------------
</TABLE>
The tax effect of the extraordinary charge for the early extinguishment of debt
during fiscal 1994 and 1993 amounted to $457,000 and $904,000, respectively (see
Note 7).
- 33 -
<PAGE>
The components of the net non-current deferred tax asset at January 1, 1995 and
January 2, 1994 are shown below:
<TABLE>
<CAPTION>
Fiscal year ended 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Reserve for losses of casualty reinsurance
subsidiary $ 5,270 $ 5,262
Undistributed income of foreign
subsidiaries (5,614) (4,428)
Reserves for claims of employee
health trust 4,692 3,502
Reserves for legal and other expenses 899 --
Capital loss carryforward 150 2,632
Deferred compensation 2,660 2,240
Depreciation (363) (848)
Building write-down 3,350 --
Other, net 127 646
------------------------
11,171 9,006
Valuation allowance (150) (2,632)
------------------------
Deferred tax asset, net $ 11,021 $ 6,374
- ------------------------------------------------------------------------------
</TABLE>
The components of the net current deferred tax (liability) asset at January 1,
1995 and January 2, 1994 are as shown below:
<TABLE>
<CAPTION>
Fiscal year ended 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
Amortization of uniforms and accessories $ (1,818) $ (1,818)
Senior note prepayment premium -- 904
Accrued vacation pay 1,033 828
Allowance for doubtful accounts 189 175
-----------------------
Deferred tax (liability) asset, net $ (596) $ 89
- -----------------------------------------------------------------------------
</TABLE>
At January 1, 1995, the corporation had available a capital loss carryforward of
$391,000 which expires in 1998. The capital loss carryforward has been fully
reserved due to the uncertainty of the corporation's ability to generate future
capital gains. The change in the valuation allowance during 1994 and 1993 is due
to the utilization of the capital loss carryforwards.
(11) WACKENHUT CORRECTIONS CORPORATION INITIAL PUBLIC OFFERING
In July and September 1994, WCC, formerly a wholly-owned subsidiary of the
corporation, sold 2,185,000 shares of common stock at an offering price of $9.00
per share in connection with its IPO. WCC received net proceeds of approximately
$17,626,000 from the IPO which were used to repay bank debt and indebtedness to
the corporation. The corporation has reflected amounts received in excess of its
investment in WCC, less the approximate 27% minority interest, as an increase in
additional paid-in capital. Following the offering, WCC has 8,185,000 shares
outstanding of which the corporation owns 73%. Under two stock option plans, the
board of directors of WCC has granted non-qualified stock options to purchase up
to 797,863 shares of common stock which, if exercised, would reduce the
corporation's ownership in WCC to approximately 67%.
(12) WACKENHUT MONITORING SYSTEMS BUSINESS
In 1993, the corporation sold its Wackenhut Monitoring Systems subsidiary in
exchange for a $1,250,000 note and $100,000 cash which resulted in a loss of
approximately $95,000. In connection with this transaction, the corporation has
guaranteed indebtedness related to certain operating leases which totaled
approximately $1,819,929 at January 1, 1995 and expire from 1995 to 1997.
(13) NON-RECURRING CHARGES
In the fourth quarter of 1993, the corporation recognized non-recurring charges
of $1,726,000. A significant portion of these charges was due to a $791,000
decrease in the value of guard contracts acquired in 1991.
(14) COMMITMENTS AND CONTINGENCIES
During the first quarter of 1994, the corporation and its insurance carriers
settled a $6,000,000 judgment for $4,500,000. The corporation's insurance
carriers contributed funds for that settlement, but these carriers dispute their
legal obligation for the amounts paid. In the opinion of management, after
consultation with outside counsel, it is more likely than not that the judgment
will be covered by the corporation's insurance carriers. In a second case, a
former employee has obtained a $1.8 million judgment against the corporation
comprised almost entirely of punitive damages. The corporation is cautiously
optimistic that its appeal will result in the diminution of the punitive damages
awarded. Finally, in a case alleging tortious interference with contract and
other related torts, plaintiff claims multimillion dollar damages, which the
insurance carrier for the corporation has denied coverage. The corporation
denies these claims and intends to vigorously defend the action. While there can
be no absolute assurance that reserves provided by the corporation are adequate,
management has made its best estimate of the potential exposure in these
matters.
