<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1997
REGISTRATION NO. 333-
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AIRXCEL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3490 48-1071795
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
3050 NORTH SAINT FRANCES STREET
WICHITA, KANSAS 67219
TELEPHONE: (316) 832-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MELVIN L. ADAMS
3050 NORTH SAINT FRANCES STREET
WICHITA, KANSAS 67219
TELEPHONE: (316) 832-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
LANCE C. BALK
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4800
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1) Fee
- ----------------------------------------------------------------------------------------------------------
Airxcel, Inc.'s 11% Senior
Subordinated Notes due 2007......... $90,000,000 $1,000 $90,000,000 $26,550,000
==========================================================================================================
</TABLE>
* Not Applicable.
(1) Estimated solely for the purpose of calculating the registration fee.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1998
PROSPECTUS
AIRXCEL, INC.
[AIRXCEL, INC. LOGO]
OFFER TO EXCHANGE ITS SERIES B 11% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF ITS OUTSTANDING 11% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED.
Airxcel, Inc., a Delaware corporation ("Airxcel" or the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its Series B
11% Senior Subordinated Notes due 2007 (the "Exchange Notes"), which will have
been registered under the Securities Act of 1933, as amended (the "Securities
Act") pursuant to a Registration Statement of which this prospectus is a part,
for each $1,000 principal amount of its outstanding 11% Senior Subordinated
Notes due 2007 (the "Notes"), of which $90,000,000 principal amount is
outstanding. The form and terms of the Exchange Notes are the same as the form
and term of the Notes (which they replace) except that the Exchange Notes will
bear a Series B designation and will have been registered under the Securities
Act and, therefore, will not bear legends restricting their transfer and will
not contain certain provisions relating to an increase in the interest rate
which were included in the terms of the Notes in certain circumstances relating
to the timing of the Exchange Offer. The Exchange Notes will evidence the same
debt as the Notes (which they replace) and will be issued under and be entitled
to the benefits of the Indenture dated November 10, 1997 between Airxcel and
United States Trust Company of New York (the "Indenture") governing the Notes.
See "The Exchange Offer" and "Description of Exchange Notes."
Airxcel has not issued, and does not have any current firm arrangements to
issue, any significant indebtedness to which the Exchange Notes would rank
senior or pari passu in right of payment. The Exchange Notes will be
subordinated in right of payment to all Senior Indebtedness of Airxcel
(including debt under the Credit Facility (as defined)).
Airxcel will accept for exchange any and all Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless
extended by Airxcel in its sole discretion (the "Expiration Date").
Notwithstanding the foregoing, Airxcel will not extend the Expiration Date
beyond , 1998. Tenders of Notes may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. The Notes were sold by Airxcel on November 10, 1997 to the
Initial Purchasers (as defined) in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act. The
Initial Purchasers subsequently placed the Notes with qualified institutional
buyers in reliance upon Rule 144A under the Securities Act and with a limited
number of institutional accredited investors that agreed to comply with certain
transfer restrictions and other conditions. Accordingly, the Notes may not be
reoffered, resold or otherwise transferred in the United States unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The Exchange Notes
are being offered hereunder in order to satisfy the obligations of Airxcel under
the Exchange and Registration Rights Agreement entered into by Airxcel in
connection with the offering of the Notes. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, Airxcel believes the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is an "affiliate" of Airxcel within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes. See "The Exchange Offer -- Purpose and Effect of the Exchange
Offer" and "The Exchange Offer -- Resales of the Exchange Notes." Each
broker-dealer (a "Participating Broker-Dealer") that receives Exchange Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Notes where such Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities. Airxcel has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
Holders of Notes not tendered and accepted in the Exchange Offer will continue
to hold such Notes and will be entitled to all the rights and benefits and will
be subject to the limitations applicable thereto under the Indenture and with
respect to transfer under the Securities Act. Airxcel will pay all the expenses
incurred by it incident to the Exchange Offer. See "The Exchange Offer."
- --------------------------------------------------------------------------------
SEE "RISK FACTORS" ON PAGE 15 FOR A DESCRIPTION OF CERTAIN RISKS TO BE
CONSIDERED BY HOLDERS WHO TENDER THEIR NOTES IN THE EXCHANGE OFFER.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
There has not previously been any public market for the Notes or the
Exchange Notes. Airxcel does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market
Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent
that Notes are tendered and accepted in the Exchange Offer, the trading market
for untendered and tendered but unaccepted Notes could be adversely affected.
The Exchange Notes will be available initially only in book-entry form.
Airxcel expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Certificate (as defined), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depositary")
and registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Certificate representing the Exchange Notes will be
shown on, and transfers thereof to qualified institutional buyers will be
effected through, records maintained by the Depositary and its participants.
After the initial issuance of the Global Certificate, Exchange Notes in
certified form will be issued in exchange for the Global Certificate only on the
terms set forth in the Indenture. See "Description of Exchange
Notes -- Book-Entry; Delivery and Form."
AVAILABLE INFORMATION
Airxcel has filed with the Commission a Registration Statement on Form S-4
(the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to Airxcel and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Regional Offices of the commission at 75 Park
Place, New York, New York 10007 and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Additionally, the
Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission, including the Company.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, Airxcel will become subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will be required to file periodic reports and other
information with the Commission. The obligation of Airxcel to file periodic
reports and other information with the Commission will be suspended if the
Exchange Notes are held of record by fewer than 300 holders as of the beginning
of any fiscal year of Airxcel other than the fiscal year in which the Exchange
Offer Registration Statement is declared effective. Airxcel will nevertheless be
required to continue to file reports with the Commission if the Exchange Notes
are listed on a national securities exchange. In the event Airxcel ceases to be
subject to the informational requirements of the Exchange Act, Airxcel will be
required under the Indenture to continue to file with the Commission the annual
and quarterly reports, information, documents or other reports, including,
without limitation, reports on Forms 10-K, 10-Q and 8-K, which would be required
pursuant to the informational requirements of the Exchange Act. Under the
Indenture, Airxcel shall
i
<PAGE> 4
file with the Trustee annual, quarterly and other reports within fifteen days
after it files such reports with the Commission. Further, to the extent that
annual, quarterly or other financial reports are furnished by Airxcel to
stockholders generally it will mail such reports to holders of Exchange Notes.
Airxcel will furnish annual and quarterly financial reports to stockholders of
Airxcel and will mail such reports to holders of Exchange Notes pursuant to the
Indenture, thus holders of Exchange Notes will receive financial reports every
quarter. Annual reports delivered to the Trustee and the holders of Exchange
Notes will contain financial information that has been examined and reported
upon, with an opinion expressed by an independent public or certified public
accountant. Airxcel will also furnish such other reports as may be required by
law.
FORWARD LOOKING STATEMENTS
THE PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO FORMA
FINANCIAL INFORMATION," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." ALL OF THESE FORWARD
LOOKING STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY THE MANAGEMENT
OF THE COMPANY WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY
UNCERTAIN. THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES
AND STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES WILL BE
REALIZED AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH
DIFFERENCES INCLUDE: (1) INCREASED COMPETITION; (2) INCREASED COSTS; (3) LOSS OR
RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (4) INCREASES IN THE COMPANY'S COST OF
BORROWING OR INABILITY OR UNAVAILABILITY OF ADDITIONAL DEBT OR EQUITY CAPITAL;
(5) ADVERSE STATE OR FEDERAL LEGISLATION OR REGULATION OR ADVERSE DETERMINATIONS
IN PENDING LITIGATION; AND (6) CHANGES IN GENERAL ECONOMIC CONDITIONS AND/OR IN
THE MARKETS IN WHICH THE COMPANY MAY, FROM TIME TO TIME, COMPETE. MANY OF SUCH
FACTORS ARE BEYOND THE CONTROL OF THE COMPANY AND ITS MANAGEMENT. FOR FURTHER,
INFORMATION OR OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF THE
COMPANY AND SUCH FORWARD LOOKING STATEMENTS, SEE "RISK FACTORS."
ii
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes included elsewhere in this Prospectus. Holders of Notes are urged
to read this Prospectus in its entirety. Unless the context otherwise requires,
references in this Prospectus to "Airxcel" refer to Airxcel, Inc., references to
"RVP" refer to Recreation Vehicle Products, a division of Airxcel, references to
"Crispaire" refer to Crispaire Corporation, and references to the "Company"
refers to Airxcel after giving effect to the Transactions (as defined). As used
in this Prospectus, the term "pro forma" reflects the Transactions. References
in this Prospectus to "fiscal year" refer, as applicable, to a December 31
fiscal year-end for Airxcel and an October 31 fiscal year-end for Crispaire.
THE COMPANY
OVERVIEW
The Company is a leading designer, manufacturer and marketer of recreation
vehicle ("RV") air conditioners and specialty wall mount air conditioners,
environmental control units ("ECUs") and heat pumps for various applications.
The combination of RVP and Crispaire is the first step in the Company's strategy
to establish itself as the leading designer, manufacturer and marketer of
specialty heating, air conditioning and water heating products. The Company
believes that it is well positioned to effectively pursue this strategy with
leading positions in each of its principal markets and a range of products
serving separate customer bases. The combination of RVP's low cost, high volume
manufacturing expertise with Crispaire's ability to provide customized products
will allow the Company to capitalize on the growing opportunities presented in
each of its markets. The Company's pro forma net sales and Adjusted EBITDA were
approximately $93.5 million and $15.8 million in fiscal 1996 and $93.4 million
and $16.0 million in the twelve months ended September 30, 1997, respectively.
RVP supplies a variety of air conditioners to several of the world's
largest RV original equipment manufacturers ("OEMs"), marketing these products
under the popular and well-established "Coleman" brand name. RVP believes that
its air conditioners are superior to those of its competitors due to greater air
flow capacity, cooling efficiency and more aerodynamic design. RVP's reputation
as a dependable source of high-quality, durable products has resulted in its
long-term relationships with leading RV manufacturers such as Fleetwood,
Winnebago, Gulf Stream and Jayco, who have relied on RVP for substantially all
of their RV air conditioner needs for each of the past six years. Sales to such
OEMs provide RVP with a large installed base of products which generates a
significant recurring stream of revenue through sales of parts and replacement
units in the aftermarket. Aftermarket sales to customers such as RV dealers,
supply and service centers are achieved primarily through an agreement with
Coast Distribution System ("Coast"), the largest wholesale distributor of
aftermarket products in the RV industry. RVP believes that Coast's extensive
market penetration and large sales force provide broad aftermarket coverage and
distribution capabilities which enhance its substantial aftermarket business. In
fiscal 1996, as a percentage of Airxcel's net sales, OEM sales represented
66.3%, and aftermarket sales represented 33.7%. In addition to serving the RV
industry, RVP designs, manufactures and markets air conditioners for marine
applications, the cooling and heating of elevators, petroleum "logging" trucks
and for a wide variety of small-space cooling applications.
Crispaire is a leading designer, manufacturer and marketer of specialty
wall mount air conditioners, ECUs and heat pumps for various applications.
Crispaire's customers are principally telecommunications companies,
manufacturers of telecommunication shelters in the cellular, cable, wireless,
satellite and personal communication services ("PCS") markets, wholesale
distributors for foreign telecommunications sales, school districts and
construction companies. The Company believes that Crispaire is the largest
provider of environmental control equipment for the U.S.
1
<PAGE> 6
telecommunication shelter market, through sales to both telecommunications
companies and manufacturers of telecommunication shelters. The Company believes
that it is positioned to benefit from growth in cellular, wireless and PCS
telecommunications markets and the resulting demand for telecommunication
shelters. The Company believes that Crispaire's focus on customer service and
quality control and its strong reputation for its ability to offer a broad and
innovative line of products in a timely manner has attracted significant
customers, including MCI, Motorola, AT&T Wireless, Lucent Technologies and other
wireless communication providers. The Company also believes that it will benefit
from an increasing need for cooling units in the nation's schools due to new
state regulations and certain building codes that mandate fresh air
requirements, the rebuilding of school system infrastructures and the steadily
growing student population. Crispaire supplies wall mount air conditioners to
multiple school districts throughout the country, including the Los Angeles
Unified School District. Crispaire has a leading position in each of its
principal markets, through solid relationships with its customers who generally
require tailored products and a high level of customer service. Crispaire's
ability to customize products without interruption of its larger production
lines allows it to work closely with customers to develop and produce equipment
that meets their specific needs quickly and efficiently. In fiscal 1996, sales
to the telecommunication shelter industry and school industry represented 61%
and 23%, of Crispaire's total net sales, respectively.
The combination of RVP and Crispaire creates a diversified specialty air
conditioning company with entrenched, leading market share in two of the largest
markets they serve: 55% of the RV air conditioning market in 1996 and an
estimated 65% of the telecommunication shelter market in 1996. By combining the
major supply purchasing contracts, it is anticipated that at least a 1% or
$700,000 savings in the annual purchases of raw materials and components of the
combined Company would be achieved. Management believes that the Company will
benefit from RVP's low variable cost structure and its cost controlling culture,
and that the Company will be able to streamline Crispaire's operations to
achieve additional cost savings and manufacturing efficiencies. Additionally,
management believes that the Company will be able to leverage off of Crispaire's
proven success in identifying new, emerging markets and customizing its products
to suit the needs of its customers.
INDUSTRY OVERVIEW
RV Industry
In 1996, the North American RV market was approximately $6.3 billion. The
RV market is broadly classified as "motorhomes" and "towables." Motorhomes are
self-propelled and grouped in three main classes: A, B and C. Class A motorhomes
typically have two air conditioners, and Class B and C motorhomes have a minimum
of one air conditioner. Towables typically have a minimum of one standard air
conditioner, with larger towables requiring two and air conditioners being
optional for campers. According to a University of Michigan study sponsored by
RVIA (as defined), approximately 8.2 million households owned RVs in 1993, an
increase from 5.8 million in 1980. In general, RV ownership has grown by an
average of 100,000 units per year over the last 17 years, and management
currently estimates that one out of every eleven households in the U.S. owns an
RV.
The consistent growth in the RV industry is attributable to the general
maturing of the industry and several key factors, including (i) the overall
increasing number of RV owners, (ii) the growth in the number of potential
consumers, as baby boomers begin entering the typical demographic profile for
premium RV owners, (iii) the changing lifestyle of the U.S. population on
average, which is aging and devoting more time to recreational activities, (iv)
an increase in population in states such as California, Florida and Texas, where
RVs are common, (v) a favorable economic environment, and (vi) the availability
of gasoline.
2
<PAGE> 7
HVAC Industry
According to the Air Conditioning and Refrigeration Institute, the
worldwide air conditioning market is currently estimated at $40 to $45 billion
and is expected to grow to $50 billion by 2005. In 1995, the U.S. HVAC market
was estimated to be $19.2 billion and is forecasted to grow by approximately
6.8% to reach approximately $20.5 billion by 2000. The Company's principal niche
markets within the larger HVAC market, telecommunication shelters and schools,
are forecasted to experience significant growth.
The telecommunications industry has experienced rapid growth over the last
several years due to deregulation and growth in wireless communication. The
number of telecommunication sites constructed has increased from 2,305 in 1987
to 30,045 in 1996. It is estimated that the number of subscribers for wireless
communication is approximately 58.3 million and is expected to grow to 160.6
million by 2007. Growth is expected to result in an increased demand for
telecommunication shelters and cabinets as new wireless networks are constructed
and old networks are overlaid with digital technology. According to the Cellular
Telecommunications Industry Association, revenues in the cellular market have
grown by over 20% per year, exceeding $23 billion in 1996. In addition to the
domestic market, future growth is also anticipated in international markets such
as Latin America, Europe, Asia and Canada, where land lines are limited and a
greater demand for wireless communications systems is expected. Suppliers of
wireless communications equipment should continue to benefit from the expected
acceleration in the deployment of wireless networks.
Beginning in the 1970's, many schools, primarily in the Sunbelt region of
the U.S., began adding air conditioners to their facilities. Currently, a
significant number of states have passed regulations and have building codes
that require a certain amount of fresh air in classrooms. Today, one-third of
the nation's schools, serving more than 14 million students, needs extensive
repair and renovation with air cooling and air conditioning being some of the
major systems needing overhaul. According to the U.S. General Accounting Office
for School Facilities, 20,104 public elementary schools nationwide are in need
of HVAC repair with an estimated cost of $3 billion. By the year 2005, U.S.
student enrollment in elementary and secondary schools is expected to increase
significantly, requiring an additional 6,000 schools. The public elementary
school HVAC new construction market is estimated to be $314 million annually
through the year 2005.
COMPETITIVE ADVANTAGES
The Company attributes its success and its continued opportunities for
growth and profitability to the following competitive advantages:
Leading Market Position in Principal Niche Markets. RVP has over a 55%
market share of the total North American RV air conditioning market and
Crispaire is the largest provider of environmental control equipment for the
U.S. telecommunications market, through sales to both telecommunications
companies and manufacturers of telecommunication shelters. The Company believes
that these market shares enable it to maintain significant competitive
advantages in serving its customers, including manufacturing efficiencies and
greater product development and marketing resources. Success in such markets has
historically been driven by areas in which the Company believes it compares
favorably with its competitors such as strong customer relationships, industry
expertise, product quality and speed and reliability of service.
Existing Long-Term Customer Relationships. The Company has long-term
relationships with most of its customers, including several of the largest OEMs,
major telecommunications companies and equipment manufacturers and school
districts. RVP has supplied leading OEMs such as Fleetwood, Winnebago, Gulf
Stream and Jayco substantially all of their air conditioner needs for each of
the past six years. The Company believes that such customer loyalty coupled with
RVP's focused product line and reputation for meeting high volume production
demands have led to its success in the seasonal RV air conditioning industry and
provide a significant advantage over competitors. Crispaire has worked closely
with its telecommunications customers such as MCI,
3
<PAGE> 8
Motorola, AT&T Wireless and Lucent Technologies, in some cases for as long as 15
years, to develop equipment to meet such customers' specialized requirements. To
support such equipment, Crispaire has an extensive network of service dealers
across the U.S. The recent proliferation of shelters for telecommunications
equipment and the importance of protecting such equipment through the use of
cooling units and ECUs has generated an increasing demand for Crispaire's
customized products and has strengthened such relationships. In addition,
Crispaire has worked with multiple school districts throughout the country, such
as the Los Angeles Unified School District, for as long as seven years, to
develop products which are designed to meet the unique heating and cooling needs
of the classroom such as achieving certain industry ventilation standards and
addressing other concerns such as architectural design and ease of servicing
considerations. The Company believes that customization provides a high level of
customer satisfaction and will foster the continued development of significant
customer relationships.
Strong Brand Name Recognition. RVP markets its products using the well
established and recognized "Coleman" brand name. The "Coleman" brand name,
established in the early part of the twentieth century, is well recognized as a
leading brand name for a variety of products related to the outdoor recreation
industry. Coleman brand air conditioners have been the leading RV air
conditioners since they were introduced into the market and are recognized by
customers to represent high quality and reliability. Crispaire, with leading
positions in most of its niche markets, benefits from strong brand name
recognition of its "Marvair" name in the telecommunication shelter market and
its "Scholar" name in the school market.
High Quality Products and Superior Customer Service and Product Design
Capabilities. The Company is recognized as a leader in the industries its
serves due to its high product quality and superior customer service. The
Company believes that its efficient manufacturing and assembly processes enable
it to offer competitively priced products while maintaining high product
quality. Because of the seasonal nature of the RV industry, timely delivery of
products to OEMs and aftermarket customers has played a critical role in RVP's
long-standing success. Similarly, Crispaire has developed a strong reputation
with its customers for its ability to develop unique solutions to customers'
environmental control needs, respond to short lead times and to deliver its
products in a timely manner. Unlike most of its competitors, Crispaire separates
its volume manufacturing from specialty manufacturing with a second plant that
is ideally suited for customization. Crispaire pursues a three-tiered product
approach, producing i) standard products, ii) "fast track" products which
involve a small amount of customization and iii) highly customized products that
are tailored to individual specifications. Crispaire is able to customize
products to the specifications of a given customer without interrupting its
larger production lines. The Company will seek to maintain its reputation for
high quality, reliable products, superior customer service and product design
capabilities which should assist in its efforts to further penetrate markets for
existing products and improve its market position.
Extensive Distribution Network and Experienced Sales Force. RVP's sales
force includes some of the most experienced sales people in the industry who are
located in close proximity to and actively work with many of the largest OEMs
regarding product design issues and estimated future orders. In addition, RVP
provides Coast, the largest wholesale distributor of replacement parts, supplies
and RV accessories, serving more than 15,000 customers throughout the U.S. and
Canada, with 100% of its RV air conditioning products. RVP believes that Coast
provides broad aftermarket coverage and distribution capabilities. Crispaire's
sales effort is organized by industry segments with representatives of its sales
force covering the U.S. telecommunications, school, and construction industries
and international sales. In addition, independent sales agents actively market
Crispaire's products, particularly to school districts, in which sales agents
have developed relationships. Crispaire sells and distributes its products in
the U.S. through a variety of channels, including wholesale distributors,
factory direct dealers, non-stocking representatives, as well as direct to
manufacturers and to end users and in the international market through
distributors.
4
<PAGE> 9
Recurring Revenues from Installed Base. RVP's sales to OEMs have provided
a large installed base of RV air conditioning equipment that generates a
significant recurring stream of revenue through sales of parts and replacement
units in the aftermarket. Such aftermarket sales consist primarily of sales of
replacement parts and new units through RV dealers and supply and service
centers. RV air conditioner units are typically replaced every five to seven
years, which is the expected life of the unit's compressor. Because the cost to
replace the unit is only slightly higher than the cost to repair the compressor,
most owners opt to purchase new units from the original supplier. With the
largest market share in the industry, RVP is well positioned to continue to
recognize revenue from aftermarket sales. In fiscal 1996, aftermarket sales
represented 33.7% of Airxcel's total net sales. Similarly, the Company expects
to generate revenue through the sales of replacement parts and units to
customers of Crispaire. The Company believes that when its customers repair or
replace such equipment, they tend to remain with the original manufacturer who
has the technical expertise to provide compatible and reliable replacement
parts, products and related services.
Experienced Management. The Company's management has over 287 years of
combined experience in the RV air conditioning, specialty HVAC and water heating
industries. Management believes that it has the depth, experience and motivation
to manage the Company's internal and external growth. On a pro forma basis, in
the aggregate, management would own approximately 44.2% of the capital stock of
Holdings on a fully-diluted basis, of which 16% will vest upon the achievement
of certain performance thresholds.
BUSINESS STRATEGY
The key elements of the Company's business strategy to maintain its
leadership position are to:
Capitalize on Anticipated Industry Growth. With leading positions in its
principal markets, the Company believes that it is well positioned to capitalize
on the anticipated growth in such markets. The Company anticipates that over the
next ten years, baby boomers will begin entering the typical demographic profile
for RV owners, including age, income, family status and location of home.
Because RVP serves several of the largest and best positioned OEMs which
collectively serve over 55% of the RV market, the Company believes that this
anticipated growth will present significant revenue generating opportunities.
The Company also anticipates that the number of telecommunication shelters in
North America will grow in tandem with the telecommunications industry at an
annual rate of 20% for the next five years. Additionally, the international
cellular market, especially in Latin America, is expected to grow at a high rate
due to limited land lines and a strong demand for wireless telecommunications.
The Company expects to retain its leading position in the telecommunications
industry and benefit from its growth by focusing on new product development and
applications to meet such industry's future needs. In addition, the Company
views the school market as a growth market due to several factors, including (i)
the number of new state regulations and certain building codes that mandate
fresh air requirements in classrooms, (ii) the increasing number of students and
required number of new schools and (iii) the number of mandated restorations of
existing school system infrastructures. Based on an analysis prepared by the
U.S. General Accounting Office for School Facilities and the Department of
Education, the replacement HVAC school market is $3 billion and the annual new
construction HVAC market is $314 million.
Generate Growth Through New Product Development. The Company intends to
continue to emphasize new product development in order to provide
technologically advanced products to its customers and reinforce its market
leadership. In its principal market, RVP works closely with OEMs to design new
types of air conditioners to meet OEM specifications. Crispaire consults closely
with key individuals in the telecommunications industry to develop new product
offerings for customers that are tailored to their particular needs, including
the development of monitoring systems designed to signal the operator when
equipment is in need of repair or when temperature varies from safety
parameters. The Company intends to continue developing new product applications
for use in various markets such as the school, hotel, and elevator markets.
5
<PAGE> 10
Pursue Growth Through Acquisition. In addition to the growth the Company
expects to come from the development of new, differentiated products and product
lines and expanding sales of existing products and product lines, the Company
intends to actively evaluate acquisition candidates. Future strategic
acquisitions may be undertaken to broaden the Company's product lines, expand
its manufacturing capacity, and strengthen its presence within the various
channels of distribution.
The Company is a Delaware corporation. Holdings is a Delaware corporation
whose sole asset is the capital stock of the Company. The Company's principal
executive offices are located at 3050 North Saint Frances Street, Wichita,
Kansas 67219, and its telephone number is (316) 832-3400.
THE TRANSACTIONS
On November 10, 1997 the Company completed the offering of the Notes (the
"Offering") and the acquisition of Crispaire (the "Acquisition") whereby, among
other things, the management of Crispaire made a cash equity investment in
Holdings, and Holdings contributed the cash equity investment and PIK Notes to
Airxcel. The Offering, the Acquisition and the Contributions (as defined) are
collectively referred to herein as the "Transactions." See "The Transactions."
THE OFFERING
Notes..................
The Notes were sold by the Company on November 10, 1997 to
Chase Securities Inc. and NationsBanc Montgomery
Securities, Inc. (the "Initial Purchasers") pursuant to a
Purchase Agreement dated November 5, 1997 (the "Purchase
Agreement"). The Initial Purchasers subsequently resold
the Notes to qualified institutional buyers pursuant to
Rule 144A under the Securities Act and to a limited number
of institutional accredited investors that agreed to
comply with certain transfer restrictions and other
conditions.
Exchange and
Registration Rights
Agreement............
Pursuant to the Purchase Agreement, the Company and the
Initial Purchasers entered into an Exchange and
Registration Rights Agreement dated November 10, 1997,
which grants the holder of the Notes certain exchange and
registration rights. The Exchange Offer is intended to
satisfy such exchange rights which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered.....
$90,000,000 aggregate principal amount of Series B 11%
Senior Subordinated Notes due 2007 (the "Exchange Notes").
The Exchange Offer.....
$1,000 principal amount of the Exchange Notes in exchange
for each $1,000 principal amount of Notes. As of the date
hereof, $90,000,000 aggregate principal amount of Notes
are outstanding. The Company will issue the Exchange Notes
to holders on or promptly after the Expiration Date.
Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties,
the Company believes that Exchange Notes issued pursuant
to the Exchange Offer in exchange for Notes may be offered
for resale, resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company
6
<PAGE> 11
within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that
such Exchange Notes are acquired in the ordinary course of
such holder's business and that such holder does not
intend to participate and has no arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes.
Each Participating Broker-Dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection
with resales of Exchange Notes received in exchange for
Notes where such Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for
a period of 180 days after the Expiration Date, it will
make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale.
See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the Exchange Notes
could not rely on the position of the staff of the
Commission enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
Failure to comply with such requirements in such instance
may result in such holder incurring liability under the
Securities Act for which the holder is not indemnified by
the Company.
Expiration Date...... 5:00 p.m., New York City time, on , 1998 unless
the Exchange Offer is extended, in which case the term
"Expiration Date" means the latest date and time to which
the Exchange Offer is extended.
Accrued Interest on
the Exchange Notes
and the Notes....... Each Exchange Note will bear interest from its issuance
date. Holders of Notes that are accepted for exchange will
receive, in cash, accrued interest thereon to, but not
including, the issuance date of the Exchange Notes. Such
interest will be paid with the first interest payment on
the Exchange Notes. Interest on the Notes accepted for
exchange will cease to accrue upon issuance of the
Exchange Notes.
Conditions to the
Exchange Offer..... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See "The
Exchange Offer -- Conditions."
Procedures for
Tendering Notes.... Each holder of Notes wishing to accept the Exchange Offer
must complete, sign and date the accompanying Letter of
Transmittal, or a facsimile thereof, in accordance with
the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with the Notes and any other required
documentation to the Exchange Agent (as defined) at the
address set forth herein. By execut-
7
<PAGE> 12
ing the Letter of Transmittal, each holder will represent
to the Company that, among other things, the Exchange
Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person
is the holder, that neither the holder nor any such other
person has any arrangement or understanding with any
person to participate in the distribution of such Exchange
Notes and that neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer" and
"-- Procedures for Tendering."
Untendered Notes.......
Following the consummation of the Exchange Offer, holders
of Notes eligible to participate but who do not tender
their Notes will not have any further exchange rights and
such Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of
the market for such Notes could be adversely affected.
Consequences of Failure
to Exchange..........
The Notes that are not exchanged pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such
Notes may be resold only (i) to the Company, (ii) pursuant
to Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the Securities Act,
(iii) outside the United States to a foreign person
pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act. See "The
Exchange Offer -- Consequences of Failure to Exchange."
Shelf Registration
Statement............
If any holder of the Notes (other than any such holder
which is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) is not eligible
under applicable securities laws to participate in the
Exchange Offer, and such holder has provided information
regarding such holder and the distribution of such
holder's Notes to the Company for use therein, the Company
has agreed to register the Notes on a shelf registration
statement (the "Shelf Registration Statement") and use its
best efforts to cause it to be declared effective by the
Commission as promptly as practical on or after the
consummation of the Exchange Offer. The Company has agreed
to maintain the effectiveness of the Shelf Registration
Statement for, under certain circumstances, a maximum of
three years, to cover resales of the Notes held by any
such holders.
Special Procedures for
Beneficial Owners....
Any beneficial owner whose Notes are registered in the
name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender should contact
such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and delivering its
Notes, either make appropriate arrangements to register
ownership of the Notes in such owner's name or obtain a
properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable
time. The Company will
8
<PAGE> 13
keep the Exchange Offer open for not less than twenty days
in order to provide for the transfer of registered
ownership.
Guaranteed Delivery
Procedures...........
Holders of Notes who wish to tender their Notes and whose
Notes are not immediately available or who cannot deliver
their Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date must
tender their Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures."
Withdrawal Rights......
Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
Acceptance of Notes and
Delivery of Exchange
Notes................
The Company will accept for exchange any and all Notes
which are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer will
be delivered promptly following the Expiration Date. See
"The Exchange Offer -- Terms of the Exchange Offer."
Use of Proceeds........
There will be no cash proceeds to the Company from the
exchange pursuant to the Exchange Offer.
Exchange Agent.........
United States Trust Company of New York
THE EXCHANGE NOTES
General................
The form and terms of the Exchange Notes are the same as
the form and terms of the Notes (which they replace)
except that (i) the Exchange Notes bear a Series B
designation, (ii) the Exchange Notes have been registered
under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and (iii) the
holders of Exchange Notes will not be entitled to certain
rights under the Exchange and Registration Rights
Agreement, including the provisions providing for an
increase in the interest rate on the Notes in certain
circumstances relating to the timing of the Exchange
Offer, which rights will terminate when the Exchange Offer
is consummated. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer." The Exchange Notes will
evidence the same debt as the Notes and will be entitled
to the benefits of the Indenture. See "Description of
Exchange Notes." The Notes and the Exchange Notes are
referred to herein collectively as the "Senior
Subordinated Notes."
Securities Offered.....
$90,000,000 aggregate principal amount of Series B 11%
Senior Subordinated Notes due 2007 of the Company.
Maturity Date..........
November 15, 2007.
Interest Payment
Dates................
May 15 and November 15, commencing May 15, 1998.
Optional Redemption....
Except as described below, the Company may not redeem the
Exchange Notes prior to November 15, 2002. On or after
such date, the Company may redeem the Exchange Notes, in
whole or in part, at the redemption
9
<PAGE> 14
prices set forth herein, together with accrued and unpaid
interest to the redemption date. In addition, at any time
and from time to time on or prior to November 15, 2000,
the Company may redeem up to 35% of the original aggregate
principal amount of the Exchange Notes with the cash
proceeds of one or more Public Equity Offerings (as
defined) by the Company or Holdings, at a redemption price
equal to 111% of the principal amount to be redeemed,
together with accrued and unpaid interest, if any, to the
date of redemption provided that at least $60 million of
the Exchange Notes remains outstanding immediately after
each such redemption. See "Description of Exchange
Notes -- Optional Redemption."
Change of Control......
Upon the occurrence of a Change of Control (as defined),
each holder will have the right to require the Company to
make an offer to repurchase all or any portion of such
holder's Exchange Notes at a price equal to 101% of the
principal amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. See
"Description of Exchange Notes -- Offer to Purchase Upon
Change of Control." The Credit Facility prohibits the
repurchase of outstanding Exchange Notes prior to
repayment of the borrowings under the Credit Facility.
There can be no assurance that upon a Change of Control
the Company will have sufficient funds to repurchase any
of the Exchange Notes. See "Description of the Revolving
Credit Facility."
Ranking................
The Exchange Notes will constitute unsecured debt
obligations of the Company and will rank subordinate in
right of payment to all existing and future Senior
Indebtedness (as defined) including any Indebtedness under
the Credit Facility. At September 30, 1997, after giving
pro forma effect to the Transactions, there would have
been no indebtedness or other liabilities to which the
Notes would have been subordinated. In addition, the
Company could have borrowed up to approximately $15
million under the terms of the Credit Facility, all of
which would have constituted Senior Indebtedness. See
"Description of the Revolving Credit Facility."
Restrictive
Covenants..............
The Indenture under which the Exchange Notes will be
issued limits (i) the incurrence of additional
Indebtedness by the Company and its Restricted
Subsidiaries (as defined); (ii) the payment of dividends
on , and redemption of, capital stock of the Company and
its Restricted Subsidiaries; (iii) certain other
Restricted Payments, including without limitation,
Investments; (iv) sales of assets and Restricted
Subsidiary stock; (v) certain transactions with
Affiliates; (vi) the sale or issuance of capital stock of
its Restricted Subsidiaries; (vii) the creation of Liens;
(viii) the lines of business in which the Company and its
Restricted Subsidiaries may operation; (ix)
consolidations, mergers and transfers of all or
substantially all of the Company's assets; and (x) sale
and leaseback transactions. The Indenture also prohibits
certain restrictions on distributions from Restricted
Subsidiaries. However, all of these limitations and
prohibitions are subject to a number of important
qualifications and exemptions. See "Description of
Exchange Notes -- Certain Covenants" and "-- Sale of
Assets, etc."
For additional information regarding the Exchange Notes, see "Description of
Exchange Notes."
10
<PAGE> 15
RISK FACTORS
Holders of the Notes should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" as well as the other information and data included
in this Prospectus prior to tendering their Notes in the Exchange Offer.
11
<PAGE> 16
SUMMARY UNAUDITED PRO FORMA FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
The following table sets forth summary unaudited pro forma financial and
other data of the Company for the fiscal year ended December 31, 1996 and the
nine-month and twelve-month periods ended September 30, 1997. The summary
unaudited pro forma statement of operations data gives effect to the
Transactions as if they occurred on January 1, 1996. The summary unaudited pro
forma balance sheet data gives effect to the Transactions as if they occurred on
September 30, 1997. The pro forma financial and other data for the year ended
December 31, 1996, and as of and for the nine-month and twelve-month periods
ended September 30, 1997, were derived from the "Unaudited Pro Forma Financial
Information" included elsewhere herein. The pro forma financial and other data
do not purport to represent what the Company's financial position or results of
operations would actually have been had the Transactions in fact occurred on the
assumed dates or to project the Company's financial position, results of
operations or cash flows for any future date or period. The information
contained in the following table should also be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Unaudited Pro Forma Financial Information," and the
historical financial statements and related notes included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
TWELVE MONTH
YEAR ENDED PERIOD ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
----------------- ------------------ ------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA (1):
Net sales............................................... $ 93,469 $ 93,402 $ 73,203
Cost of sales........................................... 69,530 69,189 54,191
------- --------
Gross profit............................................ 23,939 24,213 19,012
Selling, general and administrative expenses............ 11,962 11,106 8,245
Engineering, research and development expenses.......... 883 1,085 841
Other operating income, net............................. 86 76 44
------- --------
Operating income........................................ 11,180 12,098 9,970
Interest expense........................................ 10,330 10,300 7,725
Income from continuing operations before income taxes... 735 1,741 2,235
OTHER DATA (1):
Gross margin............................................ 25.6% 25.9% 26.0%
EBITDA(2)............................................... 15,381 15,451 12,364
Adjusted EBITDA(3)...................................... 15,839 15,951 12,864
Adjusted EBITDA margin (4).............................. 16.9% 17.1% 17.6%
Depreciation and amortization........................... 4,201 3,353 2,394
Capital expenditures.................................... 1,590 1,823 1,395
Cash interest expense................................... 9,900 9,900 7,425
Ratio of Adjusted EBITDA to cash interest expense(5).... 1.6x 1.6x 1.7x
Ratio of net debt to Adjusted EBITDA.................... 5.1x --
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (6)................................................................................ $ 23,693
Total assets (7)................................................................................... 78,643
Total debt......................................................................................... 90,000
Total stockholders' (deficiency)................................................................... (22,473)
</TABLE>
- ---------------
(1) See the historical financial statements and related notes of Recreational
Vehicle Products, Inc. included elsewhere in this Prospectus for
discontinued operations and an extraordinary item.
(2) EBITDA represents earnings before interest expense, net, other nonoperating
expense, net, income tax expense, depreciation and amortization. The Company
has included information concerning EBITDA because it is relevant for
covenant analysis under the Indenture, which defines EBITDA as set forth
above for the periods shown, and is presented because it is used by certain
investors as a measure of a company's ability to service debt. EBITDA should
not be considered in isolation or as a substitute for net income, cash flows
or other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(3) Adjusted EBITDA reflects EBITDA, adjusted to exclude stock compensation of
$458 for the fiscal year ended December 31, 1996 and warranty expense of
$500 for the nine-month period ended September 30, 1997. Adjusted EBITDA
should not be considered in isolation or as a substitute for net income,
cash flows or other consolidated income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidation.
(4) Adjusted EBITDA margin reflects Adjusted EBITDA as a percentage of net
sales.
(5) See "Selected Financial and Other Data," and "Unaudited Pro Forma Financial
Information," and the historical financial statements and related notes
included elsewhere in this Prospectus for information as to Ratio of
earnings to fixed charges.
(6) Working capital represents current assets less current liabilities,
including net assets held for sale of the discontinued Faulkner
manufacturing division of $2,382 at September 30,1997.
(7) Total assets include net assets held for sale of the discontinued Faulkner
manufacturing division of $2,382 as of September 30, 1997.
12
<PAGE> 17
SUMMARY HISTORICAL FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
AIRXCEL (FORMERLY KNOWN AS RECREATION VEHICLE PRODUCTS, INC. (RVP))
The following summary historical financial and other data of Airxcel are
derived from audited historical financial statements. The historical financial
statements of Airxcel as of December 31, 1995 and 1996 and for each of the three
years in the period ended December 31, 1996, included elsewhere herein, have
been audited by Coopers & Lybrand, L.L.P., independent accountants. The
historical financial statements of Airxcel as of December 31, 1992, 1993 and
1994 and for each of the two years in the period ended December 31, 1993 have
been derived from the consolidated financial statements of Airxcel Holdings
Corporation, formerly known as RV Products Holding Corp. and Subsidiary, audited
by Coopers & Lybrand, L.L.P., independent accountants. The summary historical
financial and other data for the nine-month periods ended September 30, 1996 and
September 30, 1997 have been derived from the unaudited interim financial
statements of Airxcel included elsewhere herein. In the opinion of management,
the information for the nine-month periods ended September 30, 1996 and
September 30, 1997 includes all material adjustments (consisting only of
adjustments of a normal and recurring nature except for adjustments related to
the discontinued Faulkner manufacturing division) necessary for a fair
presentation of the operating results for such periods. The results of
operations for any interim period are not necessarily indicative of the results
of operations for a full year. The information contained in the following table
should also be read in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Financial Information," and the historical financial
statements and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ --------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $45,490 $50,743 $56,162 $55,788 $ 58,169 $47,211 $ 43,907
Cost of sales............................ 33,812 38,338 41,614 42,257 43,803 35,518 33,489
------- ------- ------- ------- -------- ------- --------
Gross profit............................. 11,678 12,405 14,548 13,531 14,366 11,693 10,418
Selling, general and administrative
expenses(1)............................ 7,750 9,979 7,886 10,959 5,980 4,763 3,063
------- ------- ------- ------- -------- ------- --------
Operating income......................... 3,928 2,426 6,662 2,572 8,386 6,930 7,355
Interest expense(2)...................... 2,234 2,273 1,282 1,097 2,273 1,161 2,436
Income from continuing operations before
income taxes........................... 1,674 138 5,352 1,383 5,968 5,671 4,909
Net income (loss)........................ 903 (1,878) 2,616 (453) 1,074 1,644 (831)
OTHER DATA:
Gross margin............................. 25.7% 24.4% 25.9% 24.3% 24.7% 24.8% 23.7%
EBITDA(3)................................ 7,000 5,422 9,683 5,554 10,369 8,542 8,021
EBITDA margin............................ 15.4% 10.7% 17.2% 10.0% 17.8% 18.1% 18.3%
Depreciation and amortization(4)......... 3,072 2,996 3,021 2,982 1,983 1,612 666
Capital expenditures..................... 740 621 843 356 459 354 559
Cash interest expense(2)................. 2,044 2,087 1,267 1,083 2,170 1,112 2,195
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital(5)....................... $ 9,752 $ 7,131 $ 9,301 $ 8,819 $ 5,632 $ 5,887 $ 3,641
Total assets(6).......................... 29,171 26,920 24,753 26,561 24,748 25,588 19,909
Total debt............................... 17,340 20,907 15,581 24,824 48,280 48,294 42,539
Total stockholders' equity
(deficiency)........................... 6,797 735 3,718 (4,255) (28,701) (28,274) (29,447)
</TABLE>
- ---------------
(1) Selling, general and administrative expenses for 1995 includes $4,279 of
nonrecurring expenses related to costs incurred to compensate certain option
holders for their personal tax liabilities incurred when such options were
exercised.
(2) Excludes interest expense related to the discontinued Faulkner manufacturing
division.
(3) EBITDA represents earnings before interest expense, net, other nonoperating
expense, net, income tax expense, depreciation and amortization. Airxcel has
included information concerning EBITDA because it is relevant for covenant
analysis under the Indenture, which defines EBITDA as set forth above for
the periods shown, and is presented because it is used by certain investors
as a measure of a company's ability to service debt. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows or
other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(4) Excludes depreciation and amortization related to the discontinued Faulkner
manufacturing division.
(5) Working capital represents current assets less current liabilities,
including net assets held for sale of the discontinued Faulkner
manufacturing division of $4,781, $4,789, $3,704, $5,634, $6,421, $6,849 and
$2,382 as of December 31, 1992, 1993, 1994, 1995 and 1996 and September 30,
1996 and 1997, respectively.
(6) Total assets include net assets held for sale of $4,781, $4,789, $3,704,
$5,634, $6,421, $6,849 and $2,382 as of December 31, 1992, 1993, 1994, 1995,
1996 and September 30, 1996 and 1997, respectively.
13
<PAGE> 18
CRISPAIRE
The following summary historical financial and other data of Crispaire are
derived from the audited historical financial statements of Crispaire. The
historical financial statements of Crispaire as of October 31, 1992, 1993, 1994,
1995 and 1996 and for each of the fiscal years in the five-year period ended
October 31, 1996, have been audited by Mauldin & Jenkins, LLC, independent
accountants. The historical financial statements of Crispaire as of October 31,
1995 and 1996 and for each of the fiscal years in the three-year period ended
October 31, 1996 are included elsewhere herein. The selected historical
financial and other data for the nine-month periods ended July 31, 1996 and July
31, 1997 have been derived from the unaudited interim financial statements of
Crispaire included elsewhere herein. In the opinion of management, the
information for the nine-month periods ended July 31, 1996 and July 31, 1997
includes all material adjustments (consisting only of adjustments of a normal
and recurring nature) necessary for a fair presentation of the operating results
for such periods. The results of operations for any interim period are not
necessarily indicative of the results of operations for a full year. The
information contained in the following table should also be read in conjunction
with "Capitalization," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Unaudited Pro Forma Financial
Information," and the historical financial statements and related notes included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
OCTOBER 31, JULY 31,
------------------------------------------------ --------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $17,061 $17,701 $24,152 $27,304 $ 34,138 $24,624 $ 28,545
Cost of sales............................ 13,062 13,667 18,143 20,104 24,758 17,614 20,062
------ ------ ------ ------ ------ ------ ------
Gross profit............................. 3,999 4,034 6,009 7,200 9,380 7,010 8,483
Engineering, research and development.... 481 580 537 752 878 633 775
Selling, general and administrative
expenses............................... 2,643 2,632 3,547 4,089 5,129 3,646 3,782
Operating income......................... 964 843 1,989 2,381 3,438 2,771 3,959
Interest expense, net.................... 203 194 160 94 146 127 106
Net income............................... 744 649 1,829 2,287 3,292 2,644 3,853
OTHER DATA:
Gross margin............................. 23.4% 22.8% 24.9% 26.4% 27.5% 28.5% 29.7%
EBITDA(1)................................ 1,109 994 2,150 2,571 3,668 2,927 4,195
EBITDA margin............................ 6.5% 5.6% 8.9% 9.4% 10.7% 11.9% 14.7%
Depreciation and amortization............ 145 151 161 190 231 156 236
Capital expenditures..................... 124 42 565 393 1,419 1,398 455
Cash interest expense.................... 203 194 160 94 146 127 106
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital(2)....................... $ 2,275 $ 2,902 $ 4,286 $ 4,800 $ 6,213 $ 5,640 $ 8,002
Total assets............................. 7,160 8,000 9,007 10,647 14,106 13,322 16,941
Total debt............................... 921 550 758 595 1,242 1,371 559
Total stockholders' equity............... 2,344 3,133 4,731 5,717 8,298 7,951 10,646
</TABLE>
- ---------------
(1) EBITDA represents earnings before interest expense, net, income tax expense,
depreciation and amortization. The Company has included information
concerning EBITDA because it is relevant for covenant analysis under the
Indenture, which defines EBITDA as set forth above for the periods shown,
and is presented because it is used by certain investors as a measure of a
company's ability to service debt. EBITDA should not be considered in
isolation or as a substitute for net income, cash flows or other
consolidated income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(2) Working capital represents current assets less current liabilities.
14
<PAGE> 19
RISK FACTORS
Holders of Notes should carefully consider the following factors in
addition to the other information set forth in this Prospectus prior to
tendering their Notes in the Exchange Offer.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE INDEBTEDNESS
As a result of the consummation of the Transactions, the Company is highly
leveraged. After giving pro forma effect to the Transactions as of September 30,
1997, the Company would have had Indebtedness of $90.0 million and the Company's
stockholders' deficiency would have been $22.5 million. In addition, the Company
would have had the ability, subject to borrowing base and certain other
requirements, to borrow an additional $15 million under its Credit Facility, and
subject to the restrictions in the Credit Facility and the Indenture, the
Company may incur additional indebtedness from time to time. The degree to which
the Company is leveraged could have important consequences to holders of the
Exchange Notes, including the following: (i) the Company's ability to obtain
additional financing for working capital, capital expenditures, acquisitions or
general corporate purposes may be limited; (ii) a substantial portion of the
Company's cash flow from operations must be dedicated to the payment of interest
on the Exchange Notes, the Credit Facility and its other existing indebtedness,
thereby reducing the funds available to the Company for other purposes; (iii)
all of the indebtedness under the Credit Facility will be at variable rates of
interest, which will cause the Company to be vulnerable to increases in interest
rates; (iv) all of the indebtedness outstanding under the Credit Facility will
be secured by security interests in, or liens on, the accounts receivable,
inventory and real property of the Company, and will become due prior to the
time the principal on the Exchange Notes will become due; (v) the Company may be
hindered in its ability to adjust rapidly to changing market conditions and (vi)
the Company's substantial degree of leverage could make it more vulnerable in
the event of a downturn in general economic conditions or in its business.
The Company's ability to pay interest on the Exchange Notes and to satisfy
its other debt obligations will depend on its future operating performance,
which will be affected by prevailing economic conditions and financial, business
and other factors, certain of which are beyond its control. If the Company's
cash flow and capital resources are insufficient to fund its debt service
obligations, the Company may be forced to reduce or delay capital expenditures,
sell assets, obtain additional equity capital or restructure its debt. There can
be no assurance that the Company's cash flow and capital resources will be
sufficient for payment of its indebtedness in the future. In the absence of such
operating results and resources, the Company could face substantial liquidity
problems and might be required to dispose of material assets or operations to
meet its debt service and other obligations, and there can be no assurance as to
the timing of such sales or the proceeds which the Company could realize
therefrom. The financial covenants and other restrictions in the Credit Facility
and the Indenture limit the Company's ability to borrow additional funds and
dispose of certain assets. See "Description of the Revolving Credit Facility"
and "Description of Exchange Notes."
DEPENDENCE UPON SIGNIFICANT CUSTOMERS
Airxcel's net sales to Fleetwood, Jayco and Winnebago accounted for
approximately 46.8% of its net sales for 1996. Crispaire's net sales to Nonio
Hiross, Motorola and UNR-Rohn accounted for approximately 7.0%, 7.0% and 6.0% of
its net sales in 1996. While the Company has been a supplier to these companies
for many years and believes that its relationships are strong, there can be no
assurance that the Company will maintain or improve these relationships or that
the Company will continue to supply these customers at current levels. The loss
of a significant portion of sales to any of these customers could have a
material adverse effect on the Company's business. In addition, many of the
arrangements that the Company has with such customers are by purchase order and
terminable at will at the option of either party. A significant decrease or
interruption in businesses of
15
<PAGE> 20
any of the Company's significant customers could have a material adverse effect
on the Company. See "Business -- Sales, Distribution and Marketing."
DEPENDENCE UPON CONDITIONS IN VARIOUS INDUSTRIES
A significant part of the Company's operations are directly dependent upon
the conditions in the highly cyclical RV industry, highly competitive
telecommunications industry and the commercial and public construction industry.
Companies within these industries, including the Company's largest customers,
are subject to volatility in operating results due to external factors such as
economic, demographic and political changes. These factors include seasonal
factors, fuel availability and fuel prices, overall consumer confidence and
general economic conditions, the level of discretionary consumer spending,
government regulation, interest rates and unemployment. To the extent such
factors have a substantial adverse effect on the Company's largest customers in
such industries, there could be a material adverse effect on the Company.
RISKS ASSOCIATED WITH FLUCTUATIONS IN COSTS OF RAW MATERIALS
The Company depends on certain raw materials such as copper and aluminum
for the manufacturing of its products. While the prices for such materials
declined dramatically in 1996, the prices have shown considerable price
volatility during the past few years. In order to hedge against price increases
in these materials, the Company actively manages its materials costs through
futures contracts on copper and aluminum. This practice generally has enabled
the Company to successfully manage the effect of price fluctuations; however, no
assurance can be given that the Company will continue to be successful in
managing such price fluctuations or that future price fluctuations in copper and
aluminum and other raw materials will not have a material adverse effect on the
Company. Fluctuation in copper and aluminum prices can have an effect on the
Company. See "-- Supplier Relationships" and "Management's Discussion and
Analysis of Financial Condition and Result of Operations -- Overview."
SUPPLIER RELATIONSHIPS
The Company's relationships with its suppliers often afford it certain
purchasing advantages, including stable supply and favorable pricing
arrangements. The arrangements, however, are by purchase order with an average
term of one year, although terminable at will at the option of either party with
prior notice. Therefore, there can be no assurance that any of the supplier
relationships will not be terminated in the future. In addition, the Company
annually confirms existing pricing with competitive bids and while the Company
has been able to obtain sufficient supplies at competitive prices, fluctuating
raw material prices cause volatility in supplier pricing. The Company is subject
to the risk that a significant variance in the supplier pricing may trigger a
change of the product's price to customers. An interruption in the Company's
supplies or volatility in supplier pricing could have a material adverse effect
on the Company. See "Business -- Products and Services".
SUBORDINATION OF EXCHANGE NOTES
The Exchange Notes are contractually subordinated to all Senior
Indebtedness including all obligations under the Credit Facility. In the event
of a circumstance in which the contractual subordination provisions apply,
holders of the Exchange Notes will not be entitled to receive, and will have an
obligation to pay over to holders of Senior Indebtedness, any payments they may
receive in respect of the Exchange Notes. At September 30, 1997, after giving
pro forma effect to the Acquisition adjusting for the issuance of the Exchange
Notes, there would have been no indebtedness or other liabilities outstanding
subordinated to the Exchange Notes. Subject to certain limitations, the
Indenture permits the Company to incur additional indebtedness. See "Description
of Exchange Notes -- Covenants -- Limitation on Indebtedness." Substantially all
of the assets of the Company are or may be pledged to secure other indebtedness
of the Company. See "Description of the Revolving Credit Facility" and
"Description of Exchange Notes."
16
<PAGE> 21
RESTRICTIONS IMPOSED BY THE CREDIT FACILITY AND THE INDENTURE
The Credit Facility requires the Company to maintain specified financial
ratios and tests, among other obligations, including a minimum interest coverage
ratio and a maximum leverage ratio. In addition, the Credit Facility restricts,
among other things, the Company's ability to incur additional indebtedness and
make acquisitions and capital expenditures beyond a certain level. A failure to
comply with the restrictions contained in the Credit Facility could lead to an
event of default thereunder which could result in an acceleration of such
indebtedness. Such an acceleration would constitute an event of default under
the Indenture relating to the Exchange Notes. In addition, the Indenture
restricts, among other things, the Company's ability to incur additional
indebtedness, sell assets, make certain payments and dividends or merge or
consolidate. A failure to comply with the restrictions in the Indenture could
result in an event of default under the Indenture. See "Description of the
Revolving Credit Facility" and "Description of Exchange Notes."
COMPETITION
The Company competes with a number of established companies that have
greater financial, technological and marketing resources than the Company.
Although the Company has achieved a significant share of the market for a number
of its products, there can be no assurance that the Company will be able to
maintain such market share. The ability of the Company to compete as a supplier
to the RV industry is largely dependent on its ability to provide name brand
high quality products at competitive prices and to manufacture and deliver
products on a timely basis. Certain of the Company's principal competitors are
less highly-leveraged than the Company and may be better able to withstand
volatile market conditions within the RV industry which could lead to adverse
changes in the Company's relationships with its customers. In addition, the
Company faces substantial competition in the broader HVAC industry which is
comprised of hundreds of small to medium-sized companies with various niche
markets and several large, well-capitalized, highly diversified industrial
corporations with major market shares of standard residential and commercial
HVAC product lines. There can be no assurance that the Company will not
encounter increased competition in the future, which could have a material
adverse effect on the Company. See "Business -- Competition."
LIMITATIONS ON CHANGE OF CONTROL
In the event of a Change of Control, the Company will be required to make
an offer for cash to repurchase the Exchange Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the
repurchase date. A Change of Control will result in an event of default under
the Credit Facility and may result in a default under other indebtedness of the
Company that may be incurred in the future. The Credit Facility prohibits the
purchase of outstanding Exchange Notes prior to repayment of the borrowings
under the Credit Facility and any exercise by the holders of the Exchange Notes
of their right to require the Company to repurchase the Exchange Notes will
cause an event of default under the Credit Facility. Finally, there can be no
assurance that the Company will have the financial resources necessary to
repurchase the Exchange Notes upon a Change of Control. See "Description of
Exchange Notes -- Offer to Purchase Upon Change of Control."
IMPACT OF ENVIRONMENTAL REGULATION
The Company is subject to federal, state, and local environmental and
occupational health and safety laws and regulations. Such laws and regulations,
among other things, impose limitations on the discharge of pollutants and
establish standards for management of waste. While there can be no assurance
that the Company is at all times in complete compliance with all such
requirements, the Company believes that any such noncompliance is unlikely to
have a material adverse effect on the Company. As is the case with manufacturers
in general, if a release or threat of release of hazardous materials occurs on
or from the Company's properties or any associated offsite disposal location, or
if contamination from prior activities is discovered at any properties owned or
operated by the Company, the Company may be held liable for response costs and
damages to natural resources. There can be no assurance that the amount of any
such liability would not be material.
17
<PAGE> 22
LIMITED USE OF COLEMAN BRAND NAME
The Company has an exclusive, royalty-free license to use the name
"Coleman" on its products for a period of 50 years. The Company's license to use
the "Coleman" brand name on a standalone basis expired on April 30, 1997.
Therefore, the Company must use a name or product name in conjunction with the
"Coleman" brand name. Although the Company believes that such modified use of
the "Coleman" brand name will not have an impact on the marketing and sales of
its products, there can be no assurances that it will not have an adverse effect
on the Company.
PENDING PATENT LITIGATION
Crispaire has been named a defendant in a lawsuit claiming that Crispaire
infringes certain trademarks and patents with respect to certain of its air
conditioning and heating products. While Crispaire believes that it should
prevail upon trial of such claims (which trial is scheduled to commence on March
31, 1998), no assurances can be given as to the ultimate outcome of this matter.
See "Business -- Legal Proceedings."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the continued services of its senior management
team. Although the Company believes it could replace key employees in an orderly
fashion should the need arise, the loss of such key personnel could have a
material adverse effect on the Company. The Company maintains key-person
insurance for Melvin L. Adams, and George D. Wyers. See "Management."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
Prior to the Exchange Offer, there has not been any public market for the
Notes. The Notes have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for Exchange Notes by holders who are entitled to participate in this
Exchange Offer. The holders of Notes (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who are not eligible to participate in the Exchange Offer are entitled to
certain registration rights, and the Company is required to file a Shelf
Registration Statement with respect to such Notes. The Exchange Notes are new
securities for which there currently is no market. Although the Initial
Purchasers have informed the Company that they currently intend to make a market
in the Exchange Notes, they are not obligated to do so and any such market
making may be discontinued at any time without notice in the sole discretion of
the Initial Purchasers. In addition, such market making activity may be limited
during the pendency of the Exchange Offer or the effectiveness of a shelf
registration statement in lieu thereof. Accordingly, there can be no assurance
as to the development or liquidity of any market for the Exchange Notes. The
Exchange Notes are eligible for trading by qualified buyers in the Private
Offerings, Resale and Trading though Automated Linkages (PORTAL) market. The
Company does not intend to apply for listing of the Exchange Notes, on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
The Exchange Notes generally will be permitted to be resold or otherwise
transferred (subject to the restrictions described under "Exchange and
Registration Rights Agreement" and "Transfer Restrictions") by each holder
without the requirement of further registration. The Exchange Notes, however,
will also constitute a new issue of securities with no established trading
market. The Exchange Offer will not be conditioned upon any minimum or maximum
aggregate principal amount of Notes being tendered for exchange. No assurance
can be given as to the liquidity of the trading market for the Exchange Notes,
or, in the case of non-exchanging holders of Notes, the trading market for the
Notes following the Exchange Offer.
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market or by declines in the
market for similar securities. Such declines may adversely affect such liquidity
and trading markets independently of the financial performance of, and prospects
for, the Company.
18
<PAGE> 23
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for the Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Notes desiring to tender
such Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Notes for exchange. Notes that are
not tendered or are tendered but not accepted will, following the consummation
of the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, certain
registration rights under the Exchange and Registration Rights Agreement will
terminate. In addition, any holder of Notes who tenders in the Exchange Offer
for the purpose of participating in a distribution of the Exchange Notes may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transactions. Each Participating
Broker-Dealer that receives Exchange Notes for its own account in exchange for
Notes, where such Notes were acquired by such Participating Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution." To the extent that Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Notes could be adversely affected. See "The Exchange Offer."
19
<PAGE> 24
THE TRANSACTIONS
Pursuant to an Asset Purchase Agreement dated as of October 17, 1997 among
Holdings, Airxcel and Crispaire, (the "Acquisition Agreement"), Airxcel
purchased substantially all of the net assets, properties and rights and assumed
certain related liabilities of Crispaire. Crispaire received, as part of the
consideration for the Acquisition, $5.3 million of PIK Notes of Holdings. A cash
equity investment was made in Holdings in connection with the financing of the
Acquisition through the purchase of common stock and preferred stock of Holdings
by the management of Crispaire for an aggregate purchase price of approximately
$3.1 million. The PIK Notes, as well as the cash equity investment in Holdings,
were contributed by Holdings to Airxcel. The contributions to Airxcel are
collectively referred to herein as the "Contributions."
Concurrently, the Company consummated the Offering, and a portion of the
net proceeds from the Offering together with the proceeds from the sale of
securities to certain affiliates of Crispaire, including management, were used
to finance the Acquisition and the repayment of certain indebtedness. A portion
of the indebtedness repaid was held by a mezzanine investment fund managed by an
affiliate of Citicorp. The remainder of the indebtedness repaid was under a
credit facility for which The Chase Manhattan Bank, an affiliate of Chase
Securities Inc., received its proportionate share of any repayment. The Company
entered into an agreement with The Chase Manhattan Bank to provide for a
Revolving Credit Facility. Consummation of the Offering was conditioned upon the
concurrent consummation of the Acquisition and the Contributions.
The Exchange Offer results in no sources or uses of cash to the Company.
The estimated sources and uses of cash which occurred in connection with the
closing of the Acquisition on November 10, 1997, are set forth below (dollars in
thousands):
<TABLE>
<S> <C>
SOURCES:
Proceeds from sale of the Notes........................................... $90,000
Contributions from Holdings............................................... 8,354
--------
Total sources................................................... $98,354
========
USES:
Repayment of borrowings................................................... $42,539
Consideration paid for Crispaire.......................................... 44,004
Working capital........................................................... 6,811
Estimated fees and expenses............................................... 5,000
--------
Total uses...................................................... $98,354
========
</TABLE>
20
<PAGE> 25
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Exchange and Registration Rights Agreement. The Company
will not receive any cash proceeds from the issuance of the Exchange Note in the
Exchange Offer. The proceeds of $90 million to the Company from the sale and
issuance of the Notes on November 10, 1997, together with the approximately $3.1
million cash contribution made to the Company by Holdings, were used to fund the
cash portion of the consideration for the Acquisition, to refinance an existing
credit facility and to repay certain subordinated indebtedness, and to pay
related fees and expenses.
CAPITALIZATION
The following table sets forth the cash and capitalization of the Company
as of September 30, 1997 (i) on a historical basis, and (ii) on a pro forma
combined basis after giving effect to the Transactions assuming they were
consummated on such date. This table should be read in conjunction with the
"Selected Consolidated Financial and Other Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma
Consolidated Financial Information" and the consolidated financial statements
and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------------------------------------
PRO FORMA PRO FORMA
AIRXCEL CRISPAIRE ADJUSTMENTS AS ADJUSTED
-------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents.................... $ 70 $ 531 $ 8,066 $ 8,667
======== ======= =======
Debt:
Existing Credit Facility(1)................ $ 2,001 $ -- (2,001) $ --
Term A Loan................................ 11,460 -- (11,460) --
Term B Loan................................ 14,920 -- (14,920) --
Senior Subordinated Notes due 2007......... -- -- 90,000 90,000
Subordinated debt.......................... 13,796 -- (13,796) --
Other debt................................. 362 499 (861) --
-------- ------- -------
Total debt......................... 42,539 499 46,962 90,000
Total stockholders' equity (deficit)......... (29,447) 10,806 (3,832) (22,473)
-------- ------- -------
Total capitalization............... $ 13,092 $ 11,305 $ 43,130 $ 67,527
======== ======= =======
</TABLE>
- ---------------
(1) On a pro forma basis, the Company's unused availability under the new Credit
Facility would be $15 million. See "Description of the Revolving Credit
Facility."
21
<PAGE> 26
SELECTED FINANCIAL AND OTHER DATA
AIRXCEL (FORMERLY KNOWN AS RECREATION VEHICLE PRODUCTS, INC. ("RVP")
The following table sets forth the selected historical financial and other
data of Airxcel as of and for each of the fiscal years in the five-year period
ended December 31, 1996 and as of and for the nine-month periods ended September
30, 1996 and September 30, 1997. The selected historical financial and other
data as of December 31, 1992, 1993 and 1994 and for each of the fiscal years in
the two-year period ended December 31, 1993 have been derived from the
historical consolidated financial statements of Airxcel Holdings Corporation,
formerly known as RV Products Holding Corp. and Subsidiary, audited by Coopers &
Lybrand, L.L.P., independent accountants. The selected historical financial and
other data as of December 31, 1995 and 1996 and for each of the fiscal years in
the three-year period ended December 31, 1996 have been derived from the
historical financial statements of Airxcel, audited by Coopers & Lybrand,
L.L.P., and included elsewhere herein. The selected historical financial and
other data as of and for the nine-month periods ended September 30, 1996 and
September 30, 1997 have been derived from the unaudited interim consolidated
financial statements of Airxcel included elsewhere herein. In the opinion of
management, the information for the nine-month periods ended September 30, 1996
and September 30, 1997 includes all material adjustments (consisting only of
adjustments of a normal and recurring nature except for adjustments related to
the discontinued Faulkner manufacturing division) necessary for a fair
presentation of the operating results for such periods. The results of
operations for any interim period are not necessarily indicative of the results
of operations for a full year. The information contained in the following table
should also be read in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Financial Information," and the historical financial
statements and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $45,490 $50,743 $56,162 $55,788 $58,169 $47,211 $43,907
Cost of sales..................... 33,812 38,338 41,614 42,257 43,803 35,518 33,489
------ ------ ------ ------ ------- ------ -------
Gross profit...................... 11,678 12,405 14,548 13,531 14,366 11,693 10,418
Selling, general and
administrative expenses(1)...... 5,197 7,646 5,555 8,627 4,558 3,581 2,737
Amortization of intangible assets
and computer software........... 2,553 2,333 2,331 2,332 1,422 1,182 326
------ ------ ------ ------ ------- ------ -------
Operating income.................. 3,928 2,426 6,662 2,572 8,386 6,930 7,355
Interest expense(2)............... 2,234 2,273 1,282 1,097 2,273 1,161 2,436
Other nonoperating expense, net ... 20 15 28 92 145 98 10
------ ------ ------ ------ ------- ------ -------
Income from continuing operations
before income taxes and
extraordinary item.............. 1,674 138 5,352 1,383 5,968 5,671 4,909
Income tax benefit (expense)...... -- (48) (2,071) (831) (2,411) (2,155) (1,865)
------ ------ ------ ------ ------- ------ -------
Income from continuing operations
before extraordinary item....... 1,674 90 3,281 552 3,557 3,516 3,044
Loss from discontinued Faulkner
manufacturing division.......... 771 731 601 960 2,299 1,688 1,445
Loss on disposal of discontinued
Faulkner manufacturing division,
including operating losses...... -- -- -- -- -- -- 2,430
------ ------ ------ ------ ------- ------ -------
Income (loss) before extraordinary
item............................ 903 (641) 2,680 (408) 1,258 1,828 (831)
Extraordinary loss on early
extinguishment of debt, net of
tax............................. -- 1,237 64 45 184 184 --
------ ------ ------ ------ ------- ------ -------
Net income (loss)................. $ 903 $(1,878) $ 2,616 $ (453) $ 1,074 $ 1,644 $ (831)
====== ====== ====== ====== ======= ====== =======
</TABLE>
22
<PAGE> 27
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Gross margin...................... 25.7% 24.4% 25.9% 24.3% 24.7% 24.8% 23.7%
EBITDA(3)......................... 7,000 5,422 9,683 5,554 10,369 8,542 8,021
EBITDA margin..................... 15.4% 10.7% 17.2% 10.0% 17.8% 18.1% 18.3%
Depreciation and
amortization(4)................. 3,072 2,996 3,021 2,982 1,983 1,612 666
Capital expenditures.............. 740 621 843 356 459 354 559
Cash interest expense(2).......... 2,044 2,087 1,267 1,083 2,170 1,112 2,195
Ratio of earnings to fixed
charges(5)...................... 1.7x 1.1x 4.9x 2.2x 3.5x 5.6x 2.9x
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital(6)................ $ 9,752 $ 7,131 $ 9,301 $ 8,819 $ 5,632 $ 5,887 $ 3,461
Total assets(7)................... 29,171 26,920 24,753 26,561 24,748 25,588 19,909
Total debt........................ 17,340 20,907 15,581 24,824 48,240 48,294 42,539
Total stockholders' equity
(deficiency).................... 6,797 735 3,718 (4,255) (28,701) (28,274) (29,447)
</TABLE>
- ---------------
(1) Selling, general and administrative expense for 1995 includes $4,279 of
nonrecurring expenses related to costs incurred to cover the tax
consequences of certain individuals who exercised stock options.
(2) Excludes interest expense related to the discontinued Faulkner manufacturing
division.
(3) EBITDA represents earnings before interest expense, net, other nonoperating
expense, net, income tax expense, depreciation and amortization. Airxcel has
included information concerning EBITDA because it is relevant for covenant
analysis under the Indenture, which defines EBITDA as set forth above for
the periods shown, and is presented because it is used by certain investors
as a measure of a company's ability to service debt. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows or
other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(4) Excludes depreciation and amortization related to the discontinued Faulkner
manufacturing division.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
include income from continuing operations before income taxes and
extraordinary item, plus fixed charges. Fixed charges consist of interest
expense, amortization of debt issuance costs and a portion of rental expense
deemed representative of the interest factor.
(6) Working capital represents current assets less current liabilities,
including net assets held for sale of the discontinued Faulkner
manufacturing division of $4,781, $4,789, $3,704, $5,634, $6,421, $6,849 and
$2,382 as of December 31, 1992, 1993, 1994, 1995 and 1996 and September 30,
1996 and 1997, respectively.
(7) Total assets include net assets held for sale of $4,781, $4,789, $3,704,
$5,634, $6,421, $6,849 and $2,382 as of December 31, 1992, 1993, 1994, 1995,
1996 and September 30, 1996 and 1997, respectively.
23
<PAGE> 28
CRISPAIRE
The following table sets forth the selected historical financial and other
data of Crispaire as of and for each of the fiscal years in the five-year period
ended October 31, 1996 and as of and for each of the nine-month periods ended
July 31, 1996 and July 31, 1997. The selected historical financial and other
data for each fiscal year in the three-year period ended October 31, 1996 are
derived from the financial statements of Crispaire, audited by Mauldin &
Jenkins, LLC, independent accountants, and included herein. The selected
historical financial and other data as of October 31, 1992, 1993 and 1994 and
for each fiscal year in the two-year period ended October 31, 1993 are derived
from the financial statements of Crispaire, audited by Mauldin & Jenkins, LLC.
The selected historical financial and other data as of and for the nine-month
periods ended July 31, 1996 and July 31, 1997 are derived from the unaudited
interim financial statements of Crispaire included elsewhere herein. In the
opinion of management, the information for the nine-month periods ended July 31,
1996 and July 31, 1997 includes all material adjustments (consisting only of
adjustments of a normal and recurring nature) necessary for a fair presentation
of the operating results for such periods. The results of operations for any
interim period are not necessarily indicative of the results of operations for a
full year. The information contained in the following table should also be read
in conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Unaudited Pro Forma Financial
Information," and the historical financial statements and related notes included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED OCTOBER 31, JULY 31,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $17,061 $17,701 $24,152 $27,304 $34,138 $24,624 $28,545
Cost of sales...................... 13,062 13,667 18,143 20,104 24,758 17,614 20,062
------- ------- ------- ------- ------- ------- -------
Gross profit....................... 3,999 4,034 6,009 7,200 9,380 7,010 8,483
Engineering, research and
development...................... 481 580 537 752 878 633 775
Selling, general and administrative
expenses......................... 2,643 2,632 3,547 4,089 5,129 3,646 3,782
Other operating income, net........ 89 21 64 22 65 40 33
------- ------- ------- ------- ------- ------- -------
Operating income................... 964 843 1,989 2,381 3,438 2,771 3,959
Interest expense, net.............. 203 194 160 94 146 127 106
Income tax expense................. 17 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Net income......................... $ 744 $ 649 $ 1,829 $ 2,287 $ 3,292 $ 2,644 $ 3,853
======= ======= ======= ======= ======= ======= =======
OTHER DATA:
Gross margin....................... 23.4% 22.8% 24.9% 26.4% 27.5% 28.5% 29.7%
EBITDA(1).......................... 1,109 994 2,150 2,571 3,668 2,927 4,195
EBITDA margin...................... 6.5% 5.6% 8.9% 9.4% 10.7% 11.9% 14.7%
Depreciation and amortization...... 145 151 161 190 231 156 236
Capital expenditures............... 124 42 565 393 1,419 1,398 455
Cash interest expense.............. 203 194 160 94 146 127 106
Ratio of earnings to fixed
charges(2)....................... 4.7x 4.3x 6.6x 14.0x 17.7x 17.5x 28.7x
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital(3)................. $ 2,275 $ 2,902 $ 4,286 $ 4,800 $ 6,213 $ 5,640 $ 8,002
Total assets....................... 7,160 8,000 9,007 10,647 14,106 13,322 16,941
Total debt......................... 921 550 758 595 1,242 1,371 559
Total stockholders' equity......... 2,344 3,133 4,731 5,717 8,298 7,951 10,646
</TABLE>
- ---------------
(1) EBITDA represents earnings before interest expense, net, income tax expense,
depreciation and amortization. The Company has included information
concerning EBITDA because it is relevant for covenant analysis under the
Indenture, which defines EBITDA as set forth above for the periods shown,
and is presented because it is used by certain investors as a measure of
24
<PAGE> 29
a company's ability to service debt. EBITDA should not be considered in
isolation or as a substitute for net income, cash flows or other
consolidated income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
include net income, plus fixed charges. Fixed charges consist of interest
expense and a portion of rental expense deemed representative of the
interest factor.
(3) Working capital represents current assets less current liabilities.
25
<PAGE> 30
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements
(the "Unaudited Pro Forma Financial Information") give effect to the
Transactions. The Acquisition occurred simultaneously with the closing of the
Offering and was accounted for using the purchase method of accounting. These
unaudited pro forma condensed combined financial statements are based on the
historical financial statements of Airxcel and Crispaire included elsewhere in
this Prospectus and the estimates and assumptions set forth below, and in the
notes to the Unaudited Pro Forma Financial Information.
The unaudited pro forma condensed combined balance sheet gives effect to
the Transactions as if they occurred on September 30, 1997. The unaudited pro
forma condensed combined statements of operations give effect to the
Transactions as if they occurred on January 1, 1996. The Unaudited Pro Forma
Statements of Operations presented herein are not necessarily indicative of the
combined results that would have been obtained had the Transactions occurred at
the beginning of the period, as assumed, or of the future results of the
combined companies. The Unaudited Pro Forma Financial Information should be read
in conjunction with the other financial statements and notes thereto included
elsewhere in this Prospectus.
The pro forma adjustments are based on preliminary estimates, currently
available information and certain assumptions that management believes are
appropriate. The aggregate purchase price has been allocated to the tangible and
identifiable intangible assets and liabilities of the acquired business based
upon the Company's preliminary estimates of their fair value, with the remainder
allocated to goodwill. In management's opinion, the preliminary estimates
regarding allocation of the purchase price of Crispaire are not expected to
materially differ from the final allocations. Adjustments to the allocation of
the purchase price will be finalized and will include the effect of the
finalized results of asset appraisals.
The purchase price paid for the Acquisition was subject to reduction to the
extent that working capital of Crispaire, as defined, was less than
approximately $9.6 million on November 10, 1997 ("Working Capital Adjustment").
26
<PAGE> 31
AIRXCEL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AIRXCEL CRISPAIRE PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 70 $ 531 $ 8,066(a) $ 8,667
Accounts receivable, net...................... 4,121 4,996 -- 9,117
Inventories................................... 4,903 7,147 -- 12,050
Net assets held for sale...................... 2,382 -- -- 2,382
Other current assets.......................... 2,160 58 -- 2,218
---------- ------- ----------- ---------
Total current assets.................. 13,636 12,732 8,066 34,434
Property, plant and equipment, net.............. 3,603 2,573 2,522(b) 8,698
Other assets, net............................... 22 299 (265)(c) 56
Identifiable intangible assets, net............. 1,269 -- 5,858(b) 7,127
Loan financing costs, net....................... 1,379 -- 2,621(d) 4,000
Goodwill........................................ -- -- 24,328(b) 24,328
---------- ------- ----------- ---------
Total assets.................................... $ 19,909 $15,604 $43,130 $ 78,643
========= ======== ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............. 3,554 353 (3,907)(e) --
Accounts payable.............................. 2,431 2,840 -- 5,271
Accrued warranty.............................. 969 490 -- 1,459
Accrued vacation.............................. 316 97 -- 413
Other current liabilities..................... 2,726 872 -- 3,598
---------- ------- ----------- ---------
Total current liabilities............. 9,996 4,652 (3,907) 10,741
Long-term debt, net of current maturities....... 38,985 146 50,869(f) 90,000
Deferred income taxes........................... 375 -- -- 375
---------- ------- ----------- ---------
Total liabilities..................... 49,356 4,798 46,962 101,116
---------- ------- ----------- ---------
Stockholders' equity(deficiency)................ (29,447) 10,806 (3,832)(g) (22,473)
---------- ------- ----------- ---------
Total liabilities and stockholders' equity...... $ 19,909 $15,604 $43,130 $ 78,643
========= ======== ========== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
27
<PAGE> 32
AIRXCEL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
1. HISTORICAL FINANCIAL STATEMENTS
The unaudited historical balance sheets present the financial position of
Airxcel and Crispaire as of September 30, 1997 and were derived from unaudited
financial statements. Airxcel has a December 31 fiscal year-end and Crispaire
has an October 31 fiscal year-end. The audited historical financial statements
of Airxcel and Crispaire have been included elsewhere in this Prospectus.
2. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS
The Unaudited Pro Forma Condensed Combined Balance Sheet reflects the
Transactions as if they occurred on September 30, 1997, as follows:
<TABLE>
<S> <C> <C>
(a) Reflects the changes in the Company's cash due to the Transactions:
Proceeds from the Offering.......................................... $ 90,000
Cash contributed by Holdings........................................ 3,050
Retirement of the Company's debt.................................... (42,539)
Cash paid to purchase Crispaire..................................... (38,700)
Cash of Crispaire not acquired...................................... (531)
Working capital adjustment.......................................... 1,786
Loan financing costs................................................ (4,000)
Direct acquisition costs............................................ (1,000)
-------
Net increase in cash................................................ $ 8,066
=======
</TABLE>
(b) The Acquisition will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, Business Combinations (ABP
16). The purchase price is being allocated first to the identifiable
assets and liabilities of the Company based upon preliminary estimates
of their fair market values, with the remainder allocated to goodwill
and property, plant and equipment. The total purchase price is as
follows:
<TABLE>
<S> <C> <C>
Cash paid to Crispaire............................................... $38,700
Notes issued by Holdings............................................. 5,304
Working capital adjustment........................................... (1,786)
Direct acquisition costs............................................. 1,000
-------
-
Total purchase price................................................. 43,218
-------
-
Net assets of Crispaire at the Acquisition date...................... 10,806
Liabilities of Crispaire not assumed................................. 500
Assets of Crispaire not acquired, including cash of $531............. (796)
-------
-
Book value of net assets acquired.................................... 10,510
-------
-
Increase in basis of net assets purchased............................ $32,708
=======
Allocation of increase in basis:
Amount allocated to identifiable intangible assets................... $ 5,858
Increase in fair value of property, plant and equipment.............. 2,522
Amount allocated to goodwill......................................... 24,328
-------
$32,708
=======
(c) To eliminate other assets of Crispaire not acquired: $ (265)
=======
</TABLE>
28
<PAGE> 33
AIRXCEL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)
<TABLE>
<S> <C> <C>
(d) Reflects net change in loan financing costs:
Deferred financing fees and expenses incurred with the Offering...... $ 4,000
Write-off of the Company's unamortized financing costs related to the
debt retired using the proceeds of the Offering.................... (1,379)
-------
Net increase in loan financing costs................................. $ 2,621
=======
(e) Reflects net change in short-term debt:
Retirement of the Company's short-term debt using the proceeds from
the Offering....................................................... $ 3,554
Elimination of short-term debt of Crispaire not assumed.............. 353
-------
Total decrease in short-term debt.................................... $ 3,907
=======
(f) Reflects net change in long-term debt:
Issuance of debt pursuant to the Offering............................ $ 90,000
Retirement of the Company's long-term debt using the proceeds from
the Offering....................................................... (38,985)
Elimination of long-term debt of Crispaire not assumed............... (146)
-------
Net increase in long-term debt....................................... $ 50,869
=======
(g) Reflects net changes in stockholders' equity (deficiency):
Elimination of Crispaire's equity.................................... $(10,806)
Contribution of capital from Holdings to Airxcel:
Cash................................................................. 3,050
Net assets of Crispaire acquired in exchange for PIK Notes
issued by Holdings................................................... 5,304
-------
8,354
Write-off of unamortized deferred financing costs related to debt
retired using the proceeds of the Offering........................... (1,379)
-------
Rounding............................................................. (1)
Net decrease in stockholders' equity (deficiency).................... $ (3,832)
=======
</TABLE>
29
<PAGE> 34
AIRXCEL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AIRXCEL CRISPAIRE PRO FORMA PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Net sales................................... $ 58,169 $ 35,300 $93,469
Cost of sales............................... 43,803 25,522 $ 205(a) 69,530
------- ------- ------- -------
Gross profit................................ 14,366 9,778 (205) 23,939
Selling, general and administrative
expenses.................................. 5,980 5,367 615(a)(b) 11,962
Engineering, research and development....... 883 883
Other operating income, net................. -- 86 -- 86
------- ------- ------- -------
Operating income............................ 8,386 3,614 (820) 11,180
Interest expense, net....................... 2,273 166 7,861(c) 10,300
Other nonoperating expense, net............. 145 -- -- 145
------- ------- ------- -------
Income from continuing operations before
income taxes.............................. $ 5,968 $ 3,448 $(8,681) $ 735
======= ======= ======= =======
Ratio of earnings to fixed charges(1)....... 1.1x
</TABLE>
- ---------------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
include income from continuing operations before income taxes plus fixed
charges. Fixed charges consist of interest expense, amortization of debt
issuance costs and a portion of rental expense assumed representative of the
interest factor.
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of
Operations
30
<PAGE> 35
AIRXCEL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AIRXCEL CRISPAIRE PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales.................................. $ 47,211 $26,059 $73,270
Cost of sales.............................. 35,518 18,860 $ 154(a) 54,532
------- ------- ------- -------
Gross profit............................... 11,693 7,199 (154) 18,738
Selling, general and administrative
expenses................................. 4,763 3,977 361(a)(b) 9,101
Engineering, research and development...... 639 639
Other operating income, net................ -- 54 -- 54
------- ------- ------- -------
Operating income........................... 6,930 2,637 (515) 9,052
Interest expense, net...................... 1,161 140 6,424(c) 7,725
Other nonoperating expense, net............ 98 -- -- 98
------- ------- ------- -------
Income from continuing operations before
income taxes............................. $ 5,671 $ 2,497 $(6,939) $ 1,229
======= ======= ======= =======
Ratio of earnings to fixed charges(1)...... 1.2x
</TABLE>
- ---------------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
include income from continuing operations before income taxes plus fixed
charges. Fixed charges consist of interest expense, amortization of debt
issuance costs and a portion of rental expense assumed representative of the
interest factor.
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of
Operations
31
<PAGE> 36
AIRXCEL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AIRXCEL CRISPAIRE PRO FORMA PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Net sales................................... $ 43,907 $ 29,296 -- $73,203
Cost of sales............................... 33,489 20,548 $ 154(a) 54,191
------- ------- ------- -------
Gross profit................................ 10,418 8,748 (154) 19,012
Selling, general and administrative
expenses.................................. 3,063 4,079 1,103(a)(b) 8,245
Engineering, research and development....... 841 841
Other operating income, net................. -- 44 -- 44
------- ------- ------- -------
Operating income............................ 7,355 3,872 (1,257) 9,970
Interest expense, net....................... 2,436 108 5,181(c) 7,725
Other nonoperating expense, net............. 10 -- -- 10
------- ------- ------- -------
Income from continuing operations before
income taxes.............................. $ 4,909 $ 3,764 $(6,438) $ 2,235
======= ======= ======= =======
Ratio of earnings to fixed charges(1)....... 1.3x
</TABLE>
- ---------------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
include income from continuing operations before income taxes plus fixed
charges. Fixed charges consist of interest expense, amortization of debt
issuance costs and a portion of rental expense assumed representative of the
interest factor.
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of
Operations
32
<PAGE> 37
AIRXCEL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
1. HISTORICAL FINANCIAL STATEMENTS
Airxcel has a December 31 fiscal year-end. The unaudited historical
statements of operations of Airxcel for the nine-month periods ended September
30, 1996 and 1997 were derived from unaudited financial statements included
herein. The historical statement of operations of Airxcel for the year ended
December 31, 1996 were derived from audited financial statements included
herein. Crispaire has an October 31 fiscal year-end. The unaudited historical
financial statements of Crispaire for the fiscal year ended December 31, 1996
and the nine-month periods ended September 30, 1996 and 1997 were derived from
unaudited financial statements.
2. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS:
(a) Reflects amortization of identifiable intangible assets over periods
ranging from five to 40 years; amortization of goodwill over 40 years and
depreciation of the increase in the carrying value of certain property, plant,
and equipment related to the Acquisition on a straight-line basis over periods
ranging from five to 20 years. Eighty percent of depreciation is allocated to
cost of sales; 20 percent of depreciation is allocated to selling, general and
administrative expenses.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------ -----------------
1996 1996 1997
------------ ------ ------
<S> <C> <C> <C>
Amortization of identifiable intangible
assets..................................... $ 933 $ 700 $ 700
Amortization of goodwill..................... 778 584 584
Increase in depreciation expense allocated to
selling, general and administrative
expenses................................... 51 38 38
------ ------ ------
$1,762 $1,322 $1,322
====== ====== ======
Increase in depreciation expense allocated to
cost of sales.............................. $ 205 $ 154 $ 154
====== ====== ======
</TABLE>
(b) In connection with the Acquisition, the President of Crispaire has
agreed to modify his employment and compensation agreements such that his
continuing compensation will be reduced. Adjustment reflects the resulting
decrease in the President's compensation of $1,147, $961 and $219 for the year
ended December 31, 1996 and for the nine-month periods ended September 30, 1996
and 1997, respectively.
33
<PAGE> 38
AIRXCEL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF
OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(c) Reflects the net change in interest expense:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------ -------------------
1996 1996 1997
------------ ------- -------
<S> <C> <C> <C>
Interest expense related to the Notes
issued pursuant to the Offering........ $ 9,900 $ 7,425 $ 7,425
Elimination of historical interest
expense related to Airxcel's debt
retired using the proceeds of the
Offering............................... (2,169) (1,113) (2,195)
Elimination of historical interest
expense of Crispaire for debt not
assumed as part of the Acquisition..... (166) (140) (108)
Amortization of deferred financing costs
incurred in the Offering, over the
10-year term of the Notes.............. 400 300 300
Elimination of historical amortization of
financing costs related to the
Company's debt retired using the
proceeds of the Offering............... (104) (48) (241)
------- ------- -------
Net increase in interest expense......... $ 7,861 $ 6,424 $ 5,181
======= ======= =======
</TABLE>
34
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations covers periods before completion of the Acquisition. The following
discussion and analysis should be read in conjunction with "Selected Financial
and Other Data" and the Financial Statements and Notes thereto included
elsewhere in this Prospectus. Except for the historical information contained
herein, the discussion in this Prospectus contains forward-looking statements
that involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
Prospectus should be read as being applicable to all related forward-looking
statements wherever they appear in this Prospectus. The Company's actual results
could differ materially from those discussed here. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and in the section entitled "Risk Factors," as well as those discussed
elsewhere in this Prospectus.
GENERAL
The Company is a leading designer, manufacturer and marketer of RV air
conditioners, specialty wall mount air conditioners, ECUs and heat pumps for
various applications. The combination of RVP and Crispaire is the first step in
the Company's strategy to establish itself as the leading designer, manufacturer
and marketer of specialty heating, air conditioning and water heating products.
The Company believes that it is well positioned to effectively pursue this
strategy with a leading position in each of its principal markets and a range of
products serving separate customer bases. The Company will conduct its business
through two distinct operating divisions: The Recreation Vehicle Products (RVP)
Division and the Crispaire Division. Each of the divisions will continue to
maintain its own sales, marketing, engineering, manufacturing and accounting
personnel. The Company does not anticipate significant savings from
consolidation of functions. However, the Company does expect improved volume
discounts on similar component purchases through master contracts with
suppliers.
The combination of RVP and Crispaire creates a diversified specialty air
conditioning company with entrenched, leading market share in two of the largest
markets they serve: 55% of the RV air conditioning market in 1996 and an
estimated 65% of the telecommunication shelter market in 1996. By combining the
major supply purchasing contracts, it is anticipated that at least a 1% or
$700,000 savings in the annual purchases of raw materials and components of the
combined Company would be achieved. Management believes that the Company will
benefit from RVP's low variable cost structure and its cost controlling culture,
and that the Company will be able to streamline Crispaire's operations to
achieve additional cost savings. Additionally, management believes that the
Company will be able to leverage off of Crispaire's proven success in
identifying new, emerging markets and customizing its products to suit the needs
of its customers.
In certain of the niche markets in which the Company competes, OEMs and
other customers (as is sometimes the case with the telecommunications shelters)
often rely on the Company to design, engineer, manufacture and conduct quality
control testing in order to create or adapt a product to meet certain
engineering or other industry specifications. The Company believes its ability
to satisfy these demands on a consistent, timely and economical manner is a
reason that the Company enjoys strong relationships with its customers. In
addition, the price of the Company's units represent a small portion of the cost
of the customer's end product. For instance, the cost of a unit which provides
environmental control for telecommunication shelters represents a very small
percentage of the cost of the circuitry and service which the unit protects, and
the cost of an RV air conditioning unit to OEMs represents a small percentage of
the entire cost of the vehicle. The Company believes its customers value its
strong reputation, dependability, innovative product design and engineering and
make purchasing decisions on these merits in addition to system price. The
Company believes that these factors protect it from competition as well as
protect the Company's operating margin.
35
<PAGE> 40
The Company is a diversified specialty air conditioning company of a
significant size and diversified product mix such that the impact of any
industry cyclical effects and some general economic effects are minimized.
Additionally, RVP and Crispaire have a limited international presence and will
utilize common international sales representatives (unless other agreements are
in place) and strategy to improve its presence.
RESULTS OF OPERATIONS -- AIRXCEL
GENERAL
RVP is the leading manufacturer of RV air conditioners. RVP has sold over
two million units under the brand name "Coleman". RVP sells to OEMs and
aftermarket distributors. OEMs produce RVs year round with only minor
fluctuations due to seasonality. RV sales are, however, sensitive to general
economic conditions and have shown significant correlation to the movements in
consumer borrowing rates. RVP sells aftermarket products through distributors
who, in turn, may sell to retailers. The aftermarket experiences seasonality
with higher sales in the late spring and early summer months. Aftermarket sales
and, to a much lesser degree, RV sales are negatively impacted by weather
characterized as cold-wet springs. Aftermarket sales are not as affected as the
sales to OEMs by adverse general economic conditions because this market
generates sales from the existing base of RVs and does not rely on new RV sales.
Future sales from aftermarket replacements and from favorable demographic
changes appear positive. There are currently 8.6 million RVs in use, and
management expects the historic trend of 100,000 new households purchasing RVs
per year since 1980 to continue. The average age of an RV owner is 48 years old,
and as baby boomers continue to enter such age group at increasing rates over
the next 10 to 15 years, the RV industry should experience above average growth.
In addition, there is a strong population growth in the South and West regions
of the U.S., where the RV lifestyle is more popular. The U.S. Census Bureau
projects over 71% growth for the 45-64 year old age group in the West by the
year 2010, compared to the projected national growth rate of 51% for this age
group.
RVP manufactures and sells five models of RV air conditioners. RVP builds
aerodynamically designed units which are more attractive and functional than the
standard box style sold by RVP's competitors. RVP leads the industry in
producing units which combine quiet operation and high cooling capacity. In
addition, RVP manufactures air conditioning units for elevators and heavy duty
applications such as oil logging trucks.
The following table sets forth, for the periods indicated, selected items
from Airxcel's statement of operations expressed as a percentage of net sales.
Any trends reflected by the following table may not be indicative of futures
results:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
FISCAL YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- -----------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............................... 74.1 75.8 75.3 75.2 76.3
Gross profit..................................... 25.9 24.2 24.7 24.8 23.7
Selling, general and administrative expenses..... 14.0 19.6 10.3 10.1 7.0
Operating income................................. 11.9 4.6 14.4 14.7 16.8
Interest expense................................. 2.3 2.0 3.9 2.5 5.6
Income from continuing operations before income
taxes.......................................... 9.5 2.5 10.3 12.0 11.2
Net income (loss)................................ 4.7 (0.8) 1.8 3.5 (1.9)
</TABLE>
36
<PAGE> 41
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
Net sales. Net sales decreased 7.0%, from $47.2 million in the nine month
period ended September 30, 1996, to $43.9 million in the nine month period ended
September 30, 1997. Net sales decreased primarily due to weaker motor home and
aftermarket sales, which the Company believes was the result of unseasonably
cold weather.
Gross profit. Gross profit decreased 10.9% from $11.7 million in the nine
month period ended September 30, 1996 to $10.4 million in the nine month period
ended September 30, 1997. The decrease was principally attributable to weaker
motor home and aftermarket sales, which the Company believes was the result of
unseasonably cold weather. During the nine month periods ended September 30,
1996 and 1997, gross margin also decreased from 24.8% to 23.7%.
Selling, general and administrative expenses (including amortization of
intangible assets and computer software). Selling, general and administrative
expense decreased 35.7% from $4.8 million in the nine month period ended
September 30, 1996 to $3.1 million in the nine month period September 30, 1997.
Selling, general and administrative expenses as a percentage of net sales
decreased from 10.1% in the nine month period ended September 30, 1996 to 7.0%
in the nine month period ended September 30, 1997. The decrease was primarily
due to $458,000 of compensation expense incurred in 1996 related to stock
compensation and a decrease in amortization of intangibles of $856,000 due to
the fact that the carrying value of certain intangibles were fully amortized by
the end of 1996.
Interest expense. Interest expense, net increased 109.8%, from $1.2
million in the nine month period ended September 30, 1996 to $2.4 million in the
nine month period ended September 30, 1997, primarily as a result of the
issuance of $10.0 million principal amount of subordinated debt in October 1996
and increases in the Company's borrowings on its existing credit facility and
interest on capitalized lease obligations, partially offset by lower interest
rates on the Company's existing credit facility.
EBITDA. EBITDA was $8.5 million in the nine month period ended September
30, 1996 and $8.0 million in the nine month period ended September 30, 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net sales. Net sales increased 4.3%, from $55.8 million in 1995 to $58.2
million in 1996. Net sales increased primarily due to the increase in shipments
to Fleetwood and shipments of aftermarket product related to the Coast
distribution agreement.
Gross profit. Gross profit increased 6.1%, from $13.5 million in fiscal
1995 to $14.4 million in fiscal 1996. Gross margin remained relatively unchanged
at 24.3% and 24.7% for the years ended December 31, 1995 and 1996, respectively.
The increase in gross profit was due primarily to the increase in shipments to
Fleetwood and shipments of aftermarket product related to the Coast distribution
agreement.
Selling, general and administrative expenses (including amortization of
intangible assets and computer software). Selling, general and administrative
expenses decreased 45.4% from $11.0 million in 1995 to $6.0 million in 1996
primarily due to $4.3 million of expenses incurred in 1995 related to costs
associated with compensating certain option holders for their personal tax
liabilities incurred when such options were exercised. Selling, general and
administrative expense as a percentage of net sales decreased from 19.6% in 1995
to 10.3% in 1996 primarily due to this $4.3 million compensation expense.
Interest expense. Interest expense, net increased from $1.1 million in
1995 to $2.3 million in 1996, primarily as a result of the issuance of $14
million of subordinated debt in August of 1996.
EBITDA. EBITDA increased 86.7%, from $5.6 million in 1995 to $10.4 million
in 1996. EBITDA adjusted in 1995 for a one-time expense related to $4.3 million
of expenses incurred in 1995 related
37
<PAGE> 42
to costs associated with compensating certain option holders for their personal
tax liabilities incurred when such options were exercised increased 5.5% from
$9.8 million in 1995 to $10.4 in 1996. The increase in this adjusted EBITDA was
principally a result of the increase in net sales in 1996 and the stability of
Airxcel's gross margin.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales. Net sales decreased 0.7%, from $56.2 million in 1994 to $55.8
million in 1995. Net sales slightly decreased primarily due to the relatively
flat nature of the RV industry as a whole. The Company's results were marginally
better than the industry, which decreased 3.5% for the same period.
Gross profit. Gross profit decreased 7.0%, from $14.5 million in 1994 to
$13.5 million in 1995. Gross margin decreased from 25.9% in 1994 to 24.3% in
1996. The decreases were due primarily to the relatively flat nature of the
industry and the increase in price of copper and aluminum, key materials in
Airxcel's manufacturing processes.
Selling, general and administrative expenses (including amortization of
intangible assets and computer software). Selling, general and administrative
expenses increased 39.0%, from $7.9 million in 1994 to $11.0 million in 1995.
Selling, general and administrative expense as a percentage of net sales
increased from 14.0% in 1994 to 19.6% in 1995. The selling, general and
administrative expenses as a percentage of sales increased in 1995 due to $4.3
million related to costs associated with certain option holders for their
personal tax liabilities incurred when such options were exercised.
Interest expense. Interest expense, net decreased from $1.3 million in
1994 to $1.1 million in 1995, primarily as result of lower average outstanding
borrowings during 1995.
EBITDA. EBITDA decreased 42.6%, from $9.7 million in 1994 to $5.6 million
in 1995. EBITDA adjusted in 1995 for a one-time expense related to $4.3 million
related to costs associated with certain option holders for their personal tax
liabilities incurred when such options were exercised, increased 1.5% from $9.7
million in 1994 to $9.8 million in 1995. The increase in this Adjusted EBITDA
was principally as a result of the slight reduction in selling, general and
administrative expenses partially offsetting a decrease in the net sales.
38
<PAGE> 43
SELECTED QUARTERLY RESULTS OF OPERATIONS
The following table sets forth certain unaudited statements of operations
data for the eleven quarters ended September 30, 1997, as well as such data
expressed as a percentage of Airxcel's net sales for the period indicated. This
data has been derived from unaudited financial statements that, in the opinion
of Airxcel, include all adjustments (consisting of normal recurring adjustments
except for adjustments related to the discontinued Faulkner manufacturing
division) necessary for fair presentation of such information when read in
conjunction with Airxcel's Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------------------
MAR. JUNE SEPT. DEC. MAR. JUNE SEPT. DEC. MAR. JUNE SEPT.
31, 30, 30, 31, 31, 30, 30, 31, 31, 30, 30,
1995 1995 1995 1995 1996 1996 1996 1996 1997 1997 1997
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales........... $15,257 $15,029 $14,351 $11,151 $14,726 $18,298 $14,187 $10,958 $13,532 $15,428 $14,947
Cost of goods
sold.............. 11,575 11,421 11,111 8,150 11,111 13,583 10,824 8,285 10,241 11,456 11,792
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit........ 3,682 3,608 3,240 3,001 3,615 4,715 3,363 2,673 3,291 3,972 3,155
Selling, general and
administrative
expenses(1)....... 1,777 1,719 1,527 5,936 1,815 1,460 1,487 1,218 1,227 905 930
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income.... 1,905 1,889 1,713 (2,935) 1,800 3,255 1,876 1,455 2,064 3,067 2,225
Interest expense.... 288 319 257 233 363 366 432 1,112 564 944 928
Income (loss) from
continuing
operations before
income taxes...... 1,576 1,546 1,408 (3,147) 1,397 2,815 1,459 297 1,480 2,138 1,291
Net income (loss)... $ 573 $ 405 $ 986 $(2,417) $ 483 $ 1,080 $ 81 $ (570) $ 132 $ 705 $(1,668)
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
PERCENTAGE OF NET SALES
-------------------------------------------------------------------------------------------------
Net sales........... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods
sold.............. 75.9 76.0 77.4 73.1 75.5 74.2 76.3 75.6 75.7 74.3 78.9
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit........ 24.1 24.0 22.6 26.9 24.5 25.8 23.7 24.4 24.3 25.7 21.1
Selling, general and
administrative
expenses(1)....... 11.6 11.4 10.6 53.2 12.3 8.0 10.5 11.1 9.1 5.9 6.2
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income.... 12.5 12.6 11.9 (26.3) 12.2 17.8 13.2 13.3 15.3 19.9 14.9
Interest expense.... 1.9 2.1 1.8 2.1 2.5 2.0 3.0 10.1 4.2 6.1 6.2
Income (loss) from
continuing
operations before
income taxes...... 10.3 10.3 9.8 (28.2) 9.4 15.4 10.3 2.8 10.9 13.9 8.6
Net income (loss)... 3.8% 2.7% 6.9% (21.7)% 3.3% 5.9% 0.6% (5.2)% 1.0% 4.6% (11.2)%
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ---------------
(1) Selling, general and administrative expenses for the quarter ended December
31, 1995 includes $4,279 of nonrecurring expenses related to costs incurred
to compensate certain option holders for their personal tax liabilities
incurred when such options were exercised.
39
<PAGE> 44
The Company's business is subject to seasonal fluctuations. Given the
Company's historical results, management anticipates that the majority of the
Company's net sales will be during the second and third quarters. As a result,
the Company expects its sales and results of operations generally to be lower in
the first and fourth quarters. The Company believes that this seasonality will
continue in the future. The Company's quarterly results may fluctuate as a
result of various factors, including factors beyond the Company's control, such
as general economic conditions and actions of competitors. Accordingly, results
of operations in any quarter will not necessarily be indicative of the results
that may be achieved for full fiscal year or any future quarters.
RESULTS OF OPERATIONS -- CRISPAIRE
GENERAL
Crispaire is a leading designer, manufacturer and marketer of specialty
heating, air conditioning and water heating products primarily for industrial
and commercial uses. Crispaire's products are marketed under the "Marvair" trade
name to three industry segments -- telecommunications, school and construction.
Crispaire sells vertical wall mount air conditioners and heat pumps, specialty
heat pumps, ECUs, heat pump water heaters and various applied products. The
majority of such products range in capacity from a half ton to five tons.
Crispaire's products are sold worldwide primarily by its internal sales force
and independent sales agents, as well as international distributors for overseas
sales. Crispaire's main product lines are targeted towards two primary industry
segments: telecommunications and schools.
Revenues. Crispaire's net revenues increased at an average CAGR of 25%
from fiscal 1993-1996. A large portion of this growth is attributed to
Crispaire's success in new and progressive product lines and an increased
customer base as they have moved aggressively into the telecommunications
market. This growth resulted from Crispaire's leading positions in the supply of
HVAC units to two major markets -- telecommunication shelters and schools.
Crispaire's gross margin increased from 26.4% in 1995 to 27.5% in 1996. The
gross margin improvement reflects the efforts of Crispaire's management to
de-emphasize modular expansion and emphasize the telecommunication and school
markets in which the margins are greater and more opportunities exist. With the
substantial volume increases in Crispaire's core product lines, gross profit
rose to almost $9.4 million in 1996 from $7.2 million in 1995.
The telecommunications industry has experienced rapid growth due to
deregulation and continued rapid growth is anticipated. Such growth is expected
to result in an increased demand for telecommunication facilities such as
shelters and cabinets as new wireless networks are constructed and old networks
are overlaid with digital technology. Suppliers of wireless communications
equipment should continue to benefit from the expected acceleration in the
deployment of wireless networks. Beginning in the 1970's, many schools,
primarily in the Sunbelt region of the U.S., began installing air conditioners
to their facilities. Today, one-third of the nation's schools, serving more than
14 million students, need extensive repair or renovation. According to the U.S.
General Accounting Office for School Facilities, 20,104 public elementary
schools nationwide are in need of HVAC repair with an estimated cost of $3
billion. In addition, it is estimated that school districts need to build 6,000
schools by the year 2005 to meet the growing student population. The public
elementary school HVAC new construction market is estimated to be $315 million
annually through the year 2005.
40
<PAGE> 45
The following table sets forth, for the periods indicated, selected items
from Crispaire's statement of operations expressed as a percentage of net sales.
Any trends reflected by the following table may not be indicative of future
results.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER
31,
-------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Net sales.......................................................... 100% 100% 100%
Cost of goods sold................................................. 75.1% 73.6% 72.5%
Gross profit....................................................... 24.9% 26.4% 27.5%
Selling, general and administrative expenses....................... 16.9% 17.8% 17.6%
Operating income................................................... 8.2% 8.7% 10.1%
Interest expense, net.............................................. 0.7% 0.3% 0.4%
Net income......................................................... 7.6% 8.4% 9.6%
</TABLE>
COMPARISON OF NINE MONTH PERIODS ENDED JULY 31, 1996 AND JULY 31, 1997
Net sales. Net sales increased 15.9 %, from $24.6 million in the nine
months ended July 31, 1996 to $28.5 million in the nine months ended July 31,
1997. Net sales increased primarily due to an increase in sales in the
telecommunications market, particularly driven by sales of ECUs which are mainly
purchased for use in PCS cabinets and other wireless services. Management
expects that the Company will continue to generate increasing sales from this
sector as it has in previous periods and anticipates continued significant
growth for the foreseeable future in the telecommunications segment due to the
continuing expansion and acceptance of all types of communications and
information systems, including cellular, satellite and PCS. Another contributing
factor to the increase in sales was the successful introduction of new products
for the school market, including the new PTHP type.
Gross profit. Gross profit increased 21.0% from $7.0 million in the nine
months ended July 31, 1996 to $8.5 million in the nine months ended July 31,
1997. Gross margin increased 1.2% from
28.5% to 29.7% over the same periods. Gross margin improved primarily due to a
continuing shift in the mix of products sold away from lower margin products and
toward higher margin products. This continuing trend of improving gross margin
is due to management's decision over the past five years to dedicate more time
and resources to higher margin product lines such as interior classroom heat
pumps, namely the Scholar and the Graduate, as well as the majority of products
sold to the telecommunications industry.
Operating expenses. Operating expenses increased 7.0% from $4.3 million in
the nine months ended July 31, 1996 to $4.6 million in the nine months ended
July 31, 1997. Operating expense as a percentage of sales improved 1.4% from
17.4% to 16.0% over the same periods. The improvement in operating expense as a
percentage of sales which resulted from levering a greater amount of sales over
certain fixed costs was partially offset by additional expenses associated with
additional staffing in sales and engineering. The additional sales cost were a
result of an increase in the number of sales people and support personnel and
facilities associated with them. The increased engineering expenses were
incurred to support the development of new product initiatives in both the
telecommunications and school industries and included additional engineers,
support personnel and facilities associated with them.
Interest expense. Interest expense decreased 16.5%, from $127,300 in the
nine months ended 1996 to $106,300 in the nine months ended July 31, 1997.
EBITDA. EBITDA increased 43.3% from $2.9 million in the nine months ended
July 31, 1996 to $4.2 million in the nine months ended July 31, 1997,
principally a result of the increase in sales and improvement in gross margin
and operating expenses as a percentage of sales.
41
<PAGE> 46
COMPARISON OF FISCAL YEARS 1995 AND 1996
Net sales. Net sales increased 25.0%, from $27.3 million in fiscal 1995 to
$34.1 million in fiscal 1996. Net sales increased primarily due to an increase
in sales in the telecommunications market, following similar trends discussed in
the comparison of the nine month periods ended July 31st. More specifically, the
Company generated significant sales from its first full year of supplying ECUs
to Motorola for their PCS wireless telecommunication shelters. Management feels
that these sales further support the expectation of significant growth in the
telecommunications market. In addition, the Company generated international
sales from sale of ECUs to the Spanish telecommunications market as they
continue their cellular build-out.
Gross profit. Gross profit increased 30.3% from $7.2 million in fiscal
1995 to $9.4 million in fiscal 1996. Gross margin increased 1.1% from 26.4% in
fiscal 1995 to 27.5% in fiscal 1996. The improvement was primarily due to a
continuing trend toward a product mix more heavily focused on the
telecommunications and school markets, both higher margin products, as discussed
in the comparison of the nine month periods ended July 31, 1996 and 1997.
Operating expenses. Operating expenses increased 24.1% from $4.8 million
in fiscal 1995 to $6.0 million in fiscal 1996. Selling, general and
administrative expenses as a percentage of net sales remained approximately the
same equal to 17.8% in fiscal 1995 and 17.6% in fiscal 1996. Operating expenses
in fiscal 1996 included non-recurring expenses, including excess executive
management compensation associated with the exercise of management options and
certain legal expenses.
Interest expense. Interest expense increased 55.8%, from $93,500 in fiscal
1995 to $145,700 in fiscal 1996, primarily as a result of interest paid on plant
expansion financing.
EBITDA. EBITDA increased 42.7% from $2.6 million in fiscal 1995 to $3.7
million in fiscal 1996. EBITDA margin improved 1.3% from 9.4% in fiscal 1995 to
10.7% in fiscal 1996. EBITDA adjusted for non-recurring expenses, as discussed
in operating expenses, would have increased 47.1% from $3.4 million in fiscal
1995 to $5.0 million in fiscal 1996. EBITDA margin adjusted for non-recurring
expenses increased 2.1% from 12.5% in fiscal 1995 to 14.6% in fiscal 1996,
principally a result of the increase in sales and the improvement in gross
margin and operating expenses as a percentage of sales.
COMPARISON OF FISCAL YEARS 1994 AND 1995
Net sales. Net sales increased 13.1%, from $24.2 million in fiscal 1994 to
$27.3 million in fiscal 1995. Net sales increased primarily due to both strong
growth in the telecommunications market as well as a 188% increase in sales of
Scholar units for use in classrooms. The Scholar sales increased dramatically as
the school market began to recognize and understand the benefits the unit
offered. In addition, telecommunications sales were benefitted from the new
Motorola orders for the ECU units in their PCS telecommunication shelters.
Gross profit. Gross profit increased 19.8% from $6.0 million in fiscal
1994 to $7.2 million in fiscal 1995. Gross margin improved 1.5% from 24.9% in
fiscal 1994 to 26.4% in fiscal 1995. The improvement was primarily due to a
trend toward a greater focus on products of higher margin, including
telecommunications and school markets, as discussed in the comparison of the
nine month periods ended July 31st. This increase was primarily attributable to
change in product mix from modular to telecommunications.
Operating expenses. Operating expenses increased 18.6% from $4.1 million
in fiscal 1994 to $4.8 million in fiscal 1995. Operating expenses as a
percentage of net sales increased from 16.9% in fiscal 1994 to 17.8% in fiscal
1995. This increase primarily reflected a volume increase on commission sales,
which the Company ties to the sale of higher margin products, and additional
sales and engineering staff to accommodate increased focus and efforts in these
areas.
Interest expense. Interest expense decreased from $159.6 thousand in
fiscal 1994 to $93.5 thousand in fiscal 1995 primarily as a result of a decrease
in the balance of the daily line of credit.
42
<PAGE> 47
EBITDA. EBITDA increased 19.5% from $2.2 million in fiscal 1994 to $2.6
million in fiscal 1995. EBITDA margin improved 0.5% from 8.9% in fiscal 1994 to
9.4% in fiscal 1995, principally a result of the increase in sales and the
improvement in gross margin and operating expenses as a percentage of sales.
SELECTED QUARTERLY RESULTS OF OPERATIONS
The following table sets forth certain unaudited statements of operations
data for the eleven quarters ended July 31, 1997, as well as such data expressed
as a percentage of the Crispaire's net sales for the periods indicated. This
data has been derived from unaudited financial statements that, in the opinion
of Crispaire, include all adjustments (consisting only of normal recurring
adjustments) necessary for fair presentation of such information when read in
conjunction with the Crispaire's Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------
JAN. APRIL JULY OCT. JAN. APRIL JULY OCT. JAN. APRIL JULY
31, 30, 31, 31, 31, 30, 31, 31, 31, 30, 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997 1997 1997
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales........... $5,827 $6,683 $7,562 $7,232 $7,018 $8,628 $8,978 $9,514 $8,275 $9,220 $11,050
Cost of goods
sold............... 4,362 4,914 5,493 5,335 5,049 6,092 6,473 7,144 6,015 6,473 7,574
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Gross profit........ 1,465 1,769 2,069 1,897 1,969 2,536 2,505 2,370 2,260 2,747 3,476
Selling, general and
administrative
expenses........... 918 1,267 1,464 1,192 1,174 1,539 1,566 1,728 1,298 1,534 1,725
Operating income.... 559 498 618 705 811 1,023 937 666 979 1,227 1,753
Interest expense
(income), net...... (5) (3) 7 94 49 42 36 18 18 39 49
Net income.......... $ 564 $ 501 $ 611 $ 611 $ 762 $ 981 $ 901 $ 648 $ 961 $1,188 $1,704
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== =======
PERCENTAGE OF NET SALES
---------------------------------------------------------------------------------------
Net sales........... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods
sold............... 74.8% 73.5% 72.6% 73.8% 71.9% 70.6% 72.1% 75.1% 72.7% 70.2% 68.5%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Gross profit........ 25.2% 26.5% 27.4% 26.2% 28.1% 29.4% 27.9% 24.9% 27.3% 29.8% 31.5%
Selling, general and
administrative
expenses........... 15.8% 19.0% 19.4% 16.5% 16.7% 17.8% 17.4% 18.2% 15.7% 16.6% 15.6%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Operating income.... 9.6% 7.4% 8.2% 9.7% 11.6% 11.9% 10.5% 7.0% 11.8% 13.3% 15.8%
Interest expense
(income), net...... (0.1)% (0.1)% 0.1% 1.3% 0.7% 0.5% 0.4% 0.2% 0.2% 0.4% 0.4%
Net income.......... 9.7% 7.5% 8.1% 8.4% 10.9% 11.4% 10.1% 6.8% 11.6% 12.9% 15.4%
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== =======
</TABLE>
In the early 1970's, the management of Crispaire left Muncie Gear Works to
form Crispaire, at which time the majority of revenues were derived from HVAC
renovation of existing classrooms during the months of May through September.
Approximately 50% of sales to the school markets occurred during the months of
June, July and August. October 31 was the optimum time for financial reporting
due to lower inventory and receivables levels, a strong liquidity position and
slower sales during the months of October and November which resulted in the
ability to dedicate greater time to financial reporting.
As Crispaire entered and grew its telecommunications business segment, its
operations became less seasonal. Today, Crispaire's operating performance
demonstrates minimal seasonality. In 1996, sales were spread out fairly evenly
throughout the year with 61% of total revenues to the telecommunications
industry and 23% to the school industry including new construction which is less
seasonal than renovation.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations through a combination of
funds generated from operations, bank credit facilities and the private sales of
debt and equity securities. Working
43
<PAGE> 48
capital requirements generally precede the realization of net sales. The
Company's liquidity needs will arise primarily from debt service for
indebtedness incurred in connection with the Acquisition and the funding of
planned capital expenditures. The Company incurred substantial indebtedness in
connection with the Acquisition. As of September 30, 1997, on a pro forma basis,
after giving effect to the Acquisition and adjusting for the Offering (including
the application of the net proceeds therefrom), the Company would have had
outstanding $90 million of indebtedness, consisting of $90 million of Notes.
As of September 30, 1997, Holdings has preferred stock plus accrued
dividends of $9,306,634 and $4,665,572 of junior subordinated notes outstanding.
Although the preferred stock is not subject to redemption and no cash payments
are required on the notes until November 2008, Holdings is entirely dependent
upon Airxcel for its cash requirements (see Note 1 to Airxcel historical
financial statements).
Interest payments under the Credit Facility and interest payments on the
Senior Subordinated Notes will represent significant liquidity requirements for
the Company. The borrowings under the Credit Facility will bear interest at
floating rates based upon the interest rate option selected by the Company. For
a description of the Credit Facility, See "Description of the Revolving Credit
Facility."
The Company's capital expenditures were $843,090, $355,990, $458,549 and
$558,726 in fiscal 1994, 1995, 1996 and the nine month period ended September
30, 1997, respectively. The Company may seek to make selective acquisitions
although the Company currently has no commitments with respect to such. Future
acquisitions may require third party financing and there can be no assurance
that such financing could be obtained. Expected capital expenditures for 1998
are expected to be $1.1 million and to be used primarily for maintenance.
The Company estimates its principal source of cash to fund its liquidity
needs will be net cash provided by operating activities and from availability
under the Credit Facility. The Company believes that net cash expected to be
generated from operations, together with the amounts available under the Credit
Facility will be adequate to meet its debt service requirements, capital
expenditures and working capital needs for the foreseeable future, although no
assurance can be given in this regard. The Company's future operating
performance and ability to service or refinance the Senior Subordinated Notes
and to extend or refinance the Credit Facility will be subject to future
economic conditions and to financial, business and other factors, many of which
are beyond the Company's control. The Company may be required to seek additional
sources of funds in the future, and there can be no assurance that such funds
will be available on satisfactory terms or at all. Failure to obtain such
financing on a timely basis could have a material adverse effect on the
Company's business, financial condition and results of operations.
INFLATION
Results of operations have not been significantly affected by inflation
since inception. The Company, in the normal course of business, has been able to
offset the impact of increased costs through operating efficiencies and selected
price increases.
44
<PAGE> 49
INDUSTRY
RECREATION VEHICLES
Recreation vehicles ("RVs") encompass a wide variety of mobile means of
transportation and temporary dwelling, from the largest motor coaches to small
towables. In 1996, according to the Recreation Vehicle Industry Association
("RVIA"), RV manufacturers shipped units (excluding van conversion vehicles)
with an aggregate retail value of approximately $6.3 billion. RVs are used for a
variety of purposes such as camping, travel, vacation, retirement activities and
outdoor activities.
According to a University of Michigan study sponsored by the RVIA,
approximately 8.2 million households owned RVs in 1993, an increase from 7.7
million in 1988 and 5.8 million in 1980. RV ownership has grown by an average of
100,000 units per year over the last 17 years. Management currently estimates
that one out of every eleven households in the U.S. owns an RV.
RVs are broadly classified as "motor homes" and "towables." The Company
typically provides air conditioning units to motor homes and larger towables.
Motor homes are self-propelled and grouped into three main classes: A, B, and C.
Towables are mobile living spaces that are attached to a mobile vehicle and
include fifth wheel trailers, truck campers, and folding camper trailers, are
smaller and less expensive than motor homes. The following table summarizes the
various classes and types of RVs and the relative characteristics of each:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
AVG. UNITS
RETAIL SOLD AVERAGE
NUMBER OF PRICE (000'S) MEDIAN INCOME AVERAGE
TYPE A/CS (1996) 1996 AGE (OWNER) (000'S) SIZES DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
[MOTOR HOME Class A Motor home 2 standard $78,965 36.5 63 $39.0 30'-35' Self-propelled,
GRAPHIC] temporary living
for recreational,
travel, or camping
[MOTOR HOME Class B Motor home 1 standard $42,953 4.1 63 $39.0 18' Self-propelled,
GRAPHIC] van-chassis
[MOTOR HOME Class C Motor home 1 standard $47,060 14.7 63 $39.0 20'-24' Self-propelled
GRAPHIC] 28'-30' mini, built on van
frame and RV
manufacturer adds
the living area
[TRAVEL TRAILER Conventional Travel 1 standard $14,213 75.4 52 $41.0 20'-35' Towed by bumper or
GRAPHIC] Trailer frame hitch
[FIFTH WHEEL Fifth-wheel Travel 1 or 2 standard $22,673 48.5 52 $41.0 25'-35' Towed by a vehicle
TRAILER GRAPHIC] trailer with a "fifth
wheel hitch" on
top
[FOLDING CAMPING Folding Camping 0 standard (30% $4,957 57.3 43 $36.0 10'+ Towable with
TRAILER GRAPHIC] Trailer buy in collapsible
aftermarket) partial sidewalls
which unfold at
campsite
[TRUCK CAMPER Truck camper 0 standard $11,083 11.0 38 $34.0 8'-9'5" A Portable mounted
GRAPHIC] (40% buy in into a pickup
aftermarket) truck
</TABLE>
- --------------------------------------------------------------------------------
45
<PAGE> 50
The consistent growth in the RV industry is attributable to the general
maturing of the industry and several key factors including (i) the overall
increasing number of RV Owners, (ii) the growth in the number of potential
consumers, as baby boomers begin entering the typical demographic profile for
premium RV owners (iii) the changing lifestyle of the U.S. population on
average, which is aging and devoting more time to recreational activities, (iv)
an increase in population in states such as California, Florida and Texas, where
RVs are common, (v) a favorable economic environment, and (vi) the availability
of gasoline.
The average RV owner historically has been 48 years old, married with no
children living at home, with an average income of $39,000. According to the
U.S. Census Bureau, the baby boomers or the population of 45 to 64 year olds,
(the age of the average historical buyer of an RV), is expected to grow from
52.2 million in 1995 to 78.7 million in 2010, or increase by approximately
50.8%. This trend results in a large increase in the number of consumers with
significant disposable incomes and increasing amounts of leisure time.
Historically, older Americans who generally have had more disposable income have
chosen the Class A or fifth wheel trailers and recently premium motorhomes have
grown in popularity.
Throughout the United States, there are thousands of campgrounds and RV
parks that offer the RV user a variety of settings. In addition, there are RV
clubs such as the Good Sam Club and in the Family Motor Coach Association that
have over 900,000 and 100,000 members, respectively, and they sponsor RV
"rallies", offer emergency road side services, publish magazines and offer a
host of other benefits.
Traditionally, the largest group of RV buyers in the United States, with a
15.1% ownership rate, has been located in the West. Recently, there has been an
increase in population in states like California, Florida and Texas where RVs
are more common. According to the Statistical Abstract of the U.S., by 2010, the
population of 45 to 64 year olds in the Pacific, Mountain and South Atlantic
regions is expected to increase 71.8%, 60.0% and 58.1%, respectively, while the
increase in population of the same segment in the nation as a whole is expected
to be 50.8%. In addition, according to the U.S. Bureau of the Census, the 45 and
older age group, which accounted for approximately 32% of the U.S. population in
1990, is expected to grow to 40% of the U.S. population by 2010.
The Company believes as the demographics and economic factors continue to
improve, the growth in the RV industry will positively impact the sales of RV
air conditioners. The sales of RVs have historically fluctuated in accordance
with interest rates, consumer confidence and the general economy. A stable
interest rate environment is ideal in generating sales.
HVAC INDUSTRY
According to the Air Conditioning and Refrigeration Institute, the
worldwide air-conditioning market is currently estimated at $40 to $45 billion
and is expected to grow to $50 billion by 2005. While markets in Asia, Latin
America, and Eastern Europe are expanding rapidly, significant growth is also
expected in North America and Western Europe. In 1995, the US HVAC market was
estimated to be $19.2 billion and is forecasted to grow by approximately 6.8% to
reach a value of $20.5 billion by 2000. The HVAC industry grew 11% in units sold
from 1995 to 1996. In 1996, the U.S. market for the products in which Crispaire
principally competes was $950 million.
Telecommunications. The telecommunications industry has experienced rapid
growth over the past several years which is expected to continue. The number of
telecommunications sites constructed has increased from 2,305 in 1987 to 30,045
in 1996. It is estimated that the number of subscribers for wireless
communications is approximately 58.3 million and is expected to grow to 160.6
million by 2007. It is estimated that the wireless data services market will
rise to about $2.7 billion, serving approximately 62.5 million voice and data
customers by 2001. In addition, new wireless phone systems such as PCS is
expanding the wireless telecommunication sites as cellular networks serve the
same geographic area. During the last 15 years, the cellular phone industry has
46
<PAGE> 51
built approximately 22,000 antenna tower sites across the U.S., and it is
anticipated that up to 100,000 more sites may be required to accommodate the
rising number of PCS users in the next few years and the expansion of PCS
networks in the domestic and international markets. The PCS infrastructure
requires about five times as many sites as cellular networks to serve the same
area. The increasing popularity of PCS will result in more shelters and more
HVAC units. Currently 10% of U.S. companies use cellular voice services, and 53%
plan to do so within three years. According to the Cellular Telecommunications
Industry Association, revenues have grown by over 20% per year, topping $23
billion in 1996.
As the demand for wireless components, shelters, cabinets and towers
increase, manufacturing of shelters and cabinets is likely to expand as new
wireless networks are constructed and old networks are replaced with digital
technologies.
Schools. The Company estimates that approximately one third of the schools
in the U.S. serving more than 14 million students, need extensive repair or
renovation of one or more buildings, with replacement or repair of the HVAC
system being the most frequently reported needed repair. According to the U.S.
General Accounting Office for School Facilities, HVAC replacement is needed for
classrooms in 20,104 elementary schools, representing approximately $3 billion
in replacements and repairs. The Company focuses on schools which currently have
cooling or ventilation units in each classroom or need cooling or ventilation
units, including most elementary, middle and high schools and certain secondary
schools, but excluding larger schools with central air conditioning. For
September 1996, the seasonally adjusted rate of construction of public education
buildings was $29.1 billion, up from $27.1 billion in September of 1995. The
main goals of such new construction are to increase health and safety for
students by improving air quality and to increase energy efficiency. In
addition, it is estimated that by the year 2005, U.S. student enrollment in
elementary and secondary schools will increase significantly with the rising
number of annual births since 1977, or the "echo boom". The 30 year growth in
population of 5 to 13 year olds is projected by the U.S. Department of Education
to be 18.1%. Demographics indicate that the regions of highest growth are in the
warmer climates. Approximately 6,000 new schools will be needed by the year 2005
to meet such increased enrollment. In addition, many schools are adding air
conditioning as part of renovation projects. Two hundred and eighty six schools
in Los Angeles, for example, must now install or update air conditioning due to
the passing of Proposition BB of Los Angeles. The push for air conditioning in
these schools comes on the news of the expansion of the school year to a full
year in some school districts to accommodate the greater number of students.
47
<PAGE> 52
THE BUSINESS
OVERVIEW
The Company is a leading designer, manufacturer and marketer of RV air
conditioners and specialty wall mount air conditioners, ECUs and heat pumps for
various applications. The combination of RVP and Crispaire is the first step in
the Company's strategy to establish itself as the leading designer, manufacturer
and marketer of specialty heating, air conditioning and water heating products.
The Company believes that it is well positioned to effectively pursue this
strategy with leading positions in each of its principal markets and a range of
products serving separate customer bases. The combination of RVP's low cost,
high volume manufacturing expertise with Crispaire's ability to provide
customized products will allow the Company to capitalize on the growing
opportunities presented in each of its markets. The Company's pro forma net
sales and Adjusted EBITDA were approximately $93.5 million and $15.8 million in
fiscal 1996 and $93.4 million and $16.0 million in the twelve months ended
September 30, 1997, respectively.
RVP supplies a variety of air conditioners to several of the world's
largest RV original equipment manufacturers ("OEMs"), marketing these products
under the popular and well-established "Coleman" brand name. RVP believes that
its air conditioners are superior to those of its competitors due to greater air
flow capacity, cooling efficiency and more aerodynamic design. RVP's reputation
as a dependable source of high-quality, durable products has resulted in its
longterm relationships with leading RV manufacturers such as Fleetwood,
Winnebago, Gulf Stream and Jayco, who have relied on RVP for substantially all
of their RV air conditioner needs for each of the past six years. Sales to such
OEMs provide RVP with a large installed base of products which generates a
significant recurring stream of revenue through sales of parts and replacement
units in the aftermarket. Aftermarket sales to customers such as RV dealers,
supply and service centers are achieved primarily through an agreement with
Coast, the largest wholesale distributor of aftermarket products in the RV
industry. RVP believes that Coast's extensive market penetration and large sales
force provide broad aftermarket coverage and distribution capabilities which
enhance its substantial aftermarket business. In fiscal 1996, as a percentage of
Airxcel's net sales, OEM sales represented 66.3%, and aftermarket sales
represented 33.7%. In addition to serving the RV industry, RVP designs,
manufactures and markets air conditioners for marine applications, the cooling
and heating of elevators, petroleum "logging" trucks and for a wide variety of
small-space cooling applications.
Crispaire is a leading designer, manufacturer and marketer of specialty
wall mount air conditioners, ECUs and heat pumps for various applications.
Crispaire's customers are principally telecommunications companies,
manufacturers of telecommunication shelters in the cellular, cable, wireless,
satellite and PCS markets, wholesale distributors for foreign telecommunications
sales, school districts and construction companies. The Company believes that
Crispaire is the largest provider of environmental control equipment for the
U.S. telecommunication shelter market, through sales to both telecommunications
companies and manufacturers of telecommunication shelters. The Company believes
that it is positioned to benefit from growth in cellular, wireless and PCS
telecommunications markets and the resulting demand for telecommunication
shelters. The Company believes that Crispaire's focus on customer service and
quality control and its strong reputation for its ability to offer a broad and
innovative line of products in a timely manner has attracted significant
customers, including MCI, Motorola, AT&T Wireless, Lucent Technologies and other
wireless communication providers. The Company also believes that it will benefit
from an increasing need for cooling units in the nation's schools due to new
state regulations and certain building codes that mandate fresh air requirements
in classrooms, the rebuilding of school system infrastructure and the steadily
growing student population. Crispaire supplies wall mount air conditioners to
multiple school districts throughout the country, including the Los Angeles
Unified School District. Crispaire has a leading position in each of its
principal markets, through solid relationships with its customers who generally
require tailored products and a high level of customer service. Crispaire's
ability to customize products without interruption of its larger production
lines
48
<PAGE> 53
allows it to work closely with customers to develop and produce equipment that
meets their specific needs quickly and efficiently. In fiscal 1996, sales to the
telecommunication shelter industry and school industry represented 61% and 23%,
of Crispaire's total net sales, respectively.
COMPETITIVE ADVANTAGES
The Company attributes its success and its continued opportunities for
growth and profitability to the following competitive advantages:
Leading Market Position in Principal Niche Markets. RVP has over a 55%
market share of the total North American RV air conditioning market and
Crispaire is the largest provider of environmental control equipment for the
U.S. telecommunications market, through sales to both telecommunications
companies and manufacturers of telecommunication shelters. The Company believes
that these market shares enable it to maintain significant competitive
advantages in serving its customers, including manufacturing efficiencies and
greater product development and marketing resources. Success in such markets has
historically been driven by areas in which the Company believes it compares
favorably with its competitors such as strong customer relationships, industry
expertise, product quality and speed and reliability of service.
Existing Long-Term Customer Relationships. The Company has long-term
relationships with most of its customers, including several of the largest OEMs,
major telecommunications companies and equipment manufacturers and school
districts. RVP has supplied leading OEMs such as Fleetwood, Winnebago, Gulf
Stream and Jayco substantially all of their air conditioner needs for each of
the past six years. The Company believes that such customer loyalty coupled with
RVP's focused product line and reputation for meeting high volume production
demands have led to its success in the seasonal RV air conditioning industry and
provide a significant advantage over competitors. Crispaire has worked closely
with its telecommunications customers such as MCI, Motorola, AT&T Wireless and
Lucent Technologies, in some cases for as long as 15 years, to develop equipment
to meet such customers' specialized requirements. To support such equipment,
Crispaire has an extensive network of service dealers across the U.S. The recent
proliferation of shelters for telecommunications equipment and the importance of
protecting such equipment through the use of cooling units and ECUs has
generated an increasing demand for Crispaire's customized products and has
strengthened such relationships. In addition, Crispaire has worked with multiple
school districts throughout the country, such as the Los Angeles Unified School
District, for as long as seven years, to develop products which are designed to
meet the unique heating and cooling needs of the classroom such as achieving
certain industry ventilation standards and addressing other concerns such as
architectural design and ease of servicing considerations. The Company believes
that customization provides a high level of customer satisfaction and will
foster the continued development of significant customer relationships.
Strong Brand Name Recognition. RVP markets its products using the well
established and recognized "Coleman" brand name. The "Coleman" brand name,
established in the early part of the twentieth century, is well recognized as a
leading brand name for a variety of products related to the outdoor recreation
industry. Coleman brand air conditioners have been the leading RV air
conditioners since they were introduced into the market and are recognized by
customers to represent high quality and reliability. Crispaire, with leading
positions in most of its niche markets, benefits from strong brand name
recognition of its "Marvair" name in the telecommunication shelter market and
its "Scholar" name in the school market.
High Quality Products and Superior Customer Service and Product Design
Capabilities. The Company is recognized as a leader in the industries its
serves due to its high product quality and superior customer service. The
Company believes that its efficient manufacturing and assembly processes enable
it to offer competitively priced products while maintaining high product
quality. Because of the seasonal nature of the RV industry, timely delivery of
products to OEMs and aftermarket customers has played a critical role in RVP's
long-standing success. Similarly, Crispaire
49
<PAGE> 54
has developed a strong reputation with its customers for its ability to develop
unique solutions to customers' environmental control needs, respond to short
lead times and to deliver its products in a timely manner. Unlike most of its
competitors, Crispaire separates its volume manufacturing from specialty
manufacturing with a second plant that is ideally suited for customization.
Crispaire pursues a three-tiered product approach, producing i) standard
products ii) "fast track" products which involve a small amount of customization
and iii) highly customized products that are tailored to individual
specifications. Crispaire is able to customize products to the specifications of
a given customer without interrupting its larger production lines. The Company
will seek to maintain its reputation for high quality, reliable products,
superior customer service and product design capabilities which should assist in
its efforts to further penetrate markets for existing products and improve its
market position.
Extensive Distribution Network and Experienced Sales Force. RVP's sales
force includes some of the most experienced sales people in the industry who are
located in close proximity to and actively work with many of the largest OEMs
regarding product design issues and estimated future orders. In addition, RVP
provides Coast, the largest wholesale distributor of replacement parts, supplies
and RV accessories, serving more than 15,000 customers throughout the U.S. and
Canada, with 100% of its RV air conditioning products. RVP believes that Coast
provides broad aftermarket coverage and distribution capabilities. Crispaire's
sales effort is organized by industry segments with representatives of its sales
force covering the U.S. telecommunications, school, and construction industries
and international sales. In addition, independent sales agents actively market
Crispaire's products, particularly to school districts, in which sales agents
have developed relationships. Crispaire sells and distributes its products in
the U.S. through a variety of channels, including wholesale distributors,
factory direct dealers, non-stocking representatives, as well as direct to
manufacturers and to end users and in the International market through
distributors.
Recurring Revenues from Installed Base. RVP's sales to OEMs have provided
a large installed base of RV air conditioning equipment that generates a
significant recurring stream of revenue through sales of parts and replacement
units in the aftermarket. Such aftermarket sales consist primarily of sales of
replacement parts and new units through RV dealers and supply and service
centers. RV air conditioner units are typically replaced every five to seven
years, which is the expected life of the unit's compressor. Because the cost to
replace the unit is only slightly higher than the cost to repair the compressor,
most owners opt to purchase new units from the original supplier. With the
largest market share in the industry, RVP is well positioned to continue to
recognize revenue from aftermarket sales. In fiscal 1996, aftermarket sales
represented 33.7% of Airxcel's total net sales. Similarly, the Company expects
to generate revenue through the sales of replacement parts and units to
customers of Crispaire. The Company believes that when its customers repair or
replace such equipment, they tend to remain with the original manufacturer who
has the technical expertise to provide compatible and reliable replacement
parts, products and related services.
Experienced Management. The Company's management has over 287 years of
combined experience in the RV air conditioning, specialty HVAC and water heating
industries. Management believes that it has the depth, experience and motivation
to manage the Company's internal and external growth. On a pro forma basis, in
the aggregate, management would own approximately 28.2% of the capital stock of
Holdings on a fully-diluted basis, of which 16% will vest upon the achievement
of certain performance thresholds.
BUSINESS STRATEGY
The key elements of the Company's business strategy to maintain its
leadership position are to:
Capitalize on Anticipated Industry Growth. With leading positions in its
principal markets, the Company believes that it is well positioned to capitalize
on the anticipated growth in such markets. The Company anticipates that over the
next ten years, baby boomers will begin entering the typical demographic profile
for RV owners, including age, income, family status and location of home.
Because RVP serves several of the largest and best positioned OEMs which
collectively serve over
50
<PAGE> 55
55% of the RV market, the Company believes that this anticipated growth will
present significant revenue generating opportunities. The Company also
anticipates that the number of telecommunication shelters in North America will
grow in tandem, with the telecommunications industry at an annual rate of 20%
for the next five years. Additionally, the international cellular market,
especially in Latin America, is expected to grow at a high rate due to limited
land lines and a strong demand for wireless telecommunications. The Company
expects to retain its leading position in the telecommunications industry and
benefit from its growth by focusing on new product development and applications
to meet such industry's future needs. In addition, the Company views the school
market as a growth market due to several factors, including (i) the number of
new state regulations and certain building codes that mandate fresh air
requirements in classrooms (ii) the increasing number of students and required
number of new schools and (iii) the number of mandated restorations of existing
school system infrastructures. Based on an analysis prepared by the U.S. General
Accounting Office for School Facilities and the Department of Education, the
replacement HVAC school market is $3 billion and the annual new construction
HVAC school market is $314 million.
Generate Growth Through New Product Development. The Company intends to
continue to emphasize new product development in order to provide
technologically advanced products to its customers and reinforce its market
leadership. In its principal market, RVP works closely with OEMs to design new
types of air conditioners to meet OEM specifications. Crispaire consults closely
with key individuals in the telecommunications industry to develop new product
offerings for customers that are tailored to their particular needs, including
the development of monitoring systems designed to signal the operator when
equipment is in need of repair or when temperature varies from safety
parameters. The Company intends to continue developing new product applications
for use in various markets such as the institutional school, hotel, and elevator
markets.
Pursue Growth Through Acquisitions. In addition to the growth the Company
expects to come from the development of new, differentiated products and product
lines and expanding sales of existing products and product lines, the Company
intends to actively evaluate acquisition candidates. Future strategic
acquisitions may be undertaken to broaden the Company's product lines, expand
its manufacturing capacity, and strengthen its presence within the various
channels of distribution.
PRODUCTS AND SERVICES
The Company provides its customers with a broad array of specialty heating,
air conditioning and water heating products, including RV air conditioners,
vertical wall mount air conditioners and heat pumps, specialty heat pumps, ECUs,
residential and commercial heat pump water heaters and various applied products
such as pool heating dehumidifiers. In addition, the Company provides upgrade,
maintenance and repair services for its products, as well as for those supplied
by other manufacturers.
RVP
RV Air Conditioners. RVP designs and manufactures a variety of air
conditioners for most types of RVs. RVP offers its customers several models of
air conditioners with a nominal cooling capacity between 7,100 and 15,000 BTUs.
The most popular products are 115 volt systems that are installed on the roof of
a vehicle. RVP also produces a line of 115 volt air conditioners that are
installed in the underframe storage area of motorhomes and travel trailers in
both one and two ton sizes. In addition, RVP produces a complete line of 220
volt systems for the European and Australian RV markets and specialty air
conditioners for several smaller markets including the oil, marine and elevator
industries.
51
<PAGE> 56
CRISPAIRE
Crispaire offers an innovative line of vertical wall mount air conditioners
and heat pumps under the "Marvair" brand name. Crispaire's product lines include
three types of vertical wall mount air conditioning units, six types of heat
pumps, five types of environmental control units and various applied products.
All of the vertical wall mount units comply with Underwriters Laboratory (UL)
certifications for safety and are all rated in accordance with the Air
Conditioning & Refrigeration Institute (ARI) to ensure that advertised
capacities and efficiencies are delivered. All of the models share a high degree
of commonality in certain design and component features in order to maximize
production efficiencies. The products offer a unique advantage to the modular
construction industry as they can be installed in relocatable structures such as
modular homes at the structural assembly point and can travel easily with the
structure. In addition, the units can also be used in certain projects to easily
upgrade facilities with the addition of air conditioning as the units require no
interior floor space and can be installed on an exterior wall. The major markets
for vertical wall mount equipment are telecommunication shelters, institutional
schools and modular facilities.
Vertical Wall Mount Air Conditioning Units. The Marvair line of vertical
wall mount air conditioning units includes three standard products available in
sizes typically ranging from one to five tons in capacity, including the ModPac,
Compac I and Compac II. The ModPac unit is designed for use in modular
buildings. The Compac I and Compac II units are designed for use in
telecommunication shelters and allow operation in cold weather and notification
in the event of failure. The Compac II unit has a standard built-in economizer
for increased energy efficiency and reliability.
Heat Pumps. Crispaire offers six types of heat pumps, including the
Marvair Scholar (the "Scholar") and the Marvair Graduate (the "Graduate"), a
line of heat pumps to be installed in the interior of classrooms. Introduced in
1990, Crispaire believes that the Scholar is an affordable, quiet and efficient
heat pump which does not detract from the exterior architectural style of most
school buildings and is easy to service. The Scholar allows each classroom to
control its room temperature and has an optional Marvair heat recovery
ventilator which provides fresh air to meet certain ventilation standards with
respect to the amount of fresh air required per student. Crispaire recently
developed and introduced the Marvair Graduate (the "Graduate") for cooling and
heating classrooms. The Graduate is a horizontal HVAC console which is installed
inside the classroom that has the appearance and function of a cabinet. It
contains two independent heat pump chassis which it allows it to achieve greater
energy efficiency, giving it one of the highest Energy Efficiency Ratings in the
industry. The Graduate utilizes the heat recovery ventilator system to achieve
industry ventilation standards.
Environmental Control Units for Telecommunication Shelters. Crispaire's
ECUs are designed exclusively for the telecommunications industry to fit inside
a special cabinet and are designed to operate over a wide temperature range. The
units are designed with special controls that allow the system to reliably cool
the telecommunication shelter for long periods of time regardless of the outside
temperature. Some units contain an economizer mechanism which utilizes outside
air during lower temperature days to cool the shelter. Depending upon the
climate, the economizer cycle can reduce the running time of the unit's
compressor, thereby extending the life of the unit. In response to the growing
presence of "walk-in" cabinets in the telecommunications industry, Crispaire
designed the Marvair SlimPac ECU which mounts easily on the exterior of the
walk-in cabinets and provides optimum cooling.
Applied Products. Crispaire offers various applied products, including
custom made products, to its customers in the telecommunications industry. Such
customization involves variations to the design of a product such as its
dimensions or construction material in order to meet the customer's specific
needs. Crispaire's applied products also include a line of residential heat pump
water heaters marketed under the brand name "E-Tech." The E-Tech water heater
takes heat from the air, transfers it into water, and produces chilled, dry air.
The products are used primarily in single family residences to provide a cost
effective alternative to electric resistance water heaters
52
<PAGE> 57
particularly in markets such as Hawaii where there are few natural gas
alternatives. In addition, Crispaire offers a similar line of heat pump water
heaters that are sold to the commercial market. Crispaire also offers E-Tech
pool heating dehumidifiers ("PhDs") which are used in an indoor pool to heat the
water as well as dehumidify the air. Crispaire believes that PhDs save energy
both by reducing the cost of heating an indoor pool and controlling the humidity
level of the enclosure.
SALES, DISTRIBUTION AND MARKETING
The Company markets and sells its broad range of products to a wide variety
of customers through full time sales representatives and through distributors.
RVP
RVP has seven full time salesmen who focus on sales to OEMs, the top four
of whom are among the most experienced in the industry. RVP's sales force is
highly proactive, work closely with the largest OEMs and inquire regularly about
their design interests, product issues and estimated future orders. The Company
believes that this has helped foster RVP's long-standing relationships with its
key OEM customers. In addition, RVP has completed two years of a five year
distribution agreement with the Coast Distribution System, the largest wholesale
distributor of replacement parts, supplies and accessories for RVs to primarily
RV dealers, supply and service centers. Coast supplies more than 25,000 products
and serves more than 15,000 customers throughout the U.S. and Canada from 14
regional distribution centers in the U.S., and RVP provides Coast with 100% of
the RV air conditioning products which it distributes. RVP believes that its
relationship with Coast relieves it of a portion of the costs associated with
the distribution of its products while providing geographically dispersed
selling, order processing and delivery capabilities which provides broad
aftermarket coverage. RVP believes that it has benefitted and will continue to
benefit from this distribution relationship.
CRISPAIRE
Crispaire's sales effort is organized by industry segments with two full
time salesmen who focus on sales to the U.S. telecommunications industry, one
salesman for the international telecommunications market, one full time manager
working with 30 independent sales agents for the institutional school market.
Crispaire has nine sales and marketing personnel and 66 independent trade
representatives and distributors. Crispaire markets it products by attending
annual industry and trade shows, as well as through promotions and advertisement
in trade publications. It distributes its products through a variety of
channels, including wholesale distributors, factory direct dealers, as well as
direct to manufacturers and to end users. Crispaire is continually working with
the members of these various channels to increase the efficiency of the
distribution process, thereby reducing lead times and inventory holding costs.
CUSTOMERS
RVP
RVP's customers are principally OEMs and include several of the largest
OEMs in the world, including its top five customers, Fleetwood, Jayco,
Winnebago, Gulf Stream and Damon, representing an aggregate 47% of the market
share of the RV market. RVP supplies each of these customers with 100% of their
RV air conditioning requirements, and these customers accounted for
approximately 56% of Airxcel's total revenues in 1996. In addition, RVP's
aftermarket customers include (i) RV dealers, which primarily purchase RVP's
products for new RVs and replacement and repair parts for their service
departments, and (ii) RV supply stores and service centers which purchase parts
for their service centers and for resale to RV owners. RVP reaches such
customers primarily through its distribution relationship with Coast.
53
<PAGE> 58
CRISPAIRE
Crispaire's principal customers are telecommunications companies,
manufacturers of telecommunication shelters in the cellular, cable, wireless,
satellite and PCS industries, wholesale distributors for foreign
telecommunications sales, school districts and construction companies. Such
customers include MCI, Motorola, AT&T Wireless and Lucent Technologies and
multiple school districts, including the Los Angeles Unified School District.
RAW MATERIALS AND SUPPLIERS
RVP
RVP purchases most of the major component parts for its products such as
compressors, coils and motors preassembled from its suppliers. RVP also
purchases significant amounts of steel and plastics. RVP customarily orders
relatively standardized products from its suppliers and has a variety of sources
from which it can obtain necessary supplies. RVP has not had difficulties in
procuring raw materials or supplies, and does not expect to encounter any
difficulties in the future. RVP does not account for more than 10% of any of its
major suppliers' total business.
CRISPAIRE
A principal raw material used in Crispaire's products is copper, which is
principally purchased in the form of copper tubing. Crispaire also purchases
various component parts for its products such as compressors, coils, electrical
parts, and motors. Crispaire has strong relationships with its suppliers and
does not rely on any one supplier for any one category of supplies. Crispaire is
offered pricing terms by all of its suppliers and annually confirms existing
pricing with competitive bids. Crispaire customarily obtains its supplies
through purchase orders which are generally for one year. Crispaire selects
among available supply vendors by comparing cost, consistent quality and timely
delivery as well as compliance with ISO-9001 standards.
MANUFACTURING PROCESS
RVP
RVP's manufacturing operations are directed towards high product quality
and efficient manufacturing and assembly processes. The manufacturing operations
utilized by the Company include metal cutting, bending, welding, assembly and
packaging, thermal forming and stamping. RVP utilizes the CAD-System for a small
portion of its stamping operation. RVP designs, tests and qualifies all of its
air conditioners with in house support of CAD, modeling shop, environmental test
cells and quality test lab. RVP utilizes MRP planning for its factory scheduling
and procurement of materials, several JIT inventory control methods are in
place. RVP purchases most major component parts preassembled from its suppliers.
RVP performs all of its manufacturing operations in its owned Wichita, Kansas
facility. This facility currently produces over 700 air conditioning units per
day and has the capacity to expand to 900 to 1,000 units without major
expenditures. Finished air conditioners are stored and shipped from a 50,000
square foot warehouse in Wichita. RVP has created a variable cost structure that
has allowed it to operate profitably under a wide range of manufacturing output.
Since purchased materials represent 85% of standard product costs, RVP is able
to achieve a high proportion of variable costs to fixed costs. RVP's strategy is
to manufacture only those components that enhance quality and the competitive
advantage of its products.
CRISPAIRE
Crispaire's manufacturing operations include fabricating sheet metal, metal
cutting, bending, stamping, welding, and the manufacturing of major
sub-assemblies, assembly and packaging. All units are subject to comprehensive
performance testing and quality inspection. A large portion of Crispaire's major
assembly and production is performed at its 113,000 square foot production
facility in Cordele, Georgia. Assembly and production are also performed at the
37,000 square foot facility in Norcross, Georgia. Crispaire performs most
manufacturing and assembly at these
54
<PAGE> 59
facilities, but also outsources certain processes depending on the capabilities
and capacities of the plants and cost considerations. Products manufactured at
the Cordele plant are generally designed and built to Crispaire specifications
and industry standards, and products manufactured at the Norcross plant are
generally special application or customized products.
Both facilities utilize a variety of labor-saving automated equipment such
as computer-controlled punch presses and a copper tubing fabricator. In
addition, Crispaire uses computer and managing software to control its
operations, and utilizes an updated management information system that provides
controls into all of the material flow, fabrication assembly and test operations
conducted at the facilities. The Company believes that this production process
improves quality control in the manufacturing and assembly process. The Cordele
facility runs two primary production lines and has operating flexibility to run
different product lines based on product demand. The Company estimates that 60%
of production is done on an order by order basis and 40% is done for inventory.
In addition to the production lines, the facility contains a model shop where
engineers and designers build prototypes and test new products. Computer
monitored and controlled psychrometic chambers are used to simulate different
indoor and outdoor temperatures. Such system assures that new products will meet
the National Appliance Energy Conservation Act standards and other industry
standards. The Norcross facility runs three shorter production lines than the
Cordele plant, and 90% of production in Norcross is for customized products. Due
to its shorter production lines, the Norcross plant is an ideal custom
manufacturing center that provides quick turnaround and flexibility to change
the specifications of the products being manufactured.
Crispaire expects to attain ISO-9001 certification during the first quarter
of 1998, for both facilities and strives to establish quality procedures at each
of its facilities in order to manufacture the highest quality products possible.
COMPETITION
RVP
The RV air conditioning market is highly competitive with competition based
largely on a company's ability to provide name brand high quality products at
competitive prices and to manufacture and deliver products on a timely basis.
Due to the size of market, the RV air conditioning industry has not typically
attracted large air conditioning manufacturers, and there has been considerable
consolidation in the industry. Historically, the business has been driven by
strong relationships and brand name recognition, which has forced several
players out of the industry and has served as a barrier to new entrants. RVP
competes principally on the basis of quality, product performance, price and
service. RVP's principal competitor for RV air conditioning is Dometic, owned by
Electrolux. See "Risk Factors -- Competition."
CRISPAIRE
Broadly defined, the HVAC industry is relatively fragmented with hundreds
of small to medium-sized companies with various niche markets and several large,
well-capitalized, highly diversified industrial corporations with major market
shares of standard residential and commercial HVAC product lines. Within the
more limited air conditioning industry, Crispaire has targeted smaller niche
markets and competes with several manufacturers in such markets. Moreover,
Crispaire encounters different competitors in each of its product lines.
Crispaire competes principally on the basis of its reputation for reliability,
quality, service and flexibility. Crispaire's direct competitors in the vertical
wall mount and ECU markets include Bard Manufacturing ("Bard"), Sun
Manufacturing and Eubanks Manufacturing. In the school heat pump market,
Crispaire principally competes with Bard, Trane and American Air Filter.
Crispaire attempts to distinguish itself from its competitors through
technological innovation and customization. See "Risk Factors -- Competition."
55
<PAGE> 60
INTELLECTUAL PROPERTY
The Company seeks trademark protection for all of its product line trade
names. The Company presently holds trademarks covering designs, symbols and
trade names used in connection with its products. The Company has a royalty-free
license for the exclusive use of the "Coleman" trade name for its products for
50 years. The Company is a party to certain patent litigation involving
competitors of the Company see "Legal Proceedings."
EMPLOYEES
As of June 30, 1997, Airxcel and Crispaire employed approximately 187 and
240 employees, respectively, none of whom was represented by a union or covered
by a collective bargaining agreement. Of the 427 total employees, 134 were
salaried, 293 were hourly and none were part time.
PROPERTIES AND FACILITIES
As of June 30, 1997, Airxcel had these principal facilities, where it
leased or owned an aggregate of approximately 165,000 square feet of space,
while Crispaire had two principal facilities, where it leased or owned an
aggregate of approximately 150,000 square feet of space. The following table
describes the principal facilities and indicates the location, function and
approximate size of each:
<TABLE>
<CAPTION>
FACILITIES
------------------------------------------------------------------------------------------
APPROXIMATE
LOCATION SQUARE FEET OWNED/LEASED LEASE EXPIRATION
--------------------------------------- ----------- ------------ ----------------
<S> <C> <C> <C>
Norcross, Georgia...................... 37,000 Leased 8/31/00
Cordele, Georgia....................... 113,000 Owned --
Elkhart, Indiana....................... 15,000 Leased 4/18/00
Wichita, Kansas........................ 50,000 Leased 5/31/98
Wichita, Kansas........................ 100,000 Owned --
</TABLE>
Airxcel's principal facilities will be pledged as collateral under the
Credit Facility. In addition, Airxcel has a lease for a 60,000 square foot
facility in Malden, Massachusetts that was used in its discontinued awnings
business. Such lease expires on November 1, 1997.
LEGAL PROCEEDINGS
In February 1995, Bard Manufacturing Company ("Bard") commenced an action
against Crispaire Corporation in the United States District Court for the
Northern District of Ohio, Western Division. Bard alleges that Crispaire
violates Bard's trade dress, infringes a Bard patent, infringed Bard's trademark
(under state and federal law), and violates the Ohio Deceptive Trade Practices
Act in certain of Crispaire's air conditioning and heating unit products. In
addition to Bard, Airxchange Corp. ("Airxchange") has joined as a plaintiff
against Crispaire, alleging that Crispaire infringes an Airxchange patent.
Crispaire has denied all material allegations and has asserted a number of
affirmative defenses and counterclaims.
Both Bard and Airxchange seek an injunction and monetary damages in an
unspecified amount. Although discovery in the lawsuit is nearly complete and
trial is tentatively set for March 31, 1998, the parties have not engaged in
damages discovery because the proceedings have been bifurcated as to damages and
liability. Discovery as to damages will be undertaken only if there is an
adverse finding against Crispaire at trial. If successful in the action, Bard
and Airxchange could be entitled to recovery of a reasonable royalty or lost
profits together with other consequential damages. In addition, if Crispaire is
found to have acted willfully, Bard and Airxchange could recover treble damages
and attorneys' fees.
56
<PAGE> 61
The Company believes that the claims against Crispaire are unfounded and
that Crispaire should prevail at trial. No assurances can be given as to the
ultimate outcome of this matter.
The Company is a party to various litigation matters incidental to the
conduct of its business. Management does not believe that the outcome of any of
the matters in which it is currently involved will have a material adverse
effect on the financial condition or results of operations of the Company.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
The Company is subject to federal, state, and local environmental and
occupational health and safety laws and regulations. Such laws and regulations,
among other things, impose limitations on the discharge of pollutants and
establish standards for management of waste. While there can be no assurance
that the Company is at all times in complete compliance with all such
requirements, the Company believes that any such noncompliance is unlikely to
have a material adverse effect on the Company. As is the case with manufacturers
in general, if a release or threat of release of hazardous materials occurs on
or from the Company's properties or any associated offsite disposal location, or
if contamination from prior activities is discovered at any properties owned or
operated by the Company, the Company may be held liable for response costs and
damages to natural resources. There can be no assurance that the amount of any
such liability would not be material.
The Company's facility at St. Frances Avenue, Wichita, Kansas is within an
area undergoing investigation and remediation of contaminated groundwater. The
Company has been identified as a potentially responsible party with respect to a
portion of the area under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, which imposes strict, and in certain
cases, joint and several liability. The Company is one of three parties to a
Consent Decree entered into with the Environmental Protection Agency requiring
remediation. The Company does not expect to incur any material expenditures in
conjunction with this matter both because the former owner of this facility has
entered an Indemnification and Clean Up Agreement with the Company providing
coverage for specified environmental issues existing on the property at the time
of purchase, and because the facility does not appear to be a source of the
groundwater contamination.
RVP has decided to address a potential problem that exists with
approximately 35,000 air conditioning units produced between September 1, 1996
and February 22, 1997. The units were shipped to OEMs which installed them on
RVs that were in turn shipped to retail dealers for sale in the fourth quarter
of 1996 and first quarter of 1997. The units contain a P.C. control board
designed and manufactured for RVP by one of its suppliers. In some instances,
this component could fail in the event of improper or poor wiring connections by
the OEM installer or in the event of inadequate low control voltage.
Although experience and third party failure analysis indicate that the
number of actual failures is minimal, the Company believes it best to address
the situation now to avoid any future failures and customer dissatisfaction.
57
<PAGE> 62
MANAGEMENT
The following sets forth certain information with respect to the persons
who are members of the Board of Directors or executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ ---- --------------------------------------------------
<S> <C> <C>
Melvin L. Adams..................... 51 President and Chief Executive Officer, Director
Gregory G. Guinn.................... 49 Vice President -- Airxcel Sales and Marketing
Richard L. Schreck.................. 45 Chief Financial Officer, Secretary and Treasurer
T.K. Sellers, Jr.................... 45 Vice President -- Administrative Crispaire
David L. Shuford.................... 46 Vice President -- Crispaire Sales and Marketing
Lonnie L. Snook..................... 62 Vice President -- Airxcel Manufacturing and
Engineering
George D. Wyers..................... 65 President -- Crispaire, Director
Dean DuCray......................... 57 Director
Lawrence Jones...................... 66 Director
Thomas F. McWilliams................ 54 Director
James A. Urry....................... 43 Director
</TABLE>
Melvin L. Adams. Mr. Adams has been a Director, the Chief Executive
Officer and President of Airxcel since 1991. From 1989 until 1991, he served as
Vice President of Coleman. From 1979 through 1984, he served as General Manager
of the Coleman Company's Camping Trailer Division. In 1984, he was promoted to
Corporate Vice President & General Manager of Coleman's RV Group. In 1991, he
and three officers of RVP led the buy out of Coleman RV Products with Berkshire
Partners from MacAndrews and Forbes.
Gregory G. Guinn. Mr. Guinn has been the Vice President of Sales and
Marketing of RVP since 1989. Prior to that, Mr. Guinn held various positions
with the Coleman Company, including National Sales Manager and Marketing Manager
of RV Products and Corporate Vice President and General Manager of RV Products.
Mr. Guinn handles all of RVP's major accounts and its internal sales force.
Richard L. Schreck. Mr. Schreck has been a Director, the Chief Financial
Officer and Secretary of Airxcel since 1991. Beginning in 1981, Mr. Schreck held
various positions at the Coleman Company, including the RV Group Controller and
Controller/Administrative Manager for RV Products. Mr. Schreck is responsible
for all financial and MIS functions at Airxcel.
T.K. Sellers, Jr. Mr. Sellers has been Chief Financial Officer of
Crispaire since 1991. Prior to joining Crispaire, he was employed as controller
for ACC Distributors. Upon completion of the Acquisition, he will serve as Vice
President-Administrative of the Crispaire Division of the Company. From 1981 to
1986, Mr. Sellers was controller for a manufacturing passenger and truck line
company. From 1976 through 1981, he served as assistant controller for Palmyra
Park Hospital in Albany, Georgia.
David L. Shuford. Mr. Shuford has been the Vice President of Sales and
Marketing of Crispaire since 1989. Upon completion of the Acquisition, he will
serve as Vice President-Sales and Marketing of the Crispaire Division of the
Company. From 1980 to 1986, Mr. Shuford held various sales and marketing
positions at E-Tech, including Government Marketing Manager. Prior to that, he
was vice president of a speciality construction company based in Atlanta for
five years.
Lonnie L. Snook. Mr. Snook has been Vice President-Manufacturing and
Engineering of RVP since 1989. Prior to that, Mr. Snook held various positions
at the Coleman Company, including Industrial Engineer, Manager of Industrial
Engineering and Production Superintendent and Factory Manager of RV Products.
58
<PAGE> 63
George D. Wyers. Mr. Wyers has been the President and Chief Executive
Officer of Crispaire since 1988. Upon completion of the Acquisition, he will
serve as President of the Crispaire Division of Airxcel. Prior to joining
Crispaire, Mr. Wyers spent twelve years as a General Manager of a leading air
conditioning equipment distributor based in Dallas, Texas.
Dean T. DuCray. Mr. DuCray has been a director of the Company since 1996.
Mr. DuCray is Chief Financial Officer and Vice President of York International
Corporation.
Lawrence Jones. Mr. Jones has been a director of the Company since 1991.
Mr. Jones is retired and is the former Chairman of the Coleman Company.
Thomas F. McWilliams. Mr. McWilliams has been a director of the Company
since 1996. Mr. McWilliams has been affiliated with CVC since 1983 and presently
serves as managing director of CVC as well as a member of CVC's investment
committee. From 1978 until 1983, Mr. McWilliams served as an executive officer,
including as vice president, president and chief operating officer, of Shelter
Resources Corporation, a publicly-held company with operating subsidiaries in
the manufactured housing industry. From 1967 until 1978, Mr. McWilliams served
in various corporate finance and management positions at Citibank, N.A. Mr.
McWilliams is currently a director of each of Chase Brass Industries, Inc., Ergo
Science Corporation and various privately owned companies.
James A. Urry. Mr. Urry has been a director of the Company since 1996. Mr.
Urry has been with Citibank, N.A. since 1981, serving as a vice president since
1986. He has been a vice president of CVC since 1989. He is a director of
AmeriSource Health Corporation, CLARK Material Handling Corporation, CORT
Business Services Corporation, Hancor Holding Corporation, International Knife
and Saw Corporation, Palomar Technologies, Inc. and York International
Corporation.
COMPENSATION OF DIRECTORS
Directors of the Company who are officers, employees of the Company or its
affiliates are presently not expected to receive compensation for their services
as directors. Directors of the Company who are not officers or employees of the
Company or any of its affiliates receive $1,000 per Board meeting attended. In
addition, directors of the Company will be entitled to reimbursement of their
reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the board of directors or committees thereof.
59
<PAGE> 64
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of the Company is determined by the
Board of the Directors of the Company. The following table sets forth
information concerning compensation received by the five most highly compensated
officers of the Company for services rendered in fiscal 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION -----------------------------------
NAME AND ------------------ OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION SALARY BONUS SAR(#) PAYOUTS COMPENSATION(1)
- --------------------------------------- -------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Melvin L. Adams........................ $215,004 $74,334 141,606 -- $ 4,236
President and Chief Executive Officer
Gregory G. Guinn....................... $100,000 $34,445 85,554 -- $ 139
Vice President -- RVP Sales and
Marketing
Richard L. Schreck..................... $100,000 $34,445 85,554 -- $ 562
Chief Financial Officer, Secretary and
Treasurer
Lonnie L. Snook........................ $100,000 $34,445 85,554 -- $ 82
Vice President -- RVP Manufacturing and
Engineering
</TABLE>
- ---------------
(1) The named officers have participated in the Company's profit sharing, 401(k)
match, deferred compensation and excess benefit programs. The aggregate
payments made by the Company pursuant to such programs are listed as All
Other Compensation.
EMPLOYMENT AGREEMENTS
In connection with the Acquisition, the Company entered into employment
agreements with each of Messrs. Sellers, Shuford and Wyers on November 10, 1997.
Each agreement is for a term that expires upon the earlier of October 31, 2000,
the executive's death, voluntary termination, termination by resolution by the
Board of Directors, or at the Company's option, the executive's disability. Mr.
Sellers' base salary is $60,840 per year. Mr. Shuford's base salary is
$93,095.20 per year. Mr. Wyers' base salary is $200,000 per year. Each executive
is eligible for an annual performance bonus. Each agreement contains a
nonsolicitation provision, and Mr. Wyers' agreement contains a noncompetition
provision.
STOCK OPTION PLAN
The Board of Directors will adopt a stock plan (the "Stock Plan"), which
provides for the grant to certain key employees and/or directors of the Company
of stock options that are non-qualified options for federal income tax purposes.
The total number of shares of common stock of the Company expected to be granted
pursuant to the Stock Plan will represent 16% of the total number of issued and
outstanding shares of the Company. The Stock Plan will be administered by the
Compensation Committee of the Board of Directors. The Compensation Committee has
broad powers under the Stock Plan, including exclusive authority (except as
otherwise provided in the Stock Plan) to determine (i) who will receive awards,
(ii) the type, size and terms of awards, (iii) the time when awards will be
granted, and (iv) vesting criteria, if any, of the awards.
401(k) PLAN
Substantially all employees of the Company are eligible to participate in
the Company's 401(k) plan. Subject to certain conditions, the Company matches
30% of the employees' contributions up to a maximum of 6% of the employees'
annual salary. In addition, the Company can make an additional contribution
determined at the discretion of the Company's Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Board of Directors comprise the members of the
Compensation Committee.
60
<PAGE> 65
SECURITY OWNERSHIP
All of the Company's issued and outstanding capital stock is owned by
Holdings. The following table sets forth certain information with respect to the
common and preferred equity interests of Holdings. See "The Transactions."
<TABLE>
<CAPTION>
PERCENTAGE
OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK PREFERRED STOCK
----------------------------------------------------- ------------ ---------------
<S> <C> <C>
Citicorp Venture Capital, Ltd. ("CVC")(1)............ 61.16%(2) 45.19%
399 Park Avenue
New York, New York 10043
Melvin L. Adams...................................... 8.86 12.95
George D. Wyers...................................... 6.35 8.21
Gregory G. Guinn..................................... 4.43 6.47
Richard L. Schreck................................... 4.43 6.47
Lonnie L. Snook...................................... 3.44 5.03
David L. Shuford..................................... 1.41 1.82
T.K. Sellers, Jr. ................................... * *
</TABLE>
- ---------------
* Less than one-percent.
(1) Includes shares held by employees and affiliates of CVC.
(2) Includes shares of (i) voting Class A Common Stock representing 49.9% of
outstanding voting Class A Common Stock and (ii) non-voting Class B Common
Stock.
STOCKHOLDERS AGREEMENT
In connection with the Acquisition, Holdings, CVC and its affiliates, and
affiliates of Airxcel and Crispaire entered into an amended stockholders
agreement (the "Stockholders Agreement") which contains certain agreements among
such parties with respect to the equity interests and corporate governance of
Holdings and the Company. The Board of Directors of each of Holdings and the
Company is initially comprised of three (3) or five (5) directors. CVC has the
right to appoint one (1) or two (2) directors. Pursuant to the Stockholders
Agreement, the disposition of Common Stock and Preferred Stock is restricted.
The Stockholders Agreement also contains certain participation rights, approval
rights and rights of first offer exercisable by certain stockholders in the
event of certain sales or proposed sales of equity interests.
61
<PAGE> 66
DESCRIPTION OF THE REVOLVING CREDIT FACILITY
Concurrently with the consummation of the Transactions, the Company entered
into an agreement with The Chase Manhattan Bank to provide for a Revolving
Credit Facility (the "Credit Facility"). The Chase Manhattan Bank will provide
for borrowings in an aggregate principal amount of up to $15 million (of which a
portion will be available in the form of letters of credit (but in no event more
than the Borrowing Base then in effect)). The following summary of the Credit
Facility does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Credit Facility.
Borrowing Base. The Borrowing Base shall equal the sum of agreed upon
percentages of Eligible Receivables of the Company and Eligible Inventory of the
Company and cash collateral of the Company. As of September 30, 1997, on a pro
forma basis the Company could borrow the full amount of the Credit Facility.
Security. In addition, the obligations of the Company under the Credit
Facility are secured by substantially all of the assets of, and all of the
inventory and receivables of Airxcel.
Interest. The Credit Facility is a five-year facility and bears interest
at a rate per annum equal (at the Company's option) to: (i) the Agent's
Eurodollar rate plus an applicable margin or (ii) an alternate base rate plus an
applicable margin. Obligations of the Company under the Credit Facility not paid
when due shall bear interest at a default rate equal to 2% per annum above the
otherwise applicable rate. The Company is required to pay the lenders, on a
quarterly basis, commitment and other similar fees.
Prepayments. Voluntary prepayments of borrowings under the Credit Facility
and voluntary reductions of the unutilized portions of the Credit Facility are
permitted at any time in minimum principal amounts to be agreed upon.
Covenants. The Credit Facility contains a number of covenants that, among
other things, restricts the ability of the Company and its subsidiaries, subject
to certain exceptions, to dispose of assets, incur additional indebtedness,
incur guarantee obligations, prepay other indebtedness or amend other debt
instruments, make distributions or pay dividends on partnership interests or
capital stock, redeem and repurchase partnership interests or capital stock,
create liens on assets, enter into sale and leaseback transactions, make
investments, loans or advances, make acquisitions, engage in mergers or
consolidations, change the business conducted by the Company or its subsidiaries
or engage in certain transactions with affiliates and otherwise restrict certain
business activities. In addition, the Company is required to maintain compliance
with minimum interest coverage ratio and maximum leverage ratio.
The Credit Facility also contains provisions that prohibit any modification
of the Indenture without the consent of such lender.
62
<PAGE> 67
DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued under an Indenture (the "Indenture")
dated as of November 10, 1997 between the Company and the United States Trust
Company of New York, as trustee (the "Trustee"). The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and to all of the
provisions of the Indenture, including the definitions of certain terms therein
and those terms made a part of the Indenture by reference to the Trust Indenture
Act, as in effect on the date of the Indenture. The definitions of certain
capitalized terms used in the following summary are set forth below under
"Certain Definitions." References in this "Description of Exchange Notes"
section and the "Exchange and Registration Rights Agreement," "Transfer
Restrictions," and "Plan of Distribution" sections to "the Company" mean only
Airxcel, Inc.
GENERAL
The Notes are, and the Exchange Notes will be unsecured, senior
subordinated obligations of the Company. The Exchange Notes will be issued only
in registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. Pursuant to the Indenture, the Trustee, initially, will
serve as registrar and paying agent. No service charge will be made for any
registration of transfer or exchange of the Notes, except for any tax or other
governmental charge that may be imposed in connection therewith.
Initially, the Trustee will act as paying agent and registrar for the
Exchange Notes. The form and terms of the Exchange Notes are the same as the
form and terms of the Notes (which they replace) except that (i) the Exchange
Notes bear a Series B designation, (ii) the Exchange Notes have been registered
under the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of Exchange Notes will not be entitled
to certain rights under the Exchange and Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Notes in certain circumstances relating to the timing of the Exchange Offer,
which rights will terminate when the Exchange Offer is consummated.
RANKING
The Senior Subordinated Notes will rank junior to, and be subordinated in
right of payment to, all existing and future Senior Indebtedness of the Company,
pari passu in right of payment with all senior subordinated Indebtedness of the
Company and senior in right of payment to all Subordinated Indebtedness of the
Company. At September 30, 1997, on a pro forma basis after giving effect to the
Acquisition, the Company would not have any Senior Indebtedness outstanding and
no senior subordinated Indebtedness, other than the Notes. All debt incurred
under the $15 million Credit Facility will be Senior Indebtedness of the Company
and are secured by substantially all of the assets of the Company and its
Subsidiaries.
MATURITY, INTEREST AND PRINCIPAL OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes will be limited to $125 million aggregate
principal amount (of which $90 million was issued in the Offering) and will
mature on November 15, 2007. Cash interest on the Senior Subordinated Notes will
accrue at a rate of 11% per annum and will be payable semi-annually in arrears
on each May 15 and November 15, commencing on May 15, 1998, to the holders of
record of Senior Subordinated Notes at the close of business on May 1 and
November 1, respectively, immediately preceding such interest payment date.
Interest will accrue from the most recent interest payment date to which
interest has been paid or, if no interest has been paid, from the date of
issuance. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
63
<PAGE> 68
OPTIONAL REDEMPTION
The Senior Subordinated Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after November 15, 2002, at the
redemption prices (expressed as a percentage of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the Redemption Date
(subject to the right of holders of record on the relevant Interest Record Date
to receive interest due on the relevant Interest Payment Date), if redeemed
during the 12-month period commencing on November 15, of the years indicated
below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------------------- ----------
<S> <C>
2002............................................................. 105.500%
2003............................................................. 103.667%
2004............................................................. 101.833%
2005 and thereafter.............................................. 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to November 15,
2000, the Company may redeem in the aggregate up to 35% of the originally issued
aggregate principal amount of the Senior Subordinated Notes with the net cash
proceeds of one or more Public Equity Offerings by the Company or Holdings at a
redemption price in cash equal to 111% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject to
the right of Holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date); provided, however, that at
least $60 million of the Senior Subordinated Notes must remain outstanding
immediately after giving effect to each such redemption (excluding any Senior
Subordinated Notes held by the Company or any of its Affiliates). Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering of the Company or Holdings.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Senior Subordinated Notes are to be
redeemed at any time pursuant to an optional redemption, selection of such
Senior Subordinated Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Subordinated Notes are listed or, if the Senior
Subordinated Notes are not then listed on a national securities exchange, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Senior Subordinated Notes of a principal
amount of $1,000 or less shall be redeemed in part; provided, further, however,
that if a partial redemption is made with the net cash proceeds of a Public
Equity Offering by the Company or Holdings, selection of the Senior Subordinated
Notes or portions thereof for redemption shall be made by the Trustee only on a
pro rata basis or on as nearly a pro rata basis as is practicable (subject to
the procedures of the Depository), unless such method is otherwise prohibited.
Notice of redemption shall be mailed by first-class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Senior
Subordinated Notes to be redeemed at such holder's registered address. If any
Senior Subordinated Note is to be redeemed in part only, the notice of
redemption that relates to such Senior Subordinated Note shall state the portion
of the principal amount thereof to be redeemed. A new Senior Subordinated Note
in a principal amount equal to the unredeemed portion thereof will be issued in
the name of the Holder thereof upon cancellation of the original Senior
Subordinated Note. On and after the Redemption Date, interest will cease to
accrue on Senior Subordinated Notes or portions thereof called for redemption as
long as the Company has deposited with the paying agent for the Senior
Subordinated Notes funds in satisfaction of the applicable redemption price
pursuant to the Indenture.
SUBORDINATION OF THE SENIOR SUBORDINATED NOTES
The payment of the principal of, premium, if any, and interest on the
Senior Subordinated Notes is subordinated in right of payment, to the extent and
in the manner provided in the Indenture, to the prior payment in full in cash of
all Senior Indebtedness.
64
<PAGE> 69
Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities and excluding any payment
from funds deposited in accordance with, and held in trust for the benefit of
Holders pursuant to, "Legal Defeasance and Covenant Defeasance" (a "Defeasance
Trust Payment")), upon any dissolution or winding-up or total liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness then due shall first be paid in full in cash before the Holders of
the Senior Subordinated Notes or the Trustee on behalf of such Holders shall be
entitled to receive any payment by the Company of the principal of, premium, if
any, or interest on the Senior Subordinated Notes, or any payment by the Company
to acquire any of the Senior Subordinated Notes for cash, property or
securities, or any distribution by the Company with respect to the Senior
Subordinated Notes of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment). Before any payment may be made by, or on behalf of, the Company of the
principal of, premium, if any, or interest on the Senior Subordinated Notes upon
any such dissolution or winding-up or total liquidation or reorganization,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), to which the Holders of the Senior
Subordinated Notes or the Trustee on their behalf would be entitled, but for the
subordination provisions of the Indenture, shall be made by the Company or by
any receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, directly to the holders of the Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to the
trustee or trustees or agent or agents under any agreement or indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment) by or on
behalf of the Company of principal of, premium, if any, or interest on the
Senior Subordinated Notes, whether pursuant to the terms of the Senior
Subordinated Notes, upon acceleration, pursuant to an Offer to Purchase or
otherwise, shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Designated Senior
Indebtedness, whether at maturity, on account of mandatory redemption or
prepayment, acceleration or otherwise, and such default shall not have been
cured or waived or the benefits of this sentence waived by or on behalf of the
holders of such Designated Senior Indebtedness. In addition, during the
continuance of any non-payment event of default with respect to any Designated
Senior Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (a "Payment
Blockage Notice") from the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of the holders of such
Designated Senior Indebtedness, then, unless and until such non-payment event of
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full in cash or the
benefits of these provisions have been waived by the holders of such Designated
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment) will be made by or on behalf of the Company of principal of, premium,
if any, or interest on the Senior Subordinated Notes, whether pursuant to the
terms of the Senior Subordinated Notes, upon acceleration, pursuant to an Offer
to Purchase or otherwise, to such Holders, during a period (a "Payment Blockage
Period") commencing on the date of receipt of such notice by the Trustee and
ending 179 days thereafter. Notwithstanding anything in the Indenture or in
Senior Subordinated Notes to the contrary, (x) in no event will a Payment
Blockage
65
<PAGE> 70
Period extend beyond 179 days from the date the Payment Blockage Notice in
respect thereof was given, (y) there shall be a period of at least 181
consecutive days in each 360-day period when no Payment Blockage Period is in
effect and (z) not more than one Payment Blockage Period may be commenced with
respect to the Senior Subordinated Notes during any period of 360 consecutive
days. No non-payment event of default that existed or was continuing on the date
of commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period (to the extent the
holder of Designated Senior Indebtedness, or trustee or agent, giving notice
commencing such Payment Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Payment Blockage Period by the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such non-payment event of default has been cured or waived for a period
of not less than 90 consecutive days.
The failure to make any payment or distribution for or on account of the
Senior Subordinated Notes by reason of the provisions of the Indenture described
under this "Subordination of the Senior Subordinated Notes" heading will not be
construed as preventing the occurrence of any Event of Default in respect of the
Senior Subordinated Notes. See "Events of Default" below.
By reason of the subordination provisions described above, in the event of
insolvency of the Company, funds which would otherwise be payable to Holders of
the Senior Subordinated Notes will be paid to the holders of Senior Indebtedness
to the extent necessary to pay the Senior Indebtedness in full in cash, and the
Company may be unable to meet fully or at all its obligations with respect to
the Senior Subordinated Notes.
Subject to the restrictions set forth in the Indenture, in the future the
Company may issue Senior Indebtedness, including borrowings under the Credit
Facility.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Senior Subordinated Notes at a purchase price
in cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the Purchase Date (subject to the right of Holders of
record on the relevant Interest Record Date to receive interest due on the
relevant Interest Payment Date), pursuant to the offer described below and the
other procedures set forth in the Indenture:
(a) prior to the earlier to occur of the first public offering of
Voting Equity Interests of Holdings or the Company, the Permitted Holders
ceased to be entitled (by "beneficial ownership" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) of Voting Equity Interests, contract or
otherwise) to elect or cause the election of directors of the Company
having a majority of the total voting power of the Board of Directors of
the Company, whether as a result of issuance of securities of the Company,
any merger, consolidation, liquidation or dissolution of the Company, any
direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (a), the Permitted Holders shall be
deemed to beneficially own any Voting Equity Interests of a corporation
(the "specified corporation") held by any other corporation (the "parent
corporation") so long as one or more of the Permitted Holders beneficially
own (as so defined), directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent corporation);
(b) after the first public offering of Voting Equity Interests of
Holdings or the Company, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Equity Interests that
represents more than 50% of the aggregate ordinary voting power of all
classes of the Voting Equity Interests of Holdings or the Company voting
together as a single class, and either (x) the Permitted Holders
beneficially own (as defined in clause (a) above), directly or indirectly,
in the
66
<PAGE> 71
aggregate Voting Equity Interests that represents a lesser percentage of
the aggregate ordinary voting power of all classes of the Voting Equity
Interests of Holdings or the Company, as the case may be, voting together
as a single class, than such other person or group and are not entitled (by
voting power, contract or otherwise) to elect directors of Holdings or the
Company having a majority of the total voting power of the board of
directors of Holdings or the Company, as the case may be, or (y) such other
person or group is entitled to elect directors of Holdings or the Company
having a majority of the total voting power of the board of directors of
Holdings or the Company;
(c) after the first public offering of Voting Equity Interests of
Holdings or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the board of directors of Holdings or
the Company, as the case may be (together with any new directors whose
election by such board of directors, or whose nomination for election by
shareholders was approved by the Permitted Holders or by such board of
directors, in each case by a vote of a majority of the directors of
Holdings or the Company, as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason
to have a majority of the total voting power of the board of directors of
Holdings or the Company, as the case may be; or
(d) any sale, lease, or other transfer (in one transaction or in a
series of related transactions) is made by the Company of all or
substantially all of the consolidated assets of the Company to any Person.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating, among other things:
(1) that a Change of Control has occurred and that such Holder has the right to
require the Company to purchase all or any portion of such Holder's Senior
Subordinated Notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
repurchase (subject to the right of Holders of record on a Interest Record Date
to receive interest on the relevant Interest Payment Date); (2) the
circumstances and relevant facts and financial information regarding such Change
of Control; (3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (4) the
instructions determined by the Company, consistent with this covenant, that a
Holder must follow in order to have its Notes or any portion thereof purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Senior Subordinated Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company or Holdings would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions or other recapitalizations, that
would not constitute a Change of Control under the Indenture, but that could
increase the amount of indebtedness outstanding at such time or otherwise affect
the Company's capital structure or credit ratings.
The occurrence of a Change of Control would constitute a default under the
Credit Facility. Future Senior Indebtedness of the Company may contain
prohibitions of certain events which would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the Holders of their right to require the Company to
repurchase the Senior Subordinated Notes could cause a default under such Senior
Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the
67
<PAGE> 72
Company. Finally, the Company's ability to pay cash to the Holders upon a
repurchase may be limited by the Company's then existing financial resources.
There can be no assurance that sufficient funds will be available when necessary
to make any repurchases require in connection with a Change of Control. The
Company's failure to purchase the Senior Subordinated Notes in connection with a
Change of Control would result in the default under the Indenture.
CERTAIN COVENANTS
Limitation on Indebtedness. The Company shall not, and shall not cause or
permit any Subsidiary to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness), except for Permitted Indebtedness; provided,
however, that the Company may Incur Indebtedness if, at the time of and
immediately after giving pro forma effect to such Incurrence of Indebtedness and
the application of the proceeds therefrom, the Consolidated Coverage Ratio would
be greater than 2.0 to 1.0 if incurred prior to the second anniversary of the
Issue Date and 2.25 to 1.0 if incurred thereafter.
The limitations contained in the preceding paragraph will not apply to the
Incurrence of any of the following (collectively, "Permitted Indebtedness"),
each of which shall be given independent effect:
(a) Indebtedness outstanding on the Issue Date, including Indebtedness
under the Notes;
(b) Indebtedness of the Company Incurred under the Credit Facility in
an aggregate principal amount at any one time outstanding not to exceed the
greater of (I) $15 million and (II) the sum of (x) 60% of the book value of
inventory of the Company and its Subsidiaries and (y) 85% of the book value
of the accounts receivable of the Company and its Subsidiaries, in each
case determined in accordance with GAAP;
(c) Indebtedness of any Subsidiary of the Company owed to and held by
the Company or any Wholly Owned Subsidiary, and Indebtedness of the Company
owed to and held by any Wholly Owned Subsidiary that is unsecured and
subordinated in right of payment to the payment and performance of the
Company's obligations under any Senior Indebtedness, the Indenture and the
Senior Subordinated Notes; provided, however, that an Incurrence of
Indebtedness that is not permitted by this clause (c) shall be deemed to
have occurred upon (i) any sale or other disposition of any Indebtedness of
the Company or any Subsidiary of the Company referred to in this clause (c)
to a Person (other than the Company or a Wholly Owned Subsidiary), (ii) any
sale or other disposition of Equity Interests of any Subsidiary which holds
Indebtedness of the Company or another Subsidiary;
(d) Interest Rate Protection Obligations; provided, however, that such
Interest Rate Protection Obligations have been entered into for bona fide
business purposes and not for speculation;
(e) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Company or any Subsidiary of the Company and other Indebtedness of the
Company, in an aggregate principal amount at any one time outstanding not
to exceed the greater of (a) $5 million or (b) 5% of Total Assets;
(f) Indebtedness of the Company under Currency Agreements; provided,
however, (i) that such Currency Agreements have been entered into for bona
fide business purposes and not for speculation and (ii) that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
do not increase the Indebtedness of the Company and its Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation payable
thereunder;
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness (other than Indebtedness
68
<PAGE> 73
Incurred under clauses (b), (c), (d), (e), (f), (h), (i), (j) or (l) of
this covenant); provided, however, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness being refinanced, plus
the amount of accrued interest thereon, plus the amount of any reasonably
determined prepayment premium necessary to accomplish such refinancing and
such reasonable fees and expenses incurred in connection therewith, (ii)
Indebtedness representing a refinancing of Indebtedness other than Senior
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being refinanced; (iii) Indebtedness that is pari passu with the Notes may
only be refinanced with Indebtedness that is made pari passu with or
subordinate in right of payment to the Notes and Subordinated Indebtedness
may only be refinanced with Subordinated Indebtedness; and (iv)
Indebtedness of the Company may only be refinanced by Indebtedness of the
Company and Indebtedness of a Subsidiary of the Company may only be
refinanced by Indebtedness of Subsidiaries or by the Company;
(h) guarantees by a Subsidiary of the Company of Senior Indebtedness
Incurred by the Company or in respect of letters of credit provided to
support such Indebtedness so long as the Incurrence of such Indebtedness is
otherwise permitted by the terms of the Indenture;
(i) Indebtedness in respect of judgment, appeal, surety, performance
and other like bonds, bankers' acceptances and letters of credit provided
by the Company and its Subsidiaries in the ordinary course of business;
(j) Indebtedness of the Company or any Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments, in connection with the acquisition or disposition of any
business, assets or Subsidiary of the Company permitted under the
Indenture;
(k) Indebtedness of the Company or the Subsidiaries, to the extent the
proceeds thereof are immediately used after the incurrence thereof to
purchase Senior Subordinated Notes tendered in an offer to purchase made as
a result of a Change of Control;
(l) Indebtedness of the Company or the Subsidiaries owed to (including
obligations in respect of letters of credit for the benefit of) any Person
in connection with liability insurance provided by such Person to the
Company or any Subsidiary or pursuant to reimbursement or indemnification
obligations to such Person, in each case incurred in the ordinary course of
business; and
(m) Indebtedness of the Company or the Subsidiaries not to exceed $5
million in aggregate principal amount at any time outstanding, which
Indebtedness may be incurred pursuant to clause (b) above.
Limitation on Senior Subordinated Indebtedness. The Company shall not,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Senior Subordinated Notes and subordinate
in right of payment to any other Indebtedness of the Company.
The Company shall not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Guaranty of such Guarantor and expressly
rank subordinate in right of payment to any Guarantor Senior Indebtedness.
Limitation on Restricted Payments. The Company shall not, and shall not
cause or permit any Subsidiary of the Company to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Subsidiary of the Company or make
any payment or distribution to the direct or indirect holders (in their
capacities as such) of Equity Interests of the Company or any
69
<PAGE> 74
Subsidiary of the Company (other than any dividends, distributions and
payments made to the Company or any Wholly Owned Subsidiary of the Company
(and, if such Subsidiary has shareholders other than the Company or another
Subsidiary, to its other shareholders on a pro rata basis or on a basis
that results in the receipt by the Company or a Subsidiary of dividends or
distributions of equal or greater value) and dividends or distributions
payable to any Person solely in Qualified Equity Interests of the Company
or in options, warrants or other rights to purchase Qualified Equity
Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Subsidiary of the Company (other
than any such Equity Interests owned by the Company or any Subsidiary of
the Company); or
(iii) make any Investment in any Person (other than Permitted
Investments)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii) or (iii) referred to as a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of "Limitation on Indebtedness" above; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if such
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (2) 100% of the aggregate net cash proceeds received by the
Company either (x) as capital contributions to the Company after the Issue
Date or (y) from the issue and sale (other than to a Subsidiary of the
Company) of its Qualified Equity Interests after the Issue Date (excluding
the net proceeds from any issuance and sale of Qualified Equity Interests
financed, directly or indirectly, using funds borrowed from the Company or
any Subsidiary of the Company until and to the extent such borrowing is
repaid), plus (3) the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of any Indebtedness of the Company or any
Subsidiary of the Company Incurred after the Issue Date which has been
converted into or exchanged for Qualified Equity Interests of the Company
(minus the amount of any cash or property distributed by the Company or any
Subsidiary of the Company upon such conversion or exchange), plus (4) in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to 100% of
the net cash proceeds thereof (or dividends, distributions or interest
payments received in cash thereon).
The foregoing provisions will not prevent (i) the payment of any dividend
or distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of such
formal notice such payment or redemption would comply with the provisions of the
Indenture; (ii) the purchase, redemption, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the net cash proceeds
of the substantially concurrent issue and sale (other than to a Subsidiary of
the Company) of, Qualified Equity Interests of the Company; provided, however,
that any such net cash proceeds and the value of any Qualified Equity Interests
issued in exchange for such retired Equity Interests are excluded from clause
(c)(2) of the preceding paragraph (and were not included therein at any time);
(iii) the purchase, redemption,
70
<PAGE> 75
retirement or other acquisition of Disqualified Equity Interests made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Disqualified Equity Interests; (iv) payments in lieu of fractional shares in
amount not in excess of $250,000 in the aggregate; (v) payments by the Company
to Holdings to pay Federal, state and local taxes to the extent such taxes are
attributable to the Company and its Subsidiaries; (vi) in each case to the
extent such payments by Holdings are attributable to the Company and its
Subsidiaries, payments by the Company to Holding not to exceed an amount
necessary to permit Holdings to (A) make payments in respect to its
indemnification obligations owing to directors, officers or other Persons under
Holdings' charter or by-laws or pursuant to written agreements with any such
Person, (B) make payments in respect of its other operational expenses (other
than taxes) incurred in the ordinary course of business (it being understood
that management fees or other similar fees or arrangements shall not be deemed
as incurred in the ordinary course of business), or (C) make payments in respect
of indemnification obligations and costs and expenses incurred by Holdings in
connection with any offering of Common Stock of Holdings;(vii) the purchase,
redemption or other acquisition for value of Equity Interests of the Company or
Holdings (other than Disqualified Equity Interests) or options on such shares
held by officers or employees or former officers or employees (or their estates
or beneficiaries under their estates) upon the death, disability, retirement or
termination of employment of such current or former officers or employees
pursuant to the terms of an employee benefit plan or any other agreement
pursuant to which such Equity Interests or options were issued or pursuant to a
severance, buy-sell or right of first refusal agreement with such current or
former officer or employee or payments to Holdings to make such purchase,
redemption or other acquisition of such Equity Interests or options; provided,
however, that the aggregate cash consideration paid, or distributions made,
pursuant to this clause (vii) do not in any one fiscal year exceed $500,000; and
(viii) Investments constituting Restricted Payments made as a result of the
receipt of non-cash consideration from any Asset Sale made pursuant to and in
compliance with "-- Disposition of Proceeds of Asset Sales" below; provided
however, that in the case of each of clauses (ii) through (viii), no Default or
Event of Default shall have occurred and be continuing or would arise therefrom.
In determining the amount of Restricted Payments permissible under this
covenant, amounts expended pursuant to clauses (i), (vi), (vii) and (viii) of
the immediately preceding paragraph shall be included as Restricted Payments.
The amount of any non-cash Restricted Payment shall be deemed to be equal to the
Fair Market Value thereof at the date of the making of such Restricted Payment.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not cause or permit any
Subsidiary of the Company to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Subsidiary of the Company to (a) pay dividends or make any
other distributions to the Company or any other Subsidiary of the Company on its
Equity Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Subsidiary of the Company, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, or make any Investment in, the Company or
any other Subsidiary of the Company or (c) transfer any of its properties or
assets to the Company or any other Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of (i) the Credit
Facility as in effect on the Issue Date, any other agreement of the Company or
its Subsidiaries outstanding from time to time governing Senior Indebtedness
provided that such encumbrances or restrictions are no more adverse to the
Company than those contained in the Credit Facility as in effect on the Issue
Date, and any other agreement of the Company or its Subsidiaries outstanding on
the Issue Date as in effect on the Issue Date and any amendments, restatements,
renewals, replacements or refinancings thereof; provided, however, that any such
amendment, restatement, renewal, replacement or refinancing is no more
restrictive with respect to such encumbrances or restrictions than those
contained in the agreement being amended, restated, reviewed, replaced or
refinanced; (ii) applicable law; (iii) any instrument governing Indebtedness or
71
<PAGE> 76
Equity Interests of an Acquired Person acquired by the Company or any Subsidiary
of the Company as in effect at the time of such acquisition (except to the
extent such Indebtedness was Incurred by such Acquired Person in connection
with, as a result of or in contemplation of such acquisition); provided,
however, that such encumbrances and restrictions are not applicable to the
Company or any Subsidiary of the Company, or the properties or assets of the
Company or any Subsidiary of the Company, other than the Acquired Person; (iv)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices; (v) Purchase Money
Indebtedness for property acquired in the ordinary course of business that only
imposes encumbrances and restrictions on the property so acquired; (vi) any
agreement for the sale or disposition of the Equity Interests or assets of any
Subsidiary of the Company; provided, however, that such encumbrances and
restrictions described in this clause (vi) are only applicable to such
Subsidiary or assets, as applicable, and any such sale or disposition is made in
compliance with "Disposition of Proceeds of Asset Sales" below to the extent
applicable thereto; (vii) refinancing Indebtedness permitted under clause (g) of
the second paragraph of "Limitation on Indebtedness" above; provided, however,
that such encumbrances and restrictions contained in the agreements governing
such Indebtedness are no more restrictive in the aggregate than those contained
in the agreements governing such Indebtedness being refinanced immediately prior
to such refinancing; (viii) security agreements or mortgages securing
Indebtedness of a Subsidiary which are not prohibited by the covenant described
under "-- Limitation on Liens" to the extent such encumbrances or restrictions
restrict the transfer of the property or assets subject to such security
agreements or mortgages; or (ix) the Indenture.
Limitation on Liens. The Company shall not, and shall not cause or permit
any Subsidiary of the Company to, directly or indirectly, Incur any Liens of any
kind against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness unless contemporaneously therewith
effective provision is made to secure the Senior Subordinated Notes and all
other amounts due under the Indenture, equally and ratably with such
Indebtedness (or, in the event that such Indebtedness is subordinated in right
of payment to the Senior Subordinated Notes prior to such Indebtedness) with a
Lien on the same properties and assets securing such Indebtedness for so long as
such Indebtedness is secured by such Lien, except for (i) Liens securing Senior
Indebtedness and (ii) Permitted Liens.
Disposition of Proceeds of Asset Sales. The Company shall not, and shall
not cause or permit any Subsidiary of the Company to, directly or indirectly,
make any Asset Sale, unless (i) the Company or such Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets sold or otherwise disposed of and (ii) at least
75% of such consideration consists of (A) cash or Cash Equivalents or (B)
properties and capital assets that replace the properties and assets that were
the subject of such Asset Sale or in properties and capital assets that will be
used in the business of the Company and its Subsidiaries as existing on the
Issue Date or in businesses reasonably related thereto (as determined in good
faith by the Company's Board of Directors) ("Replacement Assets"), provided that
if the property or assets subject to such Asset Sale were directly owned by the
Company such Replacement Assets also shall be so directly owned. Each of (w) the
amount of any Indebtedness (other than any Subordinated Indebtedness) of the
Company or any Subsidiary of the Company that is actually assumed by the
transferee in such Asset Sale and from which the Company and its Subsidiaries
are fully and unconditionally released, (x) securities received by the Company
or any Subsidiary from the transferee that are immediately converted by the
Company or such Subsidiary into cash or Cash Equivalents, (y) Indebtedness of
any Subsidiary that is no longer a Subsidiary as a result of such Asset Sale, to
the extent that the Company and each other Subsidiary is released from any
guarantee of such Indebtedness in connection with such Asset Sale, and (z)
consideration consisting of Indebtedness of the Company or any Subsidiary, shall
be deemed to be cash for purposes of determining the percentage of cash
consideration received by the Company or its Subsidiaries.
72
<PAGE> 77
The Company or such Subsidiary of the Company, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale within 365 days of receipt thereof
to reduce Senior Indebtedness or (ii) make an Investment in Replacement Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied as described in clause (i) or (ii) of the immediately preceding
paragraph within the time periods set forth therein (the "Net Proceeds
Utilization Date") (such Net Cash Proceeds, the "Unutilized Net Cash Proceeds"),
the Company shall, within 30 days after such Net Proceeds Utilization Date, make
an Offer to Purchase all outstanding Senior Subordinated Notes up to a maximum
principal amount (expressed as a multiple of $1,000) of Notes equal to such
Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date; provided, however, that the Offer to Purchase may be deferred
until there are aggregate Unutilized Net Cash Proceeds equal to or in excess of
$5 million, at which time the entire amount of such Unutilized Net Cash
Proceeds, and not just the amount in excess of $5 million, shall be applied as
required pursuant to this paragraph.
With respect to any Offer to Purchase effected pursuant to this covenant,
among the Senior Subordinated Notes, to the extent the aggregate principal
amount of Senior Subordinated Notes tendered pursuant to such Offer to Purchase
exceeds the Unutilized Net Cash Proceeds to be applied to the repurchase
thereof, such Senior Subordinated Notes shall be purchased pro rata based on the
aggregate principal amount of such Senior Subordinated Notes tendered by each
Holder. To the extent the Unutilized Net Cash Proceeds exceed the aggregate
amount of Senior Subordinated Notes tendered by the Holders of the Senior
Subordinated Notes pursuant to such Offer to Purchase, the Company may retain
and utilize any portion of the Unutilized Net Cash Proceeds not required to be
applied to repurchase Senior Subordinated Notes tendered pursuant to such Offer
for any purpose consistent with the other terms of the Indenture.
In the event that the Company makes an Offer to Purchase the Senior
Subordinated Notes, the Company shall comply with any applicable securities laws
and regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act, and any violation of the provisions of the
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed an Event of Default or an event that with the
passing of time or giving of notice, or both, would constitute an Event of
Default.
Each Holder shall be entitled to tender all or any portion of the Senior
Subordinated Notes owned by such Holder pursuant to the Offer to Purchase,
subject to the requirement that any portion of Note tendered must be tendered in
an integral multiple of $1,000 principal amount and subject to any proration
among tendering Holders as described above.
Merger, Sale of Assets, etc. The Indenture will provide that the Company
shall not consolidate with or merge with or into any other entity and the
Company shall not and shall not cause or permit any Subsidiary to, sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Company's and its Subsidiaries' properties and assets (determined on a
consolidated basis for the Company and its Subsidiaries) to any entity in a
single transaction or series of related transactions, unless: (i) either (x) the
Company shall be the Surviving Person or (y) the Surviving Person (if other than
the Company) shall be a corporation organized and validly existing under the
laws of the United States of America or any State thereof or the District of
Columbia, and shall, in any such case, expressly assume by a supplemental
indenture, the due and punctual payment of the principal of, premium, if any,
and interest on all the Notes and the performance and observance of every
covenant of the Indenture and the Exchange and Registration Rights Agreement to
be performed or observed on the part of the Company; and (ii) immediately
thereafter, no Default or Event of Default shall have occurred and be
continuing.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Subsidiaries of the
Company the Equity Interests of which constitutes all or substantially all the
73
<PAGE> 78
properties and assets of the Company shall be deemed to be the transfer of all
or substantially all the properties and assets of the Company.
Transactions with Affiliates. The Company shall not, and shall not cause
or permit any Subsidiary of the Company to, directly or indirectly, conduct any
business or enter into any transaction (or series of related transactions) with
or for the benefit of any of their respective Affiliates (each an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms which are no
less favorable to the Company or such Subsidiary, as the case may be, than would
be available in a comparable transaction with an unaffiliated third party and
(ii) if such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments or other consideration having a Fair Market Value in
excess of $1 million, a majority of the disinterested members of the Board of
Directors of the Company shall have approved such Affiliate Transaction and
determined that such Affiliate Transaction complies with the foregoing
provisions. In addition, any Affiliate Transaction involving aggregate payments
or other consideration having a Fair Market Value in excess of $7.5 million will
also require a written opinion from an Independent Financial Advisor stating
that the terms of such Affiliate Transaction are fair, from a financial point of
view, to the Company or its Subsidiaries involved in such Affiliate Transaction,
as the case may be.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any Wholly
Owned Subsidiary or between or among Wholly Owned Subsidiaries; (ii) reasonable
fees and compensation paid to and indemnity provided on behalf of, officers,
directors, employees or agents of the Company, Holdings or any Subsidiary of the
Company as determined in good faith by the Company's Board of Directors; (iii)
any transactions undertaken pursuant to any contractual obligations in existence
on the Issue Date (as in effect on the Issue Date); (iv) any Restricted Payments
or Permitted Investments made in compliance with "Limitation on Restricted
Payments" above; (v) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors to employees of the Company or its Subsidiaries who are not
otherwise Affiliates of the Company; and (vi) loans or advances to employees
that are Affiliates of the Company in the ordinary course of business, but in
any event not to exceed $750,000 in the aggregate outstanding at any one time.
Limitation on the Sale or Issuance of Equity Interests of
Subsidiaries. The Company shall not sell any Equity Interest of a Subsidiary of
the Company, and shall not cause or permit any Subsidiary of the Company,
directly or indirectly, to issue or sell any Equity Interests (other than
directors' qualifying shares, to the extent mandated by applicable law), except
to the Company or a Wholly Owned Subsidiary. Notwithstanding the foregoing, the
Company is permitted to sell all the Equity Interest of a Subsidiary of the
Company as long as the Company is in compliance with the terms of the covenant
described under "Disposition of Proceeds of Asset Sales" and, if applicable,
"Merger, Sale of Assets, Etc." above.
Restriction on Transfer of Assets to Subsidiaries. The Indenture will
provide that if the Company transfers or causes to be transferred, in one or a
series of related transactions, assets to any one or more Subsidiaries of the
Company so that, after giving effect to such transfer, either (x) more than 15%
of the Company's consolidated total assets are owned by Subsidiaries of the
Company or (y) more than 15% of the Company's Consolidated EBITDA is derived
from Subsidiaries of the Company, the Company shall cause such Subsidiaries to
(i) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Subsidiaries shall
unconditionally guarantee, on a senior subordinated basis, all the Company's
obligations under the Notes and (ii) deliver to the Trustee an Opinion of
Counsel that such supplemental indenture has been duly executed and delivered by
such Subsidiaries; provided that if no Default or Event of Default shall have
occurred or be continuing, and neither condition (x) or (y) is then met, such
guarantees will automatically, with no action required on behalf of the Company
or its Subsidiaries be released.
74
<PAGE> 79
Provision of Financial Information. Following the effectiveness of the
Exchange Offer Registration Statement, whether or not the Company is subject to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto,
the Company shall file with the SEC (if permitted by SEC practice and applicable
law and regulations) the annual reports, quarterly reports and other documents
which the Company would have been required to file with the SEC pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company were so
subject, such documents to be filed with the SEC on or prior to the respective
dates (the "Required Filing Dates") by which the Company would have been
required so to file such documents if the Company were so subject. The Company
shall also in any event (a) within 15 days of each Required Filing Date (whether
or not permitted or required to be filed with the SEC) (i) transmit (or cause to
be transmitted) by mail to all Holders, as their names and addresses appear in
the Note register, without cost to such Holders, and (ii) file with the Trustee,
copies of the annual reports, quarterly reports and other documents which the
Company is required to file with the SEC pursuant to the preceding sentence, or,
if such filing is not so permitted, information and data of a similar nature,
and (b) if, notwithstanding the preceding sentence, filing such documents by the
Company with the SEC is not permitted by SEC practice or applicable law or
regulations, promptly upon written request supply copies of such documents to
any Holder. In addition, for so long as any Senior Subordinated Notes remain
outstanding and prior to the later of the consummation of the Exchange Offer and
the filing of the Initial Shelf Registration Statement, if required, the Company
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, and, to any beneficial holder of
Notes, if not obtainable from the SEC, information of the type that would be
filed with the SEC pursuant to the foregoing provisions, upon the request of any
such Holder.
EVENTS OF DEFAULT
The occurrence of any of the following will be defined as an "Event of
Default" under the Indenture: (a) failure to pay principal of (or premium, if
any, on) any Senior Subordinated Note when due (whether or not prohibited by the
provisions of the Indenture described under "Subordination of the Senior
Subordinated Notes" above); (b) failure to pay any interest on any Senior
Subordinated Note when due, continued for 30 days or more (whether or not
prohibited by the provisions of the Indenture described under "Subordination of
the Senior Subordinated Notes" above); (c) default in the payment of principal
of or interest on any Senior Subordinated Note required to be purchased pursuant
to any Offer to Purchase required by the Indenture when due and payable or
failure to pay on the Purchase Date the Purchase Price for any Senior
Subordinated Note validly tendered pursuant to any Offer to Purchase (whether or
not prohibited by the provisions of the Indenture described under "Subordination
of the Senior Subordinated Notes" above); (d) failure to perform or comply with
any of the provisions described under "Certain Covenants -- Merger, Sale of
Assets, etc." above; (e) failure to perform any other covenant, warranty or
agreement of the Company under the Indenture or in the Senior Subordinated
Notes, continued for 30 days or more after written notice to the Company by the
Trustee or Holders of at least 25% in aggregate principal amount of the
outstanding Senior Subordinated Notes; (f) default or defaults under the terms
of one or more instruments evidencing or securing Indebtedness of the Company or
any of its Subsidiaries having an outstanding principal amount of $5.0 million
or more individually or in the aggregate that has resulted in the acceleration
of the payment of such Indebtedness or failure by the Company or any of its
Subsidiaries to pay principal when due at the stated maturity of any such
Indebtedness and such default or defaults shall have continued after any
applicable grace period and shall not have been cured or waived; (g) the
rendering of a final judgment or judgments (not subject to appeal) against the
Company or any of its Subsidiaries in an amount of $5.0 million or more (net of
any amounts covered by reputable and creditworthy insurance companies) which
remains undischarged or unstayed for a period of 60 days after the date on which
the right to appeal has expired; or (h) certain events of bankruptcy, insolvency
or reorganization affecting the Company or any of its Significant Subsidiaries.
75
<PAGE> 80
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of Senior
Subordinated Notes, unless such Holders shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Senior Subordinated Notes will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on such Trustee.
If an Event of Default with respect to the Senior Subordinated Notes (other
than an Event of Default described in clause (h) of the preceding paragraph)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the outstanding Senior Subordinated Notes, by
notice in writing to the Company may declare the unpaid principal of (and
premium, if any) and accrued interest to the date of acceleration on all the
outstanding Senior Subordinated Notes to be due and payable immediately and,
upon any such declaration, such principal amount (and premium, if any) and
accrued interest, notwithstanding anything contained in the Indenture or the
Senior Subordinated Notes to the contrary, shall become immediately due and
payable. If an Event or Default specified in clause (h) of the preceding
paragraph occurs under the Indenture, the Senior Subordinated Notes will ipso
facto become immediately due and payable without any declaration or other act on
the part of the Trustee or any Holder of the Senior Subordinated Notes.
Any such declaration with respect to the Senior Subordinated Notes may be
rescinded and annulled by the Holders of a majority in aggregate principal
amount of the outstanding Senior Subordinated Notes upon the conditions provided
in the Indenture. For information as to waiver of defaults, see "Modification
and Waiver" below.
The Indenture will provide that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Senior
Subordinated Notes outstanding becomes known to it, give the Holders of the
Senior Subordinated Notes thereof notice of all uncured Defaults or Events of
Default thereunder known to it; provided, however, that, except in the case of a
Default or an Event of Default in payment with respect to the Senior
Subordinated Notes or a Default or Event of Default in complying with "Certain
Covenants -- Merger, Sale of Assets, etc." above, the Trustee shall be protected
in withholding such notice if and so long as a committee of its trust officers
in good faith determines that the withholding of such notice is in the interest
of the Holders of the Senior Subordinated Notes.
No Holder of any Senior Subordinated Note will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written notice of
a continuing Event of Default thereunder and unless the Holders of at least 25%
of the aggregate principal amount of the outstanding Senior Subordinated Notes
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding, and the Trustee shall have not have
received from the Holders of a majority in aggregate principal amount of such
outstanding Senior Subordinated Notes a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder of such a Senior
Subordinated Note for enforcement of payment of the principal of and premium, if
any, or interest on such Senior Subordinated Note on or after the respective due
dates expressed in such Senior Subordinated Note.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
76
<PAGE> 81
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR, MANAGER
AND STOCKHOLDERS
No director, officer, employee, incorporator, manager or stockholder of the
Company or any of its Affiliates, as such, shall have any liability for any
obligations of the Company under the Senior Subordinated Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Senior Subordinated Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Senior Subordinated Notes
("Legal Defeasance"). Such Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
outstanding Senior Subordinated Notes, except for (i) the rights of Holders to
receive payments in respect of the principal of, premium, if any, and interest
on the Senior Subordinated Notes when such payments are due, (ii) the Company's
obligations with respect to the Senior Subordinated Notes concerning issuing
temporary Senior Subordinated Notes, registration of Senior Subordinated Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payments, (iii) the rights, powers, trust, duties and immunities of
the Trustee and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or an Event of Default with respect
to the Senior Subordinated Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Senior Subordinated
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, United States Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Senior Subordinated Notes on
the stated date for payment thereof or on the applicable redemption date, as the
case may be; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
Senior Subordinated Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit (other than a Default or Event of Default with respect to
the Indenture resulting from the Incurrence of Indebtedness, all or a portion of
which will be used to defease the Senior Subordinated Notes concurrently with
such Incurrence); (v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under the Indenture
or any other material agreement or instrument to which the Company or
77
<PAGE> 82
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; (vii) the Company shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; (viii) the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Senior Indebtedness,
including, without limitation, those arising under the Indenture and (B)
assuming no intervening bankruptcy of the Company between the date of deposit
and the 91st day following the date of the deposit and that no Holder is an
insider of the Company, after the 91st day following the date of the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (ix) certain other customary conditions precedent are satisfied.
Notwithstanding the foregoing, the Opinion of Counsel required by clause (ii)
above need not be delivered if all Senior Subordinated Notes not theretofore
delivered to the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable on the maturity date within one year or (z) are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.
GOVERNING LAW
The Indenture and the Senior Subordinated Notes will be governed by the
laws of the State of New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Senior Subordinated Notes (including
consents obtained in connection with a tender offer or exchange offer for the
Notes); provided, however, that no such modification or amendment to the
Indenture may, without the consent of the Holder of each Senior Subordinated
Note affected thereby, (a) change the Stated Maturity of the principal of or any
installment of interest on any such Senior Subordinated Note or alter the
optional redemption or repurchase provisions of any such Senior Subordinated
Note or the Indenture in a manner adverse to the Holders of the Senior
Subordinated Notes; (b) reduce the principal amount of (or the premium of) any
such Senior Subordinated Note; (c) reduce the rate of or extend the time for
payment of interest on any such Senior Subordinated Note; (d) change the place
or currency of payment of principal of (or premium) or interest on any such
Senior Subordinated Note; (e) modify any provisions of the Indenture relating to
the waiver of past defaults (other than to add sections of the Indenture or the
Senior Subordinated Notes subject thereto) or the right of the Holders of Senior
Subordinated Notes to institute suit for the enforcement of any payment on or
with respect to any such Senior Subordinated Note or the modification and
amendment provisions of the Indenture and the Senior Subordinated Notes (other
than to add sections of the Indenture or the Senior Subordinated Notes which may
not be modified, amended, supplemented or waived without the consent of each
Holder affected); (f) reduce the percentage of the principal amount of
outstanding Senior Subordinated Notes necessary for amendment to or waiver of
compliance with any provision of the Indenture or the Senior Subordinated Notes
or for waiver of any Default in respect thereof; (g) waive a Default in the
payment of principal of, interest on, or redemption payment with respect to, the
Senior Subordinated Notes (except a rescission of acceleration of the Senior
Subordinated Notes by the Holders thereof as provided in the Indenture and a
waiver of the payment default that resulted from such acceleration); (h) modify
the ranking or priority of any Senior Subordinated Note or the Guaranty in
respect of any Guarantor or modify the definition of Senior Indebtedness or
Guarantor Senior Indebtedness or
78
<PAGE> 83
amend or modify the subordination provisions of the Indenture in any manner
adverse to the Holders of the Senior Subordinated Notes; (i) release any
Guarantor from any of its obligations under its Guaranty or the Indenture
otherwise than in accordance with the Indenture or (j) modify the provisions of
any covenant (or the related definitions) in the Indenture requiring the Company
to make an Offer to Purchase in a manner materially adverse to the Holders of
Senior Subordinated Notes affected thereby otherwise than in accordance with the
Indenture.
The Holders of a majority in aggregate principal amount of the outstanding
Senior Subordinated Notes, on behalf of all Holders of Senior Subordinated
Notes, may waive compliance by the Company with certain restrictive provisions
of the Indenture. Subject to certain rights of the Trustee, as provided in the
Indenture, the Holders of a majority in aggregate principal amount of the Senior
Subordinated Notes, on behalf of all Holders, may waive any past default under
the Indenture (including any such waiver obtained in connection with a tender
offer or exchange offer for the Notes), except a default in the payment of
principal, premium or interest or a default arising from failure to purchase any
Senior Subordinated Notes tendered pursuant to an Offer to Purchase, or a
default in respect of a provision that under the Indenture cannot be modified or
amended without the consent of the Holder of each Senior Subordinated Note that
is affected.
THE TRUSTEE
Except during the continuance of a Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the existence
of a Default, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company or any other obligor upon the Senior
Subordinated Notes, to obtain payment of claims in certain cases or to realize
on certain property received by it in respect of any such claim as security or
otherwise. The Trustee is permitted to engage in other transactions with the
Company or an Affiliate of the Company; provided, however, that if it acquires
any conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Subsidiary of the Company or is merged or consolidated with or
into the Company or any Subsidiary of the Company.
"Acquired Person" means, with respect to any specified Person, any other
Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) by the Company or any Subsidiary of the
Company to any other Person, or any acquisition or purchase of Equity Interests
of any other Person by the Company or any Subsidiary of the Company, in either
case pursuant to which such Person shall become a Subsidiary of the Company or
shall be consolidated with or merged into the Company or any Subsidiary of the
Company or (ii) any acquisition by the Company or any Subsidiary of the Company
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business.
79
<PAGE> 84
"Additional Interest" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(that has the effect of a disposition) or other disposition (including, without
limitation, any merger, consolidation or sale-leaseback transaction) to any
Person other than the Company in one transaction or a series of related
transactions, of (i) any Equity Interest of any Subsidiary of the Company (other
than directors' qualifying shares, to the extent mandated by applicable law);
(ii) any assets of the Company or any Subsidiary of the Company which constitute
substantially all of an operating unit or line of business of the Company or any
Subsidiary of the Company; or (iii) any other property or asset of the Company
or any Subsidiary of the Company outside of the ordinary course of business
(including the receipt of proceeds paid on account of the loss of or damage to
any property or asset and awards of compensation for any asset taken by
condemnation, eminent domain or similar proceedings). For the purposes of this
definition, the term "Asset Sale" shall not include (a) any transaction
consummated in compliance with "Certain Covenants -- Merger, Sale of Assets,
etc." above and the creation of any Lien not prohibited by "Certain
Covenants -- Limitation on Liens" above; (b) sales of property or equipment that
has become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Subsidiary of the Company, as
the case may be; and (c) any transaction consummated in compliance with "Certain
Covenants -- Limitation on Restricted Payments" above. In addition, solely for
purposes of "Certain Covenants -- Disposition of Proceeds of Asset Sales" above,
any sale, conveyance, transfer, lease or other disposition of any property or
asset, whether in one transaction or a series of related transactions, involving
assets with a Fair Market Value not in excess of $500,000 in any fiscal year,
shall be deemed not to be an Asset Sale.
"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction
means, as at the time of determination, the present value (discounted according
to GAAP at the cost of indebtedness implied in the lease) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended).
"Board of Directors" means the Board of Directors of Holdings, the Company,
any Guarantor or Person, as the case may be, or any authorized committee of such
Board of Directors.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof or any state government having maturities of not more
than one year from the date of acquisition; (c) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $250 million; (d) repurchase obligations with a
term of not more than seven days for underlying
80
<PAGE> 85
securities of the types described in clauses (b) and (c) above entered into with
any financial institution meeting the qualifications specified in clause (c)
above; (e) commercial paper rated P-1, A-1 or the equivalent thereof by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively, and in
each case maturing within one year after the date of acquisition; (f)
Investments in mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above and (g) in
the case of any Subsidiary of the Company whose jurisdiction of incorporation is
not the United States or any state thereof or the District of Columbia,
Investments: (i) in direct obligations of the sovereign nation (or any agency
thereof) in which such foreign Subsidiary is organized and is conducting
business or in obligations fully and unconditionally guaranteed by such
sovereign nation (or any agency thereof) or (ii) of the type and maturity
described in clauses (a) and (b) above of foreign obligors, which Investment or
obligors (or the parents of such obligors) have ratings described in such
clauses or equivalent ratings from comparable foreign rating agencies.
"Citicorp" means Citicorp, a Delaware corporation.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the four quarter
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination (the "Four Quarter Period") to (ii) Consolidated Net
Interest Expense for such Four Quarter Period; provided, however, that (1) if
the Company or any Subsidiary of the Company has incurred any Indebtedness since
the beginning of such Four Quarter Period that remains outstanding on such date
of determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Net Interest Expense for such Four Quarter Period shall
be calculated after giving effect on a pro forma basis to such Indebtedness and
the application of the proceeds thereof as if such Indebtedness had been
Incurred on the first day of such Four Quarter Period and the discharge of any
other Indebtedness repaid, repurchased or otherwise discharged with the proceeds
of such new Indebtedness as if such discharge had occurred on the first day of
such Four Quarter Period, (2) if since the beginning of such Four Quarter Period
the Company or any Subsidiary of the Company shall have made any Asset Sale, the
Consolidated EBITDA for such Four Quarter Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) directly attributable to the
assets that are the subject of such Asset Sale for such Four Quarter Period or
increased by an amount equal to the Consolidated EBITDA (if negative) directly
attributable thereto for such Four Quarter Period and Consolidated Net Interest
Expense for such Four Quarter Period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Subsidiary of the Company repaid, repurchased or otherwise
discharged with respect to the Company and its continuing Subsidiaries in
connection with such Asset Sale for such Four Quarter Period (or, if the Equity
Interests of any Subsidiary of the Company are sold, the Consolidated Net
Interest Expense for such Four Quarter Period directly attributable to the
Indebtedness of such Subsidiary to the extent the Company and its continuing
Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if
since the beginning of such Four Quarter Period the Company or any Subsidiary of
the Company (by merger or otherwise) shall have made an Investment in any
Subsidiary of the Company (or any Person that becomes a Subsidiary of the
Company) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit of a
business, Consolidated EBITDA and Consolidated Net Interest Expense for such
Four Quarter Period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period and (4) if
since the beginning of such Four Quarter Period any Person (that subsequently
became a Subsidiary or was merged with or into the Company or any Subsidiary of
the Company since the beginning of such Four Quarter Period) shall have made any
Asset Sale or any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (2) or (3) above if made by the Company or a
Subsidiary of the Company during such Four
81
<PAGE> 86
Quarter Period, Consolidated EBITDA and Consolidated Net Interest Expense for
such Four Quarter Period shall be calculated after giving pro forma effect
thereto as if such Asset Sale, Investment or acquisition of assets occurred on,
with respect to any Investment or acquisition, the first day of such Four
Quarter Period and, with respect to any Asset Sale, the day prior to the first
day of such Four Quarter Period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Net Interest Expense
associated with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in accordance with Regulation S-X under the
Securities Act as in effect on the date of such calculation. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any agreement under which Interest Rate Protection
Obligations are outstanding applicable to such Indebtedness if such agreement
under which such Interest Rate Protection Obligations are outstanding has a
remaining term as at the date of determination in excess of 12 months);
provided, however, that the Consolidated Net Interest Expense of the Company
attributable to interest on any Indebtedness Incurred under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the Four Quarter Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; and (iii) Consolidated
Non-cash Charges for such period less all non-cash items increasing Consolidated
Net Income for such period.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the Company
and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Rate Protection Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (e) all capitalized interest and (f) interest on Indebtedness of
another Person that is guaranteed by the Company or any Subsidiary of the
Company actually paid by the Company or any Subsidiary of the Company, and (ii)
the interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and its Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and its Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income (loss)
of any Person if such person is not a Subsidiary of the Company, except the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income (loss)
of any person acquired by the Company or a Subsidiary of the Company in a
pooling of interests transaction for any period prior to the date of such
acquisition; (iii) any net income (but not loss) of any Subsidiary of the
Company if such Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Subsidiary,
directly or indirectly, to the Company to the extent of such restrictions; (iv)
any gain or loss realized upon the sale or other disposition of any asset of the
Company or its Subsidiaries (including pursuant to any sale/leaseback
transaction) outside of the ordinary course of business including, without
limitation, on or with respect to Investments (and excluding dividends,
distributions or interest thereon);
82
<PAGE> 87
(v) any extraordinary gain or loss; (vi) the cumulative effect of a change in
accounting principles after the Issue Date; and (vii) any restoration to income
of any contingency reserve of an extraordinary, non-recurring or unusual nature,
except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Issue Date.
"Consolidated Net Interest Expense" means, with respect to the Company for
any period, Consolidated Interest Expense for such period reduced by the sum of
(x) consolidated interest income of the Company and its Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP and (y) the
amortization of any premiums, fees and other similar expenses incurred in
connection with any financings or any other permitted Incurrence of Indebtedness
for such period to the extent included in Consolidated Interest Expense for such
period.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period the sum of (A) depreciation, (B) amortization and (C) other non-cash
expenses of such Person and its Subsidiaries reducing Consolidated Net Income of
such Person and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding, for purposes of clause (C) only, such
charges which require an accrual of or a reserve for cash charges for any future
period.)
"Credit Facility" means the Credit Facility, dated as of November 10, 1997,
between the Company, the lenders named therein, and The Chase Manhattan Bank, as
Administrative Agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefor, whether by or with
the same or any other lender, creditor, group of lenders or group of creditors,
and including related notes, guarantee and note agreements and other instruments
and agreements executed in connection therewith.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the form of one or
more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency under
the Exchange Act.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the Credit Facility and (b) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $15 million, if the
instrument governing such Senior Indebtedness expressly states that such
Indebtedness is "Designated Senior Indebtedness" for purposes of the Indenture.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.
"Disqualified Equity Interest" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof, in
whole or in part, or exchangeable into Indebtedness on or prior to the earlier
of the maturity date of the Notes or the date on which no Notes remain
outstanding.
83
<PAGE> 88
"Equity Interest" in any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset shall be determined conclusively by the Board of
Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination and which are consistently applied for all applicable periods.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. The term "guarantee" used as
a verb has a corresponding meaning.
"Guarantor" means each Subsidiary, formed, created or acquired after the
Issue Date, required to be a Guarantor pursuant to "Certain
Covenants -- Restriction on Transfer of Assets to Subsidiaries" above.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, at
any date, (a) all Interest Rate Protection Obligations of such Guarantor; (b)
all Obligations of such Guarantor under stand-by letters of credit; and (c) all
other Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment to
such Guarantor's Guaranty, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Guarantor
Senior Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness between or among such Guarantor and any Subsidiary of the Company;
(c) to the extent that it may constitute Indebtedness, any Obligation in respect
of any trade payable Incurred for the purchase of goods or materials, or for
services obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of the Indenture; provided, however,
that such Indebtedness shall be deemed not to have been Incurred in violation of
the Indenture for purposes of this clause (d) if the holder(s) of such
Indebtedness or their representative or the Company shall have furnished to the
Trustee an opinion of independent legal counsel unqualified in all material
respects, addressed to the Trustee (which legal counsel may, as to matters of
fact, rely upon an Officers' Certificate of the Company) to the effect that the
Incurrence of such Indebtedness does not violate the provisions of this
Indenture; (e) Indebtedness evidenced by such Guarantor's Guaranty; (f)
Indebtedness of such Guarantor that is expressly subordinate or junior in right
of payment to any other Indebtedness of such
84
<PAGE> 89
Guarantor; (g) to the extent that it may constitute Indebtedness, any obligation
owing under leases (other than Capitalized Lease Obligations) or management
agreements; (h) any obligation that by operation of law is subordinate to any
general unsecured obligations of such Guarantor; and (i) any existing
indebtedness.
"Holders" means the registered holders of the Notes.
"Holdings" means Airxcel Holdings Corporation, a Delaware corporation.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Subsidiary of
the Company (or is merged into or consolidated with the Company or any
Subsidiary of the Company), whether or not such Indebtedness was Incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Subsidiary of the Company (or being merged into or consolidated with
the Company or any Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Subsidiary or merges into or consolidates with the
Company or any Subsidiary.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed; (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business); (e)
every Capital Lease Obligation of such Person; (f) every net obligation under
Interest Rate Protection Obligations or similar agreements or Currency
Agreements of such Person; (g) Attributable Indebtedness; (h) every obligation
of the type referred to in clauses (a) through (g) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor, guarantor or otherwise; and (i) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a) through
(h) above. Indebtedness (i) shall not be calculated taking into account any cash
and Cash Equivalents held by such Person; (ii) shall not include obligations of
any Person (x) arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business, provided that such
obligations are extinguished within two Business Days of their incurrence, (y)
resulting from the endorsement of negotiable instruments for collection in the
ordinary course of business and consistent with past business practices and (z)
under stand-by letters of credit to the extent collateralized by cash or Cash
Equivalents; (iii) which provides that an amount less than the principal amount
thereof shall be due upon any declaration of acceleration thereof shall be
deemed to be Incurred or outstanding in an amount equal to the accreted value
thereof at the date of determination; and (iv) shall not include obligations
under performance bonds, performance guarantees, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business.
"Independent Financial Advisor" means a nationally recognized accounting,
appraisal, investment banking firm or consultant which, in the judgment of the
Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
85
<PAGE> 90
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"interest" means, with respect to the Senior Subordinated Notes, the sum of
any cash interest and any Additional Interest on the Senior Subordinated Notes.
"Interest Payment Date" means each semiannual interest payment date on May
15 and November 15 of each year commencing May 15, 1998.
"Interest Rate Protection Obligations" means, with respect to any Person,
the Obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Interest Record Date" for the interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means May 1 or November 1
(whether or not a Business Day), as the case may be, immediately preceding such
Interest Payment Date.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. For
purposes of the "Limitation on Restricted Payments" covenant above, the amount
of any Investment shall be the original cost of such Investment, plus the cost
of all additions thereto, but without any other adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment; reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. In determining the
amount of any Investment involving a transfer of any property or asset other
than cash, such property shall be valued at its fair market value at the time of
such transfer, as determined in good faith by the Board of Directors (or
comparable body) of the Person making such transfer.
"Issue Date" means the original issue date of the Notes.
"Lien" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Management Investors" means Melvin L. Adams, Gregory G. Guinn, Paul
Mechler, Richard L. Schreck, T. K. Sellers, Jr., David L. Shuford, Lonnie L.
Snook and George D. Wyers.
"Maturity Date" means the date, which is set forth on the face of the
Senior Subordinated Notes, on which the Senior Subordinated Notes will mature.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Subsidiary of the Company in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale;
86
<PAGE> 91
(d) amounts deemed, in good faith, appropriate by the Board of Directors of the
Company to be provided as a reserve, in accordance with GAAP, against any
liabilities associated with such assets which are the subject of such Asset
Sale; including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale (provided that
the amount of any such reserves shall be deemed to constitute Net Cash Proceeds
at the time such reserves shall have been released or are not otherwise required
to be retained as a reserve); and (e) with respect to Asset Sales by
Subsidiaries, the portion of such cash payments attributable to Persons holding
a minority interest in such Subsidiary.
"Net Proceeds Utilization Date" has the meaning set forth in the second
paragraph under "Certain Covenants Disposition of Proceeds of Asset Sales"
above.
"Obligations" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Senior Subordinated Notes on the
date of the Offer offering to purchase up to the principal amount of Senior
Subordinated Notes specified in such Offer at the purchase price specified in
such Offer (as determined pursuant to the Indenture). Unless otherwise required
by applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase, which shall be not less than 20 Business Days
nor more than 60 days after the date of such Offer, and a settlement date (the
"Purchase Date") for purchase of Senior Subordinated Notes to occur no later
than five Business Days after the Expiration Date. The Company shall notify the
Trustee at least 5 Business Days (or such shorter period as is acceptable to the
Trustee) prior to the mailing of the Offer of the Company's obligation to make
an Offer to Purchase, and the Offer shall be mailed by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company.
The Offer shall contain all the information required by applicable law to be
included therein. The Offer shall contain all instructions and materials
necessary to enable such Holders to tender Senior Subordinated Notes pursuant to
the Offer to Purchase. The Offer shall also state: (1) the Section of the
Indenture pursuant to which the Offer to Purchase is being made; (2) the
Expiration Date and the Purchase Date; (3) the aggregate principal amount of the
outstanding Senior Subordinated Notes offered to be purchased by the Company
pursuant to the Offer to Purchase (including, if less than 100%, the manner by
which such amount has been determined pursuant to the Section of the Indenture
requiring the Offer to Purchase) (the "Purchase Amount"); (4) the purchase price
to be paid by the Company for each $1,000 aggregate principal amount of Senior
Subordinated Notes accepted for payment (as specified pursuant to the Indenture)
(the "Purchase Price"); (5) that the Holder may tender all or any portion of the
Senior Subordinated Notes registered in the name of such Holder and that any
portion of a Note tendered must be tendered in an integral multiple of $1,000
principal amount; (6) the place or places where Senior Subordinated Notes are to
be surrendered for tender pursuant to the Offer to Purchase; (7) that interest
on any Senior Subordinated Note not tendered or tendered but not purchased by
the Company pursuant to the Offer to Purchase will continue to accrue; (8) that
on the Purchase Date the Purchase Price will become due and payable upon each
Senior Subordinated Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date; (9) that each Holder electing to tender all or any portion of a
Senior Subordinated Note pursuant to the Offer to Purchase will be required to
surrender such Senior Subordinated Note at the place or places specified in the
Offer prior to the close of business on the Expiration Date (such Senior
Subordinated Note being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing); (10) that
87
<PAGE> 92
Holders will be entitled to withdraw all or any portion of Senior Subordinated
Notes tendered if the Company (or its Paying Agent) receives, not later than the
close of business on the Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Senior Subordinated Note the Holder tendered, the certificate
number of the Senior Subordinated Note the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender; (11) that (a) if
Senior Subordinated Notes in an aggregate principal amount less than or equal to
the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to
Purchase, the Company shall purchase all such Senior Subordinated Notes and (b)
if Senior Subordinated Notes in an aggregate principal amount in excess of the
Purchase Amount are tendered and not withdrawn pursuant to the Offer to
Purchase, the Company shall purchase Senior Subordinated Notes having an
aggregate principal amount equal to the Purchase Amount on a pro rata basis
(with such adjustments as may be deemed appropriate so that only Senior
Subordinated Notes in denominations of $1,000 principal amount or integral
multiples thereof shall be purchased); and (12) that in the case of any Holder
whose Senior Subordinated Note is purchased only in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Senior Subordinated Note without service charge, a new Senior Subordinated Note
or Senior Subordinated Notes, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Senior Subordinated Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Officer" means the Chairman, any Vice Chairman, the President, any Vice
President, the Chief Financial Officer, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer of Assistant Secretary of the Company
complying with certain provisions of the Indenture.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holder" means (i) CVC and its Affiliates; (ii) the Management
Investors; and (iii) their respective Permitted Transferees.