The nature of the corporation's business results in claims for damages arising
from the conduct of its employees or others. In the opinion of management, there
are no other pending legal proceedings that would have a material effect on the
consolidated financial statements of the corporation.
The corporation leases office space, data processing equipment and automobiles
under non-cancelable operating leases expiring between 1995 and 2004. Rent
expense for the fiscal years ended January 1, 1995, January 2, 1994 and January
3, 1993 was $4,993,000, $6,312,000 and $4,325,000, respectively. The minimum
commitments under these leases are as follows:
<TABLE>
<CAPTION>
Year Annual Maturity
- ---------------------------------------------
<S> <C>
1995 $ 3,737
1996 2,710
1997 1,482
1998 635
1999 279
Thereafter 501
----------
$ 9,344
- ------------------------------------------
</TABLE>
(15) STOCK INCENTIVE AND STOCK OPTION PLANS
Key employees of the corporation and its subsidiaries are eligible to
participate in the Key Employee Long-Term Incentive Stock Plan (incentive stock
plan). Under the incentive stock plan, options for the corporation's common
stock are granted to participants as approved by the Nominating and Compensation
Committee of the corporation's board of directors (committee).
Under terms of the incentive stock plan, options are granted at prices not less
than the fair market value at date of grant, or as otherwise determined by the
committee, become exercisable after a minimum of six months, and expire no later
than ten years after the date of grant. The committee may grant incentive stock
options or non-qualified stock options. Options are subject to adjustment upon
the occurrence of certain events, including stock splits and stock dividends.
- 34 -
<PAGE>
On April 30, 1994, the committee granted non-qualified stock options to purchase
323,750 shares of series B common stock at an exercise price of $7.70 per share,
as adjusted for the 25% stock dividend. The options are exercisable after May 1,
1995 and expire on April 30, 2004. All options were outstanding at January 1,
1995. On January 27, 1995, the committee granted additional non-qualified stock
options to purchase 175,000 shares of the corporation's series B common stock at
$13.50 per share.
(16) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for the corporation and its subsidiaries for
the fiscal years ended January 1, 1995 and January 2, 1994, is as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 174,537 $ 180,462 $ 196,031 $ 196,636
Income from operations (1) $ 3,203 $ 4,042 $ 3,863 $ 4,184
Income (loss) before extraordinary charge $ 1,820 $ 1,953 $ 1,982 $ (3,483)
Extraordinary charge -- early extinguishment
of debt, net of income taxes (1) -- -- $ (887) --
Net income (loss) $ 1,820 $ 1,953 $ 1,095 $ (3,483)
Earnings (loss) per share: (3)
Before extraordinary charge $ 0.19 $ 0.20 $ 0.21 $ (0.36)
Extraordinary charge -- -- $ (.10) --
Net income (loss) $ 0.19 $ 0.20 $ 0.11 $ (0.36)
- ------------------------------------------------------------------------------------------------------------------------------
1993
Revenues $ 162,112 $ 162,051 $ 165,111 $ 174,886
Income (loss) from operations (2) $ 3,081 $ 1,727 $ 2,669 $ (2,981)
Income (loss) before extraordinary charge $ 1,859 $ 1,348 $ 1,627 $ (1,225)
Extraordinary charge -- early extinguishment of
debt, net of income taxes (2) -- -- -- $ (1,444)
Net income (loss) $ 1,859 $ 1,348 $ 1,627 $ (2,669)
Earnings (loss) per share: (3)
Before extraordinary charge $ 0.19 $ 0.14 $ 0.17 $ (0.13)
Extraordinary charge -- -- -- (0.15)
Net income (loss) $ 0.19 $ 0.14 $ 0.17 $ (0.28)
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) IN THE FOURTH QUARTER OF 1994, THE CARRYING VALUE OF THE HEADQUARTERS
BUILDING WAS WRITTEN DOWN TO ITS ESTIMATED REALIZABLE VALUE AND A CHARGE OF
$8,700,000 WAS RECOGNIZED (SEE NOTE 4). ADDITIONALLY, AN EXTRAORDINARY
CHARGE OF $887,000 (AFTER TAX), OR $.10 PER SHARE, WAS RECOGNIZED IN THE
THIRD QUARTER OF 1994 FOR THE EARLY RETIREMENT OF SENIOR DEBT (SEE NOTE 7).