"Permitted Indebtedness" has the meaning set forth in the second paragraph
of "Certain Covenants-Limitation on Indebtedness" above.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) Interest
Rate Protection Obligations and Currency Agreements; (d) Investments received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers, in each case arising in the ordinary course of business; (e)
Investments in the Company or a Subsidiary of the Company and Investments in a
Person that, as a result of or in connection with such Investment, is merged
with or into or consolidated with the Company or a Subsidiary; (f) Investments
paid for in Common Stock of the Company; (g) loans or advances to officers or
employees of the Company and its Subsidiaries in the ordinary course of business
for bona fide business purposes of the Company and its Subsidiaries (including
travel and moving expenses) not in excess of $500,000 in the aggregate at any
one time outstanding and (h) other Investments that do not exceed $5 million in
the aggregate at any one time.
"Permitted Junior Securities" means any securities of the Company or any
other Person that are (i) equity securities without special covenants or (ii)
debt securities expressly subordinated in right of payment to all Senior
Indebtedness or Guarantor Senior Indebtedness, as the case may be, that may at
the time be outstanding, to substantially the same extent as, or to a greater
extent than,
88
<PAGE> 93
the Senior Subordinated Notes or the Guaranties, as the case may be, are
subordinated as provided in the Indenture, in any event pursuant to a court
order so providing and as to which (a) the rate of interest on such securities
shall not exceed the effective rate of interest on the Senior Subordinated Notes
on the date of the Indenture, (b) such securities shall not be entitled to the
benefits of covenants or defaults materially more beneficial to the holders of
such securities than those in effect with respect to the Senior Subordinated
Notes on the date of the Indenture and (c) such securities shall not provide for
amortization (including sinking fund and mandatory prepayment provisions)
commencing prior to the date six months following the final scheduled maturity
date of the Senior Indebtedness or Guarantor Senior Indebtedness, as the case
may be, (as modified by the plan of reorganization of readjustment pursuant to
which such securities are issued).
"Permitted Liens" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided, however, that such Liens were in existence
prior to such merger or consolidation and were not incurred in contemplation of
such merger or consolidation and do not secure any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
subject to the Liens prior to such merger or consolidation; (b) Liens imposed by
law such as carriers', warehousemen's and mechanics' Liens and other similar
Liens arising in the ordinary course of business which secure payment of
obligations not more than 30 days past due or which are being contested in good
faith and by appropriate proceedings; (c) Liens existing on the Issue Date and
Liens in favor of the lenders under the Credit Facility; (d) Liens securing only
the Notes; (e) Liens in favor of the Company or any Subsidiary of the Company;
(f) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided, however,
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or minor imperfections of title that in
the aggregate are not material in amount and do not in any case materially
detract from the properties subject thereto or interfere with the ordinary
conduct of the business of the Company and its Subsidiaries; (h) Liens resulting
from the deposit of cash or notes in connection with contracts, tenders or
expropriation proceedings, or to secure workers' compensation, surety or appeal
bonds, costs of litigation when required by law and public and statutory
obligations or obligations under franchise arrangements entered into in the
ordinary course of business; (i) Liens securing Indebtedness consisting of
Capitalized Lease Obligations, Purchase Money Indebtedness, mortgage financings,
industrial revenue bonds or other monetary obligations, in each case incurred
solely for the purpose of financing all or any part of the purchase price or
cost of construction or installation of assets used in the business of the
Company or its Subsidiaries, or repairs, additions or improvements to such
assets, provided, however, that (I) such Liens secure Indebtedness in an amount
not in excess of the original purchase price or the original cost of any such
assets or repair, addition or improvements thereto (plus an amount equal to the
reasonable fees and expenses in connection with the incurrence of such
Indebtedness), (II) such Liens do not extend to any other assets of the Company
or its Subsidiaries (and, in the case of repair, addition or improvements to any
such assets, such Lien extends only to the assets (and improvements thereto or
thereon) repaired, added to or improved), (III) the Incurrence of such
Indebtedness is permitted by "Certain Covenants-Limitation on Indebtedness"
above and (IV) such Liens attach within 90 days of such purchase, construction,
installation, repair, addition or improvement; and (j) Liens to secure any
refinancings, renewals, extensions, modifications or replacements (collectively,
"refinancings") (or successive refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in the clauses above so long as such
Lien does not extend to any other property (other than improvements thereto).
"Permitted Transferee" means (a) with respect to CVC (i) Citicorp, any
direct or indirect wholly owned subsidiary of Citicorp, and any officer,
director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp, (ii) any spouse or lineal descendent (including by adoption
89
<PAGE> 94
and stepchildren) of the officers, directors and employees to, in clause (a)(i)
above or (iii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of the
persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of Holdings or the Company or a subsidiary of the Company
(i) any spouse or lineal descendent (including by adoption and stepchildren) of
such officer or employee and (ii) any trust, corporation or partnership 100% in
interest of the beneficiaries, stockholders or partners of which consists of
such officer or employee or any of the persons described in clause (b)(i) above
or any combination thereof.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Preferred Equity Interest," in any Person, means an Equity Interest of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"Principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Public Equity Offering" means, with respect to the Company, an
underwritten public offering of Qualified Equity Interests of the Company or
Holdings pursuant to an effective registration statement filed under the
Securities Act (excluding registration statements filed on Form S-8); provided,
however, that if any such offering is the Offering of Qualified Equity Interests
of Holdings, only the net proceeds that are contributed to the Company shall be
taken into consideration for purposes of this definition.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Subsidiary of the Company Incurred for the purpose of financing in the ordinary
course of business all or any part of the purchase price or the cost of
construction or improvement of any property related to the business of the
Company (including Equity Interests and the assets of an ongoing business);
provided, however, that the aggregate principal amount of such Indebtedness does
not exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such Indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof as
of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest in such
Person other than any Disqualified Equity Interest.
"Redemption Date" when used with respect to any Senior Subordinated Note to
be redeemed, means the date fixed for such redemption pursuant to the Indenture.
"Replacement Assets" has the meaning set forth in the first paragraph under
"Certain Covenants -- Disposition of Proceeds of Asset Sales" above.
90
<PAGE> 95
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company of any
real or tangible personal Property, which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in contemplation of
such leasing.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Senior Indebtedness" means, at any date, (a) all Obligations of the
Company under the Credit Facility; (b) all Interest Rate Protection Obligations
of the Company and all Obligations of the Company under Currency Agreements; (c)
all Obligations of the Company under stand-by letters of credit; and (d) all
other Indebtedness of the Company, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness, unless the
instrument under which such Indebtedness of the Company is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to the Senior Subordinated Notes, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Senior Indebtedness shall not include (a) to the extent that it may
constitute Indebtedness, any Obligation for Federal, state, local or other
taxes; (b) any Indebtedness among or between the Company and any Subsidiary of
the Company or any Affiliate of the Company or any of such Affiliate's
Subsidiaries; (c) to the extent that it may constitute Indebtedness, any
Obligation in respect of any trade payable Incurred for the purchase of goods or
materials, or for services obtained, in the ordinary course of business; (d)
that portion of any Indebtedness that is Incurred in violation of the Indenture;
(e) Indebtedness evidenced by the Senior Subordinated Notes; (f) Indebtedness of
the Company that is expressly subordinate or junior in right of payment to any
other Indebtedness of the Company; (g) to the extent that it may constitute
Indebtedness, any obligation owing under leases (other than Capitalized Lease
Obligations) or management agreements; and (h) any obligation that by operation
of law is subordinate to any general unsecured obligations of the Company. No
Indebtedness shall be deemed to be subordinated to other Indebtedness solely
because such other Indebtedness is secured.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X under the Securities Act.
"Stated Maturity" means, when used with respect to any Senior Subordinated
Note or any installment of interest thereon, the date specified in such Senior
Subordinated Note as the fixed date on which the principal of such Senior
Subordinated Note or such installment of interest is due and payable.
"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Senior
Subordinated Notes or such Guarantor's Guaranty, as the case may be.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"Total Assets" means, at any date of determination, the total consolidated
assets of the Company and its Subsidiaries, as determined in accordance with
GAAP.
"United States Government Obligations" means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
91
<PAGE> 96
"Unutilized Net Cash Proceeds" has the meaning set forth in the third
paragraph under "Certain Covenants Disposition of Proceeds of Asset Sales"
above.
"Voting Equity Interests" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Subsidiary" means any Subsidiary of the Company all of the
outstanding Voting Equity Interests (other than directors" qualifying shares) of
which are owned, directly or indirectly, by the Company.
92
<PAGE> 97
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were originally sold by the Company on November 10, 1997 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Notes to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to a limited number of institutional
accredited investors that agreed to comply with certain transfer restrictions
and other conditions. As a condition to the Purchase Agreement, the Company
entered into the Exchange and Registration Rights Agreement with the Initial
Purchaser pursuant to which the Company has agreed to: (i) file with the
Commission on or prior to 45 days after the date of issuance of the Notes (the
"Issue Date") a registration statement on Form S-1 or Form S-4, if the use of
such form is then available (the "Exchange Offer Registration Statement")
relating to a registered exchange offer (the "Exchange Offer") for the Notes
under the Securities Act and (ii) use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 150 days after the Issue Date. As soon as practicable
after the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the holders of Transfer Restricted Securities (as defined
below) who are not prohibited by any law or policy of the Commission from
participating in the Exchange Offer the opportunity to exchange their Transfer
Restricted Securities for the Exchange Notes that are identical in all material
respects to the Notes (except that the Exchange Notes will not contain terms
with respect to transfer restrictions) and that would be registered under the
Securities Act. The Company will keep the Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date on which
notice of the Exchange Offer is mailed to the holders of the Notes. For each
Note surrendered to the Company pursuant to the Exchange Offer, the holder of
such Note will receive an Exchange Note having a principal amount equal to that
of the surrendered Note. Interest on each Exchange Note will accrue from the
date of its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Exchange Notes would in general
be freely tradeable after the Exchange Offer without further registration under
the Securities Act. However, any purchaser of Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing the Exchange Notes (i) will not be able to rely on the
interpretation of the staff of the Commission, (ii) will not be able to tender
its Notes in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Notes, unless such sale or transfer is made pursuant to
an exemption from such requirements.
If (i) because of any change in law or applicable interpretations thereof
by the staff of the Commission, the Company is not permitted to effect the
Exchange Offer as contemplated hereby, (ii) any Securities validly tendered
pursuant to the Exchange Offer are not exchanged for Exchange Securities within
195 days after the Issue Date, (iii) any Initial Purchaser so requests with
respect to Notes not eligible to be exchanged for Exchange Notes in the Exchange
Offer, (iv) any applicable law or interpretations do not permit any holder of
Notes to participate in the Exchange Offer, (v) any holder of Notes that
participates in the Exchange Offer does not receive freely transferable Exchange
Notes in exchange for tendered Notes, or (vi) the Company so elects, then the
Company will file with the Commission a shelf registration statement (the "Shelf
Registration Statement") to cover resales of Transfer Restricted Securities by
such holders who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. For purposes of
the foregoing, "Transfer Restricted Securities" means each Note until (i) the
date on which such Note has been exchanged for a freely transferable Exchange
Note in the Exchange Offer; (ii) the date on which such Note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such
93
<PAGE> 98
Note is distributed to the public pursuant to Rule 144 under the Securities Act
or is salable pursuant to Rule 144(k) under the Securities Act.
The Company will use its reasonable best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement
(each, a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will commence
the Exchange Offer and will use its reasonable best efforts to consummate the
Exchange Offer as promptly as practicable, but in any event prior to 195 days
after the Issue Date. If applicable, the Company will use its reasonable best
efforts to keep the Shelf Registration Statement effective for a period of two
years after the Issue Date.
If (i) the applicable Registration Statement is not filed with the
Commission on or prior to 45 days after the Issue Date; (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 150 days after the Issue Date; (iii) the
Exchange Offer is not consummated on or prior to 195 days after the Issue Date
or (iv) the Shelf Registration Statement is filed and declared effective within
150 days after the Issue Date but shall thereafter cease to be effective (at any
time that the Company is obligated to maintain the effectiveness thereof)
without being succeeded within 30 days by an additional Registration Statement
filed and declared effective (each such event referred to in clauses (i) through
(iv), a "Registration Default"), the Company will be obligated to pay liquidated
damages to each holder of Transfer Restricted Securities, during the period of
one or more such Registration Defaults, in an amount equal to $0.192 per week
per $1,000 principal amount of the Notes constituting Transfer Restricted
Securities held by such holder until the applicable Registration Statement is
filed, the Exchange Offer Registration Statement is declared effective and the
Exchange Offer is consummated or the Shelf Registration Statement is declared
effective or again becomes effective, as the case may be. All accrued liquidated
damages shall be paid to holders in the same manner as interest payments on the
Notes on semi-annual payment dates which correspond to interest payment dates
for the Notes. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease.
The Company (i) shall make available for a period of 180 days after the
consummation of the Exchange Offer a prospectus meeting the requirements of the
Securities Act to any broker-dealer for use in connection with any resale of any
such Exchange Notes and (ii) shall pay all expenses incident to the Exchange
Offer (including the expense of one counsel to the holders of the Notes) and
will indemnify certain holders of the Notes (including any broker-dealer)
against certain liabilities, including liabilities under the Securities Act. A
broker-dealer which delivers such a prospectus to purchasers in connection with
such resales will be subject to certain of the civil liability provisions under
the Securities Act and will be bound by the provisions of the Exchange and
Registration Rights Agreement (including certain indemnification rights and
obligations).
Each holder of Notes who wishes to exchange such Notes for Exchange Notes
in the Exchange Offer will be required to make representations in the Letter of
Transmittal that (i) any Exchange Notes to be received by it will be acquired in
the ordinary course of its business; (ii) it has no arrangement or understanding
with any person to participate in the distribution of the Exchange Notes and
(iii) it is not an "affiliate" (as defined in Rule 405 under the Securities Act)
of the Company, or if it is an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of the Notes) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Exchange and Registration Rights Agreement,
the Company is required to allow Participating Broker-Dealers and other persons,
if any, subject to similar prospectus delivery requirements to use the
prospectus contained in the Exchange Offer Registration Statement in connection
with the resale of such Exchange Notes.
94
<PAGE> 99
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making activities or other trading activities (an "Exchanging
Dealer"), it will be required to acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes.
Holders of the Notes will be required to make certain representations to
the Company (as described above) in order to participate in the Exchange Offer
and will be required to deliver information to be used in connection with the
Shelf Registration Statement in order to have their Notes included in the Shelf
Registration Statement and benefit from the provisions regarding liquidated
damages set forth in the preceding paragraphs. A holder who sells Notes pursuant
to the Shelf Registration Statement generally will be required to be named as a
selling securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Exchange and Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations).
For so long as the Notes are outstanding, the Company will continue to
provide to holders of the Notes and to prospective purchasers of the Notes the
information required by Rule 144A(d)(4) under the Securities Act.
The foregoing description of the Exchange and Registration Rights Agreement
is a summary only, does not purport to be complete and is qualified in its
entirety by reference to all provisions of the Exchange and Registration Rights
Agreement. The Company will provide a copy of the Exchange and Registration
Rights Agreement to prospective purchasers of Notes identified to the Company by
an Initial Purchaser upon request.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Notes accepted
in the Exchange Offer. Holders may tender some or all of their Notes pursuant to
the Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes bear a Series B designation and
a different CUSIP Number from the Notes, (ii) the Exchange Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (iii) the holders of the Exchange Notes will not be
entitled to certain rights under the Exchange and Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Notes in certain circumstances relating to the timing of the Exchange Offer, all
of which rights will terminate when the Exchange Offer is terminated. The
Exchange Notes will evidence the same debt as the Notes and will be entitled to
the benefits of the Indenture.
As of the date of this Prospectus, $90,000,000 aggregate principal amount
of Notes were outstanding. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
95
<PAGE> 100
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. Notwithstanding the
foregoing, the Company will not extend the Expiration Date beyond ,
1998.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the Exchange Notes. Such
interest will be paid with the first interest payment on the Exchange Notes on
May 15, 1998. Interest on the Notes accepted for exchange will cease to accrue
upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each May 15 and
November 15, commencing on May 15, 1998.
PROCEDURES FOR TENDERING
Only a holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Notes and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Notes, Letter of
Transmittal and other required documents must be completed and received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the Notes may
be
96
<PAGE> 101
made by book-entry transfer in accordance with the procedures described below.
Confirmation of such book-entry transfer must be received by the Exchange Agent
prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the
Company the representations set forth above in the third paragraph under the
heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE
HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "Instruction to
Registered Holder and/or Book-Entry Transfer Facility Participant from Owner"
included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Notes at the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), for the purpose of facilitating the Exchange
Offer, and subject to the establishment thereof, any financial institution that
is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Notes by causing such Book-Entry Transfer Facility to
transfer such Notes into the Exchange Agent's account with respect to the Notes
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. Although delivery of the Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery
97
<PAGE> 102
procedures described below are complied with, within the time period provided
under such procedures. Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Exchange Agent.
The Depositary and DTC have confirmed that the Exchange Offer is eligible
for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange Offer
by causing DTC to transfer Notes to the Depositary in accordance with DTC's ATOP
procedures for transfer. DTC will then send an Agent's Message to the
Depositary.
The term "Agent's Message" means a message transmitted by DTC, received by
the Depositary and forming part of the confirmation of a book-entry transfer,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Notes which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Pen-Tab may enforce such agreement
against such participant. In the case of an Agent's Message relating to
guaranteed delivery, the term means a message transmitted by DTC and received by
the Depositary, which states that DTC has received an express acknowledgment
from the participant in DTC tendering Notes that such participant has received
and agrees to be bound by the Notice of Guaranteed Delivery.
Notwithstanding the foregoing, in order to validly tender in the Exchange
Offer with respect to Securities transferred pursuant to ATOP, a DTC participant
using ATOP must also properly complete and duly execute the applicable Letter of
Transmittal and deliver it to the Depositary. Pursuant to authority granted by
DTC, any DTC participant which has Notes credited to its DTC account at any time
(and thereby held of record by DTC's nominee) may directly provide a tender as
though it were the registered holder by so completing, executing and delivering
the applicable Letter of Transmittal to the Depositary. DELIVERY OF DOCUMENTS TO
DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right in its sole discretion to waive any defects, irregularities
or conditions of tender as to particular Notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Notes must
be cured within such time as the Company shall determine. Although the Company
intends, to notify holders of defects or irregularities with respect to tenders
of Notes, neither the Company, the Exchange Agent nor any other person shall
incur any liability for failure to give such notification. Tenders of Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the
98
<PAGE> 103
Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letter of Transmittal
are received by the Exchange Agent upon five New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
withdraw a tender of Notes in the Exchange Offer, a telegram, telex, letter or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Notes register the transfer of such Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Notes are to
be registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Notes so withdrawn are validly retendered. Any
Notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
99
<PAGE> 104
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Notes and return all
tendered Notes to the tendering holders, (ii) extend the Exchange Offer and
retain all Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Notes (see
"-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Delivery to an address other than as set forth above will not constitute a
valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
100
<PAGE> 105
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Notes, which is face value, as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so
long as the Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Company), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
RESALES OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Notes in the ordinary course of
business and who is not participating, does not intend to participate, and has
no arrangement or understanding with person to participate, in the distribution
of the Exchange Notes, will be allowed to resell the Exchange Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the Exchange Notes are to be
acquired by the holder or the person receiving such Exchange Notes, whether or
not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale
101
<PAGE> 106
of the Exchange Notes and cannot rely on those no-action letters. As indicated
above, each Participating Broker-Dealer that receives an Exchange Note for its
own account in exchange for Notes must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. For a
description of the procedures for such resales by Participating Broker-Dealers,
see "Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion (including the opinion of special counsel
described below) is based upon current provisions of the Internal Revenue Code
of 1986, as amended, applicable Treasury regulations, judicial authority and
administrative rulings and practice. There can be no assurance that the Internal
Revenue Service (the "Service") will not take a contrary view, and no ruling
from the Service has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Company recommends that
each holder consult such holder's own tax advisor as to the particular tax
consequences of exchanging such holder's Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
Kirkland & Ellis, special counsel to the Company, has advised the Company
that in its opinion, the exchange of the Notes for Exchange Notes pursuant to
the Exchange Offer will not be treated as an "exchange" for federal income tax
purposes because the Exchange Notes will not be considered to differ materially
in kind or extent from the Notes. Rather, the Exchange Notes received by a
holder will be treated as a continuation of the Notes in the hands of such
holder. As a result, there will be no federal income tax consequences to holders
exchanging Notes for Exchange Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Notes where such Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1998, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchaser or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes
102
<PAGE> 107
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Exchange Notes
offered hereby will be passed upon for the Company by Kirkland & Ellis, New
York, New York.
EXPERTS
The balance sheets as of December 31, 1995 and 1996 and the statements of
operations, changes in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996, included in this Prospectus and
Exchange Offer Registration, have been included herein in reliance on the report
of Coopers & Lybrand, L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The balance sheets as of October 31, 1995 and 1996 and the statements of
operations, changes in stockholders' equity and cash flows for each of the three
years in the period ended October 31, 1996, included in this Prospectus and
Exchange Offer Registration, have been included herein in reliance on the report
of Maudlin & Jenkins, LLC, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
103
<PAGE> 108
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AIRXCEL PAGE
- ------------------------------------------------------------------------------------- ----
<S> <C>
Report of Coopers & Lybrand L.L.P., Independent Accountants.......................... F-2
Balance Sheets as of December 31, 1995 and 1996, and September 30, 1997 (unaudited).. F-3
Statements of Operations for the years ended December 31, 1994, 1995 and 1996, and
for the nine months ended September 30, 1996 and 1997 (unaudited).................. F-4
Statements of Changes in Stockholders' Equity (Deficiency) for the years ended
December 31, 1994, 1995 and 1996, and for the nine months ended September 30, 1997
(unaudited)........................................................................ F-5
Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996, and
for the nine months ended September 30, 1996 and 1997 (unaudited).................. F-6
Notes to Financial Statements........................................................ F-8
CRISPAIRE ---------------------------------------------------------------------------
Report of Mauldin & Jenkins, LLC, Independent Accountants............................ F-18
Balance Sheets as of October 31, 1995 and 1996....................................... F-19
Statements of Income for the years ended October 31, 1994, 1995 and 1996............. F-20
Statements of Stockholders' Equity for the years ended October 31, 1994, 1995 and
1996............................................................................... F-21
Statements of Cash Flows for the years ended October 31, 1994, 1995 and 1996......... F-22
Notes to Financial Statements........................................................ F-23
Balance Sheet as of July 31, 1997 (unaudited)........................................ F-28
Statements of Income for the nine months ended July 31, 1997 and 1996 (unaudited).... F-29
Statements of Cash Flows for the nine months ended July 31, 1996 and 1997
(unaudited)........................................................................ F-30
Notes to Financial Statements........................................................ F-31
</TABLE>
F-1
<PAGE> 109
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Recreational Vehicle Products, Inc.:
We have audited the accompanying balance sheets of Airxcel, Inc., formerly
known as Recreational Vehicle Products, Inc. as of December 31, 1995 and 1996,
and the related statements of operations, changes in stockholders' equity
(deficiency) and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company'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 Airxcel, Inc. as of December
31, 1995 and 1996 and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
Kansas City, Missouri
October 17, 1997,
except for the information presented
in Note 14 as to which the
date is December 24, 1997
F-2
<PAGE> 110
AIRXCEL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash......................................... $ 621,334 $ 226,431 $ 69,747
Accounts receivable, net of allowances for
doubtful accounts of $20,000, $20,000 and
$95,094, respectively..................... 4,388,679 3,693,910 4,121,088
Inventory.................................... 6,062,241 6,421,396 4,903,410
Prepaid expenses............................. 182,872 90,372 --
Income taxes receivable...................... 2,409,464 1,209,263 --
Deferred income taxes........................ 408,521 427,035 2,160,000
Net assets held for sale..................... 5,633,708 6,421,293 2,382,091
------------ ------------ ------------
Total current assets................. 19,706,819 18,489,700 13,636,336
------------ ------------ ------------
Property, plant and equipment, net............. 3,494,632 3,058,227 3,602,748
Computer software, net......................... 87,446 30,365 22,231
Intangible assets, net......................... 2,931,637 1,586,163 1,268,501
Loan financing costs, net...................... 182,500 1,583,674 1,379,135
Deferred income taxes.......................... 158,230 -- --
------------ ------------ ------------
Total assets......................... $ 26,561,264 $ 24,748,129 $ 19,908,951
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current portion of long-term debt............ $ 4,894,928 $ 7,933,087 $ 3,553,742
Accounts payable............................. 4,342,883 2,746,016 2,430,758
Warranty reserve............................. 476,000 488,000 469,000
Accrued vacation expense..................... 304,922 324,863 316,236
Accrued interest............................. 108,247 963,259 1,244,542
Upgrade reserve.............................. -- -- 500,000
Income taxes payable......................... -- -- 893,139
Other accrued expenses....................... 760,860 402,105 588,131
------------ ------------ ------------
Total current liabilities............ 10,887,840 12,857,330 9,995,548
Long-term debt, less current portion........... 19,928,572 40,346,854 38,984,927
Deferred income taxes.......................... -- 245,068 375,000
------------ ------------ ------------
Total liabilities.................... 30,816,412 53,449,252 49,355,475
------------ ------------ ------------
Commitments and contingencies (see Notes 1, 9
and 13)...................................... -- -- --
Stockholders' equity (deficiency):
Common stock, par value $1; authorized 1,000
shares; 1,000 shares issued and
outstanding............................... 1,000 1,000 1,000
Additional paid-in capital................... 6,068,528 14,222,563 15,172,564
Accumulated deficit.......................... (10,324,676) (42,924,686) (44,620,088)
------------ ------------ ------------
Total stockholders' equity
(deficiency)....................... (4,255,148) (28,701,123) (29,446,524)
------------ ------------ ------------
Total liabilities and stockholders'
equity (deficiency)................ $ 26,561,264 $ 24,748,129 $ 19,908,951
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 111
AIRXCEL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
------------------------------------------ -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales........................... $56,161,774 $55,787,855 $58,168,823 $47,211,464 $43,906,856
Cost of goods sold.............. 41,614,253 42,256,789 43,802,980 35,518,287 33,488,707
----------- ----------- ----------- ----------- -----------
Gross profit................ 14,547,521 13,531,066 14,365,843 11,693,177 10,418,149
----------- ----------- ----------- ----------- -----------
Operating expenses:
Selling, general and
administrative.............. 5,555,272 8,626,877 4,558,164 3,580,608 2,737,383
Amortization of intangible
assets and computer
software.................... 2,331,131 2,331,766 1,421,368 1,181,901 325,795
----------- ----------- ----------- ----------- -----------
Total operating expenses.... 7,886,403 10,958,643 5,979,532 4,762,509 3,063,178
----------- ----------- ----------- ----------- -----------
Income from operations...... 6,661,118 2,572,423 8,386,311 6,930,668 7,354,971
Interest expense................ 1,282,453 1,096,646 2,273,318 1,160,780 2,434,860
Other expense, net.............. 26,673 92,291 145,089 98,770 11,182
----------- ----------- ----------- ----------- -----------
Income from continuing
operations before income
tax expense and
extraordinary item........ 5,351,992 1,383,486 5,967,904 5,671,118 4,908,929
Income tax expense.............. 2,071,000 831,448 2,411,275 2,155,000 1,865,000
----------- ----------- ----------- ----------- -----------
Income from continuing
operations before
extraordinary item........ 3,280,992 552,038 3,556,629 3,516,118 3,043,929
Discontinued operations:
Loss from operations of
Faulkner Manufacturing, less
applicable income tax
benefit of $378,000,
$603,000, $1,446,638,
$1,034,000 and $804,000
respectively................ 601,363 960,257 2,299,189 1,687,939 1,444,968
Loss on disposal of Faulkner
Manufacturing including
provision of $650,000 for
operating losses during
phase-out period, less
applicable income tax
benefit of $1,570,000....... -- -- -- -- 2,430,000
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item........ 2,679,629 (408,219) 1,257,440 1,828,179 (831,039)
Extraordinary loss on early
extinguishment of debt, less
applicable income tax benefit
of $40,000, $28,000, $115,000
and $115,000, respectively.... 64,040 44,880 183,821 183,821 --
----------- ----------- ----------- ----------- -----------
Net income (loss)........... $ 2,615,589 $ (453,099) $ 1,073,619 $ 1,644,358 $ (831,039)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 112
AIRXCEL, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL EQUITY
------ ------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1994.......... 1,000 $1,000 $ 9,069,217 $ (8,335,376) $ 734,841
Capital contribution............. 21,639 -- 21,639
Capital contribution............. -- -- 346,347 -- 346,347
Net income....................... -- -- -- 2,615,589 2,615,589
----- ------ ----------- ----------- ------------
Balances, December 31, 1994........ 1,000 1,000 9,437,203 (5,719,787) 3,718,416
Dividends paid................... -- -- -- (4,151,790) (4,151,790)
Return of capital................ -- -- (4,355,069) -- (4,355,069)
Common stock options............. -- -- 122,946 -- 122,946
Tax benefit from common stock
options....................... -- -- 863,448 -- 863,448
Net loss......................... -- -- -- (453,099) (453,099)
----- ------ ----------- ----------- ------------
Balances, December 31, 1995........ 1,000 1,000 6,068,528 (10,324,676) (4,255,148)
Capital contribution............. -- -- 457,744 -- 457,744
Recapitalization................. -- -- 7,478,097 (33,673,629) (26,195,532)
Capital contribution............. -- -- 218,194 -- 218,194
Net income....................... -- -- -- 1,073,619 1,073,619
----- ------ ----------- ----------- ------------
Balances, December 31, 1996........ 1,000 1,000 14,222,563 (42,924,686) (28,701,123)
Capital contribution
(unaudited)................... -- -- 950,001 (864,363) 85,638
Net loss (unaudited)............. -- -- -- (831,039) (831,039)
----- ------ ----------- ----------- ------------
Balances, September 30, 1997
(unaudited)...................... 1,000 $1,000 $15,172,564 $(44,620,088) $(29,446,524)
===== ====== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 113
AIRXCEL, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
------------------------------------------ -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................... $ 2,615,589 $ (453,099) $ 1,073,619 $ 1,644,358 $ (831,039)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation.............................. 782,708 741,863 736,291 552,098 505,532
Amortization of intangible assets and
computer software....................... 2,578,516 2,578,940 1,594,384 1,320,987 427,585
Amortization of financing costs........... 15,240 12,840 103,657 48,225 241,140
Provision for bad debts................... -- -- -- 155,894 101,387
Provision for writedowns of inventory..... -- 40,000 307,000 250,000 --
Provision for loss on disposal of
discontinued operations................. -- -- -- -- 4,000,000
Deferred income taxes..................... (116,915) 838,534 142,849 100,327 (1,349,271)
Benefit of state income tax NOL
carryforward............................ -- (225,000) -- -- --
Stock option compensation................. 346,347 122,946 457,744 457,744 --
Gain (loss) on sale of fixed assets....... 11 (6,067) (8,623) -- --
Extraordinary loss on early extinguishment
of debt................................. 64,040 44,880 183,821 183,821 --
Changes in assets and liabilities:
Accounts receivable..................... 471,181 (2,027,786) 602,216 332,060 (1,066,635)
Inventory............................... (1,276,189) 467,954 (1,346,929) (2,092,149) 1,913,699
Prepaid expenses........................ (12,573) (92,924) 119,627 47,796 120,165
Income taxes receivable/payable......... 678,204 (1,567,702) 1,200,201 1,414,744 2,102,402
Accounts payable........................ (306,328) 902,156 (1,905,061) (1,774,464) (283,515)
Accrued expenses........................ 631,915 (521,030) 988,093 176,554 564,068
------------ ------------ ------------ ---------- ---------
Net cash provided by operating
activities......................... 6,471,746 856,505 4,248,889 2,817,995 6,445,518
------------ ------------ ------------ ---------- ---------
Cash flows from investing activities:
Proceeds from sale of assets................ 21,886 28,003 24,306 16,104 26,049
Capital expenditures........................ (843,090) (355,990) (458,549) (354,329) (558,726)
Payment for purchase of Carter Shades, Inc.
net of cash received of $11,402........... -- (854,983) -- -- --
------------ ------------ ------------ ---------- ---------
Net cash used in investing
activities......................... (821,204) (1,182,970) (434,243) (338,225) (532,677)
------------ ------------ ------------ ---------- ---------
Cash flows from financing activities:
Proceeds from long-term obligations......... 38,143,000 38,488,000 87,135,243 87,149,011 --
Principal payments on long-term debt........ (43,469,500) (29,245,500) (63,695,348) (63,695,348) (6,118,562)
Cash overdraft.............................. -- -- -- 1,201,743 --
Financing costs incurred.................... (90,000) (182,500) (1,672,106) (1,601,674) (36,601)
Capital contribution from parent company
(return of capital)....................... 21,639 (4,355,069) 218,194 74,512 85,638
Recapitalization............................ -- -- (26,195,532) (26,195,532) --
Proceeds from exercise of common stock
warrants.................................. -- -- -- -- --
Dividends paid.............................. -- (4,151,790) -- -- --
------------ ------------ ------------ ---------- ---------
Net cash (used in) provided by
financing activities............... (5,394,861) 553,141 (4,209,549) (3,067,288) (6,069,525)
------------ ------------ ------------ ---------- ---------
Net increase (decrease) in cash...... 255,681 226,676 (394,903) (587,518) (156,684)
Cash, beginning of period..................... 138,977 394,658 621,334 621,334 226,431
------------ ------------ ------------ ---------- ---------
Cash, end of period........................... $ 394,658 $ 621,334 $ 226,431 $ 33,816 $ 69,747
============ ============ ============ ========== =========
</TABLE>
F-6
<PAGE> 114
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
------------------------------------------ -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of cash flow
information:
Cash paid (received) during the year for:
Interest.................................. $ 1,463,678 $ 1,413,046 $ 2,039,514 $ 978,753 $ 3,569,513
Income taxes, net......................... 1,650,000 1,029,600 (493,413) (610,071) (1,347,767)
Supplemental disclosure of noncash investing
and financing activities:
Tax benefit from stock options.............. -- 863,448 -- -- --
Land acquired with debt, net of cash payment
of $335,734............................... -- -- -- -- 377,290
The Company purchased certain assets and
liabilities of Carter Shades, Inc., for
$866,385. In conjunction with the
acquisition, liabilities were assumed as
follows:
Fair value of assets acquired............. $ 1,382,065
Less cash paid............................ (866,385)
------------
Liabilities assumed.................. $ 515,680
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 115
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Airxcel, Inc., formerly known as Recreation Vehicle Products, Inc. (the
Company) is engaged in designing, manufacturing and marketing recreation vehicle
air conditioning equipment in the United States, Canada and certain
international markets.
The Company is a wholly-owned subsidiary of Airxcel Holdings Corporation,
formerly known as RV Holdings Corporation (Holdings). The Company is the only
subsidiary of Holdings and Holdings has no operating activities. Accordingly,
Holdings is dependent upon the Company for any cash requirements. However,
Holdings does have 300,128 shares of $.01 par value common stock and 7,984,615
shares of $1 par value Series A and Series B exchangeable preferred stock
outstanding as of December 31, 1996 and September 30, 1997. The Preferred stock
which is exchangeable at the stockholders' option for junior subordinated notes
issued by Holdings, is also subject to mandatory redemption by Holdings on
August 31, 2006 for an amount equal to the original proceeds from sale of the
stock plus accrued but unpaid dividends which accrue at 14 percent annually.
Total proceeds plus accrued and unpaid dividends were $8,360,846 and $9,306,634
as of December 31, 1996 and September 30, 1997, respectively. All proceeds
generated from the sale of such common and preferred shares have been
contributed to the Company. However, the Company is not required to fund the
mandatory redemption of these preferred shares. During 1996, Holdings also
issued $4,015,385 of junior subordinated notes to the parent company of a major
stockholder in exchange for cash. All proceeds from the issuance of these notes
have been contributed to the Company. These notes bear interest at 14% payable
semiannually in the form of additional junior subordinated notes or cash at the
election of Holdings. Such notes, plus accrued interest totaled $4,219,947 and
$4,665,572 as of December 31, 1996 and September 30, 1997, respectively. These
notes are uncollateralized and are not guaranteed by the Company. However,
Holdings is entirely dependent upon the Company to service its note obligations
and the mandatory redemption provisions of the Preferred Stock.
The balance sheet as of September 30, 1997, the statements of operations
and cash flows for the nine months ended September 30, 1996 and 1997, the
statement of changes in stockholders' equity (deficiency) for the nine months
ended September 30, 1997, together with the related notes, are unaudited, but,
in the opinion of management, include all adjustments (consisting only of normal
recurring adjustments except for adjustments related to the discontinued
Faulkner manufacturing division) necessary to present fairly the Company's
financial condition as of September 30, 1997, the Company's results of
operations and cash flows for the nine months ended September 30, 1996 and 1997
and the changes in stockholders' equity (deficiency) for the nine months ended
September 30, 1997. The results of operations and cash flows presented for the
nine months ended September 30, 1996 and 1997 are not necessarily indicative of
the results to be expected for the full fiscal year.
During October 1997, the Company's board of directors adopted a formal plan
to dispose of its awning business (see Note 12).
On August 22, 1996 (the "closing date"), RV Products Holding Corporation
and Subsidiary consummated exchange offers and adopted amendments to its
Restated Certificate of Incorporation pursuant to which the outstanding debt and
common stock were restructured (the "Recapitalization"). The objective of the
Recapitalization was to refinance existing indebtedness and pay fees and
expenses associated with the Recapitalization.
F-8
<PAGE> 116
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The significant components of the Recapitalization on the Company are as
follows:
- The Company issued new debt with interest rates ranging from 9.75% to
12.0% as follows:
<TABLE>
<S> <C>
Revolver.............................................. $ 7,222,177
Term loan A........................................... 12,750,000
Term loan B........................................... 15,250,000
Senior subordinate note............................... 14,000,000
-----------
Total....................................... $49,222,177
===========
</TABLE>
The senior subordinate note was issued with detachable stock warrants to
purchase 65,882 shares of Class B Common Stock of Holdings at $.02 per share at
any time on or before August 22, 2006. The exercise price shall be subject to
adjustment from time to time in order to prevent dilution of the rights granted
under the warrants. The holder of these warrants are entitled to receive
dividend payments as if the warrants were exercised immediately prior to the
date of record for such dividends. The estimated fair value of the warrants at
the date of issuance has been recognized as a reduction of the note payable (as
debt discount) in the amount of $218,194 with the offset to additional paid-in
capital.
The total proceeds from the debt were used to pay $1.7 million in financing
costs relating to the recapitalization and to repay $21.3 million of existing
debt. The repayment of debt was accounted for as an early extinguishment of debt
whereby the Company recognized a charge of $183,821 as an extraordinary loss,
net of tax. The remaining proceeds of the recapitalization amounting to $26.2
million were returned to Holdings and were used for certain capital
transactions.
2. SIGNIFICANT ACCOUNTING POLICIES:
a. Management's Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
b. Revenue Recognition: Revenue and related direct expenses are recognized
when the merchandised is shipped. Other operating expenses are recognized as
incurred.
c. Inventories: Inventories are stated at the lower of cost or market.
Costs are based on standards which approximate the first-in, first-out (FIFO)
method.
d. Property, Plant and Equipment: Property, plant and equipment are
recorded at cost and depreciated on a straight-line basis over their estimated
useful lives as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements.................. 15-45 years
Furniture and fixtures................................ 4-10 years
Machinery and equipment............................... 3-15 years
</TABLE>
Expenditures for repairs and maintenance are charged to operations as
incurred. The cost of an asset and the related accumulated depreciation is
removed from the appropriate accounts upon sale of the asset. The resulting gain
or loss from the sale is included in operations.
e. Computer Software: All computer software acquisition and development
costs, including applicable internal labor, are capitalized and subsequently
reported at the lower of unamortized cost or net realizable value. The cost of
capitalized software is amortized over the products' estimated
F-9
<PAGE> 117
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
useful lives (generally 5 years). Accumulated amortization as of December 31,
1995 and 1996 was $548,600 and $624,458, respectively, and $614,061 and $632,592
as of September 30, 1996 and 1997, respectively. Amortization for the years
ended December 31, 1994, 1995 and 1996 was $126,990, $127,386 and $75,858,
respectively, and $65,461 and $8,134 for the nine months ended September 30,
1996 and 1997, respectively.
f. Intangible Assets: Intangible assets, excluding those associated with
discontinued operations (see Note 12), with the exception of loan financing
costs, are amortized on a straight-line basis over the life of the agreement as
follows:
<TABLE>
<CAPTION>
AMORTIZATION DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
PERIOD 1995 1996 1997
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Non-compete agreement............. 5 years $ 6,440,000 $ -- $ --
Trademarks and contract........... 1-50 years 6,777,624 6,777,624 1,457,624
----------- ----------- -----------
13,217,624 6,777,624 1,457,624
Less accumulated amortization..... 10,285,987 5,191,461 189,123
----------- ----------- -----------
$ 2,931,637 $ 1,586,163 $ 1,268,501
=========== =========== ===========
</TABLE>
g. Loan Financing Costs: Loan financing costs are amortized using the
effective yield method over the expected terms of the related debt.
h. Income Taxes: The Company and its parent file a consolidated federal
income tax return. Deferred income taxes are recorded to reflect the tax
consequences in future years of operating loss carryforwards and temporary
differences between the tax basis of assets and liabilities and their financial
reporting amounts using enacted tax rates for the years in which these items are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
i. Allocation of Interest to Discontinued Operations: Interest expense is
allocated to discontinued operations based on the ratio of net assets of the
discontinued operations to the sum of total net assets of the Company plus debt.
3. SUMMARY BALANCE SHEET DATA:
Inventory, excluding that associated with discontinued operations (see Note
12), consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Raw materials.................... $2,148,690 $1,868,183 $1,424,728
Work-in-process.................. 432,801 368,740 627,189
Finished goods................... 3,480,750 4,184,473 2,851,493
---------- ---------- ----------
$6,062,241 $6,421,396 $4,903,410
========== ========== ==========
</TABLE>
F-10
<PAGE> 118
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Property, plant and equipment, excluding that associated with discontinued
operations (see Note 12), consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Land and land improvements...... $ 17,358 $ 17,358 $ 730,382
Buildings and building
improvements.................. 1,471,554 1,477,008 1,477,008
Machinery and equipment......... 4,056,347 4,149,915 4,192,380
Furniture and fixtures.......... 521,689 580,838 623,285
Construction in process......... 111,589 35,465 122,478
----------- ----------- -----------
6,178,537 6,260,584 7,145,533
Less accumulated depreciation... (2,683,905) (3,202,357) (3,542,785)
----------- ----------- -----------
Net................... $ 3,494,632 $ 3,058,227 $ 3,602,748
=========== =========== ===========
</TABLE>
4. LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, DECEMBER 31, 30,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Note payable to bank under a $14,000,000 revolving
line of credit, matures on January 1, 2002, with
interest at prime (8.25% at December 31, 1996)
plus 1.5% or a LIBOR base rate plus 3% (type of
rate based on election of the Company), payable
quarterly and is collateralized by accounts
receivable, equipment, general intangibles,
inventory, and investment property. The
aforementioned note contains, among other terms,
certain financial covenants and restrictive
provisions pertaining to the use of funds and
ability to incur obligations...................... $ -- $ 6,495,587 $ 2,000,000
Note payable (tranche A) to bank under a $12,750,000
term loan which matures on January 1, 2002, with
interest at prime (8.25% at December 31, 1996)
plus 1.5% or a LIBOR base rate plus 3% (type of
rate based on election of the Company), payable
quarterly and is collateralized by accounts
receivable, equipment, general intangibles,
inventory, and investment property. The
aforementioned note contains, among other terms,
certain financial covenants and restrictive
provisions pertaining to the use of funds, payment
of dividends and ability to incur obligations..... -- 12,750,000 11,459,972
</TABLE>
F-11
<PAGE> 119
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, DECEMBER 31, 30,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Note payable (tranche B) to bank under a $15,250,000
term loan which matures on July 1, 2003 with
interest at prime (8.25% at December 31, 1996)
plus 2% or a LIBOR base rate plus 3.5% (type of
rate based on election of the Company), payable
quarterly and is collateralized by accounts
receivable, equipment, general intangibles,
inventory, and investment property. The
aforementioned note contains, among other terms,
certain financial covenants and restrictive
provisions pertaining to the use of funds, payment
of dividends and ability to incur obligations..... -- 15,250,000 14,920,050
Senior subordinated note payable to the parent of a
major stockholder of Holdings, effective interest
rate of 12.3% and stated interest at 12% payable
semiannually on April 10 and October 10. Principal
payments are due in two equal installments of
$7,000,000 on August 22, 2004, and 2005;
uncollateralized. The Company may prepay the loan
at any time on or prior to the first anniversary
of the closing date at a price ranging from 100 -
105% of the principal being paid based on the
prepayment periods defined in the agreement. Net
of unamortized discount of $215,646 and $203,586
as of December 31, 1996 and September 30, 1997,
respectively...................................... $ -- $ 13,784,354 $ 13,796,414
Note payable to bank under $23,250,000 revolving
line of credit that was repaid through the
Recapitalization on August 22, 1996............... 23,250,000 -- --
Note payable to individual for land purchase, 7.5%,
due in monthly principal and interest payments of
$4,479 through April 1, 2007, collateralized by
the land.......................................... -- -- 362,233
Note payable to bank under $3,000,000 revolving line
of credit that was repaid through recapitalization
on August 22, 1996................................ 1,573,500 -- --
----------- ----------- -----------
24,823,500 48,279,941 42,538,669
Current portion of long term debt................... (4,894,928) (7,933,087) (3,553,742)
----------- ----------- -----------
$ 19,928,572 $ 40,346,854 $ 38,984,927
=========== =========== ===========
</TABLE>
F-12
<PAGE> 120
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Maturities of long-term debt, including minimum required reductions in the
revolving line of credit commitments based on balances outstanding at December
31, 1996 for each of the five succeeding years are as follows:
<TABLE>
<S> <C>
1997.................................................. $ 7,933,087
1998.................................................. 1,625,000
1999.................................................. 2,575,000
2000.................................................. 3,525,000
2001.................................................. 4,275,000
Thereafter............................................ 28,346,854
-----------
$48,279,941
===========
</TABLE>
5. STOCK OPTION PLANS:
On May 1, 1991, Holdings granted options to three employees of the Company
to purchase 25,098 shares of common stock at $.01 per share. During 1995, all
25,098 options were exercised.
In addition, Holdings adopted a Performance Stock Option Plan and granted
stock options to several employees of the Company to purchase 120,000 shares of
common stock at $.01 per share. The stock options expire at the earlier of 20
years from date of grant or the date the employee ceases to be an employee of
the Company. In 1995, 118,400 of these options were exercised under this Plan.
In 1994, Holdings adopted its second Performance Stock Option Plan (the
1994 Option Plan) and granted stock options to several employees of the Company
to purchase 30,500 shares of common stock at $12.92 per share. These stock
options may be exercised beginning December 31, 1996 or earlier if there is a
change in control of Holdings, as defined by the plan agreement, and will expire
at the earlier of 20 years from date of grant or the date the employee ceases to
be an employee of the Company.
The options granted under the 1994 Option Plan vested based on the Company
achieving certain earnings and debt reduction goals during 1994, 1995, and 1996
as set forth in the plan agreement. Compensation expense is being charged to
operations over the vesting period of three years for the difference between the
estimated fair value of the stock options and the option exercise price of
$12.92 per share. Compensation expense of $346,347, $122,946 and $457,744 was
recorded during the years ended December 31, 1994, 1995 and 1996, respectively,
and $457,744 for the nine month period ended September 30, 1996. During 1996,
all 30,500 shares were exercised as part of the Recapitalization.
As part of the Recapitalization, Holdings adopted a new Stock Option Plan
and granted stock options to key employees and/or directors of the Company to
purchase up to 75,032 shares of Class A Common Stock of Holdings at $1 per
share. The stock options may be exercised after the "trigger date" (as defined
in the agreement), and will expire at the earlier of 10 years from date of grant
or the date the employee ceases to be an employee of the company. The number of
stock options that may be exercised is based on the estimated annual interest
rate of return as of the trigger date as set forth in the plan agreement. No
compensation expense relating to this stock option plan will be recorded until
the trigger date.
In accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123), the Company has chosen
to continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations.
F-13
<PAGE> 121
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Accordingly, compensation cost for stock options granted to the Company's
employees is measured as the excess, if any, of the fair value of the Company's
stock at the date of the grant over the amount an employee must pay to acquire
the stock.
If the Company had elected to recognize compensation expense for options granted
in 1995 and 1996 based on the fair value of the options granted at the date of
grant as prescribed by SFAS No. 123, the Company's net income (loss) would not
have been materially different from that reported.
6. INCOME TAXES:
The significant components of the net deferred income tax asset (liability)
recognized in the accompanying balance sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Warranty reserve................................. $ 181,000 $ 185,000 $ 185,000
Accrued vacation................................. 102,000 97,000 97,000
Accrued self-insurance........................... 70,000 36,000 45,000
Provision for discontinued operations............ -- -- 1,570,000
Accrued reserves and liabilities................. 28,000 28,000 210,000
Depreciation..................................... (341,000) (334,000) (375,000)
Compensation..................................... 107,000 -- --
State income tax net operating loss
carryforwards, expiring in 2010................ 225,000 180,000 --
AMT credits...................................... 142,000 -- --
Other............................................ 52,751 (10,033) 53,000
--------- --------- ---------
566,751 181,967 1,785,000
Less current deferred income tax................. 408,521 427,035 2,160,000
--------- --------- ---------
Total noncurrent deferred income tax............. $ 158,230 $ (245,068) $ (375,000)
========= ========= =========
</TABLE>
The components of income tax expense before discontinued operations and
extraordinary item are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Current..................... $2,230,817 $ 222,916 $2,026,491 $ 1,866,000 $ 1,831,967
Deferred.................... (159,817) 833,532 384,784 289,000 33,033
Benefit of state income tax
net operating loss
carryforwards............. -- (225,000) -- -- --
---------- --------- ---------- ---------- ----------
Total income tax expense
before discontinued
operations and
extraordinary item...... $2,071,000 $ 831,448 $2,411,275 $ 2,155,000 $ 1,865,000
========== ========= ========== ========== ==========
</TABLE>
F-14
<PAGE> 122
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Total income tax expense before discontinued operations and extraordinary
item differed from the amounts computed by applying the federal statutory rate
to pretax income as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Total expense before
discontinued operations
and extraordinary item
computed by applying the
federal statutory rate.... $1,873,197 $ 484,220 $2,088,766 $ 1,985,000 $ 1,718,000
Adjustment to prior year
expense................... -- 284,773 143,000 -- --
State income taxes, net of
federal income tax
benefit................... 216,883 56,000 181,000 227,000 196,000
Effect of graduated rates... (54,220) (4,939) (55,645) (57,000) (49,000)
Other....................... 35,140 11,394 54,154 -- --
---------- --------- ---------- ---------- ----------
Total income tax expense
before discontinued
operations and
extraordinary item...... $2,071,000 $ 831,448 $2,411,275 $ 2,155,000 $ 1,865,000
========== ========= ========== ========== ==========
</TABLE>
Net deferred income tax assets are recognized based on the expected timing
of the reversal of taxable temporary differences and future taxable income of
the Company.
7. EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT:
In 1994 and 1995, the Company amended its credit agreement associated with
its two revolving lines of credit and retired its senior subordinated notes
payable. The related unamortized loan financing costs of $104,040 in 1994 and
$72,880 in 1995 were retired and recorded as an extraordinary loss on early
extinguishment of debt of $64,040 and $44,880, respectively (net of income tax
benefit of $40,000 in 1994 and $28,000 in 1995).
As stated in Note 1, the Company extinguished $21.3 million of debt as part
of the August 22, 1996 Recapitalization. The related unamortized loan financing
costs of $167,275 retired and the prepayment penalty of $131,546 were recorded
as an extraordinary loss on early extinguishment of debt of $183,821 (net of a
$115,000 income tax benefit).
8. ACQUISITION:
In 1995, the Company acquired Carter Shades, Inc., which is engaged in
manufacturing and selling awnings for recreational vehicles and included the
results of operations of its newly acquired subsidiary in the Company's
statement of operations from the date of acquisition forward. The Company
acquired Carter Shades, Inc. for $866,385 and accounted for the transaction
according to the guidelines provided by the purchase method of accounting (See
note 12).
9. COMMITMENTS:
The Company leases a building which is accounted for as an operating lease.
Total rental expense was $503,988, $525,950 and $407,002 for the years ended
December 31, 1994, 1995 and 1996, respectively, and $226,824 and $227,817 for
the nine months ended September 30, 1996 and 1997, respectively.
F-15
<PAGE> 123
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum lease payments under noncancellable leases as of December
31, 1996 are as follows:
<TABLE>
<S> <C>
1997..................................................... $409,720
1998..................................................... 82,328
1999..................................................... 58,231
2000..................................................... 18,928
--------
$569,207
========
</TABLE>
Since May 1991, the Company has had agreements with two shareholders to
provide management advisory services to the Company. The agreements provide for
annual fees totaling $300,000 for the years ended December 31, 1994 and 1995.
The agreements were amended, effective January 1, 1996, to provide management
fees totaling $278,000. During the years ended December 31, 1994 and 1995, the
Company paid management advisory fees of $300,000, of which $25,000 was prepaid
at December 31, 1994 and 1995. During 1996, the Company paid management advisory
fees of $178,709. On August 22, 1996, the Company terminated its Management
Advisory Services Agreements as a result of the Recapitalization described in
Note 1.
10. BENEFIT PLAN:
Substantially all employees of the Company are eligible to participate in
the Company's 401(k) plan. Subject to certain conditions, the Company matches
30% of the employees' contributions up to a maximum of 6% of the employees'
annual salary. In addition, the Company can make an additional contribution
determined at the discretion of the Company's Board of Directors. The Company's
contribution to the 401(k) plan was approximately $214,788, $207,657 and
$262,553 for the years ended December 31, 1994, 1995 and 1996, respectively, and
$212,937 and $197,648 for the nine months ended September 30, 1996 and 1997,
respectively.
11. SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK:
Substantially all of the Company's receivables are due from recreation
vehicle manufacturers and distributors. The credit risk is controlled through
credit approvals, limits and monitoring procedures. The Company's ten largest
customers accounted for approximately 80%, 80%, 93%, 75% and 79% of sales for
the years ended December 31, 1994, 1995 and 1996, and the nine months ended
September 30, 1996 and 1997, respectively, and approximately 80%, 76%, 85%, 84%
and 75% of accounts receivable at December 31, 1994, 1995 and 1996, and
September 30, 1996 and 1997, respectively. Sales from customers in excess of 10%
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Coast Distribution........ $ -- $ -- $ 22,465,434 $ 12,873,038 $ 10,836,143
Fleetwood Enterprises..... 20,314,544 17,017,302 18,979,863 14,246,775 13,814,058
STAG Parkway Inc. ........ 7,124,933 11,121,645 -- -- --
JayCo..................... -- 7,956,757 8,377,324 3,963,644 3,247,361
----------- ----------- ----------- ----------- ------------
$ 27,439,477 $ 36,095,704 $ 49,822,621 $ 31,083,457 $ 27,897,562
=========== =========== =========== =========== ============
</TABLE>
12. DISCONTINUED OPERATIONS:
During September 1997, the Company adopted a plan to discontinue its
Faulkner manufacturing division and plans to liquidate the assets and settle the
liabilities and anticipates that the business will be disposed of by June 30,
1998. Accordingly, Faulkner is reported as a discontinued
F-16
<PAGE> 124
AIRXCEL, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
operation for the years ended December 31, 1994, 1995 and 1996 and for the nine
months ended September 30, 1996 and September 30, 1997.
Net sales from Faulkner were $8,569,523, $9,894,703 and $12,003,155 for the
years ended December 31, 1994, 1995 and 1996, respectively, and $9,772,722 and
$6,555,966 for the nine months ended September 30, 1996 and 1997, respectively.
Interest expense allocated to discontinued operations was $328,773, $329,240,
$1,012,686, $647,225, $1,440,505 for the years ended December 31, 1994, 1995 and
1996 and for the nine month periods ended September 30, 1996 and 1997,
respectively.
Net assets of the discontinued operations are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS
Accounts receivable, net......................... $ 868,243 $ 960,796 $ 1,498,866
Inventory........................................ 3,462,100 4,142,874 1,966,504
Other current assets............................. 136,888 358,270 10,323
---------- ---------- ----------
Total current assets................... 4,467,231 5,461,940 3,475,693
Property, plant and equipment, net............... 768,087 892,290 452,204
Intangible assets, net........................... 1,396,908 1,223,856 --
---------- ---------- ----------
Total assets........................... 6,632,226 7,578,086 3,927,897
LIABILITIES
Account payable.................................. 596,669 288,475 320,218
Other accrued expenses........................... 341,307 801,202 1,225,588
---------- ---------- ----------
Total current liabilities.............. 937,976 1,089,677 1,545,806
Other noncurrent liabilities..................... 60,542 67,116 --
---------- ---------- ----------
Total liabilities...................... 998,518 1,156,793 1,545,806
---------- ---------- ----------
Net assets held for sale......................... $5,633,708 $6,421,293 $ 2,382,091
========== ========== ==========
</TABLE>
13. CONTINGENCY:
During September 1997, the Company made a decision to upgrade certain air
conditioning units which were sold in previous years. The range of estimated
costs to complete the upgrade is $500,000 to $2,400,000. However, management
believes that the vendor that supplied the component to be upgraded will bear a
substantial portion of these costs. The Company believes its portion of the
costs to complete the upgrade is $500,000 and accordingly, has recorded a charge
to cost of goods sold for this amount during the nine month period ended
September 30, 1997.
14. SUBSEQUENT EVENT:
On November 10, 1997, the Company acquired substantially all of the assets
and liabilities of Crispaire Corporation for approximately $43 million. On
November 10, 1997, the Company also issued $90 million of senior subordinated
notes pursuant to Securities and Exchange Commission ("SEC") Rule 144A (the
"Offering"). The proceeds of the Offering were used primarily for the
acquisition of Crispaire Corporation and to repay all of the the Company's other
outstanding debt. The senior subordinated notes, which bear interest at 11%, are
due on November 15, 2007. Terms of the Offering require the Company to file a
registration statement with the SEC, within 45 days of the issuance of the
senior subordinated notes, to register notes with terms substantially identical
to the notes issued pursuant to the Offering and to offer to exchange the
registered notes for those notes originally issued in the Offering.
F-17
<PAGE> 125
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Crispaire Corporation
Cordele, Georgia
We have audited the accompanying balance sheets of Crispaire Corporation as
of October 31, 1996 and 1995, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended October 31, 1996. These financial statements are the responsibility of the
Company'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 Crispaire Corporation as of
October 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended October 31, 1996, in conformity
with generally accepted accounting principles.
Mauldin & Jenkins, LLC
Albany, Georgia
December 4, 1996, except for Notes 11 and 12
as to which the date is October 16, 1997
F-18
<PAGE> 126
CRISPAIRE CORPORATION
BALANCE SHEETS
OCTOBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents.................................... $ 63,140 $ 9,268
Trade accounts receivable, less allowance for doubtful
accounts of $132,252 and $165,373, respectively........... 5,489,706 3,606,239
Inventories.................................................. 5,954,364 5,627,858
Prepaid expenses............................................. 43,523 55,046
----------- -----------
Total current assets................................. 11,550,733 9,298,411
----------- -----------
Other investments, at cost..................................... 33,952 32,201
----------- -----------
Property, plant and equipment
Land......................................................... 18,000 18,000
Buildings and improvements................................... 1,016,441 816,840
Machinery and equipment...................................... 2,160,456 858,092
Furniture and fixtures....................................... 246,688 196,853
Construction and equipment installations in progress......... -- 180,861
----------- -----------
3,441,585 2,070,646
Less accumulated depreciation................................ 1,109,153 902,068
----------- -----------
2,332,432 1,168,578
----------- -----------
Other assets................................................... 189,136 148,142
----------- -----------
$14,106,253 $10,647,332
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable................................................ $ -- $ 618,349
Current maturities of long-term debt......................... 771,591 162,600
Excess of outstanding checks over bank balance............... 127,331 315,320
Accounts payable............................................. 2,295,418 1,859,426
Accrued bonuses.............................................. 1,295,753 844,920
Warranty reserve............................................. 390,000 310,000
Other current liabilities.................................... 457,659 387,199
----------- -----------
Total current liabilities............................ 5,337,752 4,497,814
----------- -----------
Long-term debt, less current maturities........................ 470,588 432,200
----------- -----------
Stockholders' Equity
Common stock, par value $1 per share, authorized 250,000
shares; issued 190,588 shares............................. 190,588 190,588
Additional paid-in capital................................... 6,003,815 5,775,866
Less deferred compensation for nonvested stock............... (271,614) (526,359)
----------- -----------
5,922,789 5,440,095
Retained earnings............................................ 3,681,470 1,583,569
----------- -----------
9,604,259 7,023,664
Less cost of common shares acquired for the treasury, 44,958
shares.................................................... (1,306,346) (1,306,346)
----------- -----------
8,297,913 5,717,318
----------- -----------
$14,106,253 $10,647,332
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-19
<PAGE> 127
CRISPAIRE CORPORATION
STATEMENTS OF INCOME
YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net sales....................................... $34,138,581 $27,304,265 $24,151,596
Cost of sales................................... 24,758,248 20,104,240 18,142,826
----------- ----------- -----------
Gross profit............................... 9,380,333 7,200,025 6,008,770
----------- ----------- -----------
Other operating income, net..................... 64,190 22,112 63,683
----------- ----------- -----------
Operating expenses
Engineering, including research and
development costs of $231,692, $188,177 and
$63,529, respectively...................... 877,737 752,323 536,844
Selling....................................... 1,684,987 1,373,503 1,126,680
General and administrative.................... 3,444,005 2,715,585 2,178,815
Provision for doubtful accounts............... -- -- 241,275
----------- ----------- -----------
6,006,729 4,841,411 4,083,614
----------- ----------- -----------
Income from operations..................... 3,437,794 2,380,726 1,988,839
----------- ----------- -----------
Nonoperating expense
Interest expense, net......................... 145,727 93,458 159,628
----------- ----------- -----------
Net income................................. $ 3,292,067 $ 2,287,268 $ 1,829,211
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-20
<PAGE> 128
CRISPAIRE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
DEFERRED
COMPENSATION
ADDITIONAL FOR RETAINED
COMMON PAID-IN NONVESTED EARNINGS TREASURY
STOCK CAPITAL STOCK (DEFICIT) STOCK
-------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, October 31,
1993.................... $190,588 $5,645,243 $ (698,161) $ (721,137) $(1,283,696)
Net income.............. -- -- -- 1,829,211 --
Purchase of 1,700 shares
of common stock for
the treasury......... -- -- -- -- (45,900)
Dividends paid.......... -- -- -- (185,382) --
-------- ---------- --------- ----------- -----------
Balance, October 31,
1994.................... 190,588 5,645,243 (698,161) 922,692 (1,329,596)
Net income.............. -- -- -- 2,287,268 --
Sale of 800 shares of
treasury stock....... -- 14,134 -- -- 23,250
Vesting of 6,363 shares
of common stock under
terms of deferred
compensation stock
agreement............ -- 116,489 171,802 -- --
Dividends paid.......... -- -- -- (1,626,391) --
-------- ---------- --------- ----------- -----------
Balance, October 31,
1995.................... 190,588 5,775,866 (526,359) 1,563,569 (1,306,346)
Net income.............. -- -- -- 3,292,067 --
Vesting of 9,435 shares
of common stock under
terms of deferred
compensation stock
agreement............ -- 227,949 254,745 -- --
Dividends paid.......... -- -- -- (1,194,166) --
-------- ---------- --------- ----------- -----------
Balance, October 31,
1996.................... $190,588 $6,003,815 $ (271,614) $ 3,681,470 $(1,306,346)
======== ========== ========= =========== ===========
</TABLE>
See Notes to Financial Statements.
F-21
<PAGE> 129
CRISPAIRE CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers......................... $ 32,070,270 $ 27,111,379 $ 23,947,286
Cash paid to suppliers and employees................. (29,516,957) (25,531,491) (20,844,650)
Other operating cash receipts........................ 266,630 162,231 199,303
Interest paid........................................ (149,432) (95,881) (162,343)
------------ ------------ ------------
Net cash provided by operating activities.......... 2,670,511 1,646,238 3,139,596
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment................... (1,418,793) (393,379) (564,506)
Proceeds from sale of property and equipment......... 10,035 10,250 --
Increase in investment............................... (1,751) (20,634) (11,567)
Increase in other asset, tax deposit................. (40,584) (107,807) (40,335)
------------ ------------ ------------
Net cash used in investing activities.............. (1,451,503) (511,570) (515,408)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on revolving credit
agreements......................................... (618,349) 618,349 (2,537,189)
Proceeds from long-term borrowings................... 1,732,661 -- 400,000
Principal payments on long-term borrowings........... (1,085,282) (152,600) (192,159)
Proceeds from the sale of treasury stock............. -- 37,384 --
Purchase of common stock for the treasury............ -- -- (45,900)
Cash dividends paid.................................. (1,194,166) (1,626,391) (185,382)
------------ ------------ ------------
Net cash used in financing activities.............. (1,165,136) (1,133,258) (2,560,610)
------------ ------------ ------------
Net increase (decrease) in cash........................ 53,872 1,410 (37,422)
Cash:
Beginning............................................ 9,268 7,858 45,280
------------ ------------ ------------
Ending............................................... $ 63,140 $ 9,268 $ 7,858
=========== =========== ===========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income........................................... $ 3,292,067 $ 2,287,268 $ 1,829,211
Noncash expenses included in net income:
Depreciation....................................... 231,013 184,216 156,365
Amortization....................................... -- 6,150 4,836
Provision for doubtful accounts.................... -- -- 241,275
Loss on disposal of machinery and equipment........ 13,891 11,546 2,033
Changes in assets and liabilities:
Increase in trade receivables.................... (1,883,467) (68,335) (70,723)
Increase in inventories.......................... (326,506) (1,261,463) (775,745)
Increase (decrease) in excess of outstanding
checks over bank balance...................... (187,989) 19,222 296,098
Increase in accounts payable and accrued
expenses...................................... 1,519,979 466,789 1,442,618
Other prepaids and deferrals, net................ 11,523 845 13,628
------------ ------------ ------------
Net cash provided by operating activities..... $ 2,670,511 $ 1,646,238 $ 3,139,596
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Vesting of common stock under terms of deferred
compensation stock agreement of 9,435 shares and
6,363 shares, respectively......................... $ 482,694 $ 288,291 $ --
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-22
<PAGE> 130
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
Crispaire Corporation (the "Company") designs, manufactures and markets air
conditioning units and heat pump water heaters. The Company's manufacturing
facilities are located in Cordele and Atlanta, Georgia. The Company markets its
products to companies involved in modular construction, telecommunications and
other utilities located throughout the continental United States and selected
foreign markets.
Basis of presentation
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and general practices within their industry. In
preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates.
The principles which significantly affect the determination of financial
position, results of operations and cash flows are summarized below.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand and in banks as well as highly liquid investments and repurchase
agreements, which are convertible to a known amount of cash and carry an
insignificant risk in change in value.
The Company maintains deposits in banks which, at times, may exceed FDIC
insured limits. The Company has not experienced any losses in such accounts.
Inventories
Inventories are stated at the lower of standard cost (which includes
material, labor and manufacturing overhead) or market. Cost is determined by the
first-in, first-out (FIFO) method.
Property, plant and equipment
Property, plant and equipment are stated at cost. Expenditures for repairs
and maintenance are charged to expense as incurred, and additions and
improvements that significantly extend the lives of assets are capitalized. Upon
disposition, cost and accumulated depreciation are eliminated from the related
accounts and any gain or loss is reflected in other income or expense. The
Company provides depreciation using the straight-line method over the estimated
useful lives of the assets.
Revenue recognition
Revenue from the sale of products is recorded at the time of passage of
title, generally when the products are shipped.
Fair value of financial instruments
Financial Accounting Standards Board Statement No. 107, "Disclosure About
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which is practicable to estimate that value.
F-23
<PAGE> 131
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Carrying amounts approximated fair values for the following instruments:
<TABLE>
<S> <C>
Cash and cash items Notes payable
Trade accounts receivable Long-term debt
Other investments Accounts payable
</TABLE>
The fair value of patents owned by the Company, which are fully amortized,
has not been determined.
For other financial instruments, the determination of a fair value was not
practical for disclosures as they do not represent a significant value to the
Company and any differences from the carrying value of these instruments would
also be insignificant.
NOTE 2. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts for the years ended October
31, 1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
Balance, beginning of year..................... $165,373 $167,500 $ 190,000
Provision for doubtful accounts.............. -- -- 241,275
Accounts charged off, net of recoveries...... (33,121) (2,127) (263,775)
-------- -------- ---------
Balance, end of year........................... $132,252 $165,373 $ 167,500
========= ========= ==========
</TABLE>
NOTE 3. INVENTORIES
Inventories at October 31, 1996 and 1995 were composed of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Component parts and subassemblies......................... $4,677,898 $3,812,188
Work-in-process........................................... 240,757 172,717
Finished units............................................ 1,035,709 1,642,953
---------- ----------
$5,954,364 $5,627,858
========== ==========
</TABLE>
NOTE 4. NOTES PAYABLE
Notes payable at October 31, 1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
$5,000,000 ($4,000,000 in 1995) line of credit to
NationsBank........................................ $ -- $618,349
========= =========
</TABLE>
The line of credit is secured by accounts receivable, inventories,
equipment and real estate and is guaranteed by certain officers and stockholders
of the Company. Terms of the loan agreement provide that the Company may borrow
against eligible inventory and receivables based on formulas in the agreement.
Maximum borrowings against inventories are further limited to $2,000,000.
The loan agreement also requires that the Company meet certain specific
financial covenants. The Company is in compliance with all such covenants at
October 31, 1996.
Interest on borrowings is due monthly at a variable rate (7.15% and 8.75%
at October 31, 1996 and 1995, respectively), while principal is due on demand.
F-24
<PAGE> 132
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS
All interest incurred during the years ended October 31, 1996, 1995 and
1994 was expensed.
NOTE 5. PLEDGED ASSETS AND LONG-TERM DEBT
At October 31, 1996 and 1995, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
NationsBank, variable rate (7.56% at October 31, 1996) note
payable, due in monthly installments of $29,412 plus
interest through March 1999, collateralized by trade
accounts receivable, inventories, equipment and real
estate and guaranteed by certain stockholders of the
Company. Subject to the terms of the loan agreement
discussed in Note 4. .................................... $ 823,529 $ --
NationsBank, 7.15% note payable, due in monthly
installments of $13,550 plus interest through November
1996, final installment of all unpaid principal and
interest, due December 1996, collateralized by accounts
receivable, inventories, equipment and real estate and
guaranteed by certain stockholders of the Company.
Subject to the terms of the loan agreement discussed in
Note 4. ................................................. 418,650 594,800
---------- --------
1,242,179 594,800
Less current portion....................................... 771,591 162,600
---------- --------
Long-term portion.......................................... $ 470,588 $432,200
========== ========
</TABLE>
Aggregate maturities required on long-term debt at October 31, 1996 are as
follows:
<TABLE>
<S> <C>
1997............................................................ $ 771,591
1998............................................................ 352,941
1999............................................................ 117,647
----------
Total................................................. $1,242,179
==========
</TABLE>
NOTE 6. INCOME TAX MATTERS
For the years ended October 31, 1996, 1995 and 1994, the Company, with the
consent of the stockholders, has elected to be taxed under sections of Federal
and Georgia income tax law, which provides that, in lieu of corporation income
taxes, the stockholders separately account for their pro rata shares of the
Company's items of income, deduction, loss and credits. As a result of this
election, no income tax liability or expense has been recorded.
The Company, with the consent of its stockholders, has elected to retain
its fiscal year ending October 31, rather than an otherwise required December 31
year end, in accordance with Section 444 of the Internal Revenue Code. To do so
requires a deposit to be placed with the Internal Revenue Service which cannot
be refunded unless the election is terminated. For the year ended October 31,
1996, the Company has the required payment of $189,136 on deposit with the
Internal Revenue Service.
NOTE 7. PROFIT-SHARING PLAN
The Company has a defined contribution plan (the "plan") which adheres to
the provisions of Internal Revenue Code Section 401(k). All full-time employees,
once they have reached age 21 and have completed one full year of service, are
eligible to participate. Under the provisions of the plan, the Company must make
contributions based on a percentage of employee contributions. The
F-25
<PAGE> 133
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS
amounts charged to operations by the Company were $37,188, $30,147 and $30,536
for the years ended October 31, 1996, 1995 and 1994, respectively.
NOTE 8. LEASES
The Company has entered into leases for a warehouse and various equipment
under noncancelable leases. Future minimum payments for all noncancelable
operating leases with initial or remaining terms of one year or more are
summarized as follows:
<TABLE>
<S> <C>
Years Ending October 31,
1997........................................................... $158,209
1998........................................................... 154,909
1999........................................................... 141,645
2000........................................................... 116,091
2001........................................................... 4,431
--------
$575,285
========
</TABLE>
Rental expense for operating leases for the years ended October 31, 1996,
1995 and 1994 was $243,535, $174,193 and $136,595, respectively.
NOTE 9. EMPLOYMENT CONTRACT AND DEFERRED COMPENSATION STOCK AGREEMENT
The Company has entered into an employment contract with its president. The
contract establishes his base salary and benefits and provides for a cash bonus
to be paid based on a formula contained in the agreement. The bonus was
$501,863, $247,581 and $155,235 for the years ended October 31, 1996, 1995 and
1994, respectively. The agreement expires December 31, 1997.
The Company has also entered into a deferred compensation stock agreement
with its president. In accordance with the terms of the agreement, 30,000 shares
of the Company's common stock was issued to the president. The issued stock has
been restricted by the agreement and, while the president has all cash dividend
and voting rights with respect to the stock, his ownership interest in the stock
was not vested at the time of issuance.
Each fiscal year a bonus is computed based on a formula contained in the
agreement. Subsequent to October 31 of each year, the president will vest in a
portion of the restricted stock based on the accrued bonus and a stock valuation
formula contained in the agreement. Shares not vested at the termination of
employment or at the expiration of the agreement shall be canceled and returned
to the Company and the president shall have no further rights or interest with
respect to those shares.
The agreement contains provisions concerning the Company's acquisition of
the vested stock at the termination of employment. The agreement also provides
the president an option to purchase an additional 20,000 shares of the Company's
stock at a price based on a valuation formula contained in the agreement. This
option expires at the termination of employment or the expiration of the
agreement.
The deferred compensation stock agreement expires October 31, 1997. The
bonus accrued and expensed in accordance with this agreement for the years ended
October 31, 1996, 1995 and 1994 totaled $659,010, $482,694 and $288,291,
respectively.
The total bonus accrual included in accrued expenses and general and
administrative expenses for both of the above agreements totaled $1,160,873,
$730,275 and $443,526 at October 31, 1996, 1995 and 1994, respectively.
F-26
<PAGE> 134
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS
During the year ended October 31, 1996, the president vested in 9,435
shares of the restricted common stock based on the October 31, 1995 bonus
accrual and the stock valuation formula.
NOTE 10. CONCENTRATIONS OF SALES
Approximately 61%, 61% and 59% of the Company's sales for the years ended
October 31, 1996, 1995 and 1994 were concentrated within the telecommunications
industry. The Company grants credit to distributors throughout the world and
generally does not require collateral to secure the accounts receivable. The
company's credit is concentrated within the telecommunications industry
accounting for 53% and 55% of accounts receivable as of October 31, 1996 and
1995, respectively.
NOTE 11. SUBSEQUENT EVENTS
On August 27, 1997, the Company executed a letter of intent with Recreation
Vehicle Products, Inc. ("RVP"), a manufacturer of air conditioning equipment for
recreational vehicles located in Wichita, Kansas, whereby RVP would acquire
substantially all of the assets and assume certain liabilities of the Company.
NOTE 12. LITIGATION
The Company is a defendant in a lawsuit wherein substantial amounts are
claimed. In the opinion of the Company's legal counsel, this suit is without
substantial merit and should not result in a judgment which would have a
material adverse effect on the Company's financial statements.
F-27
<PAGE> 135
CRISPAIRE CORPORATION
BALANCE SHEETS
JULY 31, 1997 (UNAUDITED) AND OCTOBER 31, 1996
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
ASSETS 1997 1996
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents.................................... $ 132,863 $ 63,140
Trade accounts receivable, less allowance for doubtful
accounts of $270,188 and $132,262, respectively........... 7,207,405 5,489,706
Inventories.................................................. 6,693,946 5,954,364
Prepaid expenses............................................. 56,013 43,523
----------- -----------
Total current assets................................. 14,090,227 11,550,733
----------- -----------
Other investments, at cost..................................... 33,952 33,952
----------- -----------
Property, plant and equipment
Land......................................................... 18,000 18,000
Buildings and improvements................................... 1,071,766 1,016,441
Machinery and equipment...................................... 2,248,747 2,160,456
Furniture and fixtures....................................... 299,543 246,688
Construction and equipment installations in progress......... 258,607 --
----------- -----------
3,896,663 3,441,585
Less accumulated depreciation................................ 1,345,364 1,109,153
----------- -----------
2,551,299 2,332,432
----------- -----------
Other assets................................................... 265,181 189,136
----------- -----------
$16,940,659 $14,106,253
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable................................................ $ 1,665,779 $ --
Current maturities of long-term debt......................... 352,944 771,591
Excess of outstanding checks over bank balance............... -- 127,331
Accounts payable............................................. 2,591,962 2,295,418
Accrued bonuses.............................................. 534,815 1,295,753
Warranty reserve............................................. 470,000 390,000
Other current liabilities.................................... 473,041 457,659
----------- -----------
Total current liabilities............................ 6,088,541 5,337,752
----------- -----------
Long-term debt, less current maturities........................ 205,879 470,588
----------- -----------
Stockholders' Equity
Common stock, par value $1 per share, authorized 250,000
shares; issued 190,588 shares............................. 190,588 190,588
Additional paid-in capital................................... 6,391,211 6,003,815
Less deferred compensation for nonvested stock............... -- (271,614)
----------- -----------
6,581,799 5,922,789
Retained earnings............................................ 6,171,808 3,681,470
----------- -----------
12,753,607 9,604,259
Less cost of common shares acquired for the treasury 55,571
shares and 44,958 shares, respectively.................... (2,107,368) (1,306,346)
----------- -----------
10,646,239 8,297,913
----------- -----------
$16,940,659 $14,106,253
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-28
<PAGE> 136
CRISPAIRE CORPORATION
STATEMENTS OF INCOME
NINE MONTHS ENDED JULY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net sales...................................................... $28,544,919 $24,624,545
Cost of sales.................................................. 20,061,887 17,614,216
----------- -----------
Gross profit.............................................. 8,483,032 7,010,329
----------- -----------
Other operating income, net.................................... 33,192 39,763
----------- -----------
Operating expenses
Engineering, including research and development costs of
$113,407 and $168,661, respectively....................... 774,534 633,351
Selling...................................................... 1,356,272 1,126,918
General and administrative................................... 2,283,909 2,519,109
Provision for doubtful accounts.............................. 142,190 --
----------- -----------
4,556,905 4,279,378
----------- -----------
Income from operations.................................... 3,959,319 2,770,714
----------- -----------
Nonoperating expense
Interest expense, net........................................ 106,293 127,266
----------- -----------
Net income................................................ $ 3,853,026 $ 2,643,448
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-29
<PAGE> 137
CRISPAIRE CORPORATION
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers............................... $ 26,685,030 $ 24,360,661
Cash paid to suppliers and employees....................... (24,829,796) (21,885,334)
Other operating cash receipts.............................. 37,037 56,365
Interest paid.............................................. (110,138) (127,526)
------------ ------------
Net cash provided by operating activities............... 1,782,133 2,404,166
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment......................... (455,078) (1,397,894)
Proceeds from sale of property and equipment............... -- 7,584
Increase in other asset, tax deposit....................... (76,045) (40,994)
------------ ------------
Net cash used in investing activities................... (531,123) (1,431,304)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on revolving credit agreements... 1,665,779 (761,748)
Proceeds from long-term borrowings......................... -- 1,273,362
Principal payments on long-term borrowings................. (683,356) (497,097)
Purchase of common stock for the treasury.................. (801,022) --
Cash dividends paid........................................ (1,362,688) (892,712)
------------ ------------
Net cash used in financing activities................... (1,181,287) (878,195)
------------ ------------
Net increase in cash......................................... 69,723 94,667
Cash:
Beginning.................................................. 63,140 9,268
------------ ------------
Ending..................................................... $ 132,863 $ 103,935
============ ============
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income................................................. $ 3,853,026 $ 2,643,448
Noncash expenses included in net income:
Depreciation............................................ 236,211 156,411
Provision for doubtful accounts......................... 142,190 --
Loss on disposal of machinery and equipment............. -- 16,342
Changes in assets and liabilities:
Increase in trade receivables......................... (1,859,889) (263,884)
Increase in inventories............................... (739,582) (1,045,571)
Decrease in excess of outstanding checks over bank
balance............................................ (127,331) (315,320)
Increase in accounts payable and accrued expenses..... 289,998 1,224,601
Other prepaids and deferrals, net..................... (12,490) (11,851)
------------ ------------
Net cash provided by operating activities.......... $ 1,782,133 $ 2,404,166
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Vesting of common stock under terms of deferred
compensation stock agreement 10,052 and 9,435 shares,
respectively............................................ $ 659,010 $ 482,694
============ ============
</TABLE>
See Notes to Financial Statements.
F-30
<PAGE> 138
CRISPAIRE CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 1. METHOD OF PRESENTATION
The accompanying unaudited financial statements, which are for interim
periods, do not include all disclosures provided in the annual financial
statements. These financial statements and the notes thereto should be read in
conjunction with the annual financial statements and the notes thereto for the
year ended October 31, 1996 included elsewhere in this Offering Memorandum.
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (which are of a normal recurring nature)
necessary for a fair presentation of the financial statements. The results of
operations for the nine months ended July 31, 1997 are not necessarily
indicative of the results to be expected for the full year.
NOTE 2. SUBSEQUENT EVENT
On August 27, 1997, the Company executed a letter of intent with Recreation
Vehicle Products, Inc. ("RVP"), a manufacturer of air conditioning equipment for
recreational vehicles located in Wichita, Kansas, whereby RVP would acquire
substantially all of the assets and assume certain liabilities of the Company.
F-31
<PAGE> 139
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
<TABLE>
<CAPTION>
- --------------------------------------------
TABLE OF CONTENTS
<S> <C>
Summary................................ 1
Risk Factors........................... 15
The Transactions....................... 20
Use of Proceeds........................ 21
Capitalization......................... 21
Selected Financial and Other Data...... 22
Unaudited Pro Forma Financial
Information.......................... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 35
Industry............................... 45
The Business........................... 48
Management............................. 58
Security Ownership..................... 61
Description of the Revolving Credit
Facility............................. 62
Description of Exchange Notes.......... 63
The Exchange Offer..................... 93
Certain Federal Income Tax
Consequences......................... 102
Plan of Distribution................... 102
Legal Matters.......................... 103
Experts................................ 103
Index to Financial Statements.......... F-1
</TABLE>
PROSPECTUS
AIRXCEL, INC.
[AIRXCEL INC. LOGO]
OFFER TO EXCHANGE ITS 11% SERIES B SENIOR SUBORDINATED NOTES DUE 2007 FOR ANY
AND ALL OF ITS OUTSTANDING SERIES A SENIOR SUBORDINATED NOTES DUE 2007
, 1998
<PAGE> 140
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware, inter alia,
("Section 145") provides that a Delaware corporation may indemnify any persons
who were, are or are threatened to be made, parties to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation),
by reason of the fact that such person is or was an officer, director, employee
or agent of such corporation, or is or was serving at the request of such
corporation as a director, officer employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who are,
were or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the corporation's best
interests, provided that no indemnification is permitted without judicial
approval if the officer, director, employee or agent is adjudged to be liable to
the corporation. Where an officer, director, employee or agent is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
The Company's Certificate of Incorporation provides for the indemnification
of directors and officers of the Company to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as it currently exists or may
hereafter be amended.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
The Company maintains and has in effect insurance policies covering all of
the Company's directors and officers against certain liabilities for actions
taken in such capacities, including liabilities under the Securities Act of
1933.
II-1
<PAGE> 141
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<S> <C>
3.1 Certificate of Incorporation of Airxcel, Inc., as amended.
3.2 Amended and Restated By-laws of Airxcel, Inc.
4.1 Indenture dated as of November 10, 1997 between Airxcel, Inc. and United States Trust
Company of New York.
4.2 Purchase Agreement dated as of November 5, 1997 among Airxcel, Inc., Chase Securities
Inc. and NationsBanc Montgomery Securities, Inc.
4.3 Exchange and Registration Rights Agreement dated as of November 10, 1997 among
Airxcel, Inc., Chase Securities Inc. and NationsBanc Montgomery Securities, Inc.
5.1 Opinion and consent of Kirkland & Ellis.
10.1 Amended and Restated Credit Agreement dated as of November 10, 1997 among Airxcel,
Inc. and The Chase Manhattan Bank, as Agent.
10.2 Security Agreement dated as of August 22, 1996 among Recreation Vehicle Products,
Inc. and The Chase Manhattan Bank, as agent.
10.3 Security Agreement and Mortgage -- Trademarks and Patents dated as of August 22, 1996
among Recreation Vehicle Products, Inc. and The Chase Manhattan Bank, as agent.
10.4 Pledge Agreement dated as of August 22, 1996 among Recreation Vehicle Products, Inc.
and The Chase Manhattan Bank, as agent.
10.5 Executive Securities Purchase Agreement dated as of November 10, 1997 by and between
Airxcel Holdings, Inc. and the Purchasers.
10.6 Registration Rights Agreement dated as of August 22, 1996 by and among RV Products
Holding Corp., Citicorp Venture Capital, Ltd., Citicorp Mezzanine Partners, L.P., CCT
III Partners, L.P., the Executives, and the Individual Investors.
10.7 Joinder to Registration Rights Agreement dated as of November 10, 1997 by and among
Airxcel Holdings, Inc., Citicorp Venture Capital, Ltd., the Existing Stockholders,
and the New Executives.
10.8 Stockholders Agreement dated as of August 22, 1996, as amended by and among RV
Products Holding Corp., Citicorp Venture Capital, Ltd., Citicorp Mezzanine Partners,
L.P., CCT III Partners, L.P., the Executives and the Individual Investors.
10.9 Stock Purchase Warrant dated as of August 22, 1996.
10.10 Asset Purchase Agreement effective as of October 17, 1997 by and among Crispaire
Corporation, Airxcel, Inc. and Airxcel Holdings, Inc.
10.11 Distribution Agreement dated as of October 11, 1995 by and between The Coast
Distribution System and Recreation Vehicle Products, Inc.
10.12 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and the
Los Angeles Unified School District.
10.13 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and the
Los Angeles Unified School District.
10.14 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and the
Los Angeles Unified School District.
10.15 Executive Employment Agreement dated as of November 10, 1997 by and among Airxcel,
Inc. and T.K. Sellers, Jr.
10.16 Executive Employment Agreement dated as of November 10, 1997 by and among Airxcel,
Inc. and George D. Wyers.
</TABLE>
II-2
<PAGE> 142
<TABLE>
<S> <C>
10.17 Executive Employment Agreement dated as of November 10, 1997 by and among Airxcel,
Inc. and David Shuford.
12.1 Statement of Computation of Ratios.
21.1 Subsidiaries of Airxcel, Inc.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Mauldin & Jenkins, L.L.C.
23.4 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
(b) FINANCIAL STATEMENT SCHEDULES.
Not Applicable.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of the chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided, that
the registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial statements.
Notwithstanding the foregoing, with respect to registration statements on Form
F-3, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or Rule 3-19
of this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
II-3
<PAGE> 143
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Form F-3.
(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 20 or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wichita, State of Kansas,
on December 24, 1997.
AIRXCEL, INC.
By:
--------------------------------------
Name:
Title:
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Melvin L. Adams or Richard L. Schreck, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities (including his capacity as a director and/or officer of Airxcel,
Inc.), to sign any or all amendments (including post-effective amendments) to
this registration statement and any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------- --------------------------------- -------------------
<C> <S> <C>
/s/ MELVIN L. ADAMS Chief Executive Officer, December 24, 1997
- ------------------------------------- President and Director
Melvin L. Adams (principal executive officer)
/s/ RICHARD L. SCHRECK Chief Financial Officer, December 24, 1997
- ------------------------------------- Secretary and Treasurer
Richard L. Schreck (principal financial officer
and accounting officer)
/s/ GEORGE D. WYERS President -- Crispaire, Director December 24, 1997
- -------------------------------------
George D. Wyers
/s/ DEAN DUCRAY Director December 24, 1997
- -------------------------------------
Dean DuCray
/s/ LAWRENCE JONES Director December 24, 1997
- -------------------------------------
Lawrence Jones
/s/ THOMAS F. MCWILLIAMS Director December 24, 1997
- -------------------------------------
Thomas F. McWilliams
/s/ JAMES A. URRY Director December 24, 1997
- -------------------------------------
James A. Urry
</TABLE>
II-5
<PAGE> 145
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE
- ------ ------------------------------------------------------------------------------ -----
<S> <C> <C>
3.1 Certificate of Incorporation of Airxcel, Inc., as amended.
3.2 Amended and Restated By-laws of Airxcel, Inc.
4.1 Indenture dated as of November 10, 1997 between Airxcel, Inc. and United
States Trust Company of New York.
4.2 Purchase Agreement dated as of November 5, 1997 among Airxcel, Inc., Chase
Securities Inc. and NationsBanc Montgomery Securities, Inc.
4.3 Exchange and Registration Rights Agreement dated as of November 10, 1997 among
Airxcel, Inc., Chase Securities Inc. and NationsBanc Montgomery Securities,
Inc.
5.1 Opinion and consent of Kirkland & Ellis.
10.1 Amended and Restated Credit Agreement dated as of November 10, 1997 among
Airxcel, Inc. and The Chase Manhattan Bank, as Agent.
10.2 Security Agreement dated as of August 22, 1996 among Recreation Vehicle
Products, Inc. and The Chase Manhattan Bank, as agent.
10.3 Security Agreement and Mortgage -- Trademarks and Patents dated as of August
22, 1996 among Recreation Vehicle Products, Inc. and The Chase Manhattan Bank,
as agent.
10.4 Pledge Agreement dated as of August 22, 1996 among Recreation Vehicle
Products, Inc. and The Chase Manhattan Bank, as agent.
10.5 Executive Securities Purchase Agreement dated as of November 10, 1997 by and
between Airxcel Holdings, Inc. and the Purchasers.
10.6 Registration Rights Agreement dated as of August 22, 1996 by and among RV
Products Holding Corp., Citicorp Venture Capital, Ltd., Citicorp Mezzanine
Partners, L.P., CCT III Partners, L.P., the Executives, and the Individual
Investors.
10.7 Joinder to Registration Rights Agreement dated as of November 10, 1997 by and
among Airxcel Holdings, Inc., Citicorp Venture Capital, Ltd., the Existing
Stockholders, and the New Executives.
10.8 Stockholders Agreement dated as of August 22, 1996, as amended by and among RV
Products Holding Corp., Citicorp Venture Capital, Ltd., Citicorp Mezzanine
Partners, L.P., CCT III Partners, L.P., the Executives and the Individual
Investors.
10.9 Stock Purchase Warrant dated as of August 22, 1996.
10.10 Asset Purchase Agreement effective as of October 17, 1997 by and among
Crispaire Corporation, Airxcel, Inc. and Airxcel Holdings, Inc.
10.11 Distribution Agreement dated as of October 11, 1995 by and between The Coast
Distribution System and Recreation Vehicle Products, Inc.
10.12 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and
the Los Angeles Unified School District.
10.13 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and
the Los Angeles Unified School District.
10.14 Agreement dated as of October 6, 1997 by and between Crispaire Corporation and
the Los Angeles Unified School District.
</TABLE>
<PAGE> 146
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE
- ------ ------------------------------------------------------------------------------ -----
<S> <C> <C>
10.15 Executive Employment Agreement dated as of November 10, 1997 by and among
Airxcel, Inc. and T.K. Sellers, Jr.
10.16 Executive Employment Agreement dated as of November 10, 1997 by and among
Airxcel, Inc. and George D. Wyers.
10.17 Executive Employment Agreement dated as of November 10, 1997 by and among
Airxcel, Inc. and David Shuford.
12.1 Statement of Computation of Ratios.
21.1 Subsidiaries of Airxcel, Inc.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Mauldin & Jenkins, L.L.C.
23.4 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
of
COLEMAN R.V. PRODUCTS, INC.
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware, certifies as follows:
1. Name. The name of the corporation is COLEMAN R.V. PRODUCTS, INC.
(hereinafter the "Corporation").
2. Address: Registered Agent. The address of the Corporation's
registered office is Corporation Trust Center, 1209 Orange Street, Wilmington,
County of New Castle, State of Delaware; and its registered agent at such
address is The Corporation Trust Company.
3. Purposes. The nature of the business and purposes to be conducted or
promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
4. Number of Shares. The total number of shares of stock which the
Corporation shall have authority to issue is: one thousand (1,000), all of
which shall be shares of Common Stock of the par value of One Dollar ($1.00)
each.
<PAGE> 2
5. Name and Address of Incorporator. The name and mailing address of the
incorporator are: Gus Samios, 1285 Avenue of the Americas, New York, New York,
10019-6064.
6. Election of Directors. Members of the Board of Directors may be elected
either by written ballot or by voice vote.
7. Limitation of Liability. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefits.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
2
<PAGE> 3
8. INDEMNIFICATION.
8.1 The Corporation shall, to the extent not prohibited by law,
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation to procure a judgment in its favor (hereinafter a
"Proceeding"), by reason of the fact that such person, or a person of whom such
person is the legal representative, is or was a director or officer of the
Corporation, or is or was serving in any capacity at the request of the
Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against judgments, fines, penalties,
excise taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements). Persons who are not directors or
officers of the Corporation may be similarly indemnified in respect of service
to the Corporation to the extent the Board of Directors at any time denominates
such persons entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or advance to
any director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees
3
<PAGE> 4
and disbursements, incurred in connection with any Proceeding, in advance of
the final disposition of such Proceeding, provided, however, that, if required
by the Delaware General Corporation Law, such expenses incurred by or on behalf
of any director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any law, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office.
8.4 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall continue as
to a person who
<PAGE> 5
has ceased to be a director or officer (or other person indemnified hereunder)
and shall inure to the benefit of the heirs, executors and administrators of
such person.
8.5 The Corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Section 8, the By-laws of the Corporation or under Section
145 of the Delaware General Corporation Law or any other provision of law.
8.6 The provisions of this Section 8 shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Section 8 is in effect and any other person
indemnified hereunder, on the other hand, pursuant to which the Corporation and
each such director, officer or other person intend to be legally bound. No
repeal or modification of this Section 8 shall affect any rights or obligations
then
5
<PAGE> 6
existing or thereafter arising with respect to any state of facts then or
theretofore existing or thereafter arising or any Proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
8.7 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses
are not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that such a person is not entitled to such indemnification or
reimbursement or advancement of expenses, shall constitute a defense to the
action or create a presumption that such person is not so entitled. Such a
person shall also be indemnified for any expenses incurred in connection with
successfully
6
<PAGE> 7
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 Any director or officer of the Corporation serving (1) another
corporation of which a majority of the shares entitled to vote in the election
of its directors is held by the corporation, or (2) any employee benefit plan of
the corporation or any corporation referred to in clause (1), in any capacity,
shall be deemed to be doing so at the request of the Corporation.
8.9 Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided that if no such notice is given, the right to indemnification
or reimbursement or advancement of expenses shall be determined by the law in
effect at the time
7
<PAGE> 8
indemnification or reimbursement or advancement of expenses is sought.
9. Adoption, Amendment and/or Repeal of By-Laws. The Board of Directors
may from time to time (after adoption by the undersigned of the original by-laws
of the Corporation) make, alter or repeal the by-laws of the Corporation;
provided, that any by-laws made, amended or repealed by the Board of Directors
may be amended or repealed, and any by-laws may be made, by the stockholders of
the Corporation.
IN WITNESS WHEREOF, this Certificate has been signed on this 20th day of
July, 1989.
GUS SAMIOS
-------------------------
Gus Samios, Incorporator
<PAGE> 9
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
COLEMAN R.V. PRODUCTS, INC.
------------------------------
The undersigned, being the President of COLEMAN R.V. PRODUCTS, INC., a
corporation duly organized and validly existing under and by virtue of the
Delaware General Corporation Law (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That in lieu of a meeting and vote of the Sole Director of this
Corporation, and pursuant to Section 141(f) of the Delaware General Corporation
Law and the By-Laws of this Corporation, the Sole Director, by means of a
written consent, has duly adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable and presented to the Sole Stockholder of the
Corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED: that the Certificate of Incorporation of this Corporation be
amended by deleting Article FIRST in its entirety and substituting therefor the
following Article FIRST:
"FIRST: The name of this corporation shall be: Recreation Vehicle
Products, Inc."
<PAGE> 10
SECOND: That in lieu of a meeting and vote of the Sole Stockholder, the
Sole Stockholder has given its written consent to said Amendment in accordance
with the provisions of Section 228 of the Delaware General Corporation Law.
THIRD: That said Amendment was duly adopted in accordance with the
provisions of Sections 242 and 228 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by its President and attested by its Secretary this
1st day of May, 1991.
COLEMAN R.V. PRODUCTS, INC.
Attest: /s/ Richard Schreck By: /s/ Melvin Adams
------------------------ ------------------------
Richard Schreck Melvin Adams
Secretary President
-2-
<PAGE> 11
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
RECREATION VEHICLE PRODUCTS, INC.
Pursuant to Sections 242 of the General Corporation Law of the State of
Delaware the undersigned, being the Secretary of Recreation Vehicle Products,
Inc., a Delaware corporation (the "Corporation") does hereby certify the
following:
FIRST: The name of the Corporation is Recreation Vehicle Products, Inc.
SECOND: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on July 20, 1989.
THIRD: The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in paragraph 1 thereof, relating to the name of the
Corporation. Accordingly, paragraph 1 of the Certificate of Incorporation shall
be amended to read in its entirety as follows:
"1. Name. The name of the corporation is Airxcel, Inc. (hereinafter called
the "Corporation")."
FOURTH: The amendment to the Certificate of Incorporation of the
Corporation effected hereby was approved by the Board of Directors of the
Corporation, and by written consent of the sole stockholder of the Corporation.
IN WITNESS WHEREOF, the undersigned affirms as true the foregoing under
penalties of perjury, and has executed this Certificate this 16th day of
October, 1997.
RECREATION VEHICLE PRODUCTS, INC.
By: /s/ Richard L. Schreck
---------------------------------
Name: Richard L. Schreck
Title: Secretary
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
AIRXCEL, INC.
(formerly Recreation Vehicle Products, Inc.)
<PAGE> 2
AMENDED AND RESTATED BY-LAWS
OF
AIRXCEL, INC.
(A Delaware Corporation)
ARTICLE 1 CERTIFICATE OF INCORPORATION 5
Section 1.1 Contents 5
Section 1.2 Certificate in Effect 5
ARTICLE 2 MEETINGS OF STOCKHOLDERS 5
Section 2.1 Place 5
Section 2.2 Annual Meeting 6
Section 2.3 Special Meetings 6
Section 2.4 Notice of Meetings 7
Section 2.5 Affidavit of Notice 7
Section 2.6 Quorum 7
Section 2.7 Voting Requirements 8
Section 2.8 Proxies and Voting 8
Section 2.9 Action Without Meeting 9
Section 2.10 Stockholder List 10
Section 2.11 Record Date 10
ARTICLE 3 DIRECTORS 12
Section 3.1 Number; Election and Term of Office 12
Section 3.2 Duties 12
Section 3.3 Compensation 13
Section 3.4 Reliance on Books 13
ARTICLE 4 MEETINGS OF THE BOARD OF DIRECTORS 13
Section 4.1 Place 13
Section 4.2 Annual Meeting 14
Section 4.3 Regular Meetings 14
Section 4.4 Special Meetings 14
Section 4.5 Quorum 14
Section 4.6 Action Without Meeting 15
Section 4.7 Telephone Meetings 15
ARTICLE 5 COMMITTEES OF DIRECTORS 16
Section 5.1 Designation 16
Section 5.2 Records of Meetings 17
ARTICLE 6 NOTICES 17
Section 6.1 Method of Giving Notice 17
Section 6.2 Waiver 18
-2-
<PAGE> 3
ARTICLE 7 OFFICERS 18
Section 7.1 In General 18
Section 7.2 Election of President, Secretary and
Treasurer 18
Section 7.3 Election of Other Officers 19
Section 7.4 Salaries 19
Section 7.5 Term of Office 19
Section 7.6 Duties of President and Chairman of
the Board 19
Section 7.7 Duties of Vice President 20
Section 7.8 Duties of Secretary 20
Section 7.9 Duties of Assistant Secretary 21
Section 7.10 Duties of Treasurer 21
Section 7.11 Duties of Assistant Treasurer 22
ARTICLE 8 RESIGNATIONS, REMOVALS AND VACANCIES 23
Section 8.1 Directors 23
Section 8.2 Officers 24
ARTICLE 9 CERTIFICATE OF STOCK 24
Section 9.1 Issuance of Stock 24
Section 9.2 Right to Certificate; Form 25
Section 9.3 Facsimile Signature 25
Section 9.4 Lost Certificates 26
Section 9.5 Transfer of Stock 26
Section 9.6 Registered Stockholders 27
ARTICLE 10 INDEMNIFICATION 23
Section 10.1 Indemnification of Officers and Directors 23
Section 10.2 Advances 24
Section 10.3 Not Exclusive 25
Section 10.4 Heirs, etc. 25
Section 10.5 Insurance 25
Section 10.6 Contract 26
Section 10.7 Enforcement 26
Section 10.8 Other Corporations 27
Section 10.9 Election 28
ARTICLE 11 EXECUTION OF PAPERS 28
ARTICLE 12 FISCAL YEAR 29
ARTICLE 13 SEAL 29
ARTICLE 14 OFFICES 29
-3-
<PAGE> 4
ARTICLE 15 AMENDMENTS 29
-4-
<PAGE> 5
AIRXCEL, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE 1
CERTIFICATE OF INCORPORATION
Section 1.1 Contents. The name, location of principal office and purposes
of the Corporation shall be as set forth in its Certificate of Incorporation.
These By-Laws, the powers of the Corporation and of its Directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in said Certificate of Incorporation. The
Certificate of Incorporation is hereby made a part of these By-Laws.
Section 1.2 Certificate in Effect. All references in these By-Laws to the
Certificate of Incorporation shall be construed to mean the Certificate of
Incorporation of the Corporation as from time to time amended, including (unless
the context shall otherwise require) all certificates and any agreement of
consolidation or merger filed pursuant to the Delaware General Corporation Law,
as amended.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 2.1 Place. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of
-5-
<PAGE> 6
Directors, the Chairman of the Board of Directors or the President and stated in
the notice of the meeting or in any duly executed waiver of notice thereof.
Section 2.2 Annual Meeting. Annual meetings of stockholders, shall be held
on the second Tuesday of March in each year, if not a legal holiday, and, if a
legal holiday, then on the next secular day following, at 10:00 A.M., or at such
other date and time as shall be designated from time to time by the Board of
Directors, the Chairman of the Board of Directors or the President and stated in
the notice of the meeting. If such annual meeting has not been held on the day
herein provided therefor, a special meeting of the stockholders in lieu of the
annual meeting may be held, and any business transacted or elections held at
such special meeting shall have the same effect as if transacted or held at the
annual meeting, and in such case all references in these By-Laws, except in this
Section 2.2, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President, the Chairman of
the Board, or by the Board of Directors and shall be called by the President or
Secretary at the request in writing of a majority of the Directors then in
office, or at the request in writing of
-6-
<PAGE> 7
stockholders owning a majority in amount of the entire stock of the Corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting, which need not be the exclusive
purposes for which the meeting is called.
Section 2.4 Notice of Meetings. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the special meeting is
called, shall be given to each stockholder entitled to vote at such meeting.
Except as otherwise provided by law, such notice shall be given not less than
ten nor more than sixty days before the date of the meeting. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice.
Section 2.5 Affidavit of Notice. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meeting has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
Section 2.6 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not
-7-
<PAGE> 8
be present or represented by proxy at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, except as hereinafter provided, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.7 Voting Requirements. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of any
applicable statute or of the Certificate of Incorporation, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
Section 2.8 Proxies and Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock
-8-
<PAGE> 9
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held, and persons whose stock is pledged shall be entitled to vote the
pledged shares, unless in the transfer by the pledgor on the books of the
Corporation he shall have expressly empowered the pledgee to vote said shares,
in which case only the pledgee, or his proxy, may represent and vote such
shares. Shares of the capital stock of the Corporation owned by the Corporation
shall not be voted, directly or indirectly.
Section 2.9 Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
-9-
<PAGE> 10
Section 2.10 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The original or duplicate stock ledger shall be the only evidence as to
who are the stockholders entitled to examine such list, the stock ledger or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 2.11 Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
-10-
<PAGE> 11
any rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held.
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the first
written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
-11-
<PAGE> 12
ARTICLE 3
DIRECTORS
Section 3.1 Number; Election and Term of Office. There shall be a Board of
Directors of the Corporation consisting of not less than one member, the number
of members to be determined by resolution of the Board of Directors or by the
stockholders at the annual or any special meeting, unless the Certificate of
Incorporation fixed the number of Directors, in which case a change in the
number of Directors shall be made only by amendment of the Certificate. Subject
to any limitation which may be contained within the Certificate of
Incorporation, the number of the Board of Directors may be increased at any time
by vote of a majority of the Directors then in office. The Directors shall be
elected at the annual meeting of the stockholders, except as provided in
paragraph (c) of Section 8.1, and each Director elected shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal. Directors need not be stockholders.
Section 3.2 Duties. The business of the Corporation shall be managed by or
under the direction of its Board of Directors which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Certificate of Incorporation or by these By-Laws directed or required
to be exercised or done by the stockholders.
-12-
<PAGE> 13
Section 3.3 Compensation. Unless otherwise restricted by the Certificate
of Incorporation or these By-Laws, the Board of Directors shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Directors. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.4 Reliance on Books. A member of the Board of Directors or a
member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying in
good faith upon other records of the Corporation.
ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware.
-13-
<PAGE> 14
Section 4.2 Annual Meeting. The first meeting of each newly elected Board
of Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof, and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting.
Section 4.3 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 4.4 Special Meetings. Special meetings of the Board may be called
by the President on two days' notice to each Director either personally or by
mail or by telegram; special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of two
Directors unless the Board consists of only one Director, in which case special
meetings shall be called by the President or Secretary in like manner and on
like notice on the written request of the sole Director.
Section 4.5 Quorum. At all meetings of the Board a majority of the
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present
-14-
<PAGE> 15
at any meeting of the Board of Directors, the Directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 4.6 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 4.7 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
-15-
<PAGE> 16
ARTICLE 5
COMMITTEES OF DIRECTORS
Section 5.1 Designation.
(a) The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the Directors of the Corporation. The Board may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
(b) In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution of
the Board of Directors designating the committee, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the
-16-
<PAGE> 17
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the By-Laws of the
Corporation; and, unless the resolution or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors.
Section 5.2 Records of Meetings. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors when required.
ARTICLE 6
NOTICES
Section 6.1 Method of Giving Notice. Whenever, under any provision of the
law or of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, such notice shall be given
in writing by the Secretary or the person or persons calling the meeting by
leaving such notice with such Director or stockholder at his residence or usual
place of business or by mailing it addressed to such Director or stockholder, at
his address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same
-17-
<PAGE> 18
shall be deposited in the United States mail. Notice to Directors may also be
given by telegram.
Section 6.2 Waiver. Whenever any notice is required to be given under any
provision of law or of the Certificate of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE 7
OFFICERS
Section 7.1 In General. The officers of the Corporation shall be chosen by
the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors may also choose a Chairman of the Board, one
or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-Laws otherwise provide.
Section 7.2 Election of President, Secretary and Treasurer. The Board of
Directors at its first meeting after each annual meeting of stockholders shall
choose a President., a Secretary and a Treasurer.
-18-
<PAGE> 19
Section 7.3 Election of Other Officers. The Board of Directors may appoint
such other officers and agents as it shall deem appropriate who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 7.4 Salaries. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
Section 7.5 Term of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify or until their earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time in the manner specified in Section 8.2.
Section 7.6 Duties of President and Chairman of the Board. The President
shall be the chief executive officer of the Corporation, shall preside at all
meetings of the stockholders and, if he is a Director, at all meetings of the
Board of Directors if there shall be no Chairman of the Board or in the absence
of the Chairman of the Board, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. The President shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of
-19-
<PAGE> 20
Directors to some other officer or agent of the Corporation. The Chairman of the
Board, if any, shall make his counsel available to the other officers of the
Corporation, shall be authorized to sign stock certificates on behalf of the
Corporation, shall preside at all meetings of the Directors at which he is
present, and, in the absence of the President at all meetings of the
stockholders, and shall have such other duties and powers as may from time to
time be conferred upon him by the Directors.
Section 7.7 Duties of Vice President. In the absence of the President or
in the event of his inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated by the Directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President not otherwise
conferred upon the Chairman of the Board, if any, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President. The
Vice-Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 7.8 Duties of Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be
-20-
<PAGE> 21
given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, except as otherwise provided in these By-Laws, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. He shall have charge of the
stock ledger (which may, however, be kept by any transfer agent or agents of the
Corporation under his direction) and of the corporate seal of the Corporation.
Section 7.9 Duties of Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 7.10 Duties of Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors,
-21-
<PAGE> 22
taking proper vouchers for such disbursements, and shall render to the President
and the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all of his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of this office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 7.11 Duties of Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the event
of his inability or refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties and have such other powers
as the Board of Directors may from time to time prescribe.
-22-
<PAGE> 23
ARTICLE 8
RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors.
(a) Resignations. Any Director may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
(b) Removals. Subject to any provisions of the Certificate of
Incorporation, the holders of stock entitled to vote for the election of
Directors may, at any meeting called for the purpose, by vote of a majority of
the shares of such stock outstanding, remove any Director or the entire Board of
Directors with or without cause and fill any vacancies thereby created. This
Section 8.1(b) may not be altered, amended or repealed except by the holders of
a majority of the shares of stock issued and outstanding and entitled to vote
for the election of the Directors.
(c) Vacancies. Vacancies occurring in the office of Director and
newly created Directorships resulting from any increase in the authorized number
of Directors shall be filled by a majority of the Directors then in office,
though less than a quorum, unless previously filled by the stockholders entitled
to vote for the election of Directors, and the Directors so chosen
-23-
<PAGE> 24
shall hold office subject to the By-Laws until the next annual election and
until their successors are duly elected and qualify or until their earlier
resignation or removal. If there are no Directors in office, then an election of
Directors may be held in the manner provided by statute.
Section 8.2 Officers.
Any officer may resign at any time by giving written notice to the Board
of Directors or the President or the Secretary. Such resignation shall take
effect at the time specified therein; and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
The Board of Directors may, at any meeting called for the purpose, by vote of a
majority of their entire number, remove from office any officer of the
Corporation or any member of a committee, with or without cause. Any vacancy
occurring in the office of President, Secretary or Treasurer shall be filled by
the Board of Directors and the officers so chosen shall hold office subject to
the ByLaws for the unexpired term in respect of which the vacancy occurred and
until their successors shall be elected and qualify or until their earlier
resignation or removal.
ARTICLE 9
CERTIFICATE OF STOCK
Section 9.1 Issuance of Stock. The Directors may, at any time and from
time to time, if all of the shares of capital stock which the Corporation is
authorized by its Certificate of
-24-
<PAGE> 25
Incorporation to issue have not been issued, subscribed for, or otherwise
committed to be issued, issue or take subscriptions for additional shares of its
capital stock up to the amount authorized in its Certificate of Incorporation.
Such stock shall be issued and the consideration paid therefor in the manner
prescribed by law.
Section 9.2 Right to Certificate; Form. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a
Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the Corporation, certifying the number of shares owned
by him in the Corporation; provided that the Directors may provide by one or
more resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertified shares. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon shall be
specified.
Section 9.3 Facsimile Signature. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before
-25-
<PAGE> 26
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
Section 9.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 9.5 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
-26-
<PAGE> 27
Section 9.6 Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
-27-
<PAGE> 28
ARTICLE 10
INDEMNIFICATION
Section 10.1. Indemnification of Officers and Directors. The Corporation
shall, to the extent not prohibited by law, indemnify any person who is or was
made, or threatened to be made, a party to any threatened, pending or completed,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation to
procure a judgment in its favor (hereinafter a "Proceeding"), by reason of the
fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Corporation, or is or was
serving in any capacity at the request of the Corporation for any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, penalties, excise taxes, amounts paid in
settlement and costs, charges and expenses (including attorneys' fees and
disbursements). Persons who are not directors or officers of the Corporation may
be similarly indemnified in respect of service to the Corporation or to another
such entity at the request of the Corporation to the extent the Board of
Directors at any time denominates such person as entitled to the benefits of
this Article 10.
Section 10.2. Advances. The Corporation shall, from time to time, reimburse
or advance to any director or officer entitled to indemnification hereunder the
funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding, provided, however, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any director of officer may be paid in advance of the final disposition of a
Proceeding only upon receipt by the Corporation of an
-29-
<PAGE> 29
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director or officer is not entitled to be
indemnified for such expenses.
Section 10.3. Not Exclusive. The right to indemnification and reimbursement
or advancement of expenses provided by, or granted pursuant to, this Article 10
shall not be deemed exclusive of any other rights to which those seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
Section 10.4. Heirs, Etc. The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article 10
shall continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the heirs,
executors and administrators of such person.
Section 10.5. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
-30-
<PAGE> 30
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by such person in any
such capacity, or arising out of such person's status as such, whether or not
the Corporation would have the power to indemnify such person against such
liability under the provisions of this Article 10, the Certificate of
Incorporation of the Corporation or under Section 145 of the Delaware General
Corporation Law or any other provision of law.
Section 10.6. Contract. The provisions of this Article 10 shall be a
contract between the Corporation and each director and officer who serves in
such capacity at any time while this Article 10 is in effect, pursuant to which
the Corporation and each such person intend to be legally bound. No repeal or
modification of this Article 10 shall affect any rights or obligations then
existing or thereafter arising with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
Section 10.7. Enforcement. The right to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article 10 shall be enforceable by any person entitled to such
indemnification or reimbursement or
31
<PAGE> 31
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses
are not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including the Board of Directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses are proper in the circumstances nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that such person is not entitled to such indemnification or
reimbursement or advancement of expenses, shall constitute a defense to the
action or create a presumption that such person is not so entitled. Such person
shall also be indemnified for any expenses incurred in connection with
successfully establishing his or her right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
SECTION 10.8. OTHER CORPORATIONS. Any director or officer of the Corporation
serving (1) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held by the Corporation, or (2) any
employee benefit plan of the Corporation or any corporation referred to in
clause (1), in any capacity, shall be deemed to be doing so at the request of
the Corporation.
-32-
<PAGE> 32
Section 10.9. Election. Any person entitled to be indemnified or to the
reimbursement or advancement of expenses as a matter of right pursuant to this
Article 10 may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification or reimbursement or
advancement of expenses is sought. Such election shall be made, by a notice in
writing to the Corporation, at the time indemnification or reimbursement or
advancement of expenses is sought; provided that if no such notice is given,
the right to indemnification or reimbursement or advancement of expenses shall
be determined by the law in effect at the time indemnification or reimbursement
or advancement of expenses is sought.
-33-
<PAGE> 33
ARTICLE 11
EXECUTION OF PAPERS
Except as otherwise provided in these By-Laws or as the Board of Directors
may generally or in particular cases otherwise determine, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by the
President or the Treasurer.
ARTICLE 12
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE 13
SEAL
The Corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the word "Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
-34-
<PAGE> 34
ARTICLE 14
OFFICES
In addition to its principal office, the Corporation may have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 15
AMENDMENTS
Except as otherwise provided herein, these By-laws may be altered, amended
or repealed or new By-Laws may be adopted by the stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation, at any regular meeting of the stockholders or of
the Board of Directors, or at any special meeting of the stockholders or of the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new By-Laws is contained in the notice of such special meeting, or by the
written consent of a majority in interest of the outstanding voting stock of the
Corporation or by the unanimous written consent of the Directors. If the power
to adopt, amend or ~ repeal by-laws is conferred upon the Board of Directors by
the Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
-35-
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
Dated as of November 10, 1997
Between
AIRXCEL, INC., as Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
------------------
$125,000,000
11% Senior Subordinated Notes due 2007, Series A
11% Senior Subordinated Notes due 2007, Series B
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
Trust Indenture Indenture
Act Section Section
----------- -------
ss. 310(a)(1)............................................. 7.10
(a)(2)............................................... 7.10
(a)(3)............................................... N.A.
(a)(4)............................................... N.A.
(a)(5)............................................... 7.08, 7.10.
(b).................................................. 7.08; 7.10; 13.02
(c).................................................. N.A.
ss. 311(a)................................................ 7.11
(b).................................................. 7.11
(c).................................................. N.A.
ss.312(a)................................................. 2.05
(b).................................................. 13.03
(c).................................................. 13.03
ss.313(a)................................................. 7.06
(b)(1)............................................... 7.06
(b)(2)............................................... 7.06
(c).................................................. 7.06; 13.02
(d).................................................. 7.06
ss.314(a)................................................. 4.11; 4.12; 13.02
(b).................................................. N.A.
(c)(1)............................................... 13.04
(c)(2)............................................... 13.04
(c)(3)............................................... N.A.
(d).................................................. N.A.
(e).................................................. 13.05
(f).................................................. N.A.
ss.315(a)................................................. 7.01(b)
(b).................................................. 7.05; 13.02
(c).................................................. 7.01(a)
(d).................................................. 7.01(c)
(e).................................................. 6.11
ss.316(a)(last sentence).................................. 2.09
(a)(1)(A)............................................ 6.05
(a)(1)(B)............................................ 6.04
(a)(2)............................................... N.A.
(b).................................................. 6.07
(c).................................................. 10.04
ss.317(a)(1).............................................. 6.08
(a)(2)............................................... 6.09
(b).................................................. 2.04
ss.318(a)................................................. 13.01
- ----------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act............19
SECTION 1.03. Rules of Construction........................................20
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating..............................................20
SECTION 2.02. Execution and Authentication.................................21
SECTION 2.03. Registrar and Paying Agent...................................22
SECTION 2.04. Paying Agent To Hold Assets in Trust.........................22
SECTION 2.05. Securityholder Lists.........................................22
SECTION 2.06. Transfer and Exchange........................................23
SECTION 2.07. Replacement Securities.......................................23
SECTION 2.08. Outstanding Securities.......................................23
SECTION 2.09. Treasury Securities..........................................24
SECTION 2.10. Temporary Securities.........................................24
SECTION 2.11. Cancellation.................................................24
SECTION 2.12. Defaulted Interest...........................................25
SECTION 2.13. CUSIP Number.................................................25
SECTION 2.14. Deposit of Moneys............................................25
SECTION 2.15. Book-Entry Provisions for Global Securities..................25
SECTION 2.16. Registration of Transfers and Exchanges......................26
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee...........................................30
SECTION 3.02. Selection of Securities To Be Redeemed.......................30
SECTION 3.03. Notice of Redemption.........................................31
SECTION 3.04. Effect of Notice of Redemption...............................32
SECTION 3.05. Deposit of Redemption Price..................................32
SECTION 3.06. Securities Redeemed in Part..................................32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities........................................32
SECTION 4.02. Maintenance of Office or Agency..............................33
SECTION 4.03. Transactions with Affiliates.................................33
- i -
<PAGE> 4
SECTION 4.04. Limitation on Indebtedness...................................33
SECTION 4.05. Disposition of Proceeds of Asset Sales.......................35
SECTION 4.06. Limitation on Restricted Payments............................37
SECTION 4.07. Corporate Existence..........................................38
SECTION 4.08. Payment of Taxes and Other Claims............................39
SECTION 4.09. Notice of Defaults...........................................39
SECTION 4.10. Maintenance of Properties and Insurance......................39
SECTION 4.11. Compliance Certificate.......................................40
SECTION 4.12. Provision of Financial Information...........................40
SECTION 4.13. Waiver of Stay, Extension or Usury Laws......................40
SECTION 4.14. Change of Control............................................41
SECTION 4.15. Limitation on Senior Subordinated Indebtedness...............41
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions
Affecting Subsidiaries.....................................42
SECTION 4.17. Limitation on Liens..........................................42
SECTION 4.18. Restriction on Transfer of Assets to Subsidiaries............43
SECTION 4.19. Limitation on the Sale or Issuance of Equity Interests of
Subsidiaries.................................................43
SECTION 4.20. Payments for Consent.........................................43
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.................................44
SECTION 5.02 Successor Corporation Substituted............................45
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................45
SECTION 6.02. Acceleration.................................................46
SECTION 6.03. Other Remedies...............................................47
SECTION 6.04. Waiver of Past Default.......................................47
SECTION 6.05. Control by Majority..........................................48
SECTION 6.06. Limitation on Suits..........................................48
SECTION 6.07. Rights of Holders To Receive Payment.........................48
SECTION 6.08. Collection Suit by Trustee...................................48
SECTION 6.09. Trustee May File Proofs of Claim.............................49
SECTION 6.10. Priorities...................................................49
SECTION 6.11. Undertaking for Costs........................................49
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee............................................50
SECTION 7.02. Rights of Trustee............................................51
SECTION 7.03. Individual Rights of Trustee.................................52
SECTION 7.04. Trustee's Disclaimer.........................................52
SECTION 7.05. Notice of Defaults...........................................52
- ii -
<PAGE> 5
SECTION 7.06. Reports by Trustee to Holders................................53
SECTION 7.07. Compensation and Indemnity...................................53
SECTION 7.08. Replacement of Trustee.......................................54
SECTION 7.09. Successor Trustee by Merger, etc.............................55
SECTION 7.10. Eligibility; Disqualification................................55
SECTION 7.11. Preferential Collection of Claims Against Company............55
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness...............55
SECTION 8.02. No Payment on Securities in Certain Circumstances............55
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc...............56
SECTION 8.04. Subrogation..................................................57
SECTION 8.05. Obligations of Company Unconditional.........................58
SECTION 8.06. Notice to Trustee............................................58
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating
Agent........................................................59
SECTION 8.08. Trustee's Relation to Senior Indebtedness....................59
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness..............59
SECTION 8.10. Securityholders Authorize Trustee To Effectuate
Subordination of Securities................................60
SECTION 8.11. This Article Not To Prevent Events of Default................60
SECTION 8.12. Trustee's Compensation Not Prejudiced........................60
SECTION 8.13. No Waiver of Subordination Provisions........................60
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in
Trust for Securityholders; Payments May Be Paid Prior to
Dissolution................................................60
SECTION 8.15. Acceleration of Securities...................................61
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.........................61
SECTION 9.02. Legal Defeasance and Covenant Defeasance.....................62
SECTION 9.03. Conditions to Legal Defeasance or Covenant Defeasance........62
SECTION 9.04. Application of Trust Money; Trustee Acknowledgment and
Indemnity..................................................64
SECTION 9.05. Repayment to Company.........................................64
SECTION 9.06. Reinstatement................................................64
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders...................................65
SECTION 10.02. With Consent of Holders......................................66
SECTION 10.03. Compliance with Trust Indenture Act..........................67
SECTION 10.04. Revocation and Effect of Consents............................67
SECTION 10.05. Notation on or Exchange of Securities........................68
SECTION 10.06. Trustee To Sign Amendments, etc..............................68
- iii -
<PAGE> 6
ARTICLE ELEVEN
GUARANTY
SECTION 11.01. Unconditional Guaranty.......................................68
SECTION 11.02. Severability.................................................69
SECTION 11.03. Release of a Guarantor.......................................69
SECTION 11.04. Limitation of Guarantor's Liability..........................69
SECTION 11.05. Contribution.................................................70
SECTION 11.06. Execution of Security Guaranty...............................70
SECTION 11.07. Subordination of Subrogation and Other Rights................70
ARTICLE TWELVE
SUBORDINATION OF GUARANTY
SECTION 12.01. Guaranty Obligations Subordinated to Guarantor Senior
Indebtedness...............................................70
SECTION 12.02. No Payment on Guaranties in Certain Circumstances............71
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc...............72
SECTION 12.04. Subrogation..................................................73
SECTION 12.05. Obligations of Guarantors Unconditional......................73
SECTION 12.06. Notice to Trustee............................................74
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent......................................................74
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness..........74
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of
the Guarantors or Holders of Guarantor Senior
Indebtedness...............................................75
SECTION 12.10. Securityholders Authorize Trustee To Effectuate
Subordination of Guaranty..................................75
SECTION 12.11. This Article Not To Prevent Events of Default................75
SECTION 12.12. Trustee's Compensation Not Prejudiced........................75
SECTION 12.13. No Waiver of Guaranty Subordination Provisions...............75
SECTION 12.14. Payments May Be Paid Prior to Dissolution....................76
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.................................76
SECTION 13.02. Notices......................................................76
SECTION 13.03. Communications by Holders with Other Holders.................78
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...........78
SECTION 13.05. Statements Required in Certificate or Opinion................78
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar....................78
SECTION 13.07. Governing Law................................................78
SECTION 13.08. No Recourse Against Others...................................79
SECTION 13.09. Successors...................................................79
SECTION 13.10. Counterpart Originals........................................79
SECTION 13.11. Severability.................................................79
SECTION 13.12. No Adverse Interpretation of Other Agreements................79
SECTION 13.13. Legal Holidays...............................................79
- vi -
<PAGE> 7
SIGNATURES...................................................................S-1
EXHIBIT A Form of Series A Security.....................................A-1
EXHIBIT B Form of Series B Security.....................................B-1
EXHIBIT C Form of Legend for Global Securities..........................C-1
EXHIBIT D Form of Transfer Certificate..................................D-1
EXHIBIT E Form of Transfer Certificate for Institutional Accredited
Investors...................................................E-1
EXHIBIT F Form of Transfer Certificate for Regulation S Transfers.......F-1
- ----------
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
- v -
<PAGE> 8
INDENTURE dated as of November 10, 1997, between AIRXCEL, INC., a
Delaware corporation and formerly named Recreation Vehicle Products, Inc. (the
"Company"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking
corporation, not in its individual capacity, but solely as trustee (the
"Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed
in connection with an Acquisition from such Person or (b) existing at the time
such Person becomes a Subsidiary of the Company or is merged or consolidated
with or into the Company or any Subsidiary of the Company.
"Acquired Person" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Subsidiary of the Company to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Subsidiary of the
Company, in either case pursuant to which such Person shall become a Subsidiary
of the Company or shall be consolidated with or merged with or into the Company
or any Subsidiary of the Company or (ii) any acquisition by the Company or any
Subsidiary of the Company of the assets of any Person which constitute
substantially all of an operating unit or line of business of such Person or
which is otherwise outside of the ordinary course of business.
"Additional Interest" has the meaning provided in Section 4(a) of
the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" see Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease (that has the effect of a disposition) or other disposition
(including, without limitation, any merger, consolidation or sale-leaseback
<PAGE> 9
- 2 -
transaction) to any Person other than the Company in one transaction or a series
of related transactions, of (i) any Equity Interest of any Subsidiary of the
Company (other than directors' qualifying shares, to the extent mandated by
applicable law); (ii) any assets of the Company or any Subsidiary of the Company
which constitute substantially all of an operating unit or line of business of
the Company or any Subsidiary of the Company; or (iii) any other property or
asset of the Company or any Subsidiary of the Company outside of the ordinary
course of business (including the receipt of proceeds paid on account of the
loss of or damage to any property or asset and awards of compensation for any
asset taken by condemnation, eminent domain or similar proceedings). For
purposes of this definition the term "Asset Sale" shall not include (a) any
transaction consummated in compliance with Section 5.01 and the creation of any
Lien not prohibited by Section 4.18; (b) sales of property or equipment that has
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Subsidiary of the Company, as
the case may be; and (c) any transaction consummated in compliance with Section
4.06. In addition, solely for purposes of Section 4.05, any sale, conveyance,
transfer, lease or other disposition of any property or asset, whether in one
transaction or a series of related transactions, involving assets with a Fair
Market Value not in excess of $500,000 in any fiscal year shall be deemed not to
be an Asset Sale.
"Attributable Indebtedness" in respect of a Sale and Lease-Back
Transaction means, as at the time of determination, the present value
(discounted according to GAAP at the cost of indebtedness implied in the lease)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale and Lease-Back Transaction (including
any period for which such lease has been extended).
"Bankruptcy Law" see Section 6.01.
"Board of Directors" means the Board of Directors of Holdings, the
Company, any Guarantor or Person, as the case may be, or any authorized
committee of such Board of Directors.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof or any state government having maturities of not more
than one year from the date of acquisition; (c) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $250 million; (d) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) entered into with any financial institution
meeting the qualifications specified in clause (c) above; (e) commercial paper
rated P-1, A-1 or the equivalent thereof by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, and in each case maturing within
one year after the date of acquisition; (f) Investments in mutual funds which
invest substantially all of their assets in securities of the types described in
clauses (a) through (e) above; and (g) in the case of any Subsidiary of the
Company whose jurisdiction of incorporation is not the United States or any
state thereof or the District of Columbia, Investments: (i) in direct
obligations of the sovereign nation (or any agency thereof) in which such
foreign Subsidiary is organized and is conducting business
<PAGE> 10
- 3 -
or in obligations fully and unconditionally guaranteed by such sovereign nation
(or any agency thereof) or (ii) of the type and maturity described in clauses
(a) and (b) above of foreign obligors, which Investments or obligors (or the
parents of such obligors) have ratings described in such clauses or equivalent
ratings from comparable foreign rating agencies.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company or
Holdings):
(a) prior to the earlier to occur of the first public offering of
Voting Equity Interests of Holdings or the Company, the Permitted Holders
ceased to be entitled (by "beneficial ownership" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of Voting Equity Interests,
contract or otherwise) to elect or cause the election of directors of the
Company having a majority of the total voting power of the Board of
Directors of the Company, whether as a result of issuance of securities of
the Company, any merger, consolidation, liquidation or dissolution of the
Company, any direct or indirect transfer of securities by any Permitted
Holder or otherwise (for purposes of this clause (a), the Permitted
Holders shall be deemed to beneficially own any Voting Equity Interests of
a corporation (the "specified corporation") held by any other corporation
(the "parent corporation") so long as one or more of the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate
a majority of the voting power of the Voting Stock of the parent
corporation);
(b) after the first public offering of Voting Equity Interests of
Holdings or the Company, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Equity Interests that
represent more than 50% of the aggregate ordinary voting power of all
classes of the Voting Equity Interests of Holdings or the Company voting
together as a single class, and either (x) the Permitted Holders
beneficially own (as defined in clause (a) above), directly or indirectly,
in the aggregate Voting Equity Interests that represent a lesser
percentage of the aggregate ordinary voting power of all classes of the
Voting Equity Interests of Holdings or the Company, as the case may be,
voting together as a single class, than such other person or group and are
not entitled (by voting power, contract or otherwise) to elect directors
of Holdings or the Company having a majority of the total voting power of
the board of directors of Holdings or the Company, as the case may be, or
(y) such other person or group is entitled to elect directors of Holdings
or the Company having a majority of the total voting power of the board of
directors of Holdings or the Company;
(c) after the first public offering of Voting Equity Interests of
Holdings or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the board of directors of Holdings or
the Company, as the case may be (together with any new directors whose
election by such board of directors, or whose nomination for election by
shareholders was approved by the Permitted Holders or by such board of
directors, in each case by a vote of a majority of the directors of
Holdings or the Company, as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason
to have a majority of the total voting power of the board of directors of
Holdings or the Company, as the case may be; or
<PAGE> 11
- 4 -
(d) any sale, lease, or other transfer (in one transaction or in a
series of related transactions) is made by the Company of all or
substantially all of the consolidated assets of the Company to any Person.
"Change of Control Date" see Section 4.14.
"Citicorp" means Citicorp, a Delaware corporation.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, a Vice President or its Treasurer, and by
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated EBITDA for the four
quarter period of the most recent four consecutive fiscal quarters ending prior
to the date of such determination (the "Four Quarter Period") to (ii)
Consolidated Net Interest Expense for such Four Quarter Period; provided,
however, that (1) if the Company or any Subsidiary of the Company has incurred
any Indebtedness since the beginning of such Four Quarter Period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an incurrence of
Indebtedness, Consolidated EBITDA and Consolidated Net Interest Expense for such
Four Quarter Period shall be calculated after giving effect on a pro forma basis
to such Indebtedness and the application of the proceeds thereof as if such
Indebtedness had been incurred on the first day of such Four Quarter Period and
the discharge of any other Indebtedness repaid, repurchased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such Four Quarter Period, (2) if since the
beginning of such Four Quarter Period the Company or any Subsidiary of the
Company shall have made any Asset Sale, the Consolidated EBITDA for such Four
Quarter Period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) directly attributable to the assets that are the subject of such
Asset Sale for such Four Quarter Period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such Four
Quarter Period and Consolidated Net Interest Expense for such Four Quarter
Period shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Subsidiary of
the Company repaid, repurchased or otherwise discharged with respect to the
Company and its continuing Subsidiaries in connection with such Asset Sale for
such Four Quarter Period (or, if the Equity Interests of any Subsidiary of the
Company are sold, the Consolidated Net Interest Expense for such Four Quarter
Period directly attributable to the Indebtedness of such Subsidiary to the
extent the Company and its continuing Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such Four Quarter
Period the Company or any Subsidiary of the Company (by merger or otherwise)
shall have made an Investment in any Subsidiary of the Company (or any Person
that becomes a Subsidiary of the Company) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, Consolidated EBITDA and Consolidated Net
Interest Expense for such Four Quarter Period shall be calculated after giving
pro forma effect thereto (including the incurrence of any Indebtedness) as if
such Investment or acquisition occurred on the first day of such Four Quarter
Period and (4) if since the beginning of such Four Quarter Period any Person
(that subsequently became a Subsidiary or was merged with or into the Company or
any Sub-
<PAGE> 12
- 5 -
sidiary of the Company since the beginning of such Four Quarter Period) shall
have made any Asset Sale or any Investment or acquisition of assets that would
have required an adjustment pursuant to clause (2) or (3) above if made by the
Company or a Subsidiary of the Company during such Four Quarter Period,
Consolidated EBITDA and Consolidated Net Interest Expense for such Four Quarter
Period shall be calculated after giving pro forma effect thereto as if such
Asset Sale, Investment or acquisition of assets occurred on, with respect to any
Investment or acquisition, the first day of such Four Quarter Period and, with
respect to any Asset Sale, the day prior to the first day of such Four Quarter
Period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Net Interest Expense associated with any
Indebtedness incurred in connection therewith, the pro forma calculations shall
be determined in accordance with Regulation S-X under the Securities Act as in
effect on the date of such calculation. If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the interest expense on
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any agreement under which Interest Rate Protection Obligations are
outstanding applicable to such Indebtedness if such agreement under which such
Interest Rate Protection Obligations are outstanding has a remaining term as at
the date of determination in excess of 12 months); provided, however, that the
Consolidated Net Interest Expense of the Company attributable to interest on any
Indebtedness incurred under a revolving credit facility computed on a pro forma
basis shall be computed based upon the average daily balance of such
Indebtedness during the Four Quarter Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Income Tax Expense for such
period; (ii) Consolidated Interest Expense for such period; and (iii)
Consolidated Non-Cash Charges for such period less all non-cash items increasing
Consolidated Net Income for such period.
"Consolidated Income Tax Expense" means, with respect to the Company
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company
for any period, without duplication, the sum of (i) the interest expense of the
Company and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount; (b) the net cost under Interest Rate Protection
Obligations (including any amortization of discounts); (c) the interest portion
of any deferred payment obligation; (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; (e) all capitalized interest; and (f) interest on Indebtedness of
another Person that is guaranteed by the Company or any Subsidiary of the
Company actually paid by the Company or any Subsidiary of the Company; and (ii)
the interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and its Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated
net income (loss) of the Company and its Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net income
(loss) of any Person if such Person is not a Subsidiary of the Company, except
the Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income (loss)
of any Person acquired by the Company or a Subsidiary of the Company in a
pooling of interests transaction for any period prior to the date of such
acquisition; (iii) any net income (but not loss) of any Subsidiary of the
Company if such Subsidiary is subject to restrictions, directly or
<PAGE> 13
- 6 -
indirectly, on the payment of dividends or the making of distributions by such
Subsidiary, directly or indirectly, to the Company to the extent of such
restrictions; (iv) any gain or loss realized upon the sale or other disposition
of any asset of the Company or its Subsidiaries (including pursuant to any
sale/leaseback transaction) outside of the ordinary course of business
including, without limitation, on or with respect to Investments (and excluding
dividends, distributions or interest thereon); (v) any extraordinary gain or
loss; (vi) the cumulative effect of a change in accounting principles after the
Issue Date; and (vii) any restoration to income of any contingency reserve of an
extraordinary, non-recurring or unusual nature, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date.
"Consolidated Net Interest Expense" means, with respect to the
Company for any period, Consolidated Interest Expense for such period reduced by
the sum of (x) consolidated interest income of the Company and its Subsidiaries
for such period as determined on a consolidated basis in accordance with GAAP
and (y) the amortization of any premiums, fees and other similar expenses
incurred in connection with any financings or any other permitted incurrence of
Indebtedness for such period to the extent included in Consolidated Interest
Expense for such period.
"Consolidated Non-cash Charges" means, with respect to any Person,
for any period the sum of (A) depreciation, (B) amortization and (C) other
non-cash expenses of such Person and its Subsidiaries reducing Consolidated Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding, for purposes of clause
(C) only, such charges which require an accrual of or a reserve for cash charges
for any future period).
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 or such other address as the Trustee may
give notice to the Company.
"Credit Facility" means the Credit Facility, dated as of November
10, 1997, between the Company, the lenders named therein, and The Chase
Manhattan Bank, as Administrative Agent, including any deferrals, renewals,
extensions, replacements, refinancings or refundings thereof, or amendments,
modifications or supplements thereto and any agreement providing therefor,
whether by or with the same or any other lender, creditor, group of lenders or
group of creditors, and including related notes, guarantee and note agreements
and other instruments and agreements executed in connection therewith.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.
"Custodian" see Section 6.01.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Defeasance Trust Payment" see Section 8.01.
"Depository" means, with respect to the Securities issued in the
form of one or more Global Securities, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
<PAGE> 14
- 7 -
"Designated Guarantor Senior Indebtedness" means, with respect to
any Guarantor, any Guarantor Senior Indebtedness of such Guarantor which, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $15 million, if the
instrument governing such Guarantor Senior Indebtedness expressly states that
such Indebtedness is "Designated Guarantor Senior Indebtedness" for purposes of
this Indenture.
"Designated Senior Indebtedness" means (a) any Indebtedness
outstanding under the Credit Facility and (b) any other Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding, together with any commitments to lend additional amounts, of at
least $15 million, if the instrument governing such Senior Indebtedness
expressly states that such Indebtedness is "Designated Senior Indebtedness" for
purposes of this Indenture.
"Designation" see Section 4.17.
"Designation Amount" see Section 4.17.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"Disqualified Equity Interest" means any Equity Interest which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the holder
thereof, in whole or in part, or exchangeable into Indebtedness on or prior to
the earlier of the maturity date of the Securities or the date on which no
Securities remain outstanding.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Securities" means the 11% Senior Subordinated Notes due
2007, Series B, to be issued in exchange for the Initial Securities pursuant to
the Registration Rights Agreement.
"Existing Indebtedness" means any Indebtedness of the Company and
its Subsidiaries in existence on the Issue Date until such amounts are repaid.
"Expiration Date" has the meaning set forth in the definition of
"Offer to Purchase" below.
"Fair Market Value" means, with respect to any asset, the price
(after taking into account any liabilities relating to such assets) which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to com-
<PAGE> 15
- 8 -
plete the transaction; provided, however, that the Fair Market Value of any such
asset shall be determined conclusively by the Board of Directors of the Company
acting in good faith, and shall be evidenced by resolutions of the Board of
Directors of the Company.
"Final Maturity Date" means November 15, 2007.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"Funding Guarantor" see Section 11.05.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Global Securities" means one or more 144A Global Securities,
Regulation S Global Securities or IAI Global Securities.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. The term "guarantee" used as
a verb has a corresponding meaning.
"Guarantor" means each Subsidiary, formed, created or acquired after
the Issue Date, required to become a Guarantor pursuant to Section 4.18.
"Guarantor Blockage Period" see Section 12.02(a).
"Guarantor Payment Blockage Notice" see Section 12.02(a).
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, at any date, (a) all Interest Rate Protection Obligations of such
Guarantor; (b) all Obligations of such Guarantor under stand-by letters of
credit; and (c) all other Indebtedness of such Guarantor for borrowed money,
including principal, premium, if any, and interest (including Post-Petition
Interest) on such Indebtedness unless the instrument under which such
Indebtedness of such Guarantor for money borrowed is Incurred expressly provides
that such Indebtedness for money borrowed is not senior or superior in right of
payment to such Guarantor's Guaranty, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Guarantor Senior Indebtedness shall not include (a) to the extent
that it may constitute Indebtedness, any Obligation for Federal, state, local or
other taxes; (b) any Indebtedness between or among such Guarantor and any
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is Incurred in violation
of this Indenture; provided, however, that such Indebtedness shall be deemed not
to have been Incurred in violation of this Indenture for purposes of this clause
(d) if the holder(s) of such Indebtedness or their representative or the Company
shall have furnished to the Trustee an opinion of independent legal counsel
unqualified in all material
<PAGE> 16
- 9 -
respects, addressed to the Trustee (which legal counsel may, as to matters of
fact, rely upon an Officers' Certificate of the Company) to the effect that the
Incurrence of such Indebtedness does not violate the provisions of this
Indenture; (e) Indebtedness evidenced by such Guarantor's Guaranty; (f)
Indebtedness of such Guarantor that is expressly subordinate or junior in right
of payment to any other Indebtedness of such Guarantor; (g) to the extent that
it may constitute Indebtedness, any obligation owing under leases (other than
Capitalized Lease Obligations) or management agreements; (h) any obligation that
by operation of law is subordinate to any general unsecured obligations of such
Guarantor; and (i) any Existing Indebtedness.
"Guaranty" see Section 11.01.
"Holders" means the registered holders of any Security.
"Holdings" means Airxcel Holdings Corporation, a Delaware
corporation.
"IAI Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities
transferred after the Issue Date to Institutional Accredited Investors.
"Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Subsidiary of
the Company (or is merged into or consolidates with the Company or any
Subsidiary of the Company), whether or not such Indebtedness was incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Subsidiary of the Company (or being merged into or consolidated with
the Company or any Subsidiary), shall be deemed incurred at the time of any such
Acquired Person becomes a Subsidiary or merges into or consolidates with the
Company or any Subsidiary.
"Indebtedness" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business); (e)
every Capital Lease Obligation of such Person; (f) every net obligation under
Interest Rate Protection Obligations or similar agreements or Currency
Agreements of such Person; (g) Attributable Indebtedness; (h) every obligation
of the type referred to in clauses (a) through (g) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor, guarantor or otherwise; and (i) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a) through
(h) above. Indebtedness (i) shall not be calculated taking into account any cash
and Cash Equivalents held by such Person; (ii) shall not include obligations of
any Person (x) arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business, provided that such
obligations are extinguished within two Business Days of their incur-
<PAGE> 17
- 10 -
rence, (y) resulting from the endorsement of negotiable instruments for
collection in the ordinary course of business and consistent with past business
practices and (z) under stand-by letters of credit to the extent collateralized
by cash or Cash Equivalents; (iii) which provides that an amount less than the
principal amount thereof shall be due upon any declaration of acceleration
thereof shall be deemed to be Incurred or outstanding in an amount equal to the
accreted value thereof at the date of determination; and (iv) shall not include
obligations under performance guarantees, surety bonds and appeal bonds, letters
of credit or similar obligations, incurred in the ordinary course of business.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Independent Financial Advisor" means a nationally recognized
accounting, appraisal, investment banking firm or consultant which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Securities" means the 11% Senior Subordinated Notes due
2007, Series A, of the Company.
"Initial Purchasers" means Chase Securities, Inc. and NationsBanc
Montgomery Securities, Inc.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" means, with respect to the Securities, the sum of any
cash interest and any Additional Interest on the Securities.
"Interest Payment Date" means each semiannual interest payment date
on May 15 and November 15 of each year, commencing May 15, 1998.
"Interest Rate Protection Obligations" means, with respect to any
Person, the Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Interest Record Date" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the May 1
or November 1 (whether or not a Business Day), as the case may be, immediately
preceding such Interest Payment Date.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance, guarantee or other extension of credit or capital
contribution to (by means of transfers of cash or other property or assets to
others or payments for property or services for the account or use of others, or
otherwise), or purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any other
Person. For purposes of Section 4.06, the amount of any Investment shall be the
original cost of such Investment, plus the cost of all additions thereto, but
without any other adjustments for increases
<PAGE> 18
- 11 -
or decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment; reduced by the payment of dividends or distributions in
connection with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. In determining the
amount of any Investment involving a transfer of any property or asset other
than cash, such property shall be valued at its fair market value at the time of
such transfer, as determined in good faith by the Board of Directors (or
comparable body) of the Person making such transfer.
"Issue Date" means the original issue date of the Securities,
November 10, 1997.
"Lien" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof and any agreement to give any security interest).
"Management Investors" means Melvin L. Adams, Gregory G. Guinn, Paul
Mechler, Richard L. Schreck, T.K. Sellers, Jr., David L. Shuford, Lonnie L.
Snook and George D. Wyers.
"Maturity Date" means the date, which is set forth on the face of
the Notes, on which the Notes will mature.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash
or Cash Equivalents received by the Company or any Subsidiary of the Company in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale (provided that the amount of any such reserves shall be deemed
to constitute Net Cash Proceeds at the time such reserves shall have been
released or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Subsidiaries, the portion of such cash payments
attributable to Persons holding a minority interest in such Subsidiary.
"Net Proceeds Utilization Date" has the meaning set forth in the
second paragraph under "Certain Covenants -- Disposition of Proceeds of Asset
Sales" above.
"Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer to
Purchase" below.
<PAGE> 19
- 12 -
"Offer to Purchase" means a written offer (the "Offer") sent by or
on behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Securities on the date of the
Offer offering to purchase up to the principal amount of Securities specified in
such Offer at the purchase price specified in such Offer (as determined pursuant
to this Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase,
which shall be not less than 20 Business Days nor more than 60 days after the
date of such Offer, and a settlement date (the "Purchase Date") for purchase of
Securities to occur no later than five Business Days after the Expiration Date.
The Company shall notify the Trustee in writing at least 5 Business Days (or
such shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Company's obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company. The Offer shall contain all the
information required by applicable law to be included therein. The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of this Indenture requiring the Offer
to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as
specified pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue
to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on and
after the Purchase Date;
(9) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender
such Security at the place or places specified in the Offer prior to the
close of business on the Expiration Date (such Security being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
<PAGE> 20
- 13 -
(10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security the Holder tendered, the
certificate number of the Security the Holder tendered and a statement
that such Holder is withdrawing all or a portion of his tender;
(11) that (a) if Securities in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Securities having an
aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only
Securities in denominations of $1,000 principal amount or integral
multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and in exchange for
the unpurchased portion of the Security so tendered.
On the Purchase Date, the Company shall (i) accept for payment
Securities or portions thereof tendered pursuant to the Offer, (ii) deposit with
the Paying Agent U.S. legal tender sufficient to pay the Purchase Price, plus
accrued interest, if any, of all Securities to be purchased in accordance with
Section 4.15 and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof
tendered to and accepted for payment by the Company.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
"Officer" means the Chairman, any Vice Chairman, the President, any
Vice President, the Chief Financial Officer, the Treasurer, or the Secretary of
the Company.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of the
Company complying with Sections 13.04 and 13.05.
"144A Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Rule 144A.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Participant" has the meaning set forth in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Blockage Notice" see Section 8.02(a).
"Payment Blockage Period" see Section 8.02(a).
<PAGE> 21
- 14 -
"Permitted Holder" means (i) CVC and its Affiliates; (ii) the
Management Investors; and (iii) their respective Permitted Transferees.
"Permitted Indebtedness" has the meaning set forth in the second
paragraph of Section 4.04.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments
in prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (c)
Interest Rate Protection Obligations and Currency Agreements; (d) Investments
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other disputes
with, customers and suppliers, in each case arising in the ordinary course of
business; (e) Investments in the Company or a Subsidiary of the Company and
Investments in a Person that, as a result of or in connection with such
Investment, is merged with or into or consolidated with the Company or a
Subsidiary; (f) Investments paid for in Common Stock of the Company; (g) loans
or advances to officers or employees of the Company and its Subsidiaries in the
ordinary course of business for bona fide business purposes of the Company and
its Subsidiaries (including travel and moving expenses) not in excess of
$500,000 in the aggregate at any one time outstanding; and (h) other Investments
that do not exceed $5 million in the aggregate at any one time.
"Permitted Junior Securities" means any securities of the Company or
any other Person that are (i) equity securities without special covenants or
(ii) debt securities expressly subordinated in right of payment to all Senior
Indebtedness or Guarantor Senior Indebtedness, as the case may be, that may at
the time be outstanding, to substantially the same extent as, or to a greater
extent than, the Securities or the Guaranties, as the case may be, are
subordinated as provided in this Indenture, in any event pursuant to a court
order so providing and as to which (a) the rate of interest on such securities
shall not exceed the effective rate of interest on the Securities on the date of
this Indenture, (b) such securities shall not be entitled to the benefits of
covenants or defaults materially more beneficial to the holders of such
securities than those in effect with respect to the Securities on the date of
this Indenture and (c) such securities shall not provide for amortization
(including sinking fund and mandatory prepayment provisions) commencing prior to
the date six months following the final scheduled maturity date of the Senior
Indebtedness or Guarantor Senior Indebtedness, as the case may be (as modified
by the plan of reorganization or readjustment pursuant to which such securities
are issued).
"Permitted Liens" means (a) Liens on property of a Person existing
at the time such Person is merged into or consolidated with Company or any
Subsidiary of the Company; provided, however, that such Liens were in existence
prior to such merger or consolidation and were not incurred in contemplation of
such merger or consolidation and do not secure any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
subject to the Liens prior to such merger or consolidation; (b) Liens imposed by
law such as carriers', warehousemen's and mechanics' Liens and other similar
Liens arising in the ordinary course of business which secure payment of
obligations not more than 30 days past due or which are being contested in good
faith and by appropriate proceedings; (c) Liens existing on the Issue Date and
Liens in favor of the lenders under the Credit Facility; (d) Liens securing only
the Notes; (e) Liens in favor of the Company or any Subsidiary of the Company;
(f) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided, however,
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or minor imperfections of title that in
the aggregate are not material in amount and do not in any case materially
detract from the properties subject thereto or interfere with the ordinary
conduct of the business of the Company and its Subsidiaries; (h) Liens resulting
from the deposit of cash or notes in connection with contracts, tenders or
ex-
<PAGE> 22
- 15 -
propriation proceedings, or to secure workers' compensation, surety or appeal
bonds, costs of litigation when required by law and public and statutory
obligations or obligations under franchise arrangements entered into in the
ordinary course of business; (i) Liens securing Indebtedness consisting of
Capitalized Lease Obligations, Purchase Money Indebtedness, mortgage financings,
industrial revenue bonds or other monetary obligations, in each case incurred
solely for the purpose of financing all or any part of the purchase price or
cost of construction or installation of assets used in the business of the
Company or its Subsidiaries, or repairs, additions or improvements to such
assets, provided, however, that (I) such Liens secure Indebtedness in an amount
not in excess of the original purchase price or the original cost of any such
assets or repair, addition or improvements thereto (plus an amount equal to the
reasonable fees and expenses in connection with the incurrence of such
Indebtedness), (II) such Liens do not extend to any other assets of the Company
or its Subsidiaries (and, in the case of repair, addition or improvements to any
such assets, such Lien extends only to the assets (and improvements thereto or
thereon) repaired, added to or improved), (III) the Incurrence of such
Indebtedness is permitted by "Certain Covenants--Limitation on Indebtedness"
above and (IV) such Liens attach within 90 days of such purchase, construction,
installation, repair, addition or improvement; and (j) Liens to secure any
refinancings, renewals, extensions, modifications or replacements (collectively,
"refinancings") (or successive refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in the clauses above so long as such
Lien does not extent to any other property (other than improvements thereto).
"Permitted Transferee" means (a) with respect to CVC (i) Citicorp,
any direct or indirect wholly owned subsidiary of Citicorp, and any officer,
director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp, (ii) any spouse or lineal descendent (including by adoption and
stepchildren) of the officers, directors and employees to, in clause (a)(i)
above or (iii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of the
persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of Holdings or the Company or a subsidiary of the Company
(i) any spouse or lineal descendent (including by adoption and stepchildren) of
such officer or employee and (ii) any trust, corporation or partnership 100% in
interest of the beneficiaries, stockholders or partners of which consists of
such officer or employee or any of the persons described in clause (b)(i) above
or any combination thereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, limited
liability limited partnership, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Securities" means one or more certificated Securities in
registered form.