(2) IN THE FOURTH QUARTER OF 1993, THE CORPORATION RECOGNIZED UNUSUAL CHARGES
TO INCOME FROM OPERATIONS IN THE AMOUNT OF $1,726,000, OR $1,061,000 AFTER
TAX (SEE NOTE 12) AND AN EXTRAORDINARY CHARGE OF $1,444,000 (AFTER TAX), OR
$.15 PER SHARE, FOR THE EARLY RETIREMENT OF SENIOR DEBT (SEE NOTE 7). IN
ADDITION, THE INSURANCE LOSS RESERVES WERE INCREASED BY $3,600,000.
(3) EARNINGS PER SHARE HAVE BEEN RESTATED TO INCLUDE THE 25% STOCK DIVIDEND TO
BE EFFECTED IN THE FORM OF A STOCK SPLIT, DECLARED ON OCTOBER 29, 1994 AND
PAID ON JANUARY 9, 1995 (SEE NOTES 1 AND 8).
</TABLE>
- 35 -
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
The Wackenhut Corporation:
We have audited the accompanying consolidated balance sheets of The Wackenhut
Corporation (a Florida corporation) and subsidiaries as of January 1, 1995 and
January 2, 1994, and the related consolidated statements of income, cash flows
and shareholders' equity for each of the three fiscal years in the period ended
January 1, 1995. These financial statements are the responsibility of the
corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Wackenhut Corporation and
subsidiaries as of January 1, 1995 and January 2, 1994, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended January 1, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 17, 1995.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
To the Shareholders of
The Wackenhut Corporation:
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. They include amounts based on
judgments and estimates.
Representations in the financial statements and the fairness and integrity of
such statements are the responsibility of management. In order to meet
management's responsibility, the corporation maintains a system of internal
controls and procedures and a program of internal audits designed to provide
reasonable assurance that the corporation's assets are controlled and
safeguarded, that transactions are executed in accordance with management's
authorization and properly recorded, and that accounting records may be relied
upon in the preparation of financial statements.
The financial statements have been audited by Arthur Andersen LLP, independent
public accountants, whose appointment was ratified by shareholders. Their report
expresses a professional opinion as to whether management's financial statements
considered in their entirety present fairly, in conformity with generally
accepted accounting principles, the corporation's financial position and results
of operations. Their audit was conducted in accordance with generally accepted
auditing standards. As part of this audit, Arthur Andersen LLP considered the
corporation's system of internal controls to the degree they deemed necessary to
determine the nature, timing and extent of their audit tests which support their
opinion on the financial statements.
The audit committee of the board of directors meets periodically with
representatives of management, the independent public accountants and the
corporation's internal auditors to review matters relating to financial
reporting, internal accounting controls and auditing. Both the internal auditors
and the independent public accountants have unrestricted access to the audit
committee to discuss the results of their reviews.
/s/ George R. Wackenhut
- ---------------------------
George R. Wackenhut
Chairman of the Board
and Chief Executive Officer
/s/ Richard C. DeCook
- ---------------------------
Richard C. DeCook
Senior Vice President,
Chief Financial Officer
and Treasurer
Miami, Florida,
February 17, 1995.