"Post-Petition Interest" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Preferred Equity Interest," in any Person, means an Equity Interest
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Equity Interests of any other class in such Person.
<PAGE> 23
- 16 -
"Principal" of a debt security means the principal of the security,
plus, when appropriate, the premium, if any, on the security.
"Private Exchange Securities" have the meaning provided in Section
2(b) of the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on
the Initial Securities in the form set forth on Exhibit A hereto.
"Public Equity Offering" means, with respect to the Company, an
underwritten public offering of Qualified Equity Interests of the Company or
Holdings pursuant to an effective registration statement filed under the
Securities Act (excluding registration statements filed on Form S-8); provided,
however, that if any such offering is the Offering of Qualified Equity Interests
of Holdings, only the net proceeds that are contributed to the Company shall be
taken into consideration for purposes of this definition.
"Purchase Agreement" means the Purchase Agreement dated as of
November 5, 1997 by and among the Company and the Initial Purchasers.
"Purchase Amount" has the meaning set forth in the definition of
"Offer to Purchase" above.
"Purchase Date" has the meaning set forth in the definition of
"Offer to Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or
any Subsidiary of the Company Incurred for the purpose of financing in the
ordinary course of business all or any part of the purchase price or the cost of
construction or improvement of any property related to the business of the
Company (including Equity Interests and the assets of an ongoing business);
provided, however, that the aggregate principal amount of such Indebtedness does
not exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such Indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof as
of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of
"Offer to Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest
in such Person other than any Disqualified Equity Interest.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"redemption price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as set forth in the form of Security annexed hereto as Exhibit A.
"Registrar" see Section 2.03.
<PAGE> 24
- 17 -
"Registration" means a registered exchange offer for the Securities
by the Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 10, 1997 by and among the Company and the Initial
Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.
"Replacement Assets" has the meaning set forth in the first
paragraph under Section 4.05.
"Required Filing Dates" see Section 4.12.
"Restricted Payments" see Section 4.06.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided, however, that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether any Security is a Restricted Security.
"Revocation" see Section 4.17.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Lease-Back Transaction" means any arrangement with any
Person providing for the leasing by the Company or any Subsidiary of the Company
of any real or tangible personal Property, which property has been or is to be
sold or transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities, the
Private Exchange Securities and the Unrestricted Securities treated as a single
class of securities, as amended or supplemented from time to time in accordance
with the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Securities Amount" see Section 4.05.
"Securities Portion of Unutilized Net Cash Proceeds" see Section
4.05.
"Security Guarantee" means the Form of Security Guarantee of each
Guarantor to be endorsed on each of the Securities substantially in the form of
Exhibit A (in the case of an Initial Security) or Exhibit B (in the case of an
Exchange Security) hereto.
<PAGE> 25
- 18 -
"Senior Indebtedness" means, at any date, (a) all Obligations of the
Company under the Credit Facility; (b) all Interest Rate Protection Obligations
of the Company and all Obligations of the Company under Currency Agreements; (c)
all Obligations of the Company under stand-by letters of credit; and (d) all
other Indebtedness of the Company, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness, unless the
instrument under which such Indebtedness of the Company is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to the Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Senior
Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness among or between the Company and any Subsidiary of the Company or
any Affiliate of the Company or any of such Affiliate's Subsidiaries; (c) to the
extent that it may constitute Indebtedness, any Obligation in respect of any
trade payable incurred for the purchase of goods or materials, or for services
obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of this Indenture; (e) Indebtedness
evidenced by the Notes; (f) Indebtedness of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness of the
Company; (g) to the extent that it may constitute Indebtedness, any obligation
owing under leases (other than Capitalized Lease Obligations) or management
agreements; and (h) any obligation that by operation of law is subordinate to
any general unsecured obligations of the Company. No Indebtedness shall be
deemed to be subordinated to other Indebtedness solely because such other
Indebtedness is secured.
"Significant Subsidiary" shall have the meaning set forth in Rule
1.02(w) of Regulation S-Y under the Securities Act.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subordinated Indebtedness" means, with respect to the Company or
any Guarantor, any Indebtedness of the Company or such Guarantor, as the case
may be, which is expressly subordinated in right of payment to the Securities or
such Guarantor's Guaranty, as the case may be.
"Subsidiary" means, with respect to any Person, (a) any corporation
of which the outstanding Voting Equity Interests having at least a majority of
the votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except as
provided in Section 10.03) until such time as this Indenture is qualified under
the TIA, and thereafter as in effect on the date on which this Indenture is
qualified under the TIA.
"Total Assets" means, at any date of determination, the total
consolidated assets of the Company and its Subsidiaries, as determined in
accordance with GAAP.
<PAGE> 26
- 19 -
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"United States Government Obligations" means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
"Unrestricted Securities" means one or more Securities that do not
and are not required to bear the Private Placement Legend in the form set forth
in Exhibit A hereto, including, without limitation, the Exchange Securities and
any Securities registered under the Securities Act pursuant to and in accordance
with the Registration Rights Agreement.
"Unutilized Net Cash Proceeds" see Section 4.05(a).
"Voting Equity Interests" means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Subsidiary" means any Subsidiary of the Company all of
the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
<PAGE> 27
- 20 -
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
in effect from time to time, and any other reference in this Indenture to
"generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Initial Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Trustee's certificate of authentication thereof
shall be substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements (including the Security Guarantee)
required by law, stock exchange rule or usage. The Company and the Trustee shall
approve the form of the Securities and any notation, legend or endorsement
(including the Security Guarantee) on them. Each Security shall be dated the
date of its issuance and shall show the date of its authentication.
Securities offered and sold in reliance on Rule 144A and Securities
offered and sold in reliance on Regulation S shall be issued initially in the
form of one or more Global Securities, substantially in the
<PAGE> 28
- 21 -
form set forth in Exhibit A hereto, deposited with the Trustee, as custodian for
the Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Exhibit C hereto.
The aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer or an Assistant Secretary whose signature is on a
Security was an Officer or an Assistant Secretary, as the case may be, at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Securities for original
issue in an aggregate principal amount not to exceed $90,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of Initial Securities, (iii) Unrestricted Securities from time to time
only in exchange for (A) a like principal amount of Initial Securities or (B) a
like principal amount of Private Exchange Securities, in each case upon a
written order of the Company in the form of an Officers' Certificate and (iv)
additional Securities for original issue in an aggregate principal amount not to
exceed $40,000,000, which Securities are issued in compliance with Section 4.04.
Each such written order shall specify the amount of Securities to be
authenticated and the date on which the Securities are to be authenticated,
whether the Securities are to be Initial Securities, Private Exchange Securities
or Unrestricted Securities and whether the Securities are to be issued as
Physical Securities or Global Securities and such other information as the
Trustee may reasonably request. In addition, with respect to authentication
pursuant to clause (iii) of the first sentence of this paragraph, the first such
written order from the Company shall be accompanied by an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee stating that the
issuance of the Restricted Securities does not give rise to an Event of Default,
complies with this Indenture and has been duly authorized by the Company. The
aggregate principal amount of Securities outstanding at any time may not exceed
$125,000,000, except as provided in Sections 2.07 and 2.08.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise provided
in the appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Company and Affiliates of the
Company.
<PAGE> 29
- 22 -
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange (the "Registrar"), (b)
Securities may be presented or surrendered for payment (the "Paying Agent") and
(c) notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the Trustee, may appoint one
or more co-Registrars and one or more additional Paying Agents. The term "Paying
Agent" includes any additional Paying Agent. Except as provided herein, the
Company or any Guarantor may act as Paying Agent, Registrar or co-Registrar.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the Paying Agent (if
other than the Company), the Paying Agent shall have no further liability for
such assets. If the Company, any Guarantor or any of their respective Affiliates
acts as Paying Agent, it shall, on or before each due date of the principal of
or interest on the Securities, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Interest Record Date and at such other times as the Trustee
may request in writing a list as of such date and in such form as the Trustee
may reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
<PAGE> 30
- 23 -
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.05,
4.14, or 10.05). The Registrar or co-Registrar shall not be required to register
the transfer or exchange of any Security (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three
hereof, except the unredeemed portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any Agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and neither the Company,
the Trustee nor any such Agent shall be affected by notice to the contrary. Any
Holder of a beneficial interest in a Global Security shall, by acceptance of
such beneficial interest in a Global Security, agree that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depository (or its agent), and that
ownership of a beneficial interest in a Global Security shall be required to be
reflected in a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements for replacement of Securities
are met. If required by the Company or the Trustee, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee and any Agent from
any loss which any of them may suffer if a Security is replaced The Company may
charge such Holder for its reasonable out-of-pocket expenses in replacing a
Security, including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
<PAGE> 31
- 24 -
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date, Purchase Date or the Final Maturity Date
the Paying Agent holds money sufficient to pay all of the principal and interest
due on the Securities payable on that date, and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company, the Guarantors or any of their respective Affiliates shall
be disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned shall
be disregarded.
The Company shall notify the Trustee, in writing, when it, any
Guarantor or any of its Affiliates repurchases or otherwise acquires Securities,
of the aggregate principal amount of such Securities so repurchased or otherwise
acquired.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.
Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate upon receipt of a written order
of the Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Company,
dispose of and deliver evidence of such disposal of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Company may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If the Company or any Guarantor shall
acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
<PAGE> 32
- 25 -
SECTION 2.12. Defaulted Interest.
The Company shall pay interest on overdue principal from time to
time on demand at the rate of interest then borne by the Securities. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate of interest then borne by the Securities.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day preceding the date
fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to
the expiration of the 30-day period set forth in Section 6.01(b) shall be paid
to Holders as of the Interest Record Date for the Interest Payment Date for
which interest has not been paid.
Notwithstanding the foregoing, the Company may make payment of
defaulted interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use a "CUSIP" number and
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company shall
promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14. Deposit of Moneys.
Prior to 10:00 a.m. New York City time on each Interest Payment
Date, Redemption Date, Purchase Date and the Final Maturity Date, the Company
shall deposit with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date,
Redemption Date, Purchase Date or Final Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Redemption Date, Purchase Date or Final Maturity
Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit C.
<PAGE> 33
- 26 -
Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and Participants, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16; provided,
however, that Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor Depository is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
the Global Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Global Securities, an equal aggregate principal amount of Physical Securities of
authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(c) of this Section 2.15 shall, except as otherwise provided by Section 2.16,
bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled to
take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar or co-Registrar with a request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal
principal amount of Physical Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the Physical
Securities presented or surrendered for Registration of transfer or exchange:
<PAGE> 34
- 27 -
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical
Securities shall be accompanied, in the sole discretion of the Company, by
the following additional information and documents, as applicable:
(A) if such Physical Security is being delivered to the Registrar
or co-Registrar by a Holder for Registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect (substantially in the form of Exhibit D
hereto); or
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification
to that effect (substantially in the form of Exhibit D hereto)
and a transferee letter of representation substantially in the
form of Exhibit E hereto and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and a
transferor certificate for Regulation S transfers
substantially in the form of Exhibit F hereto and an Opinion
of Counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the Securities
Act; or
(E) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification
to that effect (substantially in the form of Exhibit D hereto)
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(F) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of a
Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
<PAGE> 35
- 28 -
(A) certification, substantially in the form of Exhibit D hereto,
that such Physical Security is being transferred (I) to a QIB,
(II) to an Accredited Investor or (III) in an offshore
transaction in reliance on Regulation S and, with respect to
(II) or (III), at the option of the Company, an Opinion of
Counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act;
and
(B) written instructions directing the Registrar or co-Registrar
to make, or to direct the Depository to make, an endorsement
on the applicable Global Security to reflect an increase in
the aggregate amount of the Securities represented by the
Global Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the principal amount of Securities represented by the applicable
Global Security to be increased accordingly. If no 144A Global Security, IAI
Global Security or Regulation S Global Security, as the case may be, is then
outstanding, the Company shall, unless either of the events in the proviso to
Section 2.15(b) have occurred and are continuing, issue and the Trustee shall,
upon written instructions from the Company in accordance with Section 2.02,
authenticate such a Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or Co-Registrar of written instructions,
or such other instruction as is customary for the Depository, from the
Depository or its nominee, requesting the Registration of transfer of an
interest in a 144A Global Security, an IAI Global Security or a Regulation S
Global Security, as the case may be, to another type of Global Security,
together with the applicable Global Securities (or, if the applicable type of
Global Security required to represent the interest as requested to be
transferred is not then outstanding, only the Global Security representing the
interest being transferred), the Registrar or Co-Registrar shall cancel such
Global Securities (or Global Security) and the Company shall issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate new Global Securities of the types so cancelled (or
the type so cancelled and applicable type required to represent the interest as
requested to be transferred) reflecting the applicable increase and decrease of
the principal amount of Securities represented by such types of Global
Securities, giving effect to such transfer. If the applicable type of Global
Security required to represent the interest as requested to be transferred is
not outstanding at the time of such request, the Company shall issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate a new Global Security of such type in principal
amount equal to the principal amount of the interest requested to be
transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.
(i) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical Security;
provided, however, that prior to the Registration, a transferee that is a
QIB or Institutional Accredited Investor may not exchange a beneficial
interest in Global Security for a Physical Security. Upon receipt by the
Registrar or co-Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or
its nominee on behalf of any Person (subject to the previous sentence)
having a benefi-
<PAGE> 36
- 29 -
cial interest in a Global Security and upon receipt by the Trustee of a
written order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest containing registration instructions and, in the case
of any such transfer or exchange of a beneficial interest in Securities
the offer and sale of which have not been registered under the Securities
Act, the following additional information and documents:
(A) if such beneficial interest is being transferred in reliance
on Rule 144 under the Securities Act, delivery of a
certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(B) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with
the Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository and
the Registrar or co-Registrar, the aggregate principal amount of the
applicable Global Security to be reduced and, following such reduction,
the Company will execute and, upon receipt of an authentication order in
the form of an Officers' Certificate in accordance with Section 2.02, the
Trustee will authenticate and deliver to the transferee a Physical
Security in the appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Registrar or co-Registrar in writing. The
Registrar or co-Registrar shall deliver such Physical Securities to the
Persons in whose names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar or co-Registrar shall
deliver only Securities that bear the Private Placement Legend unless, and the
Trustee is hereby authorized to deliver Securities without the Private Placement
Legend if, (i) there is delivered to the Trustee an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act;(ii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act (including pursuant to a Registration); or (iii) the date of such
transfer, exchange or replacement is two years after the later of (x) the Issue
Date and (y) the last date
<PAGE> 37
- 30 -
that the Company or any affiliate (as defined in Rule 144 under the Securities
Act) of the Company was the owner of such Securities (or any predecessor
thereto).
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Participants or
beneficial owners of interest in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company wants to redeem Securities pursuant to paragraph 5 or
6 of the Securities at the applicable redemption price set forth thereon, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed. The Company shall give such notice to the
Trustee at least 60 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein and in the Securities, the Redemption Date, the redemption
price and the principal amount of the Securities to be redeemed.
SECTION 3.02. Selection of Securities To Be Redeemed.
In the event that less than all of the Securities are to be redeemed
pursuant to paragraph 5 of the Securities, selection of such Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not then listed on a national securities
exchange, on a pro rata basis, by lot or in such other manner as the Trustee
shall deem fair and appropriate; provided, however, that no Securities of a
principal amount of $1,000 or less shall be redeemed in part. Selection of the
Securities or portions thereof to be redeemed pursuant to paragraph 6 of the
Securities shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to the procedures of the Depository)
unless such method is otherwise prohibited, based on the aggregate principal
amount of Securities held by each Holder. The Trustee
<PAGE> 38
- 31 -
shall make the selection from the Securities then outstanding, subject to
redemption and not previously called for redemption.
The Trustee may select for redemption pursuant to paragraph 5 or 6
of the Securities portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address;
provided, however, that notice of a redemption pursuant to paragraph 6 of the
Securities shall be mailed to each Holder whose Securities are to be redeemed no
later than 60 days after the date of the Closing of the relevant Public Equity
Offering of Holdings or the Company.
Each notice of redemption shall identify the Securities to be
redeemed (including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent to which the Securities
are to be surrendered for redemption;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) that, as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable redemption price pursuant to this
Indenture, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to
the Paying Agent;
(6) in the case of any redemption pursuant to paragraph 5 or 6 of
the Securities, if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof
will be issued;
(7) the subparagraph of the Securities pursuant to which such
redemption is being made; and
(8) that no representation is made as to the accuracy of the CUSIP
number listed in such notice or printed on such Security.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.
<PAGE> 39
- 32 -
SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price, plus accrued interest thereon, if any, to the Redemption Date,
but interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date.
SECTION 3.05. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company is its own Paying
Agent, shall, on or before the Redemption Date, segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest, if any, on
all Securities to be redeemed on that date other than Securities or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
If any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid on the Redemption Date due to the failure of
the Company to deposit with the Paying Agent money sufficient to pay the
redemption price thereof, the principal and accrued and unpaid interest, if any,
thereon shall, until paid or duly provided for, bear interest as provided in
Sections 2.12 and 4.01 with respect to any payment default.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities in the manner provided in the Securities and the Registration Rights
Agreement. An installment of principal or interest shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company, a Guarantor
or any of their respective Affiliates) holds on that date money designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders of the Securities pursuant to the terms of this
Indenture.
The Company shall pay cash interest on overdue principal at the same
rate per annum borne by the Securities. The Company shall pay cash interest on
overdue installments of interest at the same rate per annum borne by the
Securities, to the extent lawful, as provided in Section 2.12.
<PAGE> 40
- 33 -
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, the office or agency required under Section 2.03. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13. The
Company hereby initially designates the Trustee at its address set forth in
Section 13.02 as its office or agency in The Borough of Manhattan, The City of
New York, for such purposes.
SECTION 4.03. Transactions with Affiliates.
The Company shall not, and shall not cause or permit any Subsidiary
of the Company to, directly or indirectly, conduct any business or enter into
any transaction (or series of related transactions) with or for the benefit of
any of their respective Affiliates (each an "Affiliate Transaction"), unless (i)
such Affiliate Transaction is on terms which are no less favorable to the
Company or such Subsidiary, as the case may be, than would be available in a
comparable transaction with an unaffiliated third party and (ii) if such
Affiliate Transaction (or series of related Affiliate Transactions) involves
aggregate payments or other consideration having a Fair Market Value in excess
of $1 million, a majority of the disinterested members of the Board of Directors
of the Company shall have approved such Affiliate Transaction and determined
that such Affiliate Transaction complies with the foregoing provisions. In
addition, any Affiliate Transaction involving aggregate payments or other
consideration having a Fair Market Value in excess of $7.5 million will also
require a written opinion from an Independent Financial Advisor stating that the
terms of such Affiliate Transaction are fair, from a financial point of view, to
the Company or its Subsidiaries involved in such Affiliate Transaction, as the
case may be.
Notwithstanding the foregoing, the restrictions set forth in this
Section 4.03 shall not apply to (i) transactions with or among the Company and
any Wholly Owned Subsidiary or between or among Wholly Owned Subsidiaries; (ii)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or agents of the Company, Holdings or any
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors; (iii) any transactions undertaken pursuant to any contractual
obligations in existence on the Issue Date (as in effect on the Issue Date);
(iv) any Restricted Payments or Permitted Investments made in compliance with
Section 4.06; (v) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of, employee
arrangements, stock options and stock ownership plans approved by the Board of
Directors to employees of the Company or its Subsidiaries who are not otherwise
Affiliates of the Company; and (vi) loans or advances to employees that are
Affiliates of the Company in the ordinary course of business, but in any event
not to exceed $750,000 in the aggregate outstanding at any one time.
SECTION 4.04. Limitation on Indebtedness.
The Company shall not, and shall not cause or permit any Subsidiary
to, directly or indirectly, Incur any Indebtedness (including Acquired
Indebtedness) except for Permitted Indebtedness; provided, however, that the
Company may Incur Indebtedness if, at the time of and immediately after giving
pro forma effect to such Incurrence of Indebtedness and the application of the
proceeds therefrom, the Consolidated Coverage Ratio would be greater than 2.0 to
1.0 if incurred prior to the second anniversary of the Issue Date and 2.25 if
incurred thereafter.
<PAGE> 41
- 34 -
The foregoing limitations will not apply to the Incurrence of any of
the following (collectively, "Permitted Indebtedness"), each of which shall be
given independent effect:
(a) Indebtedness outstanding on the Issue Date, including
Indebtedness under the Notes;
(b) Indebtedness of the Company Incurred under the Credit Facility
in an aggregate principal amount at any one time outstanding not to exceed
the greater of (I) $15 million and (II) the sum of (x) 60% of the book
value of inventory of the Company and its Subsidiaries and (y) 85% of the
book value of the accounts receivable of the Company and its Subsidiaries,
in each case determined in accordance with GAAP;
(c) Indebtedness of any Subsidiary of the Company owed to and held
by the Company or any Wholly Owned Subsidiary, and Indebtedness of the
Company owed to and held by any Wholly Owned Subsidiary that is unsecured
and subordinated in right of payment to the payment and performance of the
Company's obligations under any Senior Indebtedness, the Indenture and the
Notes; provided, however, that an Incurrence of Indebtedness that is not
permitted by this clause (c) shall be deemed to have occurred upon (i) any
sale or other disposition of any Indebtedness of the Company or any
Subsidiary of the Company referred to in this clause (c) to a Person
(other than the Company or a Wholly Owned Subsidiary), (ii) any sale or
other disposition of Equity Interests of any Subsidiary which holds
Indebtedness of the Company or another Subsidiary;
(d) Interest Rate Protection Obligations; provided, however, that
such Interest Rate Protection Obligations have been entered onto for bona
fide business purposes and not for speculation;
(e) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Company or any Subsidiary of the Company and other Indebtedness of the
Company, in an aggregate principal amount at any one time outstanding not
to exceed the greater of (a) $5 million or (b) 5% of Total Assets;
(f) Indebtedness of the Company under Currency Agreements; provided,
however, (i) that such Currency Agreements have been entered into for bona
fide business purposes and not for speculation and (ii) that in the case
of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness (other than Indebtedness Incurred under clauses (b), (c),
(d), (e), (f), (h), (i), (j), or (l) of this Section 4.04); provided,
however, that (i) any such refinancing shall not exceed the sum of the
principal amount (or accreted amount (determined in accordance with GAAP),
if less) of the Indebtedness being refinanced, plus the amount of accrued
interest thereon, plus the amount of any reasonable determined prepayment
premium necessary to accomplish such refinancing and such reasonable fees
and expenses incurred in connection therewith, (ii) Indebtedness
representing a refinancing of Indebtedness other than Senior Indebtedness
shall have a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of the Indebtedness being
refinanced; (iii) Indebtedness that is pari passu with the Notes may only
be refinanced with Indebtedness that is made pari passu with or
subordinate in right of payment to the Notes and Subordinated Indebtedness
may only be refinanced with Subordinated Indebtedness; and (iv)
Indebtedness of the Company may only be refinanced by Indebtedness of the
Company and In-
<PAGE> 42
- 35 -
debtedness of a Subsidiary of the Company may only be refinanced by
Indebtedness of Subsidiaries or by the Company;
(h) Guarantees by a Subsidiary of the Company of Senior Indebtedness
Incurred by the Company or in respect of letters of credit provided to
support such Indebtedness so long as the Incurrence of such Indebtedness
is otherwise permitted by the terms of the Indenture;
(i) Indebtedness in respect of judgment, appeal, surety, performance
and other like bonds, bankers' acceptances and letters of credit provided
by the Company and its Subsidiaries in the ordinary course of business;
(j) Indebtedness of the Company or any Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments, in connection with the acquisition or disposition of any
business, assets or Subsidiary of the Company permitted under this
Indenture;
(k) Indebtedness of the Company or the Subsidiaries, to the extent
the proceeds thereof are immediately used after the incurrence thereof to
purchase Notes tendered in an offer to purchase made as a result of a
Change of Control;
(l) Indebtedness of the Company or the Subsidiaries owed to
(including obligations in respect of letters of credit for the benefit of)
any Person in connection with liability insurance provided by such Person
to the Company or any Subsidiary or pursuant to reimbursement or
indemnification obligations to such Person, in each case incurred in the
ordinary course of business; and
(m) Indebtedness of the Company or the Subsidiaries not to exceed $5
million in aggregate principal amount at any time outstanding, which
Indebtedness may be incurred pursuant to clause (b) above.
SECTION 4.05. Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not cause or permit any
Subsidiary of the Company to, directly or indirectly, make any Asset Sale,
unless (i) the Company or such Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (ii) at least 75% of such
consideration consists of (A) cash or Cash Equivalents or (B) properties and
capital assets that replace the properties and assets that were the subject of
such Asset Sale or in properties and capital assets that will be used in the
business of the Company and its Subsidiaries as existing on the Issue Date or in
businesses reasonably related thereto (as determined in good faith by the
Company's Board of Directors) ("Replacement Assets"), provided that if the
property or assets subject to such Asset Sale were directly owned by the Company
such Replacement Assets also shall be so directly owned. Each of (w) the amount
of any Indebtedness (other than any Subordinated Indebtedness) of the Company or
any Subsidiary of the Company that is actually assumed by the transferee in such
Asset Sale and from which the Company and its Subsidiaries are fully and
unconditionally released, (x) securities received by the Company or any
Subsidiary from the transferee that are immediately converted by the Company or
such Subsidiary into cash or Cash Equivalents, (y) Indebtedness of any
Subsidiary that is no longer a Subsidiary as a result of such Asset Sale, to the
extent that the Company and each other Subsidiary is released from any guarantee
of such Indebtedness in connection with such Asset Sale, and (z) consideration
consisting of Indebtedness of the Company or any Subsidiary, shall be deemed to
be cash for purposes of determining the percentage of cash consideration
received by the Company or its Subsidiaries.
<PAGE> 43
- 36 -
The Company or such Subsidiary of the Company, as the case may be,
may (i) apply the Net Cash Proceeds of any Asset Sale within 365 days of receipt
thereof to reduce Senior Indebtedness or (ii) make an Investment in Replacement
Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale
are not applied as described in clause (i) or (ii) of the immediately preceding
paragraph within the time periods set forth therein (the "Net Proceeds
Utilization Date") (such Net Cash Proceeds, the "Unutilized Net Cash Proceeds"),
the Company shall, within 30 days after such Net Proceeds Utilization Date, make
an Offer to Purchase all outstanding Securities up to a maximum principal amount
(expressed as a multiple of $1,000) of Notes equal to such Unutilized Net Cash
Proceeds, at a purchase price in cash equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date;
provided, however, that the Offer to Purchase may be deferred until there are
aggregate Unutilized Net Cash Proceeds equal to or in excess of $5 million, at
which time the entire amount of such Unutilized Net Cash Proceeds, and not just
the amount in excess of $5 million, shall be applied as required pursuant to
this paragraph.
(b) With respect to any Offer to Purchase effected pursuant to this
covenant, among the Securities, to the extent the aggregate principal amount of
Securities tendered pursuant to such Offer to Purchase exceeds the Unutilized
Net Cash Proceeds to be applied to the repurchase thereof, such Securities shall
be purchased pro rata based on the aggregate principal amount of such Securities
tendered by each Holder. To the extent the Unutilized Net Cash Proceeds exceed
the aggregate amount of Securities tendered by the Holders of the Securities
pursuant to such Offer to Purchase, the Company may retain and utilize any
portion of the Unutilized Net Cash Proceeds not required to be applied to
repurchase Securities tendered pursuant to such Offer for any purpose consistent
with the other terms of this Indenture.
(c) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) subject to paragraph (b) of this Section 4.05,
accept for payment all Securities validly tendered pursuant to the Offer, (ii)
deposit with the Paying Agent or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.04, money sufficient
to pay the Purchase Price of all Securities or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee for cancellation all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent (or the Company, if so acting) shall promptly mail or deliver to Holders
of Securities so accepted, payment in an amount equal to the Purchase Price for
such Securities, and the Trustee shall promptly authenticate and mail or deliver
to each Holder of Securities a new Security or Securities equal in principal
amount to any unpurchased portion of the Security surrendered as requested by
the Holder. Any Security not accepted for payment shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Offer on or as soon as practicable after the
Purchase Date.
(d) In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act, and any violation of the provisions of this
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed an Event of Default or an event that with the
passing of time or giving of notice, or both, would constitute an Event of
Default. Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder pursuant to the Offer to Purchase, subject to
the requirement that any portion of the Security tendered must be tendered in an
integral multiple of $1,000 principal amount and subject to any proportion among
tendering Holders as described above.
<PAGE> 44
- 37 -
SECTION 4.06. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any Subsidiary
to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Subsidiary of the Company or make
any payment or distribution to the direct or indirect holders (in their
capacities as such) of Equity Interests of the Company or any Subsidiary
of the Company (other than any dividends, distributions and payments made
to the Company or any Wholly Owned Subsidiary of the Company (and, if such
Subsidiary has shareholders other than the Company or another Subsidiary,
to its other shareholders on a pro rata basis or on a basis that results
in the receipt by the Company or a Subsidiary of dividends or
distributions of equal or greater value) and dividends or distributions
payable to any Person solely in Qualified Equity Interests of the Company
or in options, warrants or other rights to purchase Qualified Equity
Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Subsidiary of the Company (other
than any such Equity Interests owned by the Company or any Subsidiary of
the Company); or
(iii) make any Investment in any Person (other than Permitted
Investments)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii) or (iii) referred to as a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the Consolidated Coverage Ratio of the
first paragraph of Section 4.04; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after
the Issue Date and ending on the last day of the most recent fiscal
quarter immediately preceding the date of such Restricted Payment for
which consolidated financial information of the Company is available (or
if such cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss), plus (2) 100% of the aggregate net cash proceeds received by
the Company either (x) as capital contributions to the Company after the
Issue Date or (y) from the issue and sale (other than to a Subsidiary of
the Company) of its Qualified Equity Interests after the Issue Date
(excluding the net proceeds from any issuance and sale of Qualified Equity
Interests financed, directly or indirectly, using funds borrowed from the
Company or any Subsidiary of the Company until and to the extent such
borrowing is repaid), plus (3) the principal amount (or accreted amount
(determined in accordance with GAAP), if less) of any Indebtedness of the
Company or any Subsidiary of the Company Incurred after the Issue Date
which has been converted into or exchanged for Qualified Equity Interests
of the Company (minus the amount of any cash or property distributed be
the Company or any Subsidiary of the Company upon such conversion or
exchange), plus (4) in the case of the disposition or repayment of any
Investment constituting a Re-
<PAGE> 45
- 38 -
stricted Payment made after the Issue Date, an amount equal to 100% of the
net cash proceeds thereof (or dividends, distributions or interest
payments received in cash thereon).
The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving of
formal notice of such redemption, if at the date of such declaration or giving
of such formal notice such payment or redemption would comply with the
provisions of this Indenture; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other than
to a Subsidiary of the Company) of, Qualified Equity Interests of the Company;
provided, however, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for such retired Equity Interests
are excluded from clause (c)(2) of the preceding paragraph (and were not
included therein at any time); (iii) the purchase, redemption, retirement or
other acquisition of Disqualified Equity Interests made by exchange for, or out
of the proceeds of the substantially concurrent sale of, Disqualified Equity
Interests; (iv) payments in lieu of fractional shares in amount not in excess of
$250,000 in the aggregate; (v) payments by the Company to Holdings to pay
Federal, state and local taxes to the extent such taxes are attributable to the
Company and its Subsidiaries; (vi) in each case to the extent such payments by
Holdings are attributable to the Company and its Subsidiaries, payments by the
Company to Holdings not to exceed an amount necessary to permit Holdings to (A)
make payments in respect to its indemnification obligations owing to directors,
officers or other Persons under Holdings' charter or by-laws or pursuant to
written agreements with any such Person, (B) make payments in respect of its
other operational expenses (other than taxes) incurred in the ordinary course of
business (it being understood that management fees or other similar fees or
arrangements shall not be deemed as incurred in the ordinary course of
business), or (C) make payments in respect of indemnification obligations and
costs and expenses incurred by Holdings in connection with any offering of
Common Stock of Holdings; (vii) the purchase, redemption or other acquisition
for value of Equity Interests of the Company or Holdings (other than
Disqualified Equity Interests) or options on such shares held by officers or
employees or former officers or employees (or their estates or beneficiaries
under their estates) upon the death, disability, retirement or termination of
employment of such current or former officers or employees pursuant to the terms
of an employee benefit plan or any other agreement pursuant to which such Equity
Interests or options were issued or pursuant to a severance, buy-sell or right
of first refusal agreement with such current or former officer or employee or
payments to Holdings to make such purchase, redemption or other acquisition of
such Equity Interests or options; provided, however, that the aggregate cash
consideration paid, or distributions made, pursuant to this clause (vii) do not
in any one fiscal year exceed $500,000; and (viii) Investments constituting
Restricted Payments made as a result of the receipt of non-cash consideration
from any Asset Sale made pursuant to and in compliance with Section 4.05;
provided, however, that in the case of each of clauses (ii) through (viii), no
Default or Event of Default shall have occurred and be continuing or would arise
therefrom.
In determining the amount of Restricted Payments permissible under
this covenant, amounts expended pursuant to clauses (i), (vi), (vii) and (viii)
of the immediately preceding paragraph shall be included as Restricted Payments.
The amount of any non-cash Restricted Payment shall be deemed equal to the Fair
Market Value thereof at the date of the making of such Restricted Payment.
SECTION 4.07. Corporate Existence.
Subject to Article Five, the Company shall do or shall cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Subsidiary of the Company in accordance with the respective organizational
documents of each such Subsidiary of the Company and the rights (charter and
statutory) and material franchises of the
<PAGE> 46
- 39 -
Company and each Subsidiary of the Company; provided, however, that the Company
shall not be required to preserve any such right or franchise, or the corporate
existence of any Subsidiary of the Company, if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and the Subsidiaries of the Company,
taken as a whole, and that the loss thereof is not, and will not be, adverse in
any material respect to the Holders; provided, further, however, that a
determination of the Board of Directors of the Company shall not be required in
the event of a merger of one or more Wholly Owned Subsidiary of the Company with
or into another Wholly Owned Subsidiary of the Company or another Person, if the
surviving Person is a Wholly Owned Subsidiary of the Company organized under the
laws of the United States or a State thereof or of the District of Columbia.
SECTION 4.08. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary of the Company or upon the income, profits or property of the Company
or any Subsidiary of the Company and (2) all lawful claims for labor, materials
and supplies which, in each case, if unpaid, might by law become a material
liability, or Lien upon the property, of the Company or any Subsidiary of the
Company; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate provision has been made.
SECTION 4.09. Notice of Defaults.
(a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
(b) Upon becoming aware of any Default or Event of Default, the
Company shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default.
SECTION 4.10. Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties owned by or
leased to it or any Subsidiary of the Company and used or useful in the conduct
of its business or the business of any Subsidiary of the Company to be
maintained and kept in normal condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 4.10 shall prevent the Company
or any Subsidiary of the Company from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors or of
the board of directors of the Subsidiary of the Company concerned, or of an
officer (or other agent employed by the Company or of any Subsidiary of the
Company) of the Company or such Subsidiary of the Company having managerial
responsibility for any such property, desirable in the conduct of the business
of the Company or any Subsidiary of the Company, and if such discontinuance or
disposal is not adverse in any material respect to the Holders.
<PAGE> 47
- 40 -
(b) The Company shall maintain, and shall cause each of its
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, and workers' compensation
insurance.
SECTION 4.11. Compliance Certificate.
The Company shall deliver to the Trustee within 45 days after the
end of each of the first three fiscal quarters of the Company and within 90 days
after the close of each fiscal year a certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
stating that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Company that occurred during such fiscal
quarter or fiscal year. If they do know of such a Default or Event of Default,
the certificate shall describe all such Defaults or Events of Default, their
status and the action the Company is taking or proposes to take with respect
thereto. The first certificate to be delivered by the Company pursuant to this
Section 4.11 shall be for the fiscal year ending December [ ], 1997.
SECTION 4.12. Provision of Financial Information.
Following the effectiveness of the Exchange Offer Registration
Statement, whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, or any successor provision thereto, the Company shall file
with the SEC (if permitted by SEC practice and applicable law and regulations)
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the SEC pursuant to such Section 13(a) or
15(d) or any successor provision thereto if the Company were so subject, such
documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company shall also in
any event (a) within 15 days of each Required Filing Date (whether or not
permitted or required to be filed with the SEC) (i) transmit (or cause to be
transmitted) by mail to all Holders, as their names and addresses appear in the
Security register, without cost to such Holders, and (ii) file with the Trustee,
copies of the annual reports, quarterly reports and other documents which the
Company is required to file with the SEC pursuant to the preceding sentence, or,
if such filing is not so permitted, information and data of a similar nature,
and (b) if, notwithstanding the preceding sentence, filing such documents by the
Company with the SEC is not permitted by SEC practice or applicable law or
regulations, promptly upon written request supply copies of such documents to
any Holder. In addition, for so long as any Securities remain outstanding and
prior to the later of the consummation of the Exchange Offer and the filing of
the Initial Shelf Registration Statement, if required, the Company will furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act, and, to any beneficial holder of Securities, if not
obtainable from the SEC, information of the type that would be filed with the
SEC pursuant to the foregoing provisions, upon the request of any such holder.
The Company will also comply with ss. 314(a) of the TIA.
SECTION 4.13. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law, which would prohibit or forgive the Company from paying
all or any portion of the principal of and/or interest, if any, on the
Securities as contemplated herein, wherever enacted,
<PAGE> 48
- 41 -
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it shall not hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer and permit the execution
of every such power as though no such law had been enacted.
SECTION 4.14. Change of Control.
(a) Following the occurrence of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Company shall notify
the Holders of the Securities of such occurrence in the manner prescribed by
this Indenture and shall, within 30 days after the Change of Control Date, make
an Offer to Purchase all Securities then outstanding at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of Holders
of record on the relevant Interest Record Date to receive interest due on the
relevant Interest Payment Date). The Company's obligations may be satisfied if a
third party makes the Offer to Purchase in the manner, at the times and
otherwise in compliance with the requirements of this Indenture applicable to an
Offer to Purchase made by the Company and purchases all Securities validly
tendered and not withdrawn under such Offer to Purchase. Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Security tendered must be tendered in an integral multiple of $1,000
principal amount.
(b) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) accept for payment all Securities or portions
thereof validly tendered pursuant to the Offer, (ii) deposit with the Paying
Agent or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 2.04, money sufficient to pay the Purchase Price
of all Securities or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee for cancellation all Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof
accepted for payment by the Company. The Paying Agent (or the Company, if so
acting) shall promptly mail or deliver to Holders of Securities so accepted,
payment in an amount equal to the Purchase Price for such Securities, and the
Trustee shall promptly authenticate and mail or deliver to each Holder of
Securities a new Security or Securities equal in principal amount to any
unpurchased portion of the Security surrendered as requested by the Holder. Any
Security not accepted for payment shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Offer on or as soon as practicable after the Purchase Date.
(c) If the Company makes an Offer to Purchase, the Company will
comply with all applicable tender offer laws and regulations, including, to the
extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any
other applicable Federal or state securities laws and regulations and any
applicable requirements of any securities exchange on which the Securities are
listed, and any violation of the provisions of this Indenture relating to such
Offer to Purchase occurring as a result of such compliance shall not be deemed a
Default or an Event of Default.
SECTION 4.15. Limitation on Senior Subordinated Indebtedness.
(a) The Company shall not, directly or indirectly, Incur any
Indebtedness that by its terms would expressly rank senior in right of payment
to the Securities and subordinate in right of payment to any other Indebtedness
of the Company.
<PAGE> 49
- 42 -
(b) The Company shall not permit any Guarantor to, and no Guarantor
shall, directly or indirectly, Incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Guaranty of such Guarantor and
expressly rank subordinate in right of payment to any Guarantor Senior
Indebtedness of such Guarantor.
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not cause or permit any Subsidiary
of the Company to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions to the Company or any other Subsidiary of the Company on its
Equity Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Subsidiary of the Company, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, or make any Investment in, the Company or
any other Subsidiary of the Company or (c) transfer any of its properties or
assets to the Company or any other Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of (i) the Credit
Facility as in effect on the Issue Date, any other agreement of the Company or
its Subsidiaries outstanding from time to time governing Senior Indebtedness
provided that such encumbrances or restrictions are no more adverse to the
Company than those contained in the Credit Facility as in effect on the Issue
Date, and any other agreement of the Company or its Subsidiaries outstanding on
the Issue Date as in effect on the Issue Date and any amendments, restatements,
renewals, replacements or refinancings thereof; provided, however, that any such
amendment, restatement, renewal, replacement or refinancing is no more
restrictive with respect to such encumbrances or restrictions than those
contained in the agreement being amended, restated, reviewed, replaced or
refinanced; (ii) applicable law; (iii) any instrument governing Indebtedness or
Equity Interests of an Acquired Person acquired by the Company or any Subsidiary
of the Company as in effect at the time of such acquisition (except to the
extent such Indebtedness was Incurred by such Acquired Person in connection
with, as a result of or in contemplation of such acquisition); provided,
however, that such encumbrances and restrictions are not applicable to the
Company or any Subsidiary of the Company, or the properties or assets of the
Company or any Subsidiary of the Company, other than the Acquired Person; (iv)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices; (v) Purchase Money
Indebtedness for property acquired in the ordinary course of business that only
imposes encumbrances and restrictions on the property so acquired; (vi) any
agreement for the sale or disposition of the Equity Interests or assets of any
Subsidiary of the Company; provided, however, that such encumbrances and
restrictions described in this clause (vi) are only applicable to such
Subsidiary or assets, as applicable, and any such sale or disposition is made in
compliance with Section 4.05 to the extent applicable thereto; (vii) refinancing
Indebtedness permitted under clause (g) of the second paragraph of Section 4.04;
provided, however, that such encumbrances and restrictions contained in the
agreement governing such Indebtedness are no more restrictive in the aggregate
than those contained in the agreements governing such Indebtedness being
refinanced immediately prior to such refinancing; (viii) security agreements or
mortgages securing Indebtedness of a Subsidiary which are not prohibited by the
covenant described under Section 4.17 to the extent such encumbrances or
restrictions restrict the transfer of the property or assets subject to such
security agreements or mortgages; or (ix) this Indenture.
SECTION 4.17. Limitation on Liens.
The Company shall not, and shall not cause or permit any Subsidiary
of the Company to, directly or indirectly, Incur any Liens of any kind against
or upon any of their respective properties or assets now owned or hereafter
acquired, or any proceeds therefrom or any income or profits therefrom, to
secure
<PAGE> 50
- 43 -
any Indebtedness, unless contemporaneously therewith effective provision is
made, in the case of the Company to secure the Securities and all other amounts
due under the Indenture, and in the case of a Subsidiary which is a Guarantor,
to secure such Subsidiary's Guaranty and all other amounts due under the
Indenture, equally and ratably with such Indebtedness (or, in the event that
such Indebtedness is subordinated in right of payment to the Securities or such
Subsidiary's Guaranty, prior to such Indebtedness) with a Lien on the same
properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (i) Liens securing any Senior
Indebtedness and (ii) Permitted Liens.
SECTION 4.18. Restriction on Transfer of Assets to Subsidiaries.
If the Company transfers or causes to be transferred, in one or a
series of related transactions, assets to any one or more Subsidiaries of the
Company so that, after giving effect to such transfer, either (x) more than 15%
of the Company's consolidated total assets are owned by Subsidiaries of the
Company or (y) more than 15% of the Company's Consolidated EBITDA is derived
from Subsidiaries of the Company, the Company shall cause such Subsidiaries to
(i) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Subsidiaries shall
unconditionally guarantee, on a senior subordinated basis, all the Company's
obligations under the Securities and (ii) deliver to the Trustee an Opinion of
Counsel that such supplemental indenture has been duly executed and delivered by
such Subsidiaries; provided that if no Default or Event of Default shall have
occurred or be continuing, and neither condition (x) or (y) is then met, such
guarantees will automatically, with no action required on behalf of the Company
or its Subsidiaries, be released.
SECTION 4.19. Limitation on the Sale or Issuance
of Equity Interests of Subsidiaries.
The Company shall not sell any Equity Interest of a Subsidiary of
the Company, and shall not cause or permit any Subsidiary of the Company,
directly or indirectly, to issue or sell any Equity Interests (other than
directors' qualifying shares, to the extent mandated by applicable law), except
to the Company or a Wholly Owned Subsidiary. Notwithstanding the foregoing, the
Company is permitted to sell all the Equity Interests of a Subsidiary of the
Company so long as the Company is in compliance with Section 4.05 and, if
applicable, Section 5.01.
SECTION 4.20. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the
Securities, this Indenture or the Registration Rights Agreement unless such
consideration is offered to be paid or agreed to be paid to all Holders that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
<PAGE> 51
- 44 -
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.
(a) The Company shall not consolidate with or merge with or into any
other entity and the Company shall not and shall not cause or permit any
Subsidiary of the Company to, sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the Company's and its Subsidiaries'
properties and assets (determined on a consolidated basis for the Company and
the Subsidiaries) to any entity in a single transaction or series of related
transactions, unless: (i) either (x) the Company shall be the Surviving Person
or (y) the Surviving Person (if other than the Company) shall be a corporation
organized and validly existing under the laws of the United States of America or
any State thereof or the District of Columbia, and shall, in any such case,
expressly assume by a supplemental indenture, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities and the
performance and observance of every covenant of this Indenture and the
Registration Rights Agreement to be performed or observed on the part of the
Company; (ii) immediately thereafter, no Default or Event of Default shall have
occurred and be continuing; and (iii) the Company or the Surviving Person shall
have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Subsidiaries of the
Company the Equity Interests of which constitutes all or substantially all the
properties and assets of the Company shall be deemed to be the transfer of all
or substantially all the properties and assets of the Company.
(b) No Guarantor (other than a Guarantor whose Guaranty is to be
released in accordance with the terms of Section 11.03) shall consolidate with
or merge with or into another Person, whether or not such Person is affiliated
with such Guarantor and whether or not such Guarantor is the Surviving Person,
unless (i) the Surviving Person (if other than such Guarantor) is a corporation
organized and validly existing under the laws of the United States, any State
thereof or the District of Columbia; (ii) the Surviving Person (if other than
such Guarantor) expressly assumes by a supplemental indenture all the
obligations of such Guarantor under its Guaranty and the performance and
observance of every covenant of the Indenture and the Registration Right
Agreement to be performed or observed by such Guarantor; (iii) at the time of
and immediately after such Disposition, no Default or Event of Default shall
have occurred and be continuing; and (iv) the Company or the Surviving Person
shall have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.
<PAGE> 52
- 45 -
SECTION 5.02. Successor Corporation Substituted.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in Section 5.01 in which the Company or
a Guarantor, as the case may be, is not the Surviving Person and the Surviving
Person is to assume all the Obligations of the Company under the Securities,
this Indenture and the Registration Rights Agreement or of such Guarantor under
its Guaranty, the Indenture and the Registration Rights Agreement, as the case
may be, pursuant to a supplemental indenture, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, and the Company shall be
discharged from its Obligations under this Indenture and the Securities or such
Guarantor shall be discharged from its Obligations under the Indenture and its
Guaranty, as the case may be.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following shall be an "Event of Default" for purposes of
this Indenture:
(a) failure to pay principal of (or premium, if any, on) any
Security when due (whether or not prohibited by the provisions of Article
Eight);
(b) failure to pay any interest on any Security when due, continued
for 30 days or more (whether or not prohibited by the provisions of
Article Eight);
(c) default in the payment of principal of or interest on any
Security required to be purchased pursuant to any Offer to Purchase
required by this Indenture when due and payable or failure to pay on the
Purchase Date the Purchase Price for any Security validly tendered
pursuant to any Offer to Purchase (whether or not prohibited by the
provisions of Article Eight);
(d) failure to perform or comply with any of the provisions of
Section 5.01;
(e) failure to perform any other covenant, warranty or agreement of
the Company under this Indenture or in the Securities or of the Guarantors
under this Indenture or in the Guaranties continued for 30 days or more
after written notice to the Company by the Trustee or Holders of at least
25% in aggregate principal amount of the outstanding Securities;
(f) default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Company or any of its
Subsidiaries having an outstanding principal amount of $5.0 million or
more individually or in the aggregate that has resulted in the
acceleration of the payment of such Indebtedness or failure by the Company
or any of its Subsidiaries to pay principal when due at the stated
maturity of any such Indebtedness and such default or defaults shall have
continued after any applicable grace period and shall not have been cured
or waived;
<PAGE> 53
- 46 -
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Subsidiaries in an amount of
$5.0 million or more (net of any amounts covered by reputable and
creditworthy insurance companies) which remains undischarged or unstayed
for a period of 60 days after the date on which the right to appeal has
expired;
(h) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law: (i) admits in writing its inability to
pay its debts generally as they become due; (ii) commences a voluntary
case or proceeding; (iii) consents to the entry of an order for relief
against it in an involuntary case or proceeding; (iv) consents or
acquiesces in the institution of a bankruptcy or insolvency proceeding
against it; (v) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or (vi) makes a general
assignment for the benefit of its creditors, or any of them takes any
action to authorize or effect any of the foregoing;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Company or
any Significant Subsidiary in an involuntary case or proceeding; (ii)
appoints a Custodian of the Company or any Significant Subsidiary for all
or substantially all of its property; or (iii) orders the liquidation of
the Company or any Significant Subsidiary; and in each case the order or
decree remains unstayed and in effect for 60 days; provided, however, that
if the entry of such order or decree is appealed and dismissed on appeal,
then the Event of Default hereunder by reason of the entry of such order
or decree shall be deemed to have been cured; and
(j) other than as provided in or pursuant to any Guaranty or the
Indenture, any Guaranty ceases to be in full force and effect or is
declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Guaranty (other than by reason of
a release of such Guarantor from its Guaranty in accordance with the terms
of the Indenture and such Guaranty.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.
A Default under clause (e) of this Section 6.01 is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in principal amount of the outstanding Securities notify the Company and the
Trustee, of the Default in writing and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default."
Such notice shall be given by the Trustee if so requested by the Holders of at
least 25% in principal amount of the Securities then outstanding. When a Default
is cured, it ceases.
SECTION 6.02. Acceleration.
If an Event of Default with respect to the Securities (other than an
Event of Default specified in clause (h) or (i) of Section 6.01 with respect to
the Company) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Securities by notice in
writing to the Company may declare the unpaid principal of (and premium, if any)
and accrued interest to the date of acceleration on all outstanding Securities
to be due and payable immediately and, upon any such declaration, such principal
amount (and premium, if any) and accrued interest, notwithstanding anything
contained in this Indenture or the Securities to the contrary, shall become
immediately due and payable.
<PAGE> 54
- 47 -
If an Event of Default specified in clause (h) occurs, all unpaid
principal of and accrued interest on all outstanding Securities shall ipso facto
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of the Securities.
After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Securities has been obtained, the Holders of
not less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences (a) if all existing Events of Default (other than the nonpayment of
principal of and interest on the Securities which has become due solely by
virtue of such acceleration) have been cured or waived, (b) to the extent the
payment of such interest is lawful, interest on overdue installments of interest
and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, (c) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances, (d) in the event of the cure or waiver of an Event
of Default of the type described in Section 6.01, the Trustee shall have
received an Officers' Certificate and an opinion of counsel that such Event of
Default has been cured or waived, and (e) if the rescission would not conflict
with any judgment or decree. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy maturing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 10.02, prior to the declaration
of acceleration of the Securities, the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities by written notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on any
Security as specified in clauses (a), (b) and (c) of Section 6.01 or a Default
in respect of any term or provision of this Indenture that may not be amended or
modified without the consent of each Holder affected as provided in Section
10.02. The Company shall deliver to the Trustee an Officers' Certificate stating
that the requisite percentage of Holders have consented to such waiver and
attaching copies of such consents. In case of any such waiver, the Company, the
Trustee and the Holders shall be restored to their former positions and rights
hereunder and under the Securities, respectively. This paragraph of this Section
6.04 shall be in lieu of ss. 316(a)(1)(B) of the TIA and such ss. 316(a)(1)(B)
of the TIA is hereby expressly excluded from this Indenture and the Securities,
as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred
for every purpose of this Indenture and the Securities, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
<PAGE> 55
- 48 -
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of another Securityholder, or
that may involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. In the event the Trustee takes any action or
follows any direction pursuant to this Indenture, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This Section
6.05 shall be in lieu of ss. 316(a)(1)(A) of the TIA, and such ss. 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and the Securities,
as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
the outstanding Securities make a written request to the Trustee to pursue
a remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of or interest on a Security, on or
after the respective due dates expressed in the Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in Section 6.01(a), (b) or (c) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express
<PAGE> 56
- 49 -
trust against the Company or any other obligor on the Securities for the whole
amount of principal and accrued interest remaining unpaid, together with
interest overdue on principal and to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
per annum borne by the Securities and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money or property in the following order:
First: to the Trustee, its agent and attorneys for amounts due under
Section 7.07, including payment of all compensation, expenses and
liabilities incurred and all advances made by the Trustee and the cost and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.
<PAGE> 57
- 50 -
This Section 6.11 shall not apply to a suit by the Trustee, a suit by a Holder
or group of Holders of more than 10% in aggregate principal amount of the
outstanding Securities, or to any suit instituted by any Holder for the
enforcement or the payment of the principal or interest on any Securities on or
after the respective due dates expressed in the Security.
SECTION 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Security and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for the performance
of such duties as are specifically set forth herein and no covenants
or obligations shall be implied in this Indenture that are adverse
to the Trustee; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions conforming to the requirements of this Indenture; however,
in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
<PAGE> 58
- 51 -
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive from such Holders an indemnity
satisfactory to it in its sole discretion against such risk, liability, loss,
fee or expense which might be incurred by it in compliance with such request or
direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and/or an Opinion of Counsel, which shall conform
to the provisions of Section 13.05. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through attorneys and agents of its
selection and shall not be responsible for the misconduct or negligence of
any agent or attorney (other than an agent who is an employee of the
Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion
of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
(f) Any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution.
<PAGE> 59
- 52 -
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Securityholders pursuant to this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(h) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event of
Default unless a Trust Officer of the Trustee has actual knowledge thereof
or unless the Trustee shall have received written notice thereof at the
Corporate Trust Office of the Trustee, and such notice references the
Securities and this Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee, subject to
Section 7.10 hereof. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing and the
Trustee knows of such Defaults or Events of Default, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 30 days
after the occurrence thereof. Except in the case of a Default or an Event of
Default in payment of principal of or interest on any Security or a Default or
Event of Default in complying with Section 5.01, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of Securityholders.
This Section 7.05 shall be in lieu of the proviso to ss. 315(b) of the TIA and
such proviso to ss. 315(b) of the TIA is hereby expressly excluded from this
Indenture and the Securities, as permitted by the TIA.
<PAGE> 60
- 53 -
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA ss. 313(a), within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a report dated as of such May 15 that complies
with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b), (c) and
(d).
A copy of each such report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances (including fees, disbursements and expenses of its agents and
counsel) incurred or made by it in addition to the compensation for its services
except any such disbursements, expenses and advances as may be attributable to
the Trustee's negligence or bad faith. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
accountants, experts and counsel and any taxes or other expenses incurred by a
trust created pursuant to Section 9.01 hereof.
The Company shall indemnify the Trustee for, and hold it harmless
against any and all loss, damage, claims, liability or expense, including taxes
(other than franchise taxes imposed on the Trustee and taxes based upon,
measured by or determined by the income of the Trustee), arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder, except to the extent that such loss, damage, claim,
liability or expense is due to its own negligence or bad faith. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. However, the failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense
(and may employ its own counsel) at the Company's expense; provided, however,
that the Company's reimbursement obligation with respect to counsel employed by
the Trustee will be limited to the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee as a result of the violation of this Indenture by the Trustee.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a Lien prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of or interest on particular
Securities or the Purchase Price or redemption price of any Securities to be
purchased pursuant to an Offer to Purchase or redeemed.
<PAGE> 61
- 54 -
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) occurs, the expenses (including
the reasonable fees and expenses of its agents and counsel) and the compensation
for the services shall be preferred over the status of the Holders in a
proceeding under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Company's obligations under this
Section 7.07 and any claim arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Company's obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company in
writing and may appoint a successor Trustee with the Company's consent. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(c) a custodian or other public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 7.07, all property held
by it as Trustee to the successor Trustee, subject to the Lien provided in
Section 7.07, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have the rights, powers and duties of
the Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Securityholder. If a successor Trustee does not take office
within 60 days after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company or the Holders of at least 10% in principal amount of the
outstanding Securities may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
<PAGE> 62
- 55 -
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be eligible
to act as Trustee under TIA ss.ss. 310(a)(1) and 310(a)(2). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. If the Trustee has or shall
acquire any "conflicting interest" within the meaning of TIA ss. 310(b), the
Trustee and the Company shall comply with the provisions of TIA ss. 310(b);
provided, however, that there shall be excluded from the operation of TIA ss.
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article Seven.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and the Trustee and each Holder of
the Securities by his acceptance thereof likewise covenant and agree, that all
Securities shall be issued subject to the provisions of this Article Eight; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of and interest on the Securities by the Company shall, to the extent
and in the manner set forth in this Article Eight, be subordinated in right of
payment to the prior payment in full in cash of all amounts payable under Senior
Indebtedness.
SECTION 8.02. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any payment from funds
deposited in accordance with, and held in trust for the benefit of Holders
pursuant to Article Nine (a "Defeasance Trust Payment")) by or on behalf of the
Company of principal of, premium if any, or interest on the Securities, whether
pursuant to the terms of the Securities, upon acceleration, pursuant to an Offer
to Purchase or otherwise, shall be made if, at the time of such payment, there
exists a default in the payment of all or any portion of the obligations on any
Senior Indebtedness,
<PAGE> 63
- 56 -
whether at maturity, on account of mandatory redemption or prepayment,
acceleration or otherwise, and such default shall not have been cured or waived
or the benefits of this sentence waived by or on behalf of the holders of such
Senior Indebtedness. In addition, during the continuance of any non-payment
event of default with respect to any Designated Senior Indebtedness pursuant to
which the maturity thereof may be immediately accelerated, and upon receipt by
the Trustee of written notice (a "Payment Blockage Notice" ) from the holder or
holders of such Designated Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Senior Indebtedness, then, unless and until such event
of default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full in cash or the
benefits of these provisions have been waived by the holders of such Designated
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment) shall be made by or on behalf of the Company of principal of, premium,
if any, or interest on the Securities, whether pursuant to the terms of the
Securities, upon acceleration, pursuant to an Offer to Purchase or otherwise to
such Holders, during a period (a "Payment Blockage Period") commencing on the
date of receipt of such notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Payment Blockage Period extend beyond 179 days
from the date the Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360-day period
when no Payment Blockage Period is in effect and (z) not more than one Payment
Blockage Period may be commenced with respect to the Securities during any
period of 360 consecutive days. No event of default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period (to the extent the holder of Designated Senior Indebtedness, or trustee
or agent, giving notice commencing such Payment Blockage Period had knowledge of
such existing or continuing event of default) may be, or be made, the basis for
the commencement of any other Payment Blockage Period by the holder or holders
of such Designated Senior Indebtedness or the trustee or agent acting on behalf
of such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such non-payment event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 8.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Designated Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Designated Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that, upon notice from the Trustee to the holders of Designated Senior
Indebtedness that such prohibited payment has been made, the holders of the
Designated Senior Indebtedness (or their representative or representatives or a
trustee or trustees) notify the Trustee in writing of the amounts then due and
owing on the Designated Senior Indebtedness, if any, and only the amounts
specified in such notice to the Trustee shall be paid to the holders of
Designated Senior Indebtedness.
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), upon any dissolution or winding-up or
total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness then due shall first be paid in full in cash before the
Holders of the Securities or the Trustee on behalf of such Holders shall be
entitled to receive any payment by the
<PAGE> 64
- 57 -
Company of the principal of, premium, if any, or interest on the Securities, or
any payment by the Company to acquire any of the Securities for cash, property
or securities, or any distribution by the Company with respect to the Securities
of any cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment). Before
any payment may be made by, or on behalf of, the Company of the principal of,
premium, if any, or interest on the Securities upon any such dissolution or
winding-up or total liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment), to which the Holders of the Securities or the Trustee on their behalf
would be entitled, but for the subordination provisions of this Indenture, shall
be made by the Company or by any receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities and excluding any Defeasance Trust Payment), shall be received by the
Trustee or any Holder of Securities at a time when such payment or distribution
is prohibited by Section 8.03(a) and before all obligations in respect of Senior
Indebtedness are paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such holders)
or their respective representatives, or to the trustee or trustees or agent or
agents under any indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 8.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 8.04. Subrogation.
Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the Holders of the Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article Eight, and no
payment over pursuant to the provisions of this Article Eight to the
<PAGE> 65
- 58 -
holders of Senior Indebtedness by Holders of the Securities or the Trustee on
their behalf shall, as between the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Article Eight are and are intended solely
for the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Eight shall have been applied, pursuant to the provisions of this
Article Eight, to the payment of all amounts payable under Senior Indebtedness,
then and in such case, the Holders of the Securities shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount required to make payment in full in cash of such Senior Indebtedness.
SECTION 8.05. Obligations of Company Unconditional.
Nothing contained in this Article Eight or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities the
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Securities and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Holder of any Security or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Eight of the holders of the Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained
in this Article Eight shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Senior Indebtedness then due
and payable shall first be paid in full in cash before the Holders of the
Securities or the Trustee are entitled to receive any direct or indirect payment
from the Company of principal of or interest on the Securities.
SECTION 8.06. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article Eight. The Trustee shall not be charged with knowledge of the existence
of any event of default with respect to any Senior Indebtedness or of any other
facts which would prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received notice in writing at its Corporate
Trust Office to that effect signed by an Officer of the Company, or by a holder
of Senior Indebtedness or trustee or agent therefor; and prior to the receipt of
any such written notice, the Trustee shall, subject to Article Seven, be
entitled to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 8.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from the Company and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the
<PAGE> 66
- 59 -
contrary which may be received by it on or after such prior date. Nothing
contained in this Section 8.06 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Section 8.03. The Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Indebtedness (or a
trustee on behalf of, or other representative of, such holder) to establish that
such notice has been given by a holder of such Senior Indebtedness or a trustee
or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eight, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Eight, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities referred to
in this Article Eight, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Securities for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Eight.
SECTION 8.08. Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Eight with respect to any Senior Indebtedness which
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eight, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Section 8.03(b)). The Trustee shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property or securities
to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article Eight or otherwise.
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompli-
<PAGE> 67
- 60 -
ance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The provisions of this Article Eight are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 8.10. Securityholders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Eight, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, total
liquidation or reorganization of the Company (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of the Company, the filing of a claim for the unpaid balance
of its or his Securities in the form required in those proceedings.
SECTION 8.11. This Article Not To Prevent Events of Default.
The failure to make a payment or distribution for or on account of
principal of or interest on the Securities by reason of any provision of this
Article Eight shall not be construed as preventing the occurrence of an Event of
Default specified in clauses (a), (b) or (c) of Section 6.01.
SECTION 8.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Eight shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
SECTION 8.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 8.09, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Eight or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in
Trust for Securityholders; Payments May Be Paid Prior to
Dissolution.
All money and United States Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with Article Nine shall be
for the sole benefit of the Holders and shall not be subject to this Article
Eight.
Nothing contained in this Article Eight or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Section 8.02, from making payments of principal of and interest on the
Securities or from depositing with the Trustee any moneys for such payments or
from effecting
<PAGE> 68
- 61 -
a termination of the Company's and the Guarantors' obligations under the
Securities and this Indenture as provided in Article Nine, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of and interest on the Securities, to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have received
the written notice provided for in Section 8.02(b) or in Section 8.06. The
Company shall give prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
SECTION 8.15. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of the Senior Indebtedness of
the acceleration.
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.
The Company may terminate its obligations under the Securities and
this Indenture as well as the obligations of the Guarantors under the respective
Guarantees, except those obligations referred to in the penultimate paragraph of
this Section 9.01, if:
(i) either (a) all the Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Securities which have been
replaced or paid and Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or (b) all Securities not
theretofore delivered to the Trustee for cancellation have become due and
payable and the Company has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness on the Securities not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if
any, and interest on the Securities to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case
may be;
(ii) the Company has paid all other sums payable under this
Indenture by the Company; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent under this Indenture relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the first paragraph of this Section 9.01, the
Issuers' obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 4.07, 7.07,
9.05 and 9.06 shall survive until the Securities are not longer outstanding
pursuant to the last paragraph of Section 2.08. After the Securities are no
longer outstanding, the Issuers' obligations in Sections 7.07, 9.05 and 9.06
shall survive.
<PAGE> 69
- 62 -
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Issuers' and Guarantors'
obligations under the Securities and this Indenture except for those surviving
obligations specified above.
SECTION 9.02. Legal Defeasance and Covenant Defeasance.
(a) Subject to the provisions of Article Eight, the Company may
terminate its obligations in respect of the Securities by delivering all
outstanding Securities to the Trustee for cancellation and paying all sums
payable by it on account of principal of and interest on all Securities or
otherwise. In addition to the foregoing, the Company may, at its option, at any
time elect to have either paragraph (b) or (c) below be applied to all
outstanding Securities, subject in either case to compliance with the conditions
set forth in Section 9.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 9.03, be deemed to have paid
and discharged the entire indebtedness represented by the outstanding
Securities, except for (i) the rights of Holders to receive payments in respect
of the principal of, premium, if any, and interest on the Securities when such
payments are due, (ii) the Company's obligations with respect to the Securities
under Sections 2.02 through 2.07, inclusive, 2.10, 2.13, 4.02 and 4.07, (iii)
the rights, powers, trust, duties and immunities of the Trustee under this
Indenture and the Company's obligations in connection therewith and (iv) Article
Nine of this Indenture (hereinafter, "Legal Defeasance"). Subject to compliance
with this Article Nine, the Company may exercise its option under this paragraph
(b) notwithstanding the prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 9.03, be released from its
obligations under the covenants contained in Sections 4.03 through 4.20,
inclusive (other than Section 4.07), and Article Five with respect to the
outstanding Securities (hereinafter, "Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Securities. In addition, upon the Company's
exercise under paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 9.02,
any failure or omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Securities.
SECTION 9.03. Conditions to Legal Defeasance or Covenant Defeasance.
In order to exercise either Legal Defeasance pursuant to Section
9.02(b) or Covenant Defeasance pursuant to Section 9.02(c):
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in U.S. dollars or United States
Government Obligations, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the Securities on the stated date for payment thereof or
on the applicable redemption date, as the case may be;
(b) in the case of an election under Section 9.02(b), the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Serv-
<PAGE> 70
- 63 -
ice a ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 9.02(c), the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the Incurrence of Indebtedness, all or a portion of
which will be used to defease the Securities concurrently with such
Incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a Default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company
or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of holders of Senior Indebtedness, including, without limitation,
those arising under this Indenture, and (ii) assuming no intervening
bankruptcy of the Company between the date of deposit and the 91st day
following the deposit and that no Holder is an insider of the Company,
after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (b) above need not be delivered if all Securities not theretofore
delivered to the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable on the maturity date within one year (or (z) are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.
<PAGE> 71
- 64 -
SECTION 9.04. Application of Trust Money; Trustee Acknowledgment and Indemnity.
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.03, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities and this Indenture except for those surviving obligations specified
above.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to Section 9.03 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Securities.
SECTION 9.05. Repayment to Company.
Subject to Sections 7.07 and 9.04, the Trustee shall promptly pay to
the Company upon written request any excess money held by it at any time. The
Trustee shall pay to the Company upon written request any money held by it for
the payment of principal or interest that remains unclaimed for two years;
provided, however, that the Trustee before being required to make any payment
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining shall
be repaid to the Company. After payment to the Company, Holders entitled to
money must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designates another person and all liability of
the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 9.06. Reinstatement.
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 9.02 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 9.02 until
such time as the Trustee is permitted to apply all such money or United States
Government Obligations in accordance with Section 9.02; provided, however, that
if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or United States Government Obligations held by the
Trustee.
<PAGE> 72
- 65 -
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a resolution of
their respective Boards of Directors, and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency; provided,
however, that such amendment or supplement does not adversely affect the
rights of any Holder;
(b) to effect the assumption by a successor Person of all
obligations of the Company under the Securities and this Indenture in
connection with any transaction complying with Article Five of this
Indenture;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit or
rights to the Holders;
(f) to make any other change that does not adversely affect the
rights of any Holder under this Indenture;
(g) to evidence the succession of another Person to any Guarantor
and the assumption by any such successor of the covenants of such
Guarantor herein and in the Guaranty in connection with any transaction
complying with Article Five of this Indenture;
(h) to add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor;
(i) to secure the Securities pursuant to the requirements of Section
4.17 or otherwise; or
(j) to reflect the release of a Guarantor from its obligations with
respect to its Guaranty in accordance with the provisions of Section 11.03
and to add a Guarantor pursuant to the requirements of Section 4.18;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.01.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
10.06, the Trustee shall join with the Company in the execution of any
<PAGE> 73
- 66 -
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations which
may be therein contained, but the Trustee may but shall not be obligated to
enter into such amended or supplemental Indenture which affects its own rights,
duties or immunities under this Indenture or otherwise.
SECTION 10.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Guarantors, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities with the
written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities (including consents obtained in connection
with a tender offer or exchange offer for the Securities). Subject to Section
6.07, the Holders of a majority in principal amount of the outstanding
Securities may waive compliance by the Company or any Guarantor with any
provision of this Indenture or the Securities. However, without the consent of
each Securityholder affected, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(a) change the Stated Maturity of the principal of or any
installment of interest on any Security or alter the optional redemption
or repurchase provisions of any Security or this Indenture in a manner
adverse to the Holders of the Securities;
(b) reduce the principal amount of (or the premium of) any Security;
(c) reduce the rate of or extend the time for payment of interest on
any Security;
(d) change the place or currency of payment of the principal of (or
premium) or interest on any Security;
(e) modify any provisions of Section 6.04 (other than to add
sections of this Indenture or the Securities subject thereto) or 6.07 or
this Section 10.02 (other than to add sections of this Indenture or the
Securities which may not be amended, supplemented or waived without the
consent of each Securityholder affected);
(f) reduce the percentage of the principal amount of outstanding
Securities necessary for amendment to or waiver of compliance with any
provision of this Indenture or the Securities or for waiver of any
Default;
(g) waive a Default in the payment of the principal of or interest
on or redemption or purchase payment with respect to the Securities
(except a rescission of acceleration of the Securities by the Holders as
provided in Section 6.02 and a waiver of the payment default that resulted
from such acceleration);
(h) modify the ranking or priority of any Security or the Guaranty
in respect of any Guarantor, or modify the definition of Senior
Indebtedness or Guarantor Senior Indebtedness, or amend or modify any of
the provisions of Article Eight or Article Twelve in any manner adverse to
the Holders;
(i) release any Guarantor from any of its obligations under its
Guaranty or this Indenture otherwise than in accordance with this
Indenture; or
<PAGE> 74
- 67 -
(j) modify the provisions relating to any Offer to Purchase required
pursuant to Section 4.05 or 4.14 in a manner materially adverse to the
Holders.
The Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its sole discretion, but shall not
be obligated to, enter into such amended or supplemental Indenture.
An amendment under this Section 10.02 may not make any change under
Article Eight or Article Twelve hereof that adversely affects in any material
respect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, then outstanding unless the holders of such
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, (or
any representative thereof authorized to give a consent) shall have consented to
such change.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 10.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 10.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 10.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Security or portion of such
Security by notice to the Trustee or the Company received before the date on
which the Trustee receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders of Securities entitled to consent to
any amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
<PAGE> 75
- 68 -
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(a) through (j) of Section 10.02. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 10.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms. Failure to make the appropriate notation or issue a new Security shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 10.06. Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Ten is
authorized or permitted by this Indenture and that such amendment, supplement or
waiver constitutes the legal, valid and binding obligation of the Company and
the Guarantors, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
ARTICLE ELEVEN
GUARANTY
SECTION 11.01. Unconditional Guaranty.
Each Person who becomes a Guarantor pursuant to Section 4.18 of this
Indenture shall hereby unconditionally, jointly and severally, guarantee (each,
a "Guaranty") to each Holder of a Security authenticated by the Trustee and to
the Trustee and its successors and assigns that: the principal of and interest
on the Securities will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and interest on any overdue interest on the
Securities and all other obligations of the Company to the Holders or the
Trustee hereunder or under the Securities will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; subject,
however, to the limitations set forth in Section 11.04. Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to re-
<PAGE> 76
- 69 -
quire a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that the Guaranty will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture, and this Guaranty. If any Holder or the Trustee is required by any
court or otherwise to return to the Company, any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or any Guarantor, any amount paid by the Company or any Guarantor to the Trustee
or such Holder, this Guaranty, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purpose of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
obligations (whether or not due and payable) shall forth become due and payable
by each Guarantor for the purpose of this Guaranty.
SECTION 11.02. Severability.
In case any provision of this Guaranty shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.03. Release of a Guarantor.
If the Securities are defeased in accordance with the terms of this
Indenture, or if Section 5.01(b) is complied with, or if, subject to the
requirements of Section 5.01(a), all or substantially all of the assets of any
Guarantor or all of the Equity Interests of any Guarantor are sold (including by
issuance or otherwise) by the Company in a transaction constituting an Asset
Sale and (x) the Net Cash Proceeds from such Asset Sale are used in accordance
with Section 4.05 or (y) the Company delivers to the Trustee an Officers'
Certificate to the effect that the Net Cash Proceeds from such Asset Sale shall
be used in accordance with Section 4.05 and within the time limits specified by
Section 4.05, then each Guarantor (in the case of defeasance) or such Guarantor
(in the case of compliance with Section 5.01(b) or in the event of a sale or
other disposition of all of the Equity Interests of such Guarantor) or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor) shall be released
and discharged from all obligations under this Article Eleven without any
further action required on the part of the Trustee or any Holder. The Trustee
shall, at the sole cost and expense of the Company and upon receipt at the
reasonable request of the Trustee of an Opinion of Counsel that the provisions
of this Section 11.03 have been complied with, deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
11.03. Any Guarantor not so released remains liable for the full amount of
principal of and interest on the Securities and the other obligations of the
Company hereunder as provided in this Article Eleven.
SECTION 11.04. Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
guarantee by such Guarantor pursuant to its Guaranty not constitute a fraudulent
transfer or conveyance for purposes of title 11 of the United States Code, as
amended, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar U.S. Federal or state or other applicable law. To effectuate
the foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that the obligations of each Guarantor under its Guaranty shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
<PAGE> 77
- 70 -
obligations of such other Guarantor under its Guaranty or pursuant to Section
11.05, result in the obligations of such Guarantor under its Guaranty not
constituting such a fraudulent transfer or conveyance.
SECTION 11.05. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guaranty, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each Guarantor
(including the Funding Guarantor), determined in accordance with GAAP, subject
to Section 11.04, for all payments, damages and expenses incurred by such
Funding Guarantor in discharging the Company's obligations with respect to the
Securities or any other Guarantor's obligations with respect to the Guaranty.
SECTION 11.06. Execution of Security Guaranty.
To further evidence their Guaranty to the Holders, each of the
Guarantors hereby agree to execute a Security Guarantee to be endorsed on each
Security ordered to be authenticated and delivered by the Trustee. Each
Guarantor hereby agrees that its Guaranty set forth in Section 11.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Security a Security Guarantee. Each such Security Guarantee shall be signed on
behalf of each Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such Security
Guarantee on behalf of such Guarantor. Such signature upon the Security
Guarantee may be manual or facsimile signature of such officer and may be
imprinted or otherwise reproduced on the Security Guarantee, and in case such
officer who shall have signed the Security Guarantee shall cease to be such
officer before the Security on which such Security Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or disposed of by the
Company, such Security nevertheless may be authenticated and delivered or
disposed of as though the Person who signed the Security Guarantee had not
ceased to be such officer of such Guarantor.
SECTION 11.07. Subordination of Subrogation and Other Rights.
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guaranty or this Indenture, including, without limitation,
any right of subrogation, shall be subject and subordinate to, and no payment
with respect to any such claim of such Guarantor shall be made before, the
payment in full in cash of all outstanding Securities in accordance with the
provisions provided therefor in this Indenture.
ARTICLE TWELVE
SUBORDINATION OF GUARANTY
SECTION 12.01. Guaranty Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Securities by his acceptance thereof likewise covenant and agree, that
the Guaranty of such Guarantor shall be issued subject
<PAGE> 78
- 71 -
to the provisions of this Article Twelve; and each person holding any Security,
whether upon original issue or upon transfer, assignment or exchange thereof,
accepts and agrees that all payments of the principal of and interest on the
Securities pursuant to the Guaranty made by or on behalf of any Guarantor shall,
to the extent and in the manner set forth in this Article Twelve, be
subordinated and junior in right of payment to the prior payment in full in cash
of all amounts payable under Guarantor Senior Indebtedness of such Guarantor.
SECTION 12.02. No Payment on Guaranties in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor of
principal of or interest on the Securities pursuant to such Guarantor's
Guaranty, whether pursuant to the terms of the Securities, upon acceleration or
otherwise, shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Designated
Guarantor Senior Indebtedness of such Guarantor, whether at maturity, on account
of mandatory redemption or prepayment, acceleration or otherwise, and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Guarantor Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Guarantor Senior Indebtedness pursuant to
which the maturity thereof may be immediately accelerated, and upon receipt by
the Trustee of written notice (the "Guarantor Payment Blockage Notice") from the
holder or holders of such Designated Guarantor Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Guarantor Senior
Indebtedness, then, unless and until such non-payment event of default has been
cured or waived or has ceased to exist or such Designated Guarantor Senior
Indebtedness has been discharged or paid in full in cash or the benefits of
these provisions have been waived by the holders of such Designated Guarantor
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) shall be made by or on behalf of
such Guarantor of principal or interest on the Securities during a period (a
"Guarantor Blockage Period") commencing on the date of receipt of such notice by
the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Guarantor Blockage Period extend beyond 179
days from the date the Guarantor Payment Blockage Notice in respect thereof was
given, (y) there shall be a period of at least 181 consecutive days in each
360-day period when no Guarantor Blockage Period is in effect and (z) not more
than one Guarantor Blockage Period may be commenced with respect to any
Guarantor during any period of 360 consecutive days. No non-payment event of
default that existed or was continuing on the date of commencement of any
Guarantor Blockage Period with respect to the Designated Guarantor Senior
Indebtedness initiating such Guarantor Blockage Period (to the extent the holder
of Designated Guarantor Senior Indebtedness, or trustee or agent, giving notice
commencing such Guarantor Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Guarantor Blockage Period by the holder or holders of such
Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such non-payment event of default has
been cured or waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 12.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Designated Guarantor
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Designated Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that, upon notice from the Trustee to the holders
of such Designated Guarantor Senior Indebtedness that such prohibited payment
has been made, the holders of such Designated
<PAGE> 79
- 72 -
Guarantor Senior Indebtedness (or their representative or representatives or a
trustee or trustees) notify the Trustee in writing of the amounts then due and
owing on such Designated Guarantor Senior Indebtedness, if any, and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
such Designated Guarantor Senior Indebtedness.
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding-up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the Holders of the
Securities or the Trustee on behalf of such Holders shall be entitled to receive
any payment by such Guarantor of the principal of or interest on the Securities
pursuant to such Guarantor's Guaranty, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, any Guarantor of the principal of or interest on the Securities
upon any such dissolution or winding-up or total liquidation or reorganization,
any payment or distribution of assets or securities of such Guarantor of any
kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities), to which the Holders of
the Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on the
basis of the respective amounts of such Guarantor Senior Indebtedness held by
such holders) or their representatives or to the trustee or trustees or agent or
agents under any agreement or indenture pursuant to which any of such Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Guarantor Senior Indebtedness in
full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be received by the Trustee or any Holder of Securities
at a time when such payment or distribution is prohibited by Section 12.03(a)
and before all obligations in respect of the Guarantor Senior Indebtedness of
such Guarantor are paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Guarantor Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of such Guarantor Senior
Indebtedness held by such holders) or their respective representatives, or to
the trustee or trustees or agent or agents under any indenture pursuant to which
any of such Guarantor Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of such
Guarantor Senior Indebtedness remaining unpaid until all such Guarantor Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the
<PAGE> 80
- 73 -
purposes of this Section 12.03 if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article Five.
SECTION 12.04. Subrogation.
Upon the payment in full in cash of all Guarantor Senior
Indebtedness of a Guarantor, or provision for payment, the Holders of the
Securities shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of cash, property or
securities of such Guarantor made on such Guarantor Senior Indebtedness until
the principal of and interest on the Securities shall be paid in full in cash;
and, for the purposes of such subrogation, no payments or distributions to the
holders of such Guarantor Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article Twelve, and no
payment over pursuant to the provisions of this Article Twelve to the holders of
such Guarantor Senior Indebtedness by Holders of the Securities or the Trustee
on their behalf shall, as between such Guarantor, its creditors other than
holders of such Guarantor Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by such Guarantor to or on account of such
Guarantor Senior Indebtedness. It is understood that the provisions of this
Article Twelve are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of Guarantor Senior Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Twelve shall have been applied, pursuant to the provisions of this
Article Twelve, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount required to make payment in full in cash of
such Guarantor Senior Indebtedness.
SECTION 12.05. Obligations of Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities or the Guaranties is intended to or shall impair,
as among each of the Guarantors and the Holders of the Securities, the
obligation of each Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Guaranty of such Guarantor, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of any Guarantor other
than the holders of Guarantor Senior Indebtedness of such Guarantor, nor shall
anything herein or therein prevent the Holder of any Security or the Trustee on
their behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Twelve of the holders of Guarantor Senior Indebtedness in respect of
cash, property or securities of any Guarantor received upon the exercise of any
such remedy.
Without limiting the generality of the foregoing, nothing contained
in this Article Twelve shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Guarantor Senior Indebtedness
of any Guarantor then due and payable shall first be paid in full before the
Holders of the Securities or the Trustee are entitled to receive any direct or
indirect payment from such Guarantor of principal of or interest on the
Securities pursuant to such Guarantor's Guaranty.
<PAGE> 81
- 74 -
SECTION 12.06. Notice to Trustee.
The Company and each Guarantor shall give prompt written notice to
the Trustee of any fact known to the Company or such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Twelve. The Trustee shall
not be charged with knowledge of the existence of any event of default with
respect to any Guarantor Senior Indebtedness or of any other facts which would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing at its Corporate Trust Office to
that effect signed by an Officer of the Company or such Guarantor, or by a
holder of Guarantor Senior Indebtedness or trustee or agent therefor; and prior
to the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided, however, that
if the Trustee shall not have received the notice provided for in this Section
12.06 at least two Business Days prior to the date upon which by the terms of
this Indenture any moneys shall become payable for any purpose (including,
without limitation, the payment of the principal of or interest on any
Security), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from any Guarantor and
to apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date. Nothing contained in this Section 12.06 shall limit the right
of the holders of Guarantor Senior Indebtedness to recover payments as
contemplated by Section 12.03. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Guarantor Senior Indebtedness (or a trustee on behalf of, or
other representative of, such holder) to establish that such notice has been
given by a holder of such Guarantor Senior Indebtedness or a trustee or
representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Twelve, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Twelve.
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Twelve with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual
<PAGE> 82
- 75 -
or any other capacity to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee or any
Paying Agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Section 12.03(b)). The Trustee shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of the
Guarantors or Holders of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with. The provisions of this Article Twelve are intended to
be for the benefit of, and shall be enforceable directly by, the holders of
Guarantor Senior Indebtedness.
SECTION 12.10. Securityholders Authorize Trustee To Effectuate Subordination of
Guaranty.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, total
liquidation or reorganization of any Guarantor (whether in bankruptcy,
insolvency, receivership, reorganization or similar proceedings or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of such Guarantor, the filing of a claim
for the unpaid balance of its or his Securities in the form required in those
proceedings.
SECTION 12.11. This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 12.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
SECTION 12.13. No Waiver of Guaranty Subordination Provisions.
Without in any way limiting the generality of Section 12.09, the
holders of Guarantor Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the
<PAGE> 83
- 76 -
Holders of the Securities, without incurring responsibility to the Holders of
the Securities and without impairing or releasing the subordination provided in
this Article Twelve or the obligations hereunder of the Holders of the
Securities to the holders of Guarantor Senior Indebtedness, do any one or more
of the following: (a) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Guarantor Senior Indebtedness or any
instrument evidencing the same or any agreement under which Guarantor Senior
Indebtedness is outstanding or secured; (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
SECTION 12.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) a Guarantor, except under the conditions described
in Section 12.02, from making payments of principal of and interest on the
Securities, or from depositing with the Trustee any moneys for such payments, or
(ii) the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of and interest on the Securities,
to the holders entitled thereto unless at least two Business Days prior to the
date upon which such payment becomes due and payable, the Trustee shall have
received the written notice provided for in Section 12.02(b) or in Section
12.06. The Guarantors shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of such Guarantor.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture modifies any TIA
provision that may be so modified, such TIA provision shall be deemed to apply
to this Indenture as so modified. If any provision of this Indenture excludes
any TIA provision that may be so excluded, such TIA provision shall be excluded
from this Indenture.
The provisions of TIA ss.ss. 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 13.02. Notices.
Any notice or communication shall be sufficiently given if in
writing and delivered in person, by facsimile and confirmed by overnight
courier, or mailed by first-class mail addressed as follows:
<PAGE> 84
- 77 -
if to the Company or to any Guarantor:
Airxcel, Inc.
305 North Saint Frances Street
Wichita, Kansas 67219
Attention: Chief Financial Officer
Facsimile: (316) 832-3493
Telephone: (316) 832-3400
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York
Attention: Lance C. Balk
Facsimile: (212) 446-4900
Telephone: (212) 446-4800
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Patricia Stermer
Corporate Trust Administration
Facsimile: (212) 852-1626
Telephone: (212) 852-1664
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage prepaid, to
a Holder including any notice delivered in connection with TIA ss. 310(b), TIA
ss. 313(c), TIA ss. 314(a) and TIA ss. 315(b), shall be mailed to him at his
address as set forth on the Security Register and shall be sufficiently given to
him if so mailed within the time prescribed. To the extent required by the TIA,
any notice or communication shall also be mailed to any Person described in TIA
ss. 313(c).
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
<PAGE> 85
- 78 -
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance satisfactory to
the Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with; provided, however, that
with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.07. Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and the Security Guarantees without regard to principles of conflicts
of law.
<PAGE> 86
- 79 -
SECTION 13.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company or any Guarantor under the Securities, the Guaranty of such Guarantor or
this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability.
SECTION 13.09. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of each Guarantor in this Indenture and
such Guarantor's Guaranty shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.10. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.11. Severability.
In case any provision in this Indenture, in the Securities or in the
Guaranty shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
SECTION 13.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 13.13. Legal Holidays.
If a payment date is a not a Business Day at a place of payment,
payment may be made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.
[Signature Pages Follow]
<PAGE> 87
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
AIRXCEL, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
--------------------------------------
Name:
Title:
<PAGE> 88
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDERS OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
A-1
<PAGE> 89
AIRXCEL, INC.
11% Senior Subordinated Note
due November, 2007, Series A
CUSIP No.: [ ]
No. [ ] $[ ]
AIRXCEL, INC., a Delaware corporation and formerly named Recreation
Vehicle Products, Inc. (the "Company", which term includes any successor
corporation), for value received promises to pay to [ ] or registered assigns,
the principal sum of [ ] Dollars, on November 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing on May
15, 1998.
Interest Record Dates: May 1 and November 1
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officer.
AIRXCEL, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Dated: [ ]
A-2
<PAGE> 90
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11% Senior Subordinated Notes due November 15,
2007, Series A, described in the within-mentioned Indenture.
Dated: [ ]
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
By:
--------------------------------------
Authorized Signatory
A-3
<PAGE> 91
(REVERSE OF SECURITY)
AIRXCEL, INC.
11% Senior Subordinated Note
due November, 2007, Series A
1. Interest.
AIRXCEL, INC., a Delaware corporation and formerly named Recreation
Vehicle Products, Inc. (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. Cash
interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from November 10, 1997.
The Company will pay interest semi-annually in arrears on each Interest Payment
Date, commencing May 15, 1998. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time on demand
and on overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by the Securities.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
November 10, 1997 (the "Indenture"), by and between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. This Security is one of a duly authorized issue of Securities of
the Company designated as its 11% Senior Subordinated Notes due 2007, Series A
(the "Initial Securities"), limited (except as otherwise provided in the
Indenture) in aggregate principal amount to $125,000,000, which
A-4
<PAGE> 92
may be issued under the Indenture. The Securities include the Initial
Securities, the Private Exchange Securities (as defined in the Indenture) and
the Unrestricted Securities (as defined below) issued in exchange for the
Initial Securities pursuant to the Registration Rights Agreement. The Initial
Securities and the Unrestricted Securities are treated as a single class of
securities under the Indenture. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect
on the date of the Indenture (except as otherwise indicated in the Indenture)
until such time as the Indenture is qualified under the TIA, and thereafter as
in effect on the date on which the Indenture is qualified under the TIA.
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and holders of Securities are referred to the Indenture and the
TIA for a statement of them. The Securities are general unsecured obligations of
the Company. The Securities are subordinated in right of payment to all Senior
Indebtedness of the Company to the extent and in the manner provided in the
Indenture. Each Holder of a Security, by accepting a Security, agrees to such
subordination, authorizes the Trustee to give effect to such subordination and
appoints the Trustee as attorney-in-fact for such purpose.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after November 15, 2002, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject to
the right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on November 15 of the years indicated below:
Year Percentage
---- ----------
2002 105.500%
2003 103.667%
2004 101.833%
2005 and thereafter 100.000%
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to
November 15, 2000, the Company may redeem in the aggregate up to 35% of the
originally issued aggregate principal amount of the Securities with the net cash
proceeds of one or more Public Equity Offerings by the Company or Holdings at a
redemption price in cash equal to 111% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject to
the right of Holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date); provided, however, that at
least $60 million of the Securities must remain outstanding immediately after
giving effect to each such redemption (excluding any Securities held by the
Company or any of its Affiliates). Notice of any such redemption must be given
within 60 days after the date of the closing of the relevant Public Equity
Offering of the Company or Holdings.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal
A-5
<PAGE> 93
to or larger than $1,000 principal amount. Securities and portions of them the
Trustee so selects shall be in amounts of $1,000 principal amount or integral
multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase Securities at a purchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date (subject to the right of Holders of record on the Interest
Relevant Record Date to receive interest due on the relevant Interest Payment
Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for two years, the Trustee and the Paying Agent will repay the funds to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
A-6
<PAGE> 94
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guaranties, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guaranties, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guaranties may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Securities and the Guaranties to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Subsidiaries to the Company, to
consolidate, merge or sell all or substantially all of its assets, to engage in
transactions with affiliates or certain other related persons or to engage in
certain businesses. The limitations are subject to a number of important
qualifications and exceptions. The Company must report quarterly to the Trustee
on compliance with such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guaranties except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guaranties unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
A-7
<PAGE> 95
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as
such, of the Company or any Guarantor shall have any liability for any
obligation of the Company or any Guarantor under the Securities, the Guaranty of
such Guarantor or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities and the
Guaranties.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a 11% Senior Subordinated Note due 2007, Series B, of the
Company (an "Unrestricted Security") which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects to the Initial Securities. The Holders shall be entitled to
receive certain additional interest payments in the event such exchange offer is
not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guaranty thereof without regard to principles of conflicts of
laws.
A-8
<PAGE> 96
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty by the Guarantor being referred to
herein as the "Guaranty") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guaranty and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guaranty therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Security Guarantee is subject to release upon the terms set
forth in the Indenture.
By:
--------------------------------------
Name:
Title:
<PAGE> 97
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated:___________________ Signed:__________________________________
(Signed exactly as name appears
on the other side of this
Security)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 98
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:_______________________________
(Signed exactly as name appears
on the other side of this
Security)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 99
EXHIBIT B
[FORM OF SERIES B SECURITY]
AIRXCEL, INC.
11% Senior Subordinated Note
due November 15, 2007, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
AIRXCEL, INC., a Delaware corporation and formerly named Recreation
Vehicle Products, Inc. (the "Company", which term includes any successor
corporation), for value received promises to pay to [ ] or registered assigns,
the principal sum of [ ] Dollars, on November 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing on May
15, 1998.
Interest Record Dates: May 1 and November 1
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officer.
AIRXCEL, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Dated: [ ]
B-1
<PAGE> 100
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11% Senior Subordinated Notes due November 15,
2007, Series B, described in the within-mentioned Indenture.
Dated: [ ]
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
--------------------------------------
Authorized Signatory
B-2
<PAGE> 101
(REVERSE OF SECURITY)
AIRXCEL, INC.
11% Senior Subordinated Note
due November 15, 2007, Series B
1. Interest.
AIRXCEL, INC., a Delaware corporation and formerly named Recreation
Vehicle Products, Inc. (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. Cash
interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from November 10, 1997.
The Company will pay interest semi-annually in arrears on each Interest Payment
Date, commencing May 15, 1998. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to
time on demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Securities
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
November 2, 1997 (the "Indenture"), by and among the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. This Security is one of a duly authorized issue of Securities of
the Company designated as its 11% Senior Subordinated Notes due 2007, Series B
(the "Unrestricted Securities"), limited (except as otherwise provided in the
Indenture) in aggregate principal amount to $125,000,000, which
B-3
<PAGE> 102
may be issued under the Indenture. The Securities include the % Senior
Subordinated Notes due 2007, Series A (the "Initial Securities"), the Private
Exchange Securities (as defined in the Indenture) and the Unrestricted
Securities. The Initial Securities, the Private Exchange Securities and the
Unrestricted Securities are treated as a single class of securities under the
Indenture. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture (except as otherwise indicated in the Indenture) until such time as
the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding anything
to the contrary herein, the Securities are subject to all such terms, and
holders of Securities are referred to the Indenture and the TIA for a statement
of them. The Securities are general unsecured obligations of the Company. The
Securities are subordinated in right of payment to all Senior Indebtedness of
the Company to the extent and in the manner provided in the Indenture. Each
Holder of a Security, by accepting a Security, agrees to such subordination,
authorizes the Trustee to give effect to such subordination and appoints the
Trustee as attorney-in-fact for such purpose.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after November 15, 2002, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject to
the right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on November 15 of the years indicated below:
Year Percentage
---- ----------
2002 105.500%
2003 103.667%
2004 101.833%
2005 and thereafter 100.000%
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to
November 15, 2000, the Company may redeem in the aggregate up to 35% of the
originally issued aggregate principal amount of the Securities with the net cash
proceeds of one or more Public Equity Offerings by Holdings (to the extent that
the net cash proceeds thereof are contributed to the equity capital of the
Company) or the Company after which there is a Public Market, at a redemption
price in cash equal to 111% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date); provided, however, that at least $60
million of the Securities must remain outstanding immediately after giving
effect to each such redemption (excluding any Securities held by the Company or
any of its Affiliates). Notice of any such redemption must be given within 60
days after the date of the closing of the relevant Public Equity Offering of
Holdings or the Company.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address.
B-4
<PAGE> 103
The Trustee may select for redemption portions of the principal amount of
Securities that have denominations equal to or larger than $1,000 principal
amount. Securities and portions of them the Trustee so selects shall be in
amounts of $1,000 principal amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase Securities at a purchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date (subject to the right of Holders of record on the Interest
Relevant Record Date to receive interest due on the relevant Interest Payment
Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for two years, the Trustee and the Paying Agent will repay the funds to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
B-5
<PAGE> 104
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guaranties, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guaranties, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guaranties may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Securities and the Guaranties to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets, to engage in transactions with affiliates or certain other related
persons or to engage in certain businesses. The limitations are subject to a
number of important qualifications and exceptions. The Company must report
quarterly to the Trustee on compliance with such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guaranties except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guaranties unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
B-6
<PAGE> 105
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as
such, of the Company or any Guarantor shall have any liability for any
obligation of the Company or any Guarantor under the Securities, the Guaranty of
such Guarantor or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities and the
Guaranties.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guaranty thereof without regard to principles of conflicts of
laws.
B-7
<PAGE> 106
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty by the Guarantor being referred to
herein as the "Guaranty") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guaranty and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guaranty therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Security Guarantee is subject to release upon the terms set
forth in the Indenture.
By:
--------------------------------------
Name:
Title:
<PAGE> 107
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated:___________________ Signed:__________________________________
(Signed exactly as name appears
on the other side of this
Security)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 108
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:_______________________________
(Signed exactly as name appears
on the other side of this
Security)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 109
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
C-1
<PAGE> 110
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11 % Senior Subordinated Notes due 2007
(the "Securities"), of Airxcel, Inc.
This Certificate relates to $_______ principal amount of Securities
held in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "Transferor").
The Transferor:*
|_| has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Physical Security or Physical Securities in definitive, registered
form of authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
|_| has requested that the Registrar by written order to exchange or
register the transfer of a Physical Security or Physical Securities.
|_| In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 2.16 of such Indenture,
and that the transfer of the Securities does not require Registration under the
Securities Act of 1933, as amended (the "Act"), because*:
|_| Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
|_| Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
|_| Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
|_| Such Security is being transferred in reliance on Rule 144 under the
Act.
|_| Such Security is being transferred in reliance on and in compliance
with an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." An Opinion of Counsel to the effect that such transfer
does not require Registration under the Securities Act accompanies this
certification.
---------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------
[Authorized Signatory]
Date: ______________________
*Check applicable box.
D-1
<PAGE> 111
EXHIBIT E
Form of Transferee Letter of Representation
Airxcel, Inc.
c/o United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administrator
Dear Sirs:
This certificate is delivered to request a transfer of $________
principal amount of the 11% Senior Subordinated Notes due 2007 (the "Notes") of
Airxcel, Inc. (the "Company"). Upon transfer, the Notes would be registered in
the name of the new beneficial owner as follows:
Name:
----------------------------------
Address:
-------------------------------
Taxpayer ID Number:
--------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and we invest
in or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of the
Company was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000 or (e) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of
E-1
<PAGE> 112
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (d) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Notes pursuant to clause
(d) or (e) above to require the delivery of an opinion of counsel, certificates
and/or other information satisfactory to the Company and the Trustee.
Dated: ______________________ TRANSFEREE: _________________________
By:
----------------------------------
E-2
<PAGE> 113
EXHIBIT F
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Re: Airxcel, Inc. (the "Company") 11%
Senior Subordinated Notes due 2007, Series A, and 11%
Senior Subordinated Notes due 2007, Series B (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $____________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
F-1
<PAGE> 114
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
--------------------------
[Authorized Signatory]
<PAGE> 1
EXHIBIT 4.2
AIRXCEL, INC.
$90,000,000
11% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
November 5, 1997
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
c/o CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
AIRXCEL, Inc. (the "Company"), a Delaware corporation, proposes to
issue and sell $90,000,000 aggregate principal amount of its 11% Senior
Subordinated Notes due 2007 (the "Notes"). The Notes will be issued pursuant to
an Indenture to be dated as of November 10, 1997 (the "Indenture") between the
Company, and United States Trust Company of New York, as trustee (the
"Trustee"). The Company hereby confirms its agreement with Chase Securities Inc.
("CSI") and NationsBanc Montgomery Securities, Inc. (collectively, the "Initial
Purchasers") concerning the purchase of the Notes by the Initial Purchasers.
The Notes will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon exemptions therefrom. The Company has prepared a
preliminary offering memorandum dated October 20, 1997 (the "Preliminary
Offering Memorandum") and an offering memorandum dated the date hereof (the
"Offering Memorandum") setting forth information concerning the Company and the
Notes. Copies of the Preliminary Offering Memorandum have been, and copies of
the Offering Memorandum will be, delivered by the Company to the Initial
Purchasers pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted. The
Company
<PAGE> 2
-2-
hereby confirms that it has authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the offering and
resale of the Notes by the Initial Purchasers in accordance with Section 2.
Holders of the Notes (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Company
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Notes") which are identical in
all material respects to the Notes (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) and (ii) under certain
limited circumstances, a shelf registration statement with respect to the resale
of the Notes pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
The Notes are being issued and sold in connection with the
acquisition (the "Acquisition") by the Company of substantially all of the
assets and certain liabilities of Crispaire Corporation ("Crispaire") pursuant
to an Asset Purchase Agreement dated as of October 17, 1997 among Airxcel
Holdings Corporation, the Company and Crispaire, (the "Asset Purchase
Agreement"). The Asset Purchase Agreement and the documents entered into in
connection therewith are herein collectively referred to as the "Acquisition
Documents."
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the Initial Purchasers on
and as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted from
the Preliminary Offering Memorandum or the Offering Memorandum in reliance
upon and in conformity with written information relating to the Initial
Purchasers furnished to the Company by or on behalf of any Initial
Purchaser expressly for use therein (the "Initial Purchasers'
Information").
<PAGE> 3
-3-
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Notes, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act; and the Notes satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Notes to the Initial Purchasers and the
offer, resale and delivery of the Notes by the Initial Purchasers in the
manner contemplated by this Agreement and the Offering Memorandum, to
register the Notes under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(d) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business as described in the Offering Memorandum and
are in good standing as a foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct of
their respective businesses as described in the Offering Memorandum
requires such qualification and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in
which they are engaged as described in the Offering Memorandum, except
where the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect").
(e) As of the dates set forth therein, the Company had the
authorized, issued and outstanding capitalization as set forth in the
Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.
Except as set forth in the Offering Memorandum, all of the outstanding
shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and
are owned directly or indirectly by the Company, free and clear of any
lien, charge, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party.
<PAGE> 4
-4-
(f) The Company has full right, power and authority to execute and
deliver this Agreement, the Acquisition Documents, the Indenture, the
Registration Rights Agreement and the Notes (collectively, the
"Transaction Documents") to which it is a party and to perform its
respective obligations hereunder and thereunder; and all corporate action
required to be taken by the Company for the due and proper authorization,
execution and delivery of each of the Transaction Documents to which it is
a party and the consummation of the transactions contemplated thereby have
been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of
the Company.
(h) The Registration Rights Agreement has been duly authorized by
the Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (i) such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and (ii) the
enforceability of rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or regulations or the
public policy underlying such laws or regulations.
(i) The Indenture has been duly authorized by the Company and, when
duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law).
(j) The Notes have been duly authorized by the Company and, when
duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations
of the Company, entitled to the benefits of the Indenture, enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
<PAGE> 5
-5-
(k) The Exchange Notes have been duly authorized by the Company and,
when executed, authenticated, issued and delivered as provided in the
Indenture and the Registration Rights Agreement in exchange for the Notes,
will be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Company entitled to the benefits of
the Indenture, enforceable against the Company in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law).
(l) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(m) The execution, delivery and performance by the Company of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Company with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents do not and will not (i) conflict with or result in a breach or
violation of any of the terms or the provisions of, or constitute a
default under, or, with notice or lapse of time or both, constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject except where such conflict,
breach, violation or default would not have a Material Adverse Effect
provided, however, that no such conflict, breach, violation or default
will exist which would have a Material Adverse Effect upon the Company's
ability to perform its obligations under the Transaction Documents or (ii)
result in any violation of the provisions of (a) the charter or by-laws of
the Company or any of its subsidiaries or (b) to the Company's knowledge,
any statute or any judgment, order, decree, rule or regulation of any
court or arbitrator or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or
assets; and no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or
body under any such statute, judgment, order, decree, rule or regulation
is required for the execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Company with the terms thereof
and the consummation of the transac-
<PAGE> 6
-6-
tions contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications (a)
which shall have been obtained or made prior to the Closing Date, or (b)
as may be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration Rights
Agreement.
(n) Coopers & Lybrand, L.L.P. are independent certified public
accountants with respect to the Company within the meaning of Rule 101 of
the Code of Professional Conduct of the American Institute of Certified
Public Accountants ("AICPA") and its interpretations and rulings
thereunder. The historical financial statements (including the related
notes) contained in the Offering Memorandum comply in all material
respects with the requirements applicable to a registration statement on
Form S-1 under the Securities Act (except that certain supporting
schedules are omitted); such historical financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby and fairly
present the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated; and
the financial information contained in the Offering Memorandum under the
headings "Summary-- Summary Historical Financial and Other Data,"
"Capitalization," "Selected Financial and Other Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Management-- Compensation of Executive Officers" is derived from the
accounting records of the entities purported to be covered thereby and
fairly presents the information purported to be shown thereby. The pro
forma financial statements contained in the Offering Memorandum have been
prepared on a basis consistent with the historical financial statements
contained in the Offering Memorandum (except for the pro forma adjustments
specified therein), include all material adjustments to the historical
financial statements required by Rule 11-02 of Regulation S-X under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to reflect the transactions described in the Offering
Memorandum, are based on assumptions made on a reasonable basis and fairly
present the historical and proposed transactions described in the Offering
Memorandum (including the transactions contemplated by the Transaction
Documents). The other historical financial and statistical information and
data included in the Offering Memorandum are, in all material respects,
fairly presented.
(o) Other than as described in the Offering Memorandum, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of the
Company or any of its
<PAGE> 7
-7-
subsidiaries is the subject which, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries could
reasonably be expected to have a Material Adverse Effect; and to the best
knowledge of the Company, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(p) To the best knowledge of the Company, no action has been taken
and no statute, rule, regulation or order has been enacted, adopted or
issued by any governmental agency or body which prevents the issuance of
the Notes or suspends the sale of the Notes in any jurisdiction; no
injunction, restraining order or order of any nature by any federal or
state court of competent jurisdiction has been issued with respect to the
Company or any of its subsidiaries which would prevent or suspend the
issuance or sale of the Notes or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction or prevent the
consummation of the Acquisition; no action, suit or proceeding is pending
against or, to the best knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries before any court or
arbitrator or any governmental agency, body or official, domestic or
foreign, which could reasonably be expected to interfere with or adversely
affect the issuance of the Notes or in any manner draw into question the
validity or enforceability of any of the Transaction Documents or any
action taken or to be taken pursuant thereto; and the Company has complied
with any and all requests by any securities authority in any jurisdiction
for additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(q) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) in violation in
any material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject,
except for any violation or default under clauses (ii) or (iii) that would
not have a Material Adverse Effect.
(r) The Company and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except
where the failure to possess or make the same would not, sin-
<PAGE> 8
-8-
gularly or in the aggregate, have a Material Adverse Effect, and neither
the Company nor any of its subsidiaries has received notification of any
revocation or modification of any such license, certificate, authorization
or permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(s) The Company and each of its subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to the Company or any of its
subsidiaries which has had (nor does the Company or any of its
subsidiaries have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of its subsidiaries, could reasonably be
expected to have) a Material Adverse Effect.
(t) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the Commission
thereunder or (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) The Company and each of its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect the Company and its subsidiaries and their respective
businesses. Neither the Company nor any of its subsidiaries has received
notice from any insurer or agent of such insurer that capital improvements
or other expenditures are required or necessary to be made in order to
continue such insurance.
<PAGE> 9
-9-
(w) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances, claims and defects and imperfections of
title except such as (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries
or (ii) could not reasonably be expected to have a Material Adverse
Effect.
(x) No labor disturbance by or dispute with the employees of the
Company or any of its subsidiaries exists or, to the best knowledge of the
Company, is contemplated or threatened.
(y) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of the Company or any of its subsidiaries which
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each of its
subsidiaries have not incurred and do not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any pension plan for which the Company or any of its subsidiaries would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which could reasonably be expected to cause the loss of such
qualification.
(z) Except as described in the Offering Memorandum, there has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission or other release of any kind of toxic or other wastes
or other hazardous substances by, due to or caused by the Company or any
of its subsidiaries (or, to the best knowledge of the Company, any other
entity (including any predecessor) for whose acts or omissions the Company
or any of its subsidiaries is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by the
Company or any of its subsidiaries, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any li-
<PAGE> 10
-10-
ability, except for any violation or liability could not reasonably be
expected to have, singularly or in the aggregate with all such violations
and liabilities, a Material Adverse Effect; and except as described in the
Offering Memorandum there has been no disposal, discharge, emission or
other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company has knowledge, except for any
such disposal, discharge, emission or other release of any kind which
could not reasonably be expected to have, singularly or in the aggregate
with all such discharges and other releases, a Material Adverse Effect.
(aa) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Notes, the consummation of the
Acquisition and to the other transactions related thereto as described in
the Offering Memorandum) will be Solvent. As used in this paragraph, the
term "Solvent" means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to pay
the probable liabilities of the Company on its total existing debts and
liabilities (including contingent liabilities) as they become absolute and
matured, (ii) the Company is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and commitments as
they mature and become due in the normal course of business, (iii)
assuming the sale of the Notes as contemplated by this Agreement and the
Offering Memorandum, the Company is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (iv)
the Company is not engaged in any business or transaction, and is not
about to engage in any business or transaction, for which its property
would constitute unreasonably small capital after giving due consideration
to the prevailing practice in the industry in which the Company is
engaged. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount
that, in the 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.
(bb) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company or any of its subsidiaries.
(cc) Neither the Company nor any of its subsidiaries owns 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 none of the pro-
<PAGE> 11
-11-
ceeds of the sale of the Notes 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 Notes to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.
(dd) Except as provided for herein, neither the Company nor any of
its subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company
or the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Notes.
(ee) There are no securities of the Company registered under the
Exchange Act, listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(ff) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
(gg) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act
in connection with the offering of the Notes.
(hh) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with the
offering of the Notes, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(ii) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Offering Memorandum has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.
(jj) None of the Company or any of its subsidiaries does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Florida Statutes Section 517.075.
<PAGE> 12
-12-
(kk) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs, management or business prospects of the
Company, whether or not arising in the ordinary course of business, (ii)
the Company has not incurred any material liability or obligation, direct
or contingent, other than in the ordinary course of business, (iii) the
Company has not entered into any material transaction other than in the
ordinary course of business and (iv) there has not been any change in the
capital stock or long-term debt of the Company, or any dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
2. Purchase and Resale of the Notes. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Notes set forth opposite the name of such
Initial Purchaser on Schedule I hereto at a purchase price equal to 97% of the
principal amount thereof. The Company shall not be obligated to deliver any of
the Notes except upon payment for all of the Notes to be purchased as provided
herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Notes for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents, warrants and agrees with the
Company that (i) it is purchasing the Notes pursuant to a private sale exempt
from registration under the Securities Act, (ii) it has not solicited offers
for, or offered or sold, and will not solicit offers for, or offer or sell, the
Notes by means of any form of general solicitation or general advertising within
the meaning of Rule 502(c) of Regulation D under the Securities Act or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the Notes
only from, and has offered or sold and will offer, sell or deliver the Notes, as
part of their initial offering, only (A) within the United States to persons
whom it reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities Act ("Rule
144A"), or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person has
represented to it that each such account is a Qualified Institutional Buyer to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A and in each case, in transactions in accordance with Rule 144A and
(B) outside the United States to persons other than U.S. persons in reliance on
Regulation S under the Securities Act ("Regulation S").
<PAGE> 13
-13-
(c) In connection with the offer and sale of Notes in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Notes have not been registered under the Securities Act and
may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from, or in
transactions not subject to, the registration requirements of the Securities
Act.
(ii) Such Initial Purchaser has offered and sold the Notes, and will
offer and sell the Notes, (A) as part of their distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the offering of
the Notes and the Closing Date, only in accordance with Regulation S or Rule
144A or any other available exemption from registration under the Securities
Act.
(iii) None of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Notes, and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S.
(iv) at or prior to the confirmation of sale of any Notes sold in
reliance on Regulation S, it will have sent to each distributor, dealer or other
person receiving a selling concession, fee or other remuneration that purchase
Notes from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Notes and the date
of original issuance of the Notes, except in accordance with
Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Notes, except with
its affiliates or with the prior written consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
<PAGE> 14
-14-
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Notes to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Notes purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 5(d) and (e), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Notes to any affiliate of an Initial Purchaser and that any such
affiliate may sell Notes purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Notes. (a) Delivery of and
payment for the Notes shall be made at the offices of Cahill Gordon & Reindel,
New York, New York, or at such other place as shall be agreed upon by the
Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
November 10, 1997, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
<PAGE> 15
-15-
(b) On the Closing Date, payment of the purchase price for the Notes
shall be made to the Company by wire or book-entry transfer of same-day funds to
such account or accounts as the Company shall specify prior to the Closing Date
or by such other means as the parties hereto shall agree prior to the Closing
Date against delivery to the Initial Purchasers of the certificates evidencing
the Notes. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchasers hereunder. Upon delivery, the Notes shall be in global
form, registered in such names and in such denominations as CSI on behalf of the
Initial Purchasers shall have requested in writing not less than two full
business days prior to the Closing Date. The Company agrees to make one or more
global certificates evidencing the Notes available for inspection by the Initial
Purchasers in New York, New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with each
of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of
any order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Notes for offering or sale in any jurisdiction and of
the initiation or threatening of any proceeding for any such purpose; and
to use its best efforts to prevent the issuance of any such order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the earliest
possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review;
<PAGE> 16
-16-
(d) if, at any time prior to completion of the resale of the Notes
by the Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for the Initial
Purchasers or counsel for the Company, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act
and are not saleable pursuant to Rule 144(k) under the Securities Act to
furnish to holders of the Notes and prospective purchasers of the Notes
designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to
time of the Notes and prospective purchasers of the Notes designated by
such holders);
(f) for so long as the Notes are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Notes
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Notes for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and to continue such qualifications in
effect for so long as required for the resale of the Notes; and to arrange
for the determination of the eligibility for investment of the Notes under
the laws of such jurisdictions as the Initial Purchasers may reasonably
request; provided that the Company and its subsidiaries shall not be
obligated to qualify as foreign corporations in any jurisdiction in which
they are not so qualified or to file a general consent to service of
process in any jurisdiction;
<PAGE> 17
-17-
(h) to assist the Initial Purchasers in arranging for the Notes to
be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the Notes
to be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Notes in a manner which would require registration of
the Notes under the Securities Act; (j) except following the effectiveness
of the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, not to, and to cause its affiliates not to,
and not to authorize or knowingly permit any person acting on their behalf
to, solicit any offer to buy or offer to sell the Notes by means of any
form of general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Notes as contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Notes or the Exchange Notes) without the
prior written consent of the Initial Purchasers;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Notes that have
been reacquired by them, except for Notes purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act;
(m) not to, for so long as the Notes are outstanding, be or become,
or be or become owned by, an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be
registered under Section 8 of
<PAGE> 18
-18-
the Investment Company Act, and to not be or become, or be or become owned
by, a closed-end investment company required to be registered, but not
registered thereunder;
(n) in connection with the offering of the Notes, until the earlier
of (i) 90 days following the Closing Date and (ii) CSI on behalf of the
Initial Purchasers shall have notified the Company of the completion of
the resale of the Notes, not to, and to use its feasible best efforts to
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons, bid
for or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Notes, or attempt to induce any
person to purchase any Notes; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Notes;
(o) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Notes;
(p) to not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
(q) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(r) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent
with the past practices of the Company and of which the Initial Purchasers
are notified), without the prior written consent of the Initial
Purchasers, unless in the judgment of the Company and its counsel, and
after notification to the Initial Purchasers, such press release or
communication is required by law; and
(s) to apply the net proceeds from the sale of the Notes as set
forth in the Offering Memorandum under the heading "Use of Proceeds."
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of
<PAGE> 19
-19-
the date hereof and the Closing Date, of the representations and warranties of
the Company contained herein, to the accuracy of the statements of the Company
and its officers made in any certificates delivered pursuant hereto, to the
performance by the Company of its respective obligations hereunder and to each
of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers and the Company may agree; and no stop order suspending the
sale of the Notes in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion
of such counsel, is material or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby and the
Acquisition (including any agreements or documents executed and delivered
in connection therewith), shall be reasonably satisfactory in all material
respects to the Initial Purchasers, and the Company shall have furnished
to the Initial Purchasers all documents and information that they or their
counsel may reasonably request to enable them to pass upon such matters.
(d) Kirkland & Ellis shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B hereto.
(e) The Initial Purchasers shall have received from Cahill Gordon &
Reindel, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents and information as they request for the
purpose of enabling them to pass upon such matters.
<PAGE> 20
-20-
(f) The Company shall have furnished to the Initial Purchasers
letters (the "Initial Letters") of Coopers & Lybrand L.L.P. and Maudlin &
Jenkins, LLC, addressed to the Initial Purchasers and dated the date
hereof, in form and substance satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers.
(g) The Company shall have furnished to the Initial Purchasers
letters (the "Bring-Down Letters") of Coopers & Lybrand L.L.P. and Maudlin
& Jenkins, LLC, addressed to the Initial Purchasers and dated the Closing
Date, in form and substance satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its President or chief executive
officer and its chief financial or accounting officer stating that (A)
such officers have carefully examined the Offering Memorandum,(B) in their
opinion, the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and since the date of the Offering Memorandum,
no event has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum (as
so amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
and (C) as of the Closing Date, the representations and warranties of the
Company in this Agreement are true and correct in all material respects,
the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder on or prior to the
Closing Date.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company.
(j) The Indenture shall have been duly executed and delivered by
each of Company and the Trustee, and the Notes shall have been duly
executed and delivered by the Company and duly authenticated by the
Trustee.
(k) The Notes shall have been approved by the NASD for trading in
the PORTAL Market.
(l) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum,
<PAGE> 21
-21-
such amendment or supplement shall have been prepared, the Initial
Purchasers shall have been given a reasonable opportunity to comment
thereon, and copies thereof shall have been delivered to the Initial
Purchasers reasonably in advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the reasonable judgment of the Initial
Purchasers would materially impair the ability of the Initial Purchasers
to purchase, hold or effect resales of the Notes as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), other than
as described in the Offering Memorandum, there shall not have been any
change in the capital stock or increase in the long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole, the
effect of which, in any such case described above, is, in the reasonable
judgment of CSI, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Notes on the terms
and in the manner contemplated in this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(o) No action shall have been taken by and no statute, rule,
regulation or order shall have been enacted, adopted or issued by, any
governmental agency or body which would, as of the Closing Date, prevent
the issuance, sale or resale of the Notes in the manner contemplated by
the Offering Memorandum; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance, sale or resale of the Notes in the manner contemplated by the
Offering Memorandum.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Notes or the
Company's other debt securities or preferred stock by any "nationally
recognized statistical rating organization," as such term is defined by
the Commission for purposes of Rule 436(g)(2) of the rules and regulations
of the Commission under the Securities Act and (ii) no such organization
shall have publicly announced that it has under sur-
<PAGE> 22
-22-
veillance or review (other than an announcement with positive implications
of a possible upgrading), its rating of the Notes or the Company's other
debt securities or preferred stock.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
maximum or minimum prices shall have been established on any such exchange
or market by the Commission, by any such exchange or by any other
regulatory body or governmental authority having jurisdiction, or trading
in any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or (ii) any moratorium
on commercial banking activities shall have been declared by federal or
New York state authorities or (iii) an outbreak or escalation of
hostilities or a declaration by the United States of a national emergency
or war or (iv) a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) the effect of which,
in the case of clauses (iii) and (iv), is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or the delivery of the Notes on the
terms and in the manner contemplated in this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(r) All of the conditions contained in the Credit Agreement to be
fulfilled or complied with prior to any borrowings under such agreement
shall have been complied with or waived in accordance with the terms
thereof; provided, that the Initial Purchasers shall have received prior
notice of any such waiver, and the Credit Agreement will be in full force
and effect.
(s) The Initial Purchasers shall have received a true and correct
copy of each of the Acquisition Documents and there shall have been no
material amendments, alterations, modifications or waivers of any of the
provisions thereof or the schedules thereto since the date of execution
and delivery thereof. All conditions to effect the Acquisition shall have
been satisfied or waived. The Acquisition and all other transactions
contemplated by the Transaction Documents to be consummated at or prior to
the Closing Date shall occur simultaneously with the closing of the sale
of the Notes by the Company hereunder.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
<PAGE> 23
-23-
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Notes if, prior to that time, any of the events described in Section 5(m),
(n), (o), (p) or (q) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchaser may make arrangements for the
purchase of the Notes which such defaulting Purchaser agreed but failed to
purchase by other reasons satisfactory to the Company and the non-defaulting
Initial Purchaser, but if no such arrangements are made within 36 hours after
such default, this Agreement shall terminate without liability on the part of
the non-defaulting Initial Purchaser or the Company, except that the Company
will continue to be liable for the payment of expenses to the extent set forth
in Sections 8 and 12 and except that the provisions of Sections 9, 10, 13 and 17
shall not terminate and shall remain in effect. As used in this Agreement, the
term "Initial Purchasers" includes, for all purposes of this Agreement unless
the context otherwise requires, any party not listed in Schedule 1 hereto that,
pursuant to this Section 7, purchases Notes which a defaulting Initial Purchaser
agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons agree to
purchase the Notes of a defaulting Initial Purchaser, either the non-defaulting
Initial Purchaser or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the reasonable opinion
of counsel for the Company or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other document or arrangement,
and the Company agrees to reasonably promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Company
shall fail to tender the Notes for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Notes for any reason permitted under this Agreement, the
Company, shall reimburse the Initial Purchasers for such out-of-pocket expenses
(including reasonable fees and disbursements of counsel) as shall have been
reasonably incurred by the Initial Purchasers in connection with this Agreement
and the proposed purchase and resale of the Notes. If this Agreement is
terminated pursuant to Section 7 by reason of the default of one or more of the
Initial Purchasers, the Company shall not be obligated to reimburse any
defaulting Initial Purchaser on account of such expenses.
<PAGE> 24
-24-
9. Indemnification. (a) The Company shall indemnify and hold
harmless each Initial Purchaser, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively referred to for
purposes of this Section 9(a) and Section 10 as the "Initial Purchasers"), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Notes), to
which such Initial Purchasers may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the Company
pursuant to Section 4(e) or (ii) the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
shall reimburse each Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers'
Information; and provided, further, however, that with respect to any such
untrue statement in or omission from the Preliminary Offering Memorandum, the
indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of any such Initial Purchaser to the extent that the sale to the person
asserting any such loss, claim, damage, liability or action was an initial
resale by such Initial Purchaser and any such loss, claim, damage, liability or
action of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the Offering
Memorandum was not sent or given to such person at or prior to the written
confirmation of the sale of such Notes to such person and (B) the untrue
statement in or omission from the Preliminary Offering Memorandum was corrected
in the Offering Memorandum, unless, in either case, such failure to deliver the
Offering Memorandum was a result of non-compliance by the Company with Section
4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its respective affiliates, its
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company
<PAGE> 25
-25-
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the "Company"), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers' Information, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of such claim or the commencement of such action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party
<PAGE> 26
-26-
has reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld or delayed), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld or delayed), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party in form and substance
satisfactory to such indemnified party from all liability on claims that are the
subject matter of such proceeding and does not contain an admission of fault or
culpability.
The obligations of the Company and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropri-
<PAGE> 27
-27-
ate to reflect the relative benefits received by the Company on the one hand and
the Initial Purchasers on the other from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes purchased
under this Agreement (before deducting expenses) received by or on behalf of the
Company, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Notes purchased under this Agreement,
on the other, bear to the total gross proceeds from the sale of the Notes under
this Agreement, in each case, as set forth in the table on the cover page of the
Offering Memorandum. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to the
Company or information supplied by the Company on the one hand or to any Initial
Purchasers' Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 10 were to be
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10 shall be deemed to include, for purposes of this Section 10, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 10, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
with respect to the Notes purchased by it hereunder exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 10 are several
in proportion to their respective purchase obligations and not joint.
<PAGE> 28
-28-
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers and the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Notes. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company agrees
with the Initial Purchasers to pay (a) the costs incident to the authorization,
issuance, sale, preparation and delivery of the Notes and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
any amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident to the
preparation, printing and delivery of the certificates evidencing the Notes,
including stamp duties and transfer taxes, if any, payable upon issuance of the
Notes; (e) the fees and expenses of the Company's counsel and independent
accountants; (f) the fees and expenses of qualifying the Notes under the Notes
laws of the several jurisdictions as provided in Section 4(g) and of preparing,
printing and distributing the Blue Sky memoranda (including related fees and
expenses of counsel for the Initial Purchasers); (g) any fees charged by rating
agencies for rating the Notes; (h) the fees and expenses of the Trustee and any
paying agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection with the
application for the inclusion of the Notes on the PORTAL Market and the approval
of the Notes for book-entry transfer by DTC; and (j) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement which are not otherwise specifically provided for in this Section
12; provided, however, that except as expressly provided in this Section 12 and
Section 8, the Initial Purchasers shall pay their own costs and expenses
(including, without limitation, fees and expenses of counsel for the Initial
Purchasers).
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Company or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Notes and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
<PAGE> 29
-29-
any of them or any of their respective affiliates, officers, directors,
employees, representatives, agents or controlling persons.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: James Casey (telecopier no.: (212)
270-0994);
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Mel Adams (telecopier no.: (316)
832-3493);
provided, however, that any notice to an Initial Purchaser pursuant to Section
9(c) shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
15. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that for all purposes of this Agreement (including, but not limited
to, Section 1(a), Section 9 and Section 10) the Initial Purchasers' Information
consists solely of the following information in the Preliminary Offering
Memorandum and the Offering Memorandum: (i) the last paragraph on the front
cover page concerning the terms of the offering by the Initial Purchasers; (ii)
the first paragraph on page "i" concerning stabilization, over allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the first sentence of the third
paragraph, and the fourth, fifth, seventh, ninth, eleventh and twelfth paragraph
under the heading "Plan of Distribution."
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE SATE OF NEW YORK, WITHOUT REGARD TO PRINCIPALS OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE
<PAGE> 30
-30-
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE> 31
S-1
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the Initial
Purchasers in accordance with its terms.
Very truly yours,
AIRXCEL, INC.
By:
-------------------------------
Name:
Title:
<PAGE> 32
S-2
Accepted:
CHASE SECURITIES, INC.
By:
-------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
270 Park Avenue
New York, New York 10017
Attention: Legal Department
NATIONSBANC MONTGOMERY SECURITIES, INC.
By:
-------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
100 North Tryon Street
Charlotte, NC 28255
Attention: Legal Department
<PAGE> 33
SCHEDULE II
Principal
Amount of
Initial Purchasers Notes
- ------------------ -----
Chase Securities, Inc........................ $54,000,000
Nationsbanc Montgomery Securities, Inc....... $36,000,000
-----------
Total.................................. $90,000,000
===========
<PAGE> 34
ANNEX A
[Form of Registration Rights Agreement]
<PAGE> 35
ANNEX B
[Form of Opinion of Counsel for the Company]
(i) the Company is validly existing as a corporation in good
standing under the laws of the state of Delaware, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction set forth on schedule I hereto;
(ii) the statements in the Offering Memorandum under the heading
"Certain Federal Income Tax Considerations", to the extent that they
constitute summaries of matters of law or regulation or legal conclusions,
have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects; and such counsel does not have
actual knowledge of any current or pending legal or governmental actions,
suits or proceedings other than as described in the Offering Memorandum;
(iii) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
(iv) the Company has the Corporate power to execute and deliver each
of the Transaction Documents and to perform its obligations thereunder;
and the Company's Board of Directors has adopted by requisite vote the
resolutions necessary to authorize the Company's execution, delivery and
performance of the Transaction Documents to which it is a party and the
Pricing Committee appointed by the Board of Directors has approved by
requisite vote the price and interest rate set forth therein;
(v) each of the Purchase Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Company and
constitutes a valid, and assuming the due authorization, execution and
delivery thereof by each other party thereto, legally binding agreement of
the Company enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law) and except to the extent that the indemnification provisions
thereof may be unenforceable;
(vi) the Indenture has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery thereof by
the Trustee, constitutes a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and
<PAGE> 36
-2-
by general equitable principles (whether considered in a proceeding in
equity or at law);
(vii) the Notes have been duly executed and delivered by the Company
and, assuming due authentication thereof by the Trustee and upon payment
and delivery in accordance with the Purchase Agreement, will constitute
valid and legally binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law);
(viii) When the Exchange Notes have been duly executed and delivered
by the Company in accordance with the terms of the Registration Rights
Agreement, the Exchange Offer and the Indenture (assuming due
authentication thereof by the Trustee), the Exchange Notes will constitute
valid and legally binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law);
(ix) the Asset Purchase Agreement has been duly executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law);
(x) each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum;
(xi) the execution, delivery and performance by the Company of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes to the Initial Purchasers and performance by the
Company of its agreements thereunder will not (i) result in a breach or
default under any of the terms or provisions of any material agreement set
forth on Schedule II hereto; (ii) violate the charter or by-laws of the
Company or (iii) constitute a material violation of any statute or
governmental rule or regulation which, in the experience of such counsel,
is normally applicable both to general business corporations that are not
engaged in regulated business
<PAGE> 37
-3-
activities and to transactions of the type contemplated by the Offering
Memorandum (but without such counsel having made any special investigation
as to other laws and provided that such counsel need express no opinion
with respect to (a) any laws, rules or regulations to which the Company
may be subject as a result of any of the Initial Purchaser's legal or
regulatory status or the involvement of any of the Initial Purchaser in
such transactions or (b) any laws, rules or regulations relating to
disclosure, misrepresentations or fraud; and (iv) to the actual knowledge
of such counsel no consent, approval, authorization or order of, or filing
or registration with, any such court or arbitrator or governmental agency
or body under any such statute, judgment, order, decree, rule or
regulation is required for the execution, delivery and performance by the
Company of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Notes and compliance by the
Company with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications (a)
which have been obtained or made prior to the Closing Date and (b) as may
be required to be obtained or made under the Securities Act, the Exchange
Act, the Trust Indenture Act and applicable state securities laws as
provided in the Registration Rights Agreement (as to which such counsel
need express no opinion) except (in the case of clauses (i) and (iii)
above) for any such conflict, breach, violation, default or event which
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Such counsel's opinion in this paragraph
need not address any impact the Company's actions may have under any
financial covenants or tests in the contracts specified in clause (i)
above, any consequences a default by the Company under the Purchase
Agreement, the Registration Rights Agreement or the Indenture may have
under any contract specified in clause (i) above, or any cross default
provisions in the contracts specified in clause (i) above;
(xii) to the actual knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company is a party or to
which the property or assets of the Company is subject that seek to
restrain, enjoin or prevent the consummation of or otherwise challenge the
issuance or sale of the Notes to be sold to the Initial Purchaser or the
performance or its agreements contemplated by the Transaction Documents;
(xiv) neither the Company nor any of its subsidiaries is (A) an
"investment company" within the meaning of the Investment Company Act and
the rules and regulations of the Commission thereunder, or (B) a "holding
company" or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of
1935, as amended;
<PAGE> 38
-4-
(xv) neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the Notes
will violate Regulation G, T, U or X of the Federal Reserve Board; and
(xvi) assuming the accuracy of the representations, warranties and
agreements of the Company and of the Initial Purchasers contained in the
Purchase Agreement, no registration of the Notes under the Securities Act
or qualification of the Indenture under the Trust Indenture Act is
required in connection with the issuance and sale of the Notes by the
Company and the offer, resale and delivery of the Notes by the Initial
Purchasers in the manner contemplated by the Purchase Agreement and the
Offering Memorandum.
Such counsel shall also state that they have participated in conferences
with representatives of the Company, representatives of its independent
accountants and counsel and representatives of the Initial Purchasers and their
counsel at which conferences the contents of the Preliminary Offering Memorandum
and the Offering Memorandum and any amendment and supplement thereto and related
matters were discussed and, although such counsel assumes no responsibility for
the accuracy, completeness or fairness of the Offering Memorandum or any
amendment or supplement thereto (except as expressly provided above), nothing
has come to the attention of such counsel to cause such counsel to believe that
the Offering Memorandum or any amendment or supplement thereto (other than the
financial statements and other financial and statistical information contained
therein, as to which such counsel need express no belief), as of the date
thereof and as of the Closing Date, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and public officials which are furnished to the Initial Purchasers.
<PAGE> 1
EXHIBIT 4.3
AIRXCEL, INC.
$90,000,000
11% Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
November 10, 1997
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Airxcel, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to Chase Securities Inc. ("CSI") and NationsBanc Montgomery
Securities, Inc. (the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in a purchase agreement dated November [ ], 1997 (the
"Purchase Agreement"), $90,000,000 aggregate principal amount of its 11% Senior
Subordinated Notes due 2007 (the "Securities"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with the Initial Purchasers,
for the benefit of the holders (including the Initial Purchasers) of the
Securities, the Exchange Securities (as defined herein) and the Private Exchange
Securities (as defined herein) (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall (i) prepare and, not
later than 45 days following the date of original issuance of the Securities
(the "Issue Date"), file with the Commission a registration statement (the
"Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer to the Holders of the Securities
(the "Registered Exchange Offer") to issue and deliver to such Holders, in
exchange for the Securities, a like aggregate principal amount of debt
securities of the Company that are identical in all material respects to the
Securities except for the transfer restrictions relating to the Securities, (ii)
use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 150 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 195 days after the Issue Date and (iii) keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer
<PAGE> 2
Registration Period"). The Exchange Securities will be issued under the
Indenture or an indenture (the "Exchange Securities Indenture") between the
Company and the Trustee or such other bank or trust company that is reasonably
satisfactory to the Initial Purchasers, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects to the
Indenture, except for the transfer restrictions relating to the Securities (as
described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate the Company or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Securities that have, or that are reasonably likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Initial Purchasers and
each Exchanging Dealer acknowledge that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, each Holder that is a
broker-dealer electing to exchange Securities, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing substantially the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
principal amount of debt securities of the Company (the "Private Exchange
Securities") that are identical in all material respects to the Exchange
Securities except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
-2-
<PAGE> 3
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for
exchange.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
-3-
<PAGE> 4
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of any of the
Company or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 195 days after
the Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered Exchange Offer, or (iv) any applicable law or
interpretations do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder that participates in the Registered Exchange
Offer does not receive freely transferable Exchange Securities in exchange for
tendered Securities, or (vi) the Company so elects, then the following
provisions shall apply:
-4-
<PAGE> 5
(a) The Company shall use its reasonable best efforts to file as
promptly as practicable (but in no event more than 30 days after so
required or requested pursuant to this Section 2) with the Commission, and
thereafter shall use its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with
any Exchange Offer Registration Statement, a "Registration Statement").
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer
Restricted Securities for a period ending on the earlier of (i) two years
from the Issue Date or such shorter period that will terminate when all
the Transfer Restricted Securities covered by the Shelf Registration
Statement have been sold pursuant thereto and (ii) the date on which the
Securities become eligible for resale without volume restrictions pursuant
to Rule 144 under the Securities Act (in any such case, such period being
called the "Shelf Registration Period"). The Company shall be deemed not
to have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes
any action that would result in Holders of Transfer Restricted Securities
covered thereby not being able to offer and sell such Transfer Restricted
Securities during that period, unless such action is required by
applicable law
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with
respect to information included therein in reliance upon or in conformity
with written information furnished to the Company by or on behalf of any
Holder specifically for use therein (the "Holders' Information")) does not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages.
(a) The parties hereto agree that the Holders of Transfer Restricted
Securities will suffer damages if the Company fails to fulfill its obligations
under Section 1 or
-5-
<PAGE> 6
Section 2, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if (i) the applicable Registration
Statement is not filed with the Commission on or prior to 45 days after the
Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is not declared effective within 150
days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 30 days after
publication of the change in law or interpretation), (iii) the Registered
Exchange Offer is not consummated on or prior to 195 days after the Issue Date,
or (iv) the Shelf Registration Statement is filed and declared effective within
150 days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 30 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company will be
obligated to pay liquidated damages to each Holder of Transfer Restricted
Securities, during the period of one or more such Registration Defaults, in an
amount equal to $ 0.192 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder until (i) the applicable Registration
Statement is filed, (ii) the Exchange Offer Registration Statement is declared
effective and the Registered Exchange Offer is consummated, (iii) the Shelf
Registration Statement is declared effective or (iv) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. As used
herein, the term "Transfer Restricted Securities" means (i) each Security until
the date on which such Security has been exchanged for a freely transferable
Exchange Security in the Registered Exchange Offer, (ii) each Security or
Private Exchange Security until the date on which it has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) each Security or Private Exchange Security until
the date on which it is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Company shall
not be required to pay liquidated damages to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or failed
to provide the information required to be provided by it, if any, pursuant to
Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Company for these purposes), in trust, for the benefit of the Holders thereof,
prior to 11:00 a.m., New York City time, on the next interest payment date
specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on each
interest payment date specified by the Indenture and the Securities to the
record holder enti-
-6-
<PAGE> 7
tled to receive the interest payment to be made on such date. Each obligation to
pay liquidated damages shall be deemed to accrue from and including the date of
the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as any Initial Purchaser may reasonably propose; (ii) include the
information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Annex C hereto in the "Plan of Distribution" section
of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the
Letter of Transmittal delivered pursuant to the Registered Exchange Offer;
and (iii) if requested by any Initial Purchaser, include the information
required by Items 507 or 508 of Regulation S-K, as applicable, in the
prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise each Initial Purchaser, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
-7-
<PAGE> 8
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities,
the Exchange Securities or the Private Exchange Securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus included
therein in order that the statements therein are not misleading and
do not omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(c) The Company will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company consents to
the use of such prospectus or any amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Securities in connection
with the offer and sale of the Transfer Restricted Securities covered by
such prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
-8-
<PAGE> 9
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement or the Shelf Registration Statement
and any amendment or supplement thereto as such Initial Purchaser,
Exchanging Dealer or other persons may reasonably request; and the Issuers
consent to the use of such prospectus or any amendment or supplement
thereto by any such Initial Purchaser, Exchanging Dealer or other persons,
as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company will use its reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities,
Exchange Securities or Private Exchange Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities, Exchange Securities or Private Exchange
Securities covered by such Registration Statement; provided that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities to facilitate the
timely preparation and delivery of certificates representing Securities,
Exchange Securities or Private Exchange Securities to be sold pursuant to
any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may
request in writing prior to sales of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company is required to maintain an
effective Registration Statement, the Company will promptly prepare and
file with the Commission a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a
Holder, the prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
-9-
<PAGE> 10
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may
be, and provide the applicable trustee with printed certificates for the
Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earning statement satisfying the
provisions of Section 11(a) of the Securities Act; provided that in no
event shall such earning statement be delivered later than 45 days after
the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the applicable Registration
Statement, which statement shall cover such 12-month period.
(m) The Company will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture
Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement
to furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may
from time to time reasonably require for inclusion in such Shelf
Registration Statement, and the Company may exclude from such registration
the Transfer Restricted Securities of any Holder that fails to furnish
such information within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of
any notice from the Company pursuant to Section 4(b)(ii) through (v), such
Holder will discontinue disposition of such Transfer Restricted Securities
until such Holder's receipt of copies of the supplemental or amended
prospectus contemplated by Section 4(j) or until advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed. If the Company shall give any notice under Section 4(b)(ii)
through (v) during the period that the Issuers are required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such
period from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities
covered by such Registration Statement shall have received (x) the copies
of the supplemental or amended prospectus contemplated by Section 4(j) (if
an
-10-
<PAGE> 11
amended or supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company shall
enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action,
if any, as Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold
or the managing underwriters (if any) shall reasonably request in order to
facilitate any disposition of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and
Private Exchange Securities being sold and any underwriter participating
in any disposition of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement, all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries and (ii) use its reasonable best
efforts to have its officers, directors, employees, accountants and
counsel supply all relevant information reasonably requested by such
representative, Special Counsel or any such underwriter (an "Inspector")
in connection with such Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Company
shall, if requested by Holders of a majority in aggregate principal amount
of the Securities, Exchange Securities and Private Exchange Securities
being sold, their Special Counsel or the managing underwriters (if any) in
connection with such Shelf Registration Statement, use its reasonable best
efforts to cause (i) its counsel to deliver an opinion relating to the
Shelf Registration Statement and the Securities, Exchange Securities or
Private Exchange Securities, as applicable, in customary form, (ii) its
officers to execute and deliver all customary documents and certificates
requested by Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being
sold, their Special Counsel or the managing underwriters (if any) and
(iii) its independent public accountants to provide a comfort letter or
letters in customary form, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards
No. 72.
5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 and the Company will reimburse the Initial Purchasers and the Holders
for the reasonable fees and disbursements of one firm of attorneys (in addition
to any local counsel) chosen by the Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities to be sold pursuant to each Registration Statement (the "Special
Counsel") acting for the Initial Purchasers or Holders in connection therewith.
-11-
<PAGE> 12
6. Indemnification.
(a) In the event of a Shelf Registration Statement or in connection
with any prospectus delivery pursuant to an Exchange Offer Registration
Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the
Company shall indemnify and hold harmless each Holder (including, without
limitation, any such Initial Purchaser or Exchanging Dealer), its affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6 and Section 7 as a Holder) from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of Securities, Exchange Securities or Private
Exchange Securities), to which that Holder may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Issuers shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, that with respect to any such
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Securities, Exchange Securities or Private
Exchange Securities to the extent that such loss, claim, damage, liability or
action of or with respect to such Holder results from the fact that both (A) a
copy of the final prospectus was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities, Exchange Securities or
Private Exchange Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was a result of non-compliance by the Company with Section 4(d), 4(e), 4(f) or
4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for
-12-
<PAGE> 13
purposes of this Section 6(b) and Section 7 as the Company), from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information
furnished to the Issuers by such Holder, and shall reimburse the Issuers for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf Registration
Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those
-13-
<PAGE> 14
available to the indemnifying party, (3) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuers from the offering and sale of the Securities,
on the one hand, and a Holder with respect to the sale by such Holder of
Securities, Exchange Securities or Private Exchange Securities, on the other, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Issuers on the one hand and such Holder on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.. The relative benefits received by the Company on the one hand
and a Holder on the other with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by or on behalf of the
Company as set forth in the table on the cover of the Offering Memorandum, on
the one hand, bear to the total proceeds received by such Holder with respect to
its sale of Securities, Exchange Securities or Private Exchange Securities, on
the other.
-14-
<PAGE> 15
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Issuers or
information supplied by the Issuers on the one hand or to any Holders'
Information supplied by such Holder on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. Rules 144 and 144A. The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Company covenants that it will take such further action as any
Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Securities, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
-15-
<PAGE> 16
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority in aggregate principal amount of the
Securities, the Exchange Securities and the Private Exchange Securities, taken
as a single class. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders whose Securities, Exchange Securities or Private Exchange
Securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Securities, the
Exchange Securities and the Private Exchange Securities being sold by such
Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture, with a copy in like
manner to Chase Securities Inc., Bear, Stearns & Co. Inc. and NationsBanc
Montgomery Securities, Inc.;
(ii) if to an Initial Purchaser, initially at its address set
forth in the Purchase Agreement; and
(iii) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
-16-
<PAGE> 17
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the 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.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company or by any
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery of
damages for a breach by the Issuers of their obligations under Sections 1 or 2
hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agree that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Company represents, warrants and
agrees that (i) it has not entered into, shall not, on or after the date of this
Agreement, enter into any agreement that is inconsistent with the rights granted
to the Holders in this Agreement or otherwise conflicts with the provisions
hereof, (ii) it has not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of its debt
securities to any person and (iii) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Transfer Restricted Securities, it
shall not grant to any person the right to request the Company to register any
debt securities of the Company under the Securities Act unless the rights so
granted are not in conflict or inconsistent with the provisions of this
Agreement.
(j) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and
-17-
<PAGE> 18
restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
-18-
<PAGE> 19
Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchasers.
Very truly yours,
AIRXCEL, INC.
By
--------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BY: CHASE SECURITIES INC.
By
------------------------------
Authorized Signatory
-19-
<PAGE> 20
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution"
<PAGE> 21
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution.
<PAGE> 22
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
199_, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or
<PAGE> 23
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
<PAGE> 24
ANNEX D
o CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF KIRKLAND & ELLIS]
To Call Writer Direct:
212 446-4800
December 24, 1997
Airxcel, Inc.
3050 North Saint Frances Street
Wichita, Kansas 67219
Re: Series B 11% Senior Subordinated Notes due 2007
Ladies and Gentlemen:
We are acting as special counsel to Airxcel, Inc., a Delaware
corporation (the "Company"), in connection with the proposed registration by the
Company of up to $90,000,000 in aggregate principal amount of the Company's
Series B 11% Senior Subordinated Notes due 2007 (the "Exchange Notes"), pursuant
to a Registration Statement on Form S-4 filed with the Securities and Exchange
Commission (the "Commission") on December 23, 1997 under the Securities Act of
1933, as amended (the "Securities Act") (such Registration Statement, as amended
or supplemented, is hereinafter referred to as the "Registration Statement"),
for the purpose of effecting an exchange offer (the "Exchange Offer") for the
Company's 11% Senior Subordinated Notes due 2007 (the "Old Notes"). The Exchange
Notes are to be issued pursuant to the Indenture (the "Indenture"), dated as of
November 10, 1997, between the Company and United States Trust Company of New
York, as Trustee, in exchange for and in replacement of the Company's
outstanding Old Notes, of which $90,000,000 in aggregate principal amount is
outstanding.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including (i) the corporate and organizational documents of the
Company, (ii) minutes and records of the corporate proceedings of the Company
with respect to the issuance of the Exchange Notes, (iii) the Registration
Statement and exhibits thereto and (iv) the Exchange and Registration Rights
Agreement, dated as of November 10, 1997, among the Company, Chase Securities
Inc. and NationsBanc Montgomery Securities, Inc.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of all
documents submitted to us as copies. We have also assumed the
<PAGE> 2
Airxcel, Inc.
December 24, 1997
Page 2
genuineness of the signatures of persons signing all documents in connection
with which this opinion is rendered, the authority of such persons signing on
behalf of the parties thereto other than the Company, and the due authorization,
execution and delivery of all documents by the parties thereto other than the
Company. As to any facts material to the opinions expressed herein which we have
not independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company and others.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we are of the opinion
that:
(1) The Company is a corporation existing and in good standing under
the General Corporation Law of the State of Delaware.
(2) The sale and issuance of the Exchange Notes has been validly
authorized by the Company.
(3) When, as and if (i) the Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the Indenture
shall have been qualified pursuant to the provisions of the Trust Indenture Act
of 1939, as amended, (iii) the Old Notes shall have been validly tendered to the
Company and (iv) the Exchange Notes shall have been issued in the form and
containing the terms described in the Registration Statement, the Indenture, the
resolutions of the Company's Board of Directors (or authorized committee
thereof) authorizing the foregoing and any legally required consents, approvals,
authorizations and other order of the Commission and any other regulatory
authorities to be obtained, the Exchange Notes when issued pursuant to the
Exchange Offer will be legally issued, fully paid and nonassessable and will
constitute valid and binding obligations of the Company.
Our opinions expressed above are subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of (i)
any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (iii)
public policy considerations which may limit the rights of parties to obtain
certain remedies and (iv) any laws except the laws of
<PAGE> 3
Airxcel, Inc.
December 24, 1997
Page 3
the State of New York and the General Corporation Law of the State of Delaware.
We advise you that issues addressed by this letter may be governed in whole or
in part by other laws, but we express no opinion as to whether any relevant
difference exists between the laws upon which our opinions are based and any
other laws which may actually govern. For purposes of the opinion in paragraph
1, we have relied exclusively upon recent certificates issued by the Delaware
Secretary of State and such opinion is not intended to provide any conclusion or
assurance beyond that conveyed by such certificates. We have assumed without
investigation that there has been no relevant change or development between the
respective dates of such certificates and the date of this letter.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of the rules and regulations of
the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various states to the issuance of the Exchange Notes.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the States of Delaware or New York be changed by legislative action,
judicial decision or otherwise.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Yours very truly,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 10, 1997
Among
AIRXCEL, INC.,
THE GUARANTORS AT ANY TIME PARTY HERETO,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK, AS AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
I. DEFINITIONS...........................................................1
SECTION 1.01. Certain Defined Terms..................................1
SECTION 1.02. Accounting Terms......................................19
II. THE LOANS............................................................19
SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments...........................................19
SECTION 2.02. Loans.................................................20
SECTION 2.03. Notice of Loans.......................................22
SECTION 2.04. Notes; Repayment of Loans.............................23
SECTION 2.05. Interest on Loans.....................................24
SECTION 2.06. Fees..................................................24
SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments.................24
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of
Interest..............................................25
SECTION 2.09. Prepayment of Loans...................................25
SECTION 2.10. Reserve Requirements; Change in Circumstances.........28
SECTION 2.11. Change in Legality....................................31
SECTION 2.12. Indemnity.............................................31
SECTION 2.13. Pro Rata Treatment; Assumption by and Delegation of
Authority to the Agent................................32
SECTION 2.14. Sharing of Setoffs....................................33
SECTION 2.15. Taxes.................................................34
SECTION 2.16. Payments and Computations.............................36
SECTION 2.17. Issuance of Letters of Credit.........................37
SECTION 2.18. Payment of Letters of Credit; Reimbursement...........38
SECTION 2.19. Agent's Actions with respect to Letters of Credit.....39
SECTION 2.20. Letter of Credit Fees.................................40
III. COLLATERAL SECURITY..................................................40
SECTION 3.01. Security Documents....................................40
SECTION 3.02. Filing and Recording..................................40
IV. REPRESENTATIONS AND WARRANTIES.......................................41
SECTION 4.01. Organization, Legal Existence.........................41
SECTION 4.02. Authorization.........................................41
SECTION 4.03. Governmental Approvals................................42
i
<PAGE> 3
Page
----
SECTION 4.04. Binding Effect........................................42
SECTION 4.05. Material Adverse Change...............................42
SECTION 4.06. Litigation; Compliance with Laws; etc.................42
SECTION 4.07. Financial Statements..................................42
SECTION 4.08. Federal Reserve Regulations...........................43
SECTION 4.09. Taxes.................................................44
SECTION 4.10. Employee Benefit Plans................................44
SECTION 4.11. No Material Misstatements.............................46
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act...........................................46
SECTION 4.13. Security Interest.....................................46
SECTION 4.14. Use of Proceeds.......................................46
SECTION 4.15. Subsidiaries..........................................46
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks............................................46
SECTION 4.17. Solvency..............................................47
SECTION 4.18. Permits, etc..........................................48
SECTION 4.19. Compliance with Environmental Laws....................48
SECTION 4.20. No Change in Credit Criteria or Collection Policies...49
SECTION 4.21. Acquisition...........................................49
SECTION 4.22. Bank Accounts.........................................50
V. CONDITIONS OF CREDIT EVENTS..........................................50
SECTION 5.01. All Credit Events.....................................50
SECTION 5.02. First Borrowing.......................................50
VI. AFFIRMATIVE COVENANTS................................................55
SECTION 6.01. Legal Existence.......................................55
SECTION 6.02. Businesses and Properties.............................55
SECTION 6.03. Insurance.............................................55
SECTION 6.04. Taxes.................................................56
SECTION 6.05. Financial Statements, Reports, etc....................56
SECTION 6.06. Litigation and Other Notices..........................59
SECTION 6.07. ERISA.................................................59
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit...........................60
SECTION 6.09. Use of Proceeds.......................................61
SECTION 6.10. Fiscal Year-End.......................................61
SECTION 6.11. Further Assurances....................................61
SECTION 6.12. Additional Grantors and Guarantors....................61
SECTION 6.13. Environmental Laws....................................61
ii
<PAGE> 4
Page
----
SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants.............................................63
SECTION 6.15. Maintain Operating Accounts...........................63
SECTION 6.16. Amendments............................................64
SECTION 6.17. Lock-Box Accounts.....................................64
VII. NEGATIVE COVENANTS...................................................64
SECTION 7.01. Liens.................................................64
SECTION 7.02. Sale and Lease-Back Transactions......................65
SECTION 7.03. Indebtedness..........................................66
SECTION 7.04. Dividends, Distributions and Payments.................66
SECTION 7.05. Consolidations, Mergers and Sales of Assets...........66
SECTION 7.06. Investments...........................................67
SECTION 7.07. [Intentionally Omitted.]..............................67
SECTION 7.08. [Intentionally Omitted.]..............................68
SECTION 7.09. Leverage Ratio........................................68
SECTION 7.10. Interest Coverage Ratio...............................68
SECTION 7.11. Business..............................................68
SECTION 7.12. Sales of Receivables..................................68
SECTION 7.13. Use of Proceeds.......................................68
SECTION 7.14. ERISA.................................................68
SECTION 7.15. Accounting Changes....................................69
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents.....................69
SECTION 7.17. Transactions with Affiliates..........................69
SECTION 7.18. Consulting Fees.......................................69
SECTION 7.19. Negative Pledges, Etc.................................69
VIII. EVENTS OF DEFAULT....................................................70
IX. AGENT................................................................73
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER
COLLATERAL...........................................................76
SECTION 10.01. Collection of Receivables; Management of Collateral...76
SECTION 10.02. Receivables Documentation.............................78
SECTION 10.03. Status of Receivables and Other Collateral............78
SECTION 10.04. Monthly Statement of Account..........................79
SECTION 10.05. Collateral Custodian..................................79
XI. MISCELLANEOUS........................................................80
SECTION 11.01. Notices...............................................80
iii
<PAGE> 5
Page
----
SECTION 11.02. Survival of Agreement.................................80
SECTION 11.03. Successors and Assigns; Participations................81
SECTION 11.04. Expenses; Indemnity...................................84
SECTION 11.05. Applicable Law........................................85
SECTION 11.06. Right of Setoff.......................................85
SECTION 11.07. Payments on Business Days.............................86
SECTION 11.08. Waivers; Amendments...................................86
SECTION 11.09. Severability..........................................87
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc...........88
SECTION 11.11. Confidentiality.......................................88
SECTION 11.12. Submission to Jurisdiction............................89
SECTION 11.13. Counterparts; Facsimile Signature.....................89
SECTION 11.14. Headings..............................................89
XII. GUARANTEES...........................................................90
EXHIBITS
EXHIBIT A Form of Term Note
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Security Agreement - Patents and Trademarks
EXHIBIT H Form of Guarantee
EXHIBIT I Form of Assignment of Contract
iv
<PAGE> 6
SCHEDULES
SCHEDULE 2.01(a) Term Loan Commitments
SCHEDULE 2.01(b) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 2.20 Letter of Credit Fee Schedule
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.16(a) Defects in Title
SCHEDULE 4.16(c) Pending Claims
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 4.22 Bank Accounts
SCHEDULE 6.05(g) Inventory Designations
SCHEDULE 6.05(k) Borrowing Base Certificate
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE I Management Investors
v
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 10, 1997,
among AIRXCEL, INC. (formerly known as Recreation Vehicle Products,
Inc.), a Delaware corporation (the "Borrower"), the Guarantors at
any time party hereto, the lenders named in Schedules 2.01(a) and
2.01(b) annexed hereto (collectively, the "Lenders"), and THE CHASE
MANHATTAN BANK, as agent for the Lenders (in such capacity, the
"Agent").