- 36 -
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE CORPORATION
SUBSIDIARIES OF THE WACKENHUT CORPORATION
- -----------------------------------------
Wackenhut Services, Incorporated (Florida)
Wackenhut International, Incorporated (Florida)
Wackenhut Corrections Corporation (Florida)
Wackenhut Airline Services, Inc. (Florida)
Wackenhut Educational Services, Inc. (Florida)
Wackenhut Sports Security, Inc. (Florida)
American Guard and Alert, Inc. (Alaska)
Titania Insurance Company of America (Vermont)
Titania Advertising, Inc. (Florida)
Wackenhut of Nevada, Inc. (Nevada)
SUBSIDIARIES OF WACKENHUT INTERNATIONAL, INCORPORATED
-----------------------------------------------------
Wackenhut Puerto Rico, Inc. (Puerto Rico)
Wackenhut of Canada Limited (Canada)
Wackenhut Czech, SPOL, S.R.O. (Czech Republic)
Wackenhut Dominicana, S.A. (Dominican Republic)
Wackenhut Del Ecuador, S.A. (Ecuador)
Wackenhut De El Salvador, S.A. (El Salvador)
Wackenhut U K Limited (United Kingdom)
Wackenhut De Honduras, S.A. (Honduras)
Wackenhut S.A. (Costa Rica)
Wackenhut Paraguay, S. A. (Paraguay)
Wackenhut Belize Ltd. (Belize)
Wackenhut Bolivia, S. A. (Bolivia)
Wackenhut Ghana Limited (Ghana)
Wackenhut De Nicaragua, S. A. (Nicaragua)
Wackenhut Chile, S.A. (Chile)
Wackenhut Uruguay (Uruguay)
Wackenhut De Guatemala, S.A. (Guatemala)
Wackenhut Central Europe GMBH (Germany)
Wackenhut A/O (Russia)
Wackenhut Sierra Leone (Sierra Leone)
Wackenhut De Venezuela, S.A. (Venezuela)
Wackenhut Korea Corporation (Korea)
Wackenhut Gambia, LTD. (Gambia)
Wackenhut Seges (Ivory Coast)
Wackenhut International (PVT) (Pakistan)
Peruana De Seguridad Y Vigilancia, S.A. (PESEVISA) (Peru)
Seguridad Movil del Ecuador, S.A. (Ecuador)
WII / Sound and Security Engineering Co. (Jordan)
<PAGE>
SUBSIDIARIES OF WACKENHUT U K LIMITED
-------------------------------------
Wackenhut Investigations Limited (United Kingdom)
Wackenhut Appointments Limited (United Kingdom)
Advanced Security Technology, Ltd. (United Kingdom)
SUBSIDIARY OF AMERICAN GUARD AND ALERT
--------------------------------------
Ahtna AGA Security, Inc. (Alaska)
SUBSIDIARY OF WACKENHUT CORRECTIONS CORPORATION
-----------------------------------------------
Wackenhut Corrections Corporation Australia (Australia)
Wackenhut Corrections (U.K.), Limited (United Kingdom)
SUBSIDIARY OF WACKENHUT CORRECTIONS CORPORATION AUSTRALIA
---------------------------------------------------------
Australasian Correctional Management PTY, Limited
(Australia)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-START> JAN-03-1994
<PERIOD-END> JAN-01-1995
<EXCHANGE-RATE> 1
<CASH> 13,808
<SECURITIES> 11,495
<RECEIVABLES> 103,127
<ALLOWANCES> (1,056)
<INVENTORY> 7,179
<CURRENT-ASSETS> 137,645<F1>
<PP&E> 45,928
<DEPRECIATION> (15,102)
<TOTAL-ASSETS> 212,757
<CURRENT-LIABILITIES> 65,570
<BONDS> 38,991
<COMMON> 965
0
0
<OTHER-SE> 56,494
<TOTAL-LIABILITY-AND-EQUITY> 212,757<F2>
<SALES> 0
<TOTAL-REVENUES> 747,666
<CGS> 0
<TOTAL-COSTS> 732,374
<OTHER-EXPENSES> 8,700<F3>
<LOSS-PROVISION> 508
<INTEREST-EXPENSE> 3,590<F4>
<INCOME-PRETAX> 3,002
<INCOME-TAX> 17
<INCOME-CONTINUING> 2,272
<DISCONTINUED> 0
<EXTRAORDINARY> (887)<F6>
<CHANGES> 0
<NET-INCOME> 1,385<F5>
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES $16,233 OF OTHER CURRENT ASSETS
<F2>INCLUDES $38,450 RESERVE FOR LOSSES OF CASUALTY RESURANCE SUBSIDIARY,
$8,258 MINORITY INTEREST AND $4,029 OTHER LIABILITIES
<F3>WRITE DOWN OF HEADQUARTERS BUILDING
<F4>INTEREST EXPENSE OF $5,104 NET OF INTEREST AND INVESTMENT INCOME OF $1,514
<F5>INCLUDES MINORITY INTEREST AND EQUITY INCOME OF $999 AND $(286) RESPECTIVELY
<F6>EARLY EXTINGUISHMENT OF DEBT, NET OF TAXES
</FN>
</TABLE>