The Borrower has applied to the Lenders for Loans (such term and all
other capitalized terms used in this paragraph having the respective meanings
ascribed to such terms above or hereinafter) in the form of Revolving Credit
Loans to the Borrower at any time and from time to time prior to the Revolving
Credit Termination Date in an aggregate principal amount not in excess of
$15,000,000 at any time outstanding. The proceeds of the Revolving Credit Loans
shall be used for working capital and general corporate purposes. The Grantors
will provide Collateral in accordance with the provisions of this Agreement and
the Security Documents. The Lenders are severally, and not jointly, willing to
extend such Loans to the Borrower subject to the terms and conditions
hereinafter set forth. Accordingly, the Borrower, the Guarantors, the Lenders
and the Agent hereby agree as follows:
I. DEFINITIONS
SECTION 1.01 Certain Defined Terms. For purposes hereof, the
following terms shall have the meanings specified below:
"Acquisition" shall mean the purchase by the Borrower of all of the
assets, and the assumption of certain liabilities, of Crispaire Corporation
pursuant to the provisions of the Acquisition Agreement.
"Acquisition Agreement" shall mean the Asset Purchase Agreement
dated as of October 17, 1997, among Crispaire Corporation, as seller, and the
Borrower, as buyer, and Holdings, the parent of Borrower.
"Acquisition Documents" shall mean the Acquisition Agreement and all
agreements, documents and instruments executed and delivered pursuant thereto or
in connection therewith, in each case as in effect on the Closing Date.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate in
effect for such Interest Period and (ii) Statutory Reserves. For purposes
hereof, "Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum
<PAGE> 8
reserve percentages (including, without limitation, any marginal, special,
emergency, or supplemental reserves) expressed as a decimal established by the
Board and any other banking authority to which any Lender is subject with
respect to the Adjusted LIBO Rate for Eurocurrency Liabilities (as defined in
Regulation D). Such reserve percentages shall include, without limitation, those
imposed under Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets which may be available from time to time to any Lender under Regulation
D. Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common control
with such person and, without limiting the generality of the foregoing, includes
(i) any person which beneficially owns or holds 5% or more of any class of
voting securities of such person or 5% or more of the equity interest in such
person, (ii) any person of which such person benefi cially owns or holds 5% or
more of any class of voting securities or in which such person beneficially owns
or holds 5% or more of the equity interest in such person and (iii) any director
or officer of such person. For the purposes of this definition, the term
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Alternate Base Loan" shall mean a Loan based on the Alternate Base
Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1%, and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent at its principal office in New York
City as its prime rate in effect at such time. "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal
2
<PAGE> 9
Reserve Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Agent from
three New York City negotiable certificate of deposit dealers of recognized
standing selected by it. "Statutory Reserves" shall mean a fraction (expressed
as a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal,
established by the Board and any other banking authority to which the Agent is
subject with respect to the Base CD Rate, for new negotiable nonpersonal time
deposits in dollars of over $100,000 with maturities approximately equal to
three months. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage. "Assessment Rate"
shall mean the annual assessment rate (net of refunds and rounded upwards, if
necessary, to the next 1/16 of 1%) estimated by the Agent (in good faith, but in
no event in excess of statutory or regulatory maximums) to be payable by the
Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Agent's domestic offices during the current calendar year.
"Federal Funds Effective Rate" shall mean, for any day, 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 on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it. If for any reason
the Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Base CD Rate or the Federal
Funds Effective Rate, or both, for any reason, including, the inability or
failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Lending Office" shall mean, with respect to each Lender,
such Lender's Domestic Lending Office in the case of an Alternate Base Loan and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee and accepted by the Agent, in
substantially
3
<PAGE> 10
the form of Exhibit F annexed hereto.
"Assignment of Contract" shall mean, collectively, the Assignment of
Contract, dated as of the date hereof, between the Borrower and the Agent, for
its own benefit and for the benefit of the Lenders, and the Assignment of
Contract, dated as of the Original Closing Date, between Holdings and the Agent,
for its own benefit and for the benefit of the Lenders, each substantially in
the form of Exhibit I annexed hereto, each as amended, modified or supplemented
from time to time.
"Availability" shall mean at any time (i) the lesser at such time of
(x) the Total Revolving Credit Commitment and (y) the Borrowing Base as set
forth in the most recent certificate delivered pursuant to Section 6.05(j),
minus (ii) the sum at such time of (x) the unpaid principal balance of the
Revolving Credit Loans together with all reserves established pursuant to this
Agreement including, without limitation, Sections 2.01 and 7.01(c) hereof, and
(y) the Letter of Credit Usage.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(b) hereof.
"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City except that, if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capitalized Lease Obligation" shall mean an obligation to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Cash Interest Expense" shall mean, with respect to any person for
any period, the Interest Expense of such person for such period less all
non-cash items constituting Interest Expense during such period (including,
without limitation, amortization of debt discounts and payments of interest on
Indebtedness by issuance of Indebtedness or by accrual), determined on a
Consolidated basis in accordance with
4
<PAGE> 11
GAAP.
"Change of Control" shall mean either (i) Holdings shall cease to
own 100% all classes of the Borrower's outstanding capital stock, free and clear
of any Liens (other than Liens created pursuant to this Agreement), or (ii) the
Investor Group shall cease to own common stock of Holdings representing not less
than 65% of the common equity interest, whether voting or non-voting, in
Holdings on a fully diluted basis assuming the exercise of all securities
exercisable, convertible or exchangeable for or into common stock equity
interests and (B) after a registered initial public offering of the common stock
of Holdings, the Investor Group shall cease to own common stock of Holdings
representing not less than 51% of the common equity interest, whether voting or
non-voting, in Holdings on a fully diluted basis assuming the exercise of all
securities exercisable, convertible or exchangeable for or into common stock
interests.
"Closing Date" shall mean the date of the first borrowing under this
Agreement, but in no event later than November 17, 1997.
"Coast" shall mean The Coast Distribution Systems, Inc., a
California corporation.
"Coast Distribution Agreement" shall mean the Distribution Agreement
dated as of October 11, 1995 between the Borrower and Coast.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all collateral and security as described in
the Security Documents.
"Commitment" shall mean, with respect to each Lender, the sum of the
Term Loan Commitment of such Lender as set forth in Schedule 2.01(a), and the
Revolving Credit Commitment of such Lender as set forth in Schedule 2.01(b), as
each may be adjusted from time to time pursuant to this Agreement including,
without limitation, Section 2.07 hereof.
"Consolidated" shall mean, in respect of any person, as applied to
any financial or accounting term, such term determined on a consolidated basis
in accordance with GAAP (except as otherwise required herein) for the person and
all consolidated subsidiaries thereof.
"Credit Event" shall mean each borrowing and each issuance of a
Letter of Credit hereunder.
"Credits" shall mean each Loan and each Letter of Credit.
5
<PAGE> 12
"Customer" shall mean and include the account debtor or obligor with
respect to any Receivable.
"Default" shall mean any condition, act or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"dollars" or the symbol "$" shall mean dollars in lawful currency of
the United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name in Schedule 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Agent.
"Domestic Subsidiary" means, with respect to any person, any
subsidiary of such person which is incorporated or organized under the laws of
the United States, any State or the District of Columbia or the Commonwealth of
Puerto Rico.
"EBITDA" shall mean with respect to any person for any period the
sum of (i) Net Income, (ii) Interest Expense, (iii) depreciation and
amortization of intangible assets and (iv) federal, state and local income
taxes, in each case of such person for such period, in each case, determined on
a Consolidated basis in accordance with GAAP.
"Eligible Inventory" shall mean the Eligible Raw Materials/Finished
Goods and the Eligible WIP Inventory.
"Eligible Raw Materials/Finished Goods Inventory" shall mean
inventory of the Borrower comprised solely of raw materials and finished goods
which is, in the opinion of the Agent, not obsolete, slow-moving or
unmerchantable and is and at all times shall continue to be acceptable to the
Agent in all respects; provided, however, that Eligible Raw Materials/Finished
Goods Inventory shall in no event include inventory which (i) is not located at
one of the addresses for locations of Collateral set forth on Schedule I to the
Security Agreement and with respect to which the Agent has not been granted and
has not perfected a valid, first priority security interest, (ii) has been
returned or rejected by a Customer or (iii) is Eligible WIP Inventory. Standards
of eligibility may be fixed and revised from time to time solely by the Agent in
the Agent's exclusive judgment exercised in its reasonable commercial
discretion. In determining eligibility, the Agent may, but need not, rely on
reports and schedules furnished by the Borrower, but reliance by the Agent
thereon from time to time shall not be deemed to limit the right of the Agent to
revise standards of eligibility at any time as to both present and future
inventory of the Borrower. If any inventory at any time ceases to be Eligible
Raw Materials/Finished Goods Inventory, such inventory shall promptly be
excluded from the calculation of Eligible Raw Materials/Finished Goods
Inventory.
6
<PAGE> 13
"Eligible WIP Inventory" shall mean inventory of the Borrower (but
only the RVP Division) comprised solely of work-in-process consisting of
component parts used in the assembly of air conditioning units, excluding any
work-in-process relating to the assembly of awning products, which is, in the
opinion of the Agent, not obsolete, slow-moving or unmerchantable and is and at
all times shall continue to be acceptable to the Agent in all respects;
provided, however, that Eligible WIP Inventory shall in no event include
inventory which (i) is not located at one of the addresses for locations of
Collateral set forth on Schedule I to the Security Agreement and with respect to
which the Agent has not been granted and has not perfected a valid, first
priority security interest, (ii) has been returned or rejected by a Customer or
(iii) is Eligible Raw Materials/Finished Goods Inventory. Standards of
eligibility may be fixed and revised from time to time solely by the Agent in
the Agent's exclusive judgment exercised in its reasonable commercial
discretion. In determining eligibility, the Agent may, but need not, rely on
reports and schedules furnished by the Borrower, but reliance by the Agent
thereon from time to time shall not be deemed to limit the right of the Agent to
revise standards of eligibility at any time as to both present and future
inventory of the Borrower. If any inventory at any time ceases to be Eligible
WIP Inventory, such inventory shall promptly be excluded from the calculation of
Eligible WIP Inventory.
"Eligible Receivables" shall mean Receivables created by the
Borrower in the ordinary course of business arising out of the sale or lease of
goods or rendition of services by the Borrower, which are and at all times shall
continue to be acceptable to the Agent in all respects. Standards of eligibility
may be fixed and revised from time to time solely by the Agent in the Agent's
exclusive judgment exercised in its reasonable commercial discretion. In
general, without limiting the foregoing, a Receivable shall in no event be
deemed to be an Eligible Receivable unless: (a) all payments due on the
Receivable have been invoiced and the underlying goods shipped or services
performed, as the case may be; (b) the payment due on the Receivable is not more
than 60 days past the invoice date; (c) the payments due on more than 50% of all
Receivables from the same Customer are less than 60 days past the invoice date;
(d) the Receivable arose from a completed and bona fide transaction (and with
respect to a sale of goods, a transaction in which title has passed to the
Customer) which requires no further act under any circumstances on the part of
the Borrower in order to cause such Receivable to be payable in full by the
Customer; (e) the Receivable is in conformity in all material respects with the
representations and warranties made by the Borrower to the Agent and the Lenders
with respect thereto and is free and clear of all security interests and Liens
of any nature whatsoever other than any security interest deemed to be held by
the Borrower or any security interest created pursuant to the Security Documents
or permitted by Section 7.01 hereof; (f) the Receivable constitutes an "account"
or "chattel paper" within the meaning of the Uniform Commercial Code of the
state in which the Receivable is located; (g) the Customer has not asserted that
the Receivable, and the Borrower is not aware that the Receivable, arises out of
a bill and hold, consignment or progress billing arrangement or is subject to
any setoff, contras, net-out contract, offset, deduction, dispute, credit,
counterclaim or other defense arising
7
<PAGE> 14
out of the transactions represented by the Receivables or independently thereof
and the Customer has finally accepted the goods from the sale out of which the
Receivable arose and has not objected to its liability thereon or returned,
rejected or repossessed any of such goods, except for complaints made or goods
returned in the ordinary course of business for which, in the case of goods
returned, goods of equal or greater value have been shipped in return; (h) the
Receivable arose in the ordinary course of business of the Borrower; (i) the
Customer is not (x) the United States government or the government of any state
or political subdivision thereof or therein, or any agency or department of any
thereof or (y) an Affiliate of Holdings, the Borrower or any subsidiary thereof;
(j) (x) the Customer is a United States or Canadian person or an obligor in the
United States or Canada or (y) such Receivable is secured or payable by a letter
of credit, insurance or guaranty satisfactory to the Agent in its discretion;
(k) the Receivable complies with all material requirements of all applicable
laws and regulations, whether Federal, state or local (including, without
limitation, usury laws and laws, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy); (l) to the knowledge of the
Borrower, the Receivable is in full force and effect and constitutes a legal,
valid and binding obligation of the Customer enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles; (m) the Receivable
is denominated in and provides for payment by the Customer in dollars; (n) the
Receivable has not been and is not required to be charged off or written off as
uncollectible in accordance with GAAP or the customary business practices of the
Borrower; (o) the Agent on behalf of the Lenders possesses a valid, perfected
first priority security interest in such Receivable as security for payment of
the Obligations; and (p) the Agent is satisfied with the credit standing of the
Customer (or any guarantor of a Customer, including without limitation, Coast)
in relation to the amount of credit extended.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Hazardous Material at, in, by or from any of the
properties of the Borrower or its subsidiaries, (ii) the environmental aspects
of the transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of any of the properties of the Borrower or its
subsidiaries or (iii) the violation, or alleged violation by the Borrower or any
of its subsidiaries, of any statutes, ordinances, orders, rules, regulations,
Permits or licenses of or from any governmental authority, agency or court
relating to environmental matters connected with any of the properties of the
Borrower or its subsidiaries, under any applicable
8
<PAGE> 15
Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Oil Pollution Act of
1990 (33 U.S.C. ss.2701 et. seq.), the Safe Drinking Water Act (42 U.S.C. ss.
300f, et seq.), the Clear Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. ss. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), as such laws
have been and hereafter may be amended or supplemented, and any applicable
related or analogous present or future Federal, state or local, statutes, rules,
regulations, ordinances, licenses, permits and orders of regulatory and
administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with the Borrower or any of its subsidiaries would
be treated as a single employer under the provisions of Title I or Title IV of
ERISA.
"Eurodollar Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name in Schedule 2.03 annexed hereto (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Agent.
"Eurodollar Loan" shall mean a Loan based on the Adjusted LIBO Rate
in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Final Maturity Date" shall mean October 31, 2002.
"Financial Officer" shall mean, with respect to any person, the
chief financial officer or the chief accounting officer of such person.
"Fiscal Year" shall mean the fiscal year of the Borrower for
accounting purposes which ends on December 31 of each year.
"Foreign Subsidiary" means, with respect to any person, any
subsidiary of
9
<PAGE> 16
such Person which is not a Domestic Subsidiary of such Person. On the Closing
Date, the Borrower's sole Foreign Subsidiary is RVPI.
"Funded Debt" shall mean with respect to any person as of the date
of determination thereof, all Indebtedness of such person and its subsidiaries
on a Consolidated basis outstanding at such time which matures more than one
year after the date of calculation, and any such Indebtedness maturing within
one year from such date of calculation which is renewable or extendable at the
option of the obligor to a date more than one year from such date and including
in any event the Revolving Credit Loans.
"GAAP" shall have the meaning assigned to such term in Section 1.02
hereof.
"Grantor" shall mean any Grantor, Pledgor or Debtor, as such terms
are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise, of
any person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and shall include, without limitation, any obligation of such
person, direct or indirect, to (i) purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Indebtedness or obligation, (ii) purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness or
obligation of the payment of such Indebtedness or obligation, or (iii) maintain
working capital, equity capital, available cash or other financial condition of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or obligation; provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either case in the
ordinary course of business.
"Guarantor" shall mean, collectively, any Domestic Subsidiary of the
Borrower which becomes a guarantor of the Obligations after the date hereof.
"Hazardous Material" shall mean any pollutant, contaminant, or
hazardous, toxic or dangerous waste, substance or material, defined or regulated
as such in (or for purposes of) any Environmental Law and any other toxic,
reactive, or flammable chemicals, including (without limitation) any asbestos,
any petroleum (including crude oil or any fraction), any radioactive substance
and any polychlorinated biphenyls; provided, in the event that any Environmental
Law is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment;
and provided, further, to the extent that the applicable laws of any state
establish a meaning for "hazardous material," "hazardous substance," "hazardous
waste," "solid waste" or "toxic substance"
10
<PAGE> 17
which is broader than that specified in any Federal Environmental Law, such
broader meaning shall apply.
"Holdings" shall mean Airxcel Holdings, Inc., a Delaware
corporation, together with its successors and assigns.
"Indebtedness" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such person's business, or, if overdue, the validity
of which are being contested in good faith by appropriate proceedings by such
person, (d) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person and all
Capitalized Lease Obligations, (e) all payment obligations of such person with
respect to interest rate or currency protection agreements, (f) all obligations
of such person as an account party under any letter of credit or in respect of
bankers' acceptances, (g) all obligations of any third party secured by property
or assets of such person (regardless of whether or not such person is liable for
repayment of such obligations), (h) all Guarantees of such person and (i) the
redemption price of all redeemable preferred stock of such person, but only to
the extent that such stock is redeemable at the option of the holder or requires
sinking fund or similar payments at any time prior to the Final Maturity Date.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in Sec
tion 11.11 hereof.
"Interest Coverage Ratio" shall mean, with respect to any person for
any four-quarter period, the ratio of (i) (x) EBITDA for the four (or such
lesser number of quarters as shall have elapsed since the Closing Date) most
recent consecutive fiscal quarters ending on or prior to the date of
determination minus (y) capital expenditures [(including, without limitation,
Capitalized Lease Obligations) of such person for such period, to (ii) the Cash
Interest Expense of such person for such four (or such lesser number of quarters
as shall have elapsed since the Closing Date) quarter period, in each case,
determined on a Consolidated basis in accordance with GAAP.
"Interest Expense" shall mean, with respect to any person for any
period, the interest expense of such person during such period determined on a
Consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (i) the
11
<PAGE> 18
amortization of debt discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense, (iii) the portion of any Capitalized Lease Obligation
allocable to interest expense, (iv) all fixed and all calculable dividend
payments on preferred stock, and (v) payments of interest expense in kind.
"Interest Payment Date" shall mean (i) in the case of an Alternate
Base Loan, the first Business Day of each January, April, July and October,
commencing January 2, 1998, and (ii) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable thereto, and, in addition, in respect
of any Eurodollar Loan of more than three (3) months' duration, each earlier day
which is three (3) months after the first day of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrower may elect with respect to its Eurodollar Loans;
provided, however, that (x) if an Interest Period would end on a day that is not
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Loans, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (y) no Interest Period
shall end later than the Final Maturity Date and (z) interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"Investor Group" shall mean Citicorp Venture Capital, Ltd.,
its Affiliates, their respective employees and the Management Investors.
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned such term in
Section 2.17 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (ii) the
unreimbursed drawings at such time under all such Letters of Credit.
"Leverage Ratio" with respect to any person at the end of any fiscal
quarter shall mean the ratio of (i) Funded Debt as at the date of determination
to (ii) EBITDA of such person for the four most recent consecutive fiscal
quarters ending on or prior to the date of determination, in each case,
determined on a Consolidated basis in accordance with GAAP.
12
<PAGE> 19
"LIBO Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Eurodollar Loan of the Agent and for a maturity
equal to the applicable Interest Period are offered in immediately available
funds to the London branch of the Agent by leading banks in the London interbank
market for Eurodollars at approxi mately 11:00 a.m., London time, two (2)
Business Days prior to the first day of such Interest Period.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset, (ii)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset, (iii)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities or (iv) any other right of or arrangement
with any creditor to have such creditor's claim satisfied out of such assets, or
the proceeds therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean any Term Loan or any Revolving Credit Loan.
"Loan Documents" shall mean this Agreement, each Security Document,
each Guarantee executed and delivered at any time with respect to the
Obligations, the Notes and each other document, instrument, or agreement now or
hereafter delivered to the Agent or any Lender in connection herewith or
therewith.
"Loan Party" shall mean the Borrower, each Grantor, each Guarantor,
and each subsidiary thereof.
"Management Investors" shall mean the individual investors listed on
Schedule I attached hereto.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, prospects, operations or financial or other condition
of any Loan Party, (ii) the ability of any Loan Party to perform or pay the
Obligations in accordance with the terms hereof or of any other Loan Document,
(iii) the rights of, or benefits available to, the Lenders or the Agent under
any Loan Document or (iv) the Agent's Lien on any material portion of the
Collateral or the priority of such Lien.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sec tion 4001(a)(3) of ERISA.
13
<PAGE> 20
"Net Amount of Eligible Inventory" shall mean, at any time, the Net
Amount of Eligible Raw Materials/Finished Goods Inventory and the Net Amount of
Eligible WIP Inventory.
"Net Amount of Eligible Raw Materials/Finished Goods Inventory"
shall mean, at any time, the aggregate value, computed at the lower of cost (on
a FIFO basis) and current market value, of Eligible Raw Materials/Finished Goods
Inventory of the Borrower.
"Net Amount of Eligible Receivables" shall mean and include at any
time, without duplication, the gross amount of Eligible Receivables at such time
less (i) sales, excise or similar taxes and (ii) returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Net Amount of Eligible WIP Inventory" shall mean, at any time,
sixty-five percent (65%) of the aggregate value, computed at the lower of cost
(on a FIFO basis) and current market value, of Eligible WIP Inventory of the
Borrower.
"Net Income" shall mean, with respect to any person for any period,
the aggregate income (or loss) of such person for such period which shall be an
amount equal to net revenues and other proper items of income for such person
less the aggregate for such person of any and all items that are treated as
expenses under GAAP, less Federal, state and local income taxes, plus, to the
extent deducted or added in determining net income, non-cash expenses associated
with Holdings' stock option plans, but excluding any extraordinary gains or
losses or any gains or losses from the sale or disposition of assets other than
in the ordinary course of business, in each case, determined on a Consolidated
basis in accordance with GAAP.
"Notes" shall mean the Term Notes and the Revolving Credit Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrower to the Lenders and the Agent under or in connection
with the Loan Documents, whether now existing or hereafter created, direct or
indirect, due or not, whether created directly or acquired by assignment,
participation or otherwise, including without limitation all obligations,
liabilities and Indebtedness of the Borrower with respect to the Security
Documents and other Loan Documents, the principal of and interest on the
Revolving Credit Loans, the Term Loans and the payment or performance of all
other obligations, liabilities, and Indebtedness of the Borrower to the Lenders
and the Agent hereunder, under the Letters of Credit or under any one or more of
the other Loan Documents (including the payment of amounts that would become due
but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, and interest that, but for the filing of a petition in
bankruptcy with respect to the Borrower, would accrue on such obligations,
whether or not a claim is allowed against the Borrower for such interest in the
related bankruptcy proceeding), including without
14
<PAGE> 21
limitation all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"Original Closing Date" shall mean August 22, 1996.
"Original Credit Agreement" shall mean the Credit Agreement, dated
as of August 22, 1996, as amended to the Closing Date, among the Borrower, the
lenders and guarantors named therein, and the Agent.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.15(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in Section
4.18 hereof.
"person" shall mean any natural person, corporation, limited
liability company, business trust, association, company, joint venture,
partnership or government or any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Borrower, any subsidiary or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement dated as of the
Original Closing Date, between the Grantor(s) and the Agent, for its own benefit
and for the benefit of the Lenders, in substantially the form of Exhibit D
annexed hereto, as amended, modified or supplemented from time to time.
"Pledged Stock" shall have the meaning assigned to such term in the
Pledge Agreement.
"Qualified Sale" shall mean any sale or other disposition by any
Loan Party or any of their respective subsidiaries, other than in the ordinary
course of business, of any equipment or property (other than inventory or
Receivables) for (x) cash equal to at least 90% of the fair market value thereof
determined in good faith by the Board of Directors of such Loan Party, (y)
"trade-in" or (z) "trade-up", in each case, of all of the net cash proceeds
thereof (a) within twelve months after the date of such sale shall be applied to
the purchase of capital equipment or property, such purchased equipment or
property to be used in the ordinary course of business of such
15
<PAGE> 22
Loan Party or subsidiary, and to have a fair market value in the aggregate of
not less than the amount of such net cash proceeds, or (b) shall be applied to
the payment of Indebtedness incurred in connection with the purchase of any
equipment or property described in clause (a) above, and (c) in the case of
clause (a) above, pending such application, shall be deposited into a cash
collateral account maintained with the Agent, pursuant to agreements in form,
scope and substance reasonably satisfactory to the Agent.
"Receivables" shall mean and include all of the Borrower's accounts,
instruments, documents, chattel paper and general intangibles, whether secured
or unsecured, whether now existing or hereafter created or arising, and whether
or not specifically assigned to the Agent for its own benefit and/or the ratable
benefit of the Lenders.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of the Borrower or its subsidiaries (whether
such property is owned, leased, subleased or used), including, without
limitation, with respect to Hazardous Materials and the Release thereof.
"Reportable Event" shall mean a Reportable Event as defined in Sec-
16
<PAGE> 23
tion 4043(c) of ERISA.
"Required Lenders" shall mean Lenders having 51% of the Total
Commitment.
"Responsible Officer" shall mean, with respect to any person, any
vice president or president, or the chief financial officer or controller, of
such person.
"Revolving Credit Alternate Base Loan" shall mean a Revolving Credit
Loan that is an Alternate Base Loan.
"Revolving Credit Commitment" shall mean, with respect to any
Lender, the Revolving Credit Commitment of such Lender as set forth in Schedule
2.01(b) annexed hereto, as the same may be reduced from time to time pursuant to
this Agreement including, without limitation, Section 2.07 hereof.
"Revolving Credit Commitment Fee" shall have the meaning set forth
in Section 2.06(a) hereof.
"Revolving Credit Eurodollar Loan" shall mean a Revolving
Credit Loan that is a Eurodollar Loan.
"Revolving Credit Loan" shall mean a Revolving Credit Loan made
pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes of
the Borrower, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B annexed hereto, as amended, modified or
supplemented from time to time.
"Revolving Credit Termination Date" shall mean the earlier to occur
of (i) the Final Maturity Date and (ii) such date as the Revolving Credit Loans
shall otherwise be payable in full and the Revolving Credit Commitment shall
terminate, expire or be canceled in accordance with the terms of this Agreement.
"RVPI" shall mean RVP International Sales Corporation, a Barbados
corporation.
"Security Agreement" shall mean the Security Agreement dated as of
the Original Closing Date, between the Grantor(s) and the Agent, for its own
benefit and for the benefit of the Lenders, substantially in the form of Exhibit
E annexed hereto, as amended, modified or supplemented from time to time.
"Security Agreement - Patents and Trademarks" shall mean the
Security
17
<PAGE> 24
Agreement and Mortgage - Patents and Trademarks, dated as of the Original
Closing Date, between the Debtor(s), as such term is defined therein, and the
Agent, for its own benefit and for the benefit of the Lenders, substantially in
the form of Exhibit G annexed hereto, as amended, modified or supplemented from
time to time.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, the Security Agreement - Patents and Trademarks, the Assignment of
Contract and each other agreement now existing or hereafter created providing
collateral security for the payment or performance of any Obligations.
"Subordinated Indebtedness" shall mean, with respect to the
Borrower, Indebtedness subordinated in right of payment to such person's
monetary obligations under this Agreement upon terms satisfactory to and
approved in writing by the Agent, to the extent it does not by its terms (except
as otherwise approved in writing by the Agent) mature or become subject to any
mandatory prepayment or amortization of principal prior to the Final Maturity
Date, and shall in any event include the Indebtedness of the Borrower pursuant
to the Subordinated Notes.
"Subordinated Notes" shall mean the $125,000,000 principal amount of
Senior Subordinated Notes due 2007, Series A and Series B.
"subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power are,
at the time as of which any determination is being made, owned or controlled,
directly or indirectly, by the parent of such person or one or more subsidiaries
of the parent of such person.
"Taxes" shall have the meaning assigned to such term in Section
2.15(a) hereof.
"Term Alternate Base Loan" shall mean a Term Loan that is an
Alternate Base Loan.
"Term Eurodollar Loan" shall mean a Term Loan that is a
Eurodollar Loan.
"Term Loan" shall mean the Term Loan made pursuant to Sections 2.01
and 2.02.
"Term Loan Commitment" shall mean, with respect to any Lender, the
Term Loan Commitment of such Lender as set forth in Schedule 2.01(a).
"Term Notes" shall mean the Term Notes executed and delivered as
provided in Section 2.04, in substantially the form of Exhibit A hereto, as
amended, modified or supplemented from time to time.
18
<PAGE> 25
"Total Commitment" shall mean the sum of the Lenders' Total Term
Loan Commitment and Total Revolving Credit Commitment, as the same may be
reduced from time to time pursuant to this Agreement including, without
limitation, Section 2.07 hereof.
"Total Revolving Credit Commitment" shall mean the sum of the
Lenders' Revolving Credit Commitments, as the same may be reduced from time to
time pursuant to this Agreement including, without limitation, Section 2.07
hereof.
"Total Term Loan Commitment" shall mean the sum of the Lenders' Term
Loan Commitments, as the same may be reduced from time to time pursuant to this
Agreement including, without limitation, Section 2.07 hereof.
"Transactions" shall have the meaning assigned to such term in Sec
tion 4.02 hereof.
SECTION 1.02 Accounting Terms. Unless otherwise expressly provided
herein, each accounting term used herein shall have the meaning given it under
generally accepted accounting principles in effect from time to time in the
United States applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof ("GAAP"); provided,
however, that each reference to GAAP in Article VII hereof, in the definition of
any term used in Article VII hereof shall mean GAAP as in effect on the date
hereof. In determining compliance with any of the financial ratios which include
the payment of interest on the Notes, payment of interest on the Notes
(excluding fees and expenses payable in connection with this Agreement) (i) made
on or about January 1 in any Fiscal Year shall be deemed to have been made in
the fourth fiscal quarter of the prior Fiscal Year, (ii) made on or about April
1 of any Fiscal Year shall be deemed to have been made in the first fiscal
quarter of such Fiscal Year, (iii) made on or about July 1 in any Fiscal Year
shall be deemed to have been made in the second fiscal quarter of such Fiscal
Year and (iv) made on or about October 1 in any Fiscal Year shall be deemed to
have been made in the third fiscal quarter of such Fiscal Year. In calculating
the financial covenants contained in Sections 7.09 and 7.10, such calculations
shall be made for the Borrower and its subsidiaries on a Consolidated basis in
accordance with GAAP.
II. THE LOANS
SECTION 2.01 Term Loan Commitments and Revolving Credit Commitments.
(a) Subject to the terms and conditions and relying upon the representations and
warranties herein set forth, each Lender, severally and not jointly, agrees to
make a Term Loan to the Borrower, in a principal amount not to exceed the amount
of such Lender's Term Loan Commitment set forth opposite its name in Schedule
2.01(a) hereto. On the Closing Date, the Total Term Loan Commitment shall be
zero.
19
<PAGE> 26
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender, severally and not
jointly, agrees to make Revolving Credit Loans to the Borrower, at any time and
from time to time from the date hereof to the Revolving Credit Termination Date,
in an aggregate principal amount at any time outstanding not to exceed the
amount of such Lender's Revolving Credit Commitment set forth opposite its name
in Schedule 2.01(b) annexed hereto, as such Revolving Credit Commitment may be
reduced from time to time in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the aggregate principal amount of Revolving
Credit Loans outstanding at any time to the Borrower shall not exceed (1) the
lesser of (A) the Total Revolving Credit Commitment (as such amount may be
reduced pursuant to this Agreement including, without limitation, Section 2.07
hereof) and (B) an amount equal to the sum of (i) up to eighty-five percent
(85%) of the Net Amount of Eligible Receivables, plus (ii) the lesser of (x)
$7,500,000 or (y) up to sixty percent (60%) of the Net Amount of Eligible
Inventory, plus (iii) cash and equivalents thereof maintained with the Agent on
terms satisfactory to the Agent and in which the Agent shall have a first
priority perfected Lien (this clause 1(B) referred to herein as the "Borrowing
Base") minus (2) the Letter of Credit Usage at such time (not to exceed $500,000
at any time). The Borrowing Base will be computed monthly and a compliance
certificate from a Responsible Officer of the Borrower presenting its
computation will be delivered to the Agent in accordance with Section 6.05(j)
hereof.
Subject to the foregoing and within the foregoing limits, the
Borrower may borrow, repay (or, subject to the provisions of Section 2.09
hereof, prepay) and reborrow Revolving Credit Loans, on and after the date
hereof and prior to the Revolving Credit Termination Date, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
requirement that no Revolving Credit Loan shall be made hereunder if the amount
thereof exceeds the Availability as set forth in the most recent certificate
delivered to the Agent pursuant to Section 6.05(j) hereof.
SECTION 2.02 Loans. (a) The Revolving Credit Loans made by the
Lenders on any date shall be in integral multiples of $50,000; provided,
however, that the Eurodollar Loans made on any date shall be in a minimum
aggregate principal amount equal to the product of $500,000 times the number of
Lenders on such date.
(b) Loans shall be made ratably by the Lenders in accordance with
their respective Term Loan Commitments or Revolving Credit Commitments, as the
case may be; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend
hereunder. The Term Loans shall be made by the Lenders on the date such Loan is
made against delivery of Term Notes, payable to the order of the Lenders, as
referred to in Section 2.04. The initial Revolving Credit Loans shall be made by
the Lenders against delivery of Revolving Credit Notes, payable to the order of
the Lenders, as referred to in Sec tion 2.04 hereof.
20
<PAGE> 27
(c) Each Loan shall be either an Alternate Base Loan or a Eurodollar
Loan as the Borrower may request pursuant to Section 2.03 hereof. Each Lender
may fulfill its obligations under this Agreement by causing its Applicable
Lending Office to make such Loan; provided, however, that the exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the term of the applicable Note. Not more than five (5)
Eurodollar Loans may be outstanding at any one time.
(d) Subject to the provisions of paragraph (e) below, each Lender
shall make its Term Loans and Revolving Credit Loans on the proposed dates
thereof by paying the amount required to the Agent in New York, New York in
immediately available funds not later than 12:00 noon, New York City time, and
the Agent shall as soon as practicable, but in no event later than 3:00 p.m.,
New York City time, credit the amounts so received to the general deposit
account of the Borrower with the Agent in immediately available funds or, if
Loans are not to be made on such date because any condition precedent to a
borrowing herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrower shall have the right at any time upon prior
irrevocable written, telex or facsimile notice (promptly confirmed in writing)
to the Agent given in the manner and at the times specified in Section 2.03 with
respect to the Loans into which conversion or continuation is to be made, to
convert all or any portion of Eurodollar Loans into Alternate Base Loans, to
convert all or any portion of Alternate Base Loans into Eurodollar Loans
(specifying the Interest Period to be applicable thereto), to convert the
Interest Period with respect to all or any portion of any Eurodollar Loans to
another permissible Interest Period, and to continue all or any portion of any
Loans into a subsequent Interest Period of the same duration, subject to the
terms and conditions of this Agreement (including the last sentence of Section
2.02(c) hereof) and to the following:
(i) in the case of a conversion or continuation of fewer
than all the Loans, the aggregate principal amount of Loans
converted or continued shall not be less than $50,000 in the case of
Alternate Base Loans or $500,000 times the number of Lenders on such
date in the case of Eurodollar Loans and shall be an integral
multiple of $100,000;
(ii) accrued interest on a Loan (or portion thereof) being
converted or continued shall be paid by the Borrower at the time of
conversion or continuation;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the Borrower
shall make such payments associated therewith as are required
pursuant to Sec tion 2.12;
21
<PAGE> 28
(iv) any portion of a Revolving Credit Loan which is
subject to an Interest Period ending on a date that is less than one
month prior to the Revolving Credit Termination Date may not be
converted into, or continued as, a Eurodollar Loan and shall be
automatically converted at the end of such Interest Period into an
Alternate Base Loan;
(v) any portion of a Term Eurodollar Loan required to be
paid on any Repayment Date occurring less than one month after the
end of the then current Interest Period applicable to such Loan, may
not be converted into, or continued as, a Term Eurodollar Loan and
shall be automatically converted at the end of such Interest Period
into a Term Alternate Base Loan; and
(vi) no unwaived Default or Event of Default shall have
occurred and be continuing.
The Interest Period applicable to any Eurodollar Loan resulting from
a conversion shall be specified by the Borrower in the irrevocable notice of
conversion delivered pursuant to this Section; provided, however, that if no
such Interest Period shall be specified, the Borrower shall be deemed to have
selected an Interest Period of one month's duration. If the Borrower shall not
have given timely notice to continue any Eurodollar Loan into a subsequent
Interest Period (and shall not otherwise have given notice to convert such
Loan), such Loan (unless repaid or required to be repaid pursuant to the terms
hereof) shall, subject to (iv) and (v) above, automatically be converted into an
Alternate Base Loan. The Agent shall promptly advise the Lenders of any notice
given pursuant to this Section and of each Lender's portion of the continuation
or conversion hereunder.
SECTION 2.03 Notice of Loans. The Borrower shall, through a
Responsible Officer of the Borrower, give the Agent irrevocable written, telex
or facsimile notice (promptly confirmed in writing) of each borrowing
(including, without limitation, a conversion as permitted by Section 2.02(e)
hereof) not later than 11:00 a.m., New York City time, (i) three (3) Business
Days before a proposed Eurodollar Loan borrowing or conversion and (ii) on the
Business Day of an Alternate Base Loan borrowing or conversion (except that no
such confirmation will be required, unless requested by the Agent, to the extent
that the proceeds of such borrowing are requested to be disbursed to the
Borrower's controlled disbursement account maintained with the Agent). Such
notice shall specify (w) whether the Loans then being requested are to be
Alternate Base Loans or Eurodollar Loans, (x) the date of such borrowing (which
shall be a Business Day) and amount thereof and (y) if such Loans are to be
Eurodollar Loans, the Interest Period with respect thereto. If no election as to
the type of Loan is specified in any such notice, all such Loans shall be
Alternate Base Loans. If no Interest Period with respect to any Eurodollar Loan
is specified in any such notice, then an Interest Period of three (3) months'
duration shall be deemed to have been selected. The
22
<PAGE> 29
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.
SECTION 2.04 Notes; Repayment of Loans. (a) The Term Loan if and
when made by a Lender shall be evidenced by a single Term Note, duly executed on
behalf of the Borrower, dated the date such Loan is made, in substantially the
form of Exhibit A annexed hereto, delivered and payable to such Lender in a
principal amount equal to its Term Loan Commitment on such date.
(b) All Revolving Credit Loans made by a Lender to the Borrower
shall be evidenced by a single Revolving Credit Note, duly executed on behalf of
the Borrower, dated the Closing Date, in substantially the form of Exhibit B
annexed hereto, delivered and payable to such Lender in a principal amount equal
to its Revolving Credit Commitment on such date.
(c) Each Revolving Credit Note shall bear interest from its date on
the outstanding principal balance thereof, as provided in Section 2.05 hereof.
(d) Each Term Note shall bear interest from its date on the
outstanding principal balance thereof, as provided in Section 2.05. All
principal payments in respect of the Term Loan shall be accompanied by accrued
interest on the principal amount being repaid to the date of payment. No
scheduled payment of principal in respect of the Term Loan shall be made to the
extent that a lesser principal payment would result in the payment in full of
the outstanding amount of the Term Loan, and such lesser amount is paid.
(e) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrower to, endorse on the schedule attached to a Term Note
or Revolving Credit Note, as applicable, of such Lender (or on a continuation of
such schedule attached to such Note and made a part thereof) an appropriate
notation evidencing the date and amount of each Loan to the Borrower from such
Lender, as well as the date and amount of each payment and prepayment with
respect thereto; provided, however, that the failure of any person to make such
a notation on a Note shall not affect any obligations of the Borrower under such
Note. Any such notation shall be conclusive and binding as to the date and
amount of such Loan or portion thereof, or payment or prepayment of principal or
interest thereon, absent manifest error.
SECTION 2.05 Interest on Loans. (a) Subject to the provisions of
Section 2.05(c) and Section 2.08 hereof, each Alternate Base Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate plus one percent
(1%).
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the
23
<PAGE> 30
Adjusted LIBO Rate plus two and one-half (2 1/2%).
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the Final Maturity Date. Interest on
each Alternate Base Loan and Eurodollar Loan shall be computed based on the
number of days elapsed in a year of 360 days. The Agent shall determine each
interest rate applicable to the Loans and shall promptly advise the Borrower and
the Lenders of the interest rate so determined.
SECTION 2.06 Fees. (a) The Borrower shall pay each Lender, through
the Agent, (i) on the first Business Day of each January, April, July and
October commencing January 2, 1998, (ii) on the date of any reduction of the
Revolving Credit Commitments pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (iii) on the Revolving Credit Termination
Date, in immediately available funds, a commitment fee (the "Revolving Credit
Commitment Fee") of one-half of one percent (1/2 of 1%) per annum on the average
daily unused amount of the Revolving Credit Commitment of such Lender, during
the quarter (or shorter period commencing with the date hereof or ending with
the Revolving Credit Termination Date) ending on such date. The Revolving Credit
Commitment Fee due to each Lender under this Sec tion 2.06 shall commence to
accrue on the date hereof and cease to accrue on the earlier of (i) the
Revolving Credit Termination Date and (ii) the termination of the Revolving
Credit Commitment of such Lender pursuant to this Agreement including, without
limitation, pursuant to Section 2.07 hereof. The Revolving Credit Commitment Fee
shall be calculated on the basis of the actual number of days elapsed in a year
of 360 days.
(b) The Borrower shall pay to the Agent for its own account an
administration fee of $15,000 on January 2, 1998 and each anniversary thereof
prior to the Final Maturity Date.
SECTION 2.07 Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments. (a) Upon at least three (3) Business
Days' prior irrevocable written notice (or facsimile notice promptly confirmed
in writing) to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total Revolving
Credit Commitment, ratably among the Lenders in accordance with the amounts of
their Revolving Credit Commitments; provided, however, that the Total Revolving
Credit Commitment shall not be reduced at any time to an amount less than the
Revolving Credit Loans outstanding under the Revolving Credit Commitments and
the Letter of Credit Usage at such time. Each partial reduction of the Total
Revolving Credit Commitment shall be in a minimum of $500,000 or an integral
multiple of $100,000.
(b) Simultaneously with any termination or reduction of the Total
Revolving Credit Commitment pursuant to paragraph (a) of this Section 2.07, the
24
<PAGE> 31
Borrower shall pay to each Lender, through the Agent, the Revolving Credit
Commitment Fee due and owing through and including the date of such termination
or reduction on the amount of the Revolving Credit Commitment of such Lender so
terminated or reduced.
SECTION 2.08 Interest on Overdue Amounts; Alternate Rate of
Interest. (a) If the Borrower shall default in the payment of the principal of
or interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on all Obligations outstanding up to
the date of actual payment of such defaulted amount (after as well as before
judgment) at a rate per annum equal to two percent (2%) in excess of the rates
otherwise applicable thereto.
(b) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Agent shall have determined that dollar deposits in the amount of each
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not reflect
adequately and fairly the cost to any Lender of making or maintaining such
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Agent shall as soon as
practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrower and the Lenders, and
any request by the Borrower for the making of a Eurodollar Loan pursuant to Sec
tion 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for an Alternate Base
Loan. Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
SECTION 2.09 Prepayment of Loans. (a) Subject to the terms and
conditions contained in this Section 2.09 and elsewhere in this Agreement, the
Borrower shall have the right to prepay any Loan at any time in whole or from
time to time in part (except in the case of a Eurodollar Loan only on the last
day of an Interest Period) without penalty (except as otherwise provided for
herein); provided, however, that each such partial prepayment of a Loan shall be
in an integral multiple of $100,000.
(b) On the date of any termination or reduction of the Total
Revolving Credit Commitment pursuant to Section 2.07(a) hereof or elsewhere in
this Agreement, the Borrower shall pay or prepay so much of the Revolving Credit
Loans as shall be necessary in order that the Availability equals or exceeds
zero following such termination or reduction. Any prepayments required by this
paragraph (b) shall be applied to outstanding Revolving Credit Alternate Base
Loans up to the full amount thereof before they are applied to outstanding
Revolving Credit Eurodollar Loans; provided, however, that the Borrower shall
not be required to make any prepayment of
25
<PAGE> 32
any Eurodollar Loan pursuant to this Section until the last day of the Interest
Period with respect thereto so long as an amount equal to such prepayment is
deposited by the Borrower in a cash collateral account with the Agent to be held
in such account on terms satisfactory to the Agent.
(c) The Borrower shall make prepayments of the Revolving Credit
Loans from time to time such that the Availability equals or exceeds zero at all
times. Any prepayments required by this paragraph (c) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full amount thereof
before they are applied to outstanding Revolving Credit Eurodollar Loans;
provided, however, that the Borrower shall not be required to make any
prepayment of any Eurodollar Loan pursuant to this Section until the last day of
the Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrower in a cash collateral account with the
Agent to be held in such account on terms satisfactory to the Agent.
(d) Within three days of (i) the sale of any assets subject to Sec
tion 7.05 hereof of any Loan Party aggregating for the Borrower and its
subsidiaries in excess of $25,000 in any Fiscal Year (excluding sales of
inventory in the ordinary course of business, Qualified Sales, sales or other
dispositions of obsolete equipment and the license of trademarks and other
intellectual property for fair value in the ordinary course of business to third
parties, or of the capital stock of the Borrower (subject to Section 7.05
hereof) or sales of any stock of Holdings (other than to members of the Investor
Group where the proceeds are invested in the Borrower), or (ii) the consummation
of the issuance of any debt securities of any Loan Party (other than
Indebtedness permitted under Section 7.03 (except subsection (viii) thereof)),
the Borrower shall make a mandatory prepayment of the Loans in an amount equal
to 100% of the cash proceeds (or non-cash proceeds when converted to cash)
received (net of taxes due and any reasonable expenses of sale), which proceeds
shall be applied as set forth in paragraph (g) below. Nothing contained in this
paragraph (d) shall be or be deemed to be a consent to the sale of any assets or
stock or the issuance of any stock or debt securities.
(e) [intentionally omitted].
(f) (i) Except as provided in clause (ii) below, promptly and in any
event not more than two (2) Business Days following the receipt by the Agent or
the Borrower or any of its subsidiaries of any net cash proceeds of (x) any
casualty insurance required to be maintained pursuant to Section 6.03 hereof on
account of each separate loss, damage or injury (each, a "Casualty Event") in
excess of $500,000 (or, if there shall be continuing a Default or an Event of
Default, of the full amount of net proceeds) to any asset of the Borrower or
such subsidiary (including, without limitation, any Collateral), or (y) any
business interruption insurance required to be maintained pursuant to Section
6.03 hereof on account of any business interruption event (each, a
26
<PAGE> 33
"BI Event") in excess of $500,000 (or, if there shall be continuing a Default or
Event of Default, of the full amount of net proceeds), the Borrower or such
subsidiary shall notify the Agent of such receipt in writing or by telephone
promptly confirmed in writing, and not later than two (2) Business Days
following receipt by the Agent or the Borrower or such subsidiary of any such
proceeds, there shall become due and payable a prepayment of the Loans in an
amount equal to 100% of such proceeds. Prepayments from such net proceeds shall
be applied as set forth in paragraph (g) below.
(ii) In the case of the receipt of net cash proceeds described
in clause (i) above with respect to a Casualty Event or BI Event, the Borrower
may elect, by written notice delivered to the Agent not later than the day on
which a prepayment would otherwise be required under clause (i), (x) in the case
of proceeds received with respect to a BI Event, to use such proceeds in the
ordinary course of Borrower's business and (y) in the case of proceeds received
with respect to any Casualty Event, to apply all or a portion of such net
proceeds for the purpose of replacing, repairing, restoring or rebuilding
(referred to herein as a "Rebuilding") the relevant tangible property, and, in
any such event, any required prepayment under clause (i) above shall be reduced
dollar for dollar by the amount of such election under clause (x) or clause (y)
of this sentence. An election under this clause (ii) shall not be effective
unless: (x) at the time of such election there is continuing no Default or Event
of Default; (y) the Borrower shall have certified to the Agent that: (i) the net
proceeds of the insurance adjustment with respect to a Casualty Event, together
with other funds available to the Borrower, shall be sufficient to complete such
proposed Rebuilding in accordance with all applicable laws, regulations and
ordinances; and (ii) no Default or Event of Default has arisen or will arise as
a result of such BI Event, Casualty Event or Rebuilding; and (z) if the amount
of net proceeds in question exceeds $500,000, the Borrower shall have obtained
the written consent of the Required Lenders to such election.
(iii) In the event of an election under clause (ii) above,
pending application of the net proceeds to business operations with respect to a
BI Event or to Rebuilding with respect to a Casualty Event, the Borrower shall
not later than the time at which prepayment would have been, in the absence of
such election, required under clause (i) above, apply such net proceeds to the
prepayment of the outstanding principal balance, if any, of the Revolving Credit
Loans (not in permanent reduction of the Revolving Credit Commitment), and
deposit (the "Special Deposit") with the Agent, the balance, if any, of such net
proceeds remaining after such application, pursuant to agreements in form, scope
and substance reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be available to the
Borrower solely for the applicable Rebuilding or ordinary course business
operations, as the case may be; provided, however, that at such time as a
Default or Event of Default shall occur, the balance of the Special Deposit and
earnings thereon may be applied by the Agent to repay the Obligations in such
order as the Agent shall elect. The Agent shall be entitled to require
reasonable proof, as a condition to the making of any withdrawal from the
Special Deposit, that the proceeds of such
27
<PAGE> 34
withdrawal are being applied for the purposes permitted hereunder.
(g) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a), (b), (c), (d) or (f) above, the Borrower shall
furnish to the Agent, not later than 11:00 a.m. (New York City time) (i) three
(3) Business Days (or such shorter period of time as provided in the applicable
paragraph above) prior to the date of such prepayment of Alternate Base Loans
and (ii) five (5) Business Days (or such shorter period of time as provided in
the applicable paragraph above) prior to the date of such prepayment of
Eurodollar Loans, written, telex or facsimile notice (promptly confirmed in
writing) of prepayment which shall specify the prepayment date and the principal
amount of each Loan (or portion thereof) to be prepaid, which notice shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount
stated therein on the date stated therein. All prepayments shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
prepayment. Prepayments made pursuant to paragraph (d) or (f) above shall be
applied as follows: (A) first, to outstanding Term Alternate Base Loans (applied
to scheduled installments of principal thereof on a pro rata basis) up to the
full amount thereof and then to outstanding Term Eurodollar Loans (applied to
scheduled installments of principal thereof on a pro rata basis) up to the full
amount thereof; and (B) second, to outstanding Revolving Credit Alternate Base
Loans up to the full amount thereof and then to Revolving Credit Eurodollar
Loans up to the full amount thereof; provided, however, that the Borrower shall
not be required to make any prepayment of any Term or Revolving Credit
Eurodollar Loan required pursuant to this Section 2.09(g) until the last day of
the Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrower into a cash collateral account with the
Agent to be held in such account pursuant to terms satisfactory to the Agent.
(h) All prepayments under this Section 2.09 shall be subject to Sec
tion 2.12 hereof.
(i) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this Section
2.09.
(j) The amount of the Term Loan prepaid may not be reborrowed.
SECTION 2.10 Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee of any Lender, the date of assignment) any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law), or any change in GAAP or regulatory accounting principles applicable to
the Agent or any Lender shall: (i) subject the Agent or any Lender (which shall
for the purpose of this Section 2.10 include any assignee or lending office of
the Agent or any
28
<PAGE> 35
Lender) to any charge, fee, deduction or withholding of any kind or to any tax
with respect to any amount paid or to be paid by either the Agent or any Lender
with respect to any Eurodollar Loans made by a Lender to the Borrower or with
respect to the obligations of any Lender under Sections 2.17 through 2.20 hereof
or under any Letter of Credit (other than (x) taxes imposed on the overall net
income of the Agent or such Lender and (y) franchise taxes imposed on the Agent
or such Lender, in either case by the jurisdiction in which such Lender or the
Agent has its principal office or its lending office with respect to such
Eurodollar Loan or any political subdivision or taxing authority of either
thereof); (ii) change the basis of taxation of payments to any Lender or the
Agent of the principal of or interest on any Eurodollar Loan or any other fees
or amounts payable with respect to any Letter of Credit or otherwise hereunder
(other than taxes imposed on the overall net income of such Lender or the Agent
by the jurisdiction in which such Lender or the Agent has its principal office
or by any political subdivision or taxing authority therein); (iii) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or loans or loan
commitments extended by, or Letters of Credit issued and maintained by, such
Lender; or (iv) impose on any Lender or, with respect to Eurodollar Loans, the
London interbank market, any other condition affecting this Agreement, Letters
of Credit issued and maintained by or Eurodollar Loans made by such Lender; and
the result of any of the foregoing shall be to increase the cost to any such
Lender of making or maintaining any Eurodollar Loan or Letter of Credit, or to
reduce the amount of any payment (whether of principal, interest, fee,
compensation or otherwise) receivable by such Lender or to require such Lender
to make any payment in respect of any Eurodollar Loan or Letter of Credit, then
the Borrower shall pay to such Lender or the Agent, as the case may be, upon
such Lender's or the Agent's demand, such additional amount or amounts as will
compensate such Lender or the Agent for such additional costs or reduction. The
Agent and each Lender agree to give notice to the Borrower of any such change in
law, regulation, interpretation or administration with reasonable promptness
after becoming actually aware thereof and of the applicability thereof to the
Transactions. Notwith standing anything contained herein to the contrary,
nothing in clause (i) or (ii) of this Section 2.10(a) shall be deemed to (x)
permit the Agent or any Lender to recover any amount thereunder which would not
be recoverable under Section 2.15 hereof or (y) require the Borrower to make any
payment of any amount to the extent that such payment would duplicate any
payment made by the Borrower pursuant to Section 2.15 hereof.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy,
including, without limitation, the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards", or any change in the
interpretation or administration of any thereof by any governmental authority,
central bank or comparable agency charged with the
29
<PAGE> 36
interpretation or administration thereof, or compliance by such Lender (or its
lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or will have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of its obligations hereunder to a level below that which
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy), then from time to
time the Borrower shall pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction. Each Lender agrees to give
notice to the Borrower of any adoption of, change in, or change in
interpretation or administration of, any such law, rule, regulation or guideline
with reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the Transactions.
(c) A statement of any Lender or the Agent setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender (or the Agent) as specified in paragraphs
(a) and (b) above shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay each Lender or the Agent the
amount shown as due on any such statement within ten (10) days after its receipt
of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or any Letter of Credit or
reduction in the rate of return earned on such Lender's capital, shall not
constitute a waiver of such Lender's or the Agent's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return in such Interest Period or in any
other Interest Period or with respect to such Letter of Credit. The protection
under this Section 2.10 shall be available to each Lender and the Agent
regardless of any possible contention of the invalidity or inapplicability of
any law, regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.10 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.11 Change in Legality. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation
30
<PAGE> 37
thereof shall make it unlawful for any Lender to make or maintain any Eurodollar
Loan or to give effect to its obligations to make Eurodollar Loans as
contemplated hereby, then, by written notice to Borrower and to the Agent, such
Lender may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon the Borrower shall be
prohibited from requesting Eurodollar Loans from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by
such Lender be converted to Alternate Base Loans, in which event (A)
all such Eurodollar Loans shall be automatically converted to
Alternate Base Loans as of the effective date of such notice as
provided in paragraph (b) below and (B) all payments of principal
which would otherwise have been applied to repay the converted
Eurodollar Loans shall instead be applied to repay the Alternate
Base Loans resulting from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the Borrower
by any Lender shall be effective, if lawful, on the last day of the then current
Interest Period or, if there are then two or more current Interest Periods, on
the last day of each such Interest Period, respectively; otherwise, such notice
shall be effective with respect to the Borrower on the date of receipt by the
Borrower.
SECTION 2.12 Indemnity. The Borrower shall indemnify the Agent and
each Lender against any loss or reasonable expense (including, but not limited
to, any loss or reasonable expense sustained or incurred or to be sustained or
incurred by reason of or in connection with the execution and delivery or
assignment of, or payment under, any Letter of Credit, or in liquidating or
employing deposits from third parties acquired to affect or maintain any Loan or
part thereof as a Eurodollar Loan) which the Agent or such Lender may sustain or
incur as a consequence of the following events (regardless of whether such
events occur as a result of the occurrence of an Event of Default or the
exercise of any right or remedy of the Agent or the Lenders under this Agreement
or any other agreement, or at law): any failure of the Borrower to fulfill on
the date of any Credit Event the applicable conditions set forth in Article V
hereof applicable to it; any failure of the Borrower to borrow hereunder after
irrevocable notice of borrowing pursuant to Section 2.03 hereof has been given;
any payment, prepayment or conversion of a Eurodollar Loan on a date other than
the last day of the relevant Interest Period; any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, or with respect to any Letter of Credit, in each case as and
when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise); or the occurrence of an Event of Default. Such loss or
reasonable expense shall include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on
31
<PAGE> 38
the principal or other 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, in the case of a Loan, the last day of the 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 of such failure to borrow), at the
applicable rate of interest for such Loan provided for herein over (ii) the
amount of interest (as reasonably determined by such Lender) that would be
realized by such Lender in reemploying the funds so paid, prepaid or converted
or not borrowed for such period or Interest Period, as the case may be. Any such
Lender shall provide to the Borrower a statement, signed by an officer of such
Lender, explaining any loss or expense and setting forth, if applicable, the
computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such statement within ten (10) days after the receipt of the
same. The indemnities contained herein shall survive the expiration or
termination of this Agreement and of the Letters of Credit.
SECTION 2.13 Pro Rata Treatment; Assumption by and Delegation of
Authority to the Agent. (a) Except as permitted under Sections 2.10, 2.11 and
2.15 hereof, each borrowing, each payment or prepayment of principal of the
Notes, each payment of interest on the Notes, each payment of any fee or other
amount payable hereunder and each reduction of the Total Revolving Credit
Commitment and Total Term Loan Commitment shall be made pro rata among the
Lenders in the proportions that their Revolving Credit Commitments bear to the
Total Revolving Credit Commitment or that their Term Loan Commitments bears to
the Total Term Loan Commitment, as the case may be.
(b) Notwithstanding the occurrence or continuance of a Default or
Event of Default or other failure of any condition to the making of Loans or
occurrence of other Credit Events hereunder subsequent to the Credit Events on
the Closing Date, unless the Agent shall have been notified in writing by any
Lender in accordance with the provisions of paragraph (c) below prior to the
date of a proposed Credit Event that such Lender will not make the amount that
would constitute its pro rata share of the applicable Credits on such date
available to the Agent, the Agent may assume that such Lender has made such
amount available to the Agent on such date, and the Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
amount is made available to the Agent on a date after such Credit Event date,
such Lender shall pay to the Agent on demand an amount equal to the product of
(i) the daily average Federal funds rate during such period as quoted by the
Agent, times (ii) the amount of such Lender's pro rata share of such Credits,
times (iii) a fraction the numerator of which is the number of days that elapse
from and including such Credit Event date to the date on which such Lender's pro
rata share of such Credits shall have become immediately available to the Agent
and the denominator of which is 360. A certificate of the Agent submitted to any
Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence
32
<PAGE> 39
of manifest error. If such Lender's pro rata share of such Credits is not in
fact made available to the Agent by such Lender within three Business Days of
such Credit Event date, the Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to the Loans hereunder, on
demand, from the Borrower.
(c) Unless and until the Agent shall have received written notice
from the Required Lenders as to the existence of a Default, an Event of Default
or some other circumstance which would relieve the Lenders of their respective
obligations to extend Credits hereunder, which notice shall be in writing and
shall be signed by the Required Lenders and shall expressly state that the
Required Lenders do not intend to make available to the Agent such Lenders'
ratable share of Credits extended after the effective date of such notice, the
Agent shall be entitled to continue to make the assumptions described in Section
2.13(b) above. After receipt of the notice described in the preceding sentence,
which shall become effective on the third Business Day after receipt of such
notice by the Agent (unless otherwise agreed by the Agent), the Agent shall be
entitled to make the assumptions described in Section 2.13(b) above as to any
Credits as to which it has not received a written notice to the contrary prior
to 11:00 a.m. (New York time) on the Business Day next preceding the day on
which such Credits are to be extended. The Agent shall not be required to extent
any Credits as to which it shall have received notice by a Lender of such
Lender's intention not to make its ratable portion of such Credits available to
the Agent. Any withdrawal of authorization as described under this Section
2.13(c) shall not affect the validity of any Credits extended prior to the
effectiveness thereof.
SECTION 2.14 Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, including, but not limited to, a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note held by it as a result
of which the unpaid principal portion of the Notes held by it shall be
proportionately less than the unpaid principal portion of the Notes held by any
other Lender, it shall be deemed to have simultaneously purchased from such
other Lender a participation in the Notes held by such other Lender, so that the
aggregate unpaid principal amount of the Notes and participations in Notes held
by it shall be in the same proportion to the aggregate unpaid principal amount
of all Notes then outstanding as the principal amount of the Notes held by it
prior to such exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes outstanding prior to such exercise of banker's
lien, setoff or counterclaim; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.14 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees
33
<PAGE> 40
that any Lender holding a participation in a Note deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender as fully as if such Lender held a Note in the amount of such
participation.
SECTION 2.15 Taxes. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.16 hereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings in any such case imposed by the
United States or any political subdivision thereof, excluding:
(i) in the case of the Agent and each Lender, taxes imposed or
based on its net income, and franchise or capital taxes imposed on
it, (A) if the Agent or such Lender is organized under the laws of
the United States or any political subdivision thereof and (B) if
the Agent or such Lender is not organized under the laws of the
United States or any political subdivision thereof, and its
principal office or Applicable Lending Office is located in the
United States, and in the case of both (A) and (B), withholding
taxes payable with respect to payments to the Agent or such Lender
at its principal office or Applicable Lending Office under laws
(including, without limitation, any treaty, ruling, determination or
regula tion) in effect on the date hereof, but not any increase in
withholding tax resulting from any subsequent change in such laws
(other than withholding with respect to taxes imposed or based on
its net income or with respect to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason of
the failure of the Agent or any Lender, in either case that is
organized outside the United States, to comply with Section 2.15(f)
hereof (or the inaccuracy at any time of the certificates, documents
and other evidence delivered thereunder)
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders or the Agent, (x) the sum payable shall be increased by
the amount necessary so that after making all required deductions (including
without limitation deductions applicable to additional sums payable under this
Section 2.15) such Lender or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (y)
the Borrower shall make such deduc tions and (z) the Borrower shall pay the full
amount deducted to the relevant tax authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp
34
<PAGE> 41
or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction (except as specified in clauses (a)(i)
and (ii)) on amounts payable under this Section 2.15) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor. If any Lender receives a refund in respect of
any Taxes or Other Taxes for which such Lender has received payment from the
Borrower hereunder, such Lender shall promptly notify the Borrower of such
refund and such Lender shall, within 30 days of receipt of a request by the
Borrower, repay such refund to the Borrower, provided that the Borrower, upon
the request of such Lender, agrees to return such refund (plus any penalties,
interest or other charges) to such Lender in the event such Lender is required
to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender, the
Borrower will furnish to the Agent, at its address referred to in Section 11.01
hereof, such certifi cates, receipts and other documents as may be reasonably
required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.15 shall
survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States shall
deliver to the Borrower on the date hereof (or, in the case of an assignee, on
the date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms), as appropriate,
indicating in each case that such Lender is entitled to receive payments under
this Agreement without any deduction or withholding of any United States federal
income taxes. The Agent (if the Agent is an entity organized outside the United
States) and each Lender that is organized outside the United States shall
promptly notify the Borrower and the Agent of any change in its Applicable
Lending Office and upon written request of the Borrower such Lender shall, prior
to the immediately following due date of any payment by the Borrower or any
Guarantor hereunder or under any other Loan Document, deliver to the Borrower or
such Guarantor, as the case may be (with copies to the Agent), such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued
35
<PAGE> 42
pursuant thereto, including without limitation Internal Revenue Service Form
4224, Form 1001 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c) or any subsequent
version thereof, properly completed and duly executed by such Lender
establishing that such payment is (i) not subject to withholding under the Code
because such payment is effectively connected with the conduct by such Lender of
a trade or business in the United States or (ii) totally exempt from United
States tax under a provision of an applicable tax treaty. The Borrower shall be
entitled to rely on such forms in their possession until receipt of any revised
or successor form pursuant to this Sec tion 2.15(f). If the Agent or a Lender
fails to provide a certificate, document or other evidence required pursuant to
this Section 2.15(f), then (i) the Borrower shall be entitled to deduct or
withhold on payments to the Agent or such Lender as a result of such failure, as
required by law, and (ii) the Borrower shall not be required to make payments of
additional amounts with respect to such withheld Taxes pursuant to clause (x) of
Section 2.15(a) to the extent such withholding is required solely by reason of
the failure of the Agent or such Lender to provide the necessary certificate,
document or other evidence.
(g) Each Lender and the Agent shall use reasonable efforts to avoid
or minimize any amounts which might otherwise be payable pursuant to this
subsection 2.15 (including seeking refunds of any amounts that are reasonably
believed not to have been correctly or legally asserted); provided, however,
that such efforts shall not include the taking of any actions by such Lender or
the Agent that would result in any tax, costs or other expense to such Lender or
the Agent (other than a tax, cost or other expense for which such Lender or the
Agent shall have been reimbursed or indemnified by the Borrower pursuant to this
Agreement or otherwise) or any action which would or might in the reasonable
opinion of such Lender or the Agent have an adverse effect upon its business,
operations or financial condition or otherwise be disadvantageous to such Lender
or the Agent.
SECTION 2.16 Payments and Computations. (a) The Borrower shall make
each payment hereunder and under any instrument delivered hereunder not later
than 12:00 noon (New York City time) on the day when due in lawful money of the
United States (in freely transferable dollars) to the Agent at its offices at
633 Third Avenue, New York, New York 10017-6764 for the account of the Lenders,
in immediately available funds. The Agent may charge, when due and payable, the
Borrower's account with the Agent for all interest, principal and Commitment
Fees or other fees owing to the Agent or the Lenders on or with respect to this
Agreement and/or the Loans and other Loan Documents. If at any time there is not
sufficient Availability to cover any of the payments referred to in the prior
sentence, and in any event upon the occurrence of any Default, the Borrower
shall make any such payments upon demand.
(b) If the Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
the
36
<PAGE> 43
Agent from the Borrower and such related payment is not received by the Agent,
then the Agent will be entitled to recover such amount from such Lender without
setoff, counterclaim or deduction of any kind. If the Agent determines at any
time that any amount received by the Agent under this Agreement must be returned
to the Borrower or paid to any other person pursuant to any solvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement,
the Agent will not be required to distribute any portion thereof to any Lender.
In addition, each Lender will repay to the Agent on demand any portion of such
amount that the Agent has distributed to such Lender, together with interest at
such rate, if any, as the Agent is required to pay to the Borrower or such other
person, without setoff, counterclaim or deduction of any kind.
SECTION 2.17 Issuance of Letters of Credit. Upon the request of the
Borrower, and subject to the conditions set forth in Article V hereof and such
other con ditions to the opening of Letters of Credit as the Agent requires of
its customers generally, the Agent shall from time to time open commercial and
standby letters of credit (each, a "Letter of Credit") for the account of the
Borrower, the aggregate undrawn amount of all outstanding Letters of Credit not
at any time to exceed $500,000; provided, however, that the Borrower may not
request the Agent to open a Letter of Credit if after giving effect thereto
(measured by the face amount of such Letter of Credit) Availability would be
less than zero. The issuance of each Letter of Credit shall be made on at least
three (3) Business Days' prior written notice from the Borrower to the Agent, at
its Domestic Lending Office, which written notice shall be an application for a
Letter of Credit on the Agent's customary form completed to the satisfaction of
the Agent, together with the proposed form of the Letter of Credit (which shall
be satisfactory to the Agent) and such other certificates, documents and other
papers and information as the Agent may reasonably request. The Agent shall not
at any time be obligated to issue any Letter of Credit if such issuance would
conflict with, or cause the Agent or any Lender to exceed any limits imposed by,
any applicable requirements of law. The expiration date of any (i) commercial
Letter of Credit shall not be later than 90 days from the date of issuance
thereof and (ii) any standby Letter of Credit shall not be later than 360 days
from the date of issuance thereof, and, in any event, no Letter of Credit shall
have an expiration date later than the Revolving Credit Termination Date. The
Letters of Credit shall be issued with respect of transactions occurring in the
ordinary course of business of the Borrower.
SECTION 2.18 Payment of Letters of Credit; Reimbursement. Upon the
issuance of any Letter of Credit, the Agent shall notify each Lender of the
principal amount, the number, and the expiration date thereof and the amount of
such Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall be nonrecourse to the Agent) in such Letter
37
<PAGE> 44
of Credit equal to such Lender's pro rata (based on its Revolving Credit
Commitment) share of such Letter of Credit, effective upon the issuance of such
Letter of Credit. Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and discharge, and to
indemnify and hold the Agent harmless from liability in respect of, such
Lender's pro rata share of the amount of any drawing under a Letter of Credit.
Each Lender acknowledges and agrees that its obligation to acquire
participations in each Letter of Credit issued by the Agent and its obligation
to make the payments specified herein, and the right of the Agent to receive the
same, in the manner specified herein, are absolute and unconditional and shall
not be affected by any circumstance whatsoever, including, without limitation,
the occurrence and continuance of a Default or an Event of Default hereunder,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. The Agent shall review, on behalf of the
Lenders, each draft and any accompanying documents presented under a Letter of
Credit and shall notify each Lender of any such presentment. Promptly after it
shall have ascertained that any draft and any accompanying documents presented
under such Letter of Credit appear on their face to be in substantial conformity
with the terms and conditions of the Letter of Credit, the Agent shall give
telephonic or facsimile notice to the Lenders and the Borrower of the receipt
and amount of such draft and the date on which payment thereon will be made, and
the Lenders shall, by 11:00 a.m., New York City time on the date such payment is
to be made, pay the amounts required to the Agent in New York, New York in
immediately available funds, and the Agent, not later than 3:00 p.m. on such
day, shall make the appropriate payment to the beneficiary of such Letter of
Credit. If in accordance with the prior sentence the Lenders shall pay any draft
presented under a Letter of Credit, then the Agent, on behalf of the Lenders,
shall charge the general deposit account of the Borrower with the Agent for the
amount thereof, together with the Agent's customary overdraft fee in the event
the funds available in such account shall not be sufficient to reimburse the
Lenders for such payment and the Borrower shall not otherwise have discharged
such reimbursement obligation by 11:00 a.m., New York City time, on the date of
such payment. If the Lenders have not been reimbursed with respect to such
drawing as provided above, the Borrower shall pay to the Agent, for the account
of the Lenders, the amount of the drawing together with interest on such amount
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Alternate Base Rate plus two percent (2%),
payable on demand. The obligations of the Borrower under this Section 2.18 to
reimburse the Lenders and the Agent for all drawings under Letters of Credit
shall be joint and several, absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
the Borrower or any other person may at any time have against the
beneficiary under any Letter of Credit, the Agent or any Lender (other
than the defense of payment in accordance with the terms of this Agreement
or a defense based on the gross negligence or willful misconduct of the
Agent or any Lender) or any
38
<PAGE> 45
other person in connection with this Agreement or any other transaction;
(c) any draft or other document presented under any 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;
(d) payment by the Agent or any Lender under any Letter of Credit
against presentation of a draft or other document which does not comply
with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's and any Lender's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters set forth
therein, including, without limitation, reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, not be deemed willful misconduct or gross
negligence of the Agent or any Lender.
SECTION 2.19 Agent's Actions with respect to Letters of Credit. Any
Letter of Credit may, in the discretion of the Agent or its correspondents, be
interpreted by them (to the extent not inconsistent with such Letter of Credit)
in accordance with the Uniform Customs and Practice for Documentary Credits of
the International Chamber of Commerce, as adopted or amended from time to time,
or any other rules, regulations and customs prevailing at the place where any
Letter of Credit is available or the drafts are drawn or negotiated. The Agent
and its correspondents may accept and act upon the name, signature, or act of
any party purporting to be the executor, administrator, receiver, trustee in
bankruptcy, or other legal representative of any party designated in any Letter
of Credit in the place of the name, signature, or act of such party.
SECTION 2.20 Letter of Credit Fees. The Borrower agrees to pay to
the Agent (a) with respect to each commercial Letter of Credit, (i) for the
ratable benefit of the Lenders, a letter of credit fee equal to two and one-half
percent (2 1/2%) of the face amount thereof per annum payable to the Agent at
its Domestic Lending Office quarterly in advance in immediately available funds,
plus (ii) an issuance fee charged by the Agent for transactions of this nature
and, if applicable, an amendment fee, in
39
<PAGE> 46
each case payable to the Agent for its own account at its Domestic Lending
Office on the date of issuance or amendment, as applicable, of such Letter of
Credit in immediately available funds in accordance with Schedule 2.20 hereto
and (b) with respect to standby Letters of Credit, (i) for the ratable benefit
of the Lenders, a letter of credit fee equal to two and one-half percent (2
1/2%) of the face amount thereof per annum payable to the Agent at its Domestic
Lending Office quarterly in advance in immediately available funds, plus (ii) an
issuance fee charged by the Agent for transactions of this nature and, if
applicable, an amendment fee, in each case payable to the Agent for its own
account at its Domestic Lending Office on the date of issuance or amendment, as
applicable, of such Letter of Credit in immediately available funds in
accordance with Schedule 2.20 hereto. The Agent shall disburse to each Lender
such Lender's pro rata share of any payment of the Letter of Credit fees
referred to in clauses (a)(i) and (b)(i) of the first sentence of this paragraph
in immediately available funds within two (2) Business Days of the Agent's
receipt of such payment.
III. COLLATERAL SECURITY
SECTION 3.01 Security Documents. The Obligations shall be secured by
the Collateral described in the Security Documents and are entitled to the
benefits thereof. The Borrower shall duly execute and deliver the Security
Documents, all consents of third parties necessary to permit the effective
granting of the Liens created in such agreements, financing statements pursuant
to the Uniform Commercial Code and other documents, all in form and substance
satisfactory to the Agent, as may be reasonably required by the Agent to grant
to the Lenders a valid, perfected and enforceable first priority Lien on and
security interest in (subject only to the Liens permitted under Section 7.01
hereof) the Collateral, except to the extent permitted by the Security
Documents.
SECTION 3.02 Filing and Recording. The Borrower shall, at its sole
cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the Agent, and
take such other actions as the Agent may reasonably request, in order to perfect
and protect the Liens of the Agent and Lenders in the Collateral. The Borrower,
to the extent permitted by law, hereby authorizes the Agent to file any
financing statement in respect of any Lien created pursuant to the Security
Documents which may at any time be required or which, in the opinion of the
Agent, may at any time be desirable although the same may have been executed
only by the Agent or, at the option of the Agent, to sign such financing
statement on behalf of the Borrower and file the same, and the Borrower hereby
irrevocably designates the Agent, its agents, representatives and designees as
its agent and attorney-in-fact for this purpose. In the event that any
re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such Lien, the Borrower shall, at the Borrower's cost and expense,
cause the same to be recorded and/or refiled at the time
40
<PAGE> 47
and in the manner requested by the Agent.
IV. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that
both before and after giving effect to the consummation of the Transactions
(including, without limitation, under the Acquisition Documents):
SECTION 4.01 Organization, Legal Existence. The Borrower and each of
its subsidiaries are legal entities duly organized, validly existing and in good
standing under the laws of the jurisdiction of their respective organization,
have the requisite power and authority to own their property and assets and to
carry on their business as now conducted and as currently proposed to be
conducted and are qualified to do business in every jurisdiction where such
qualification is required, except where the failure to so qualify would not have
a Material Adverse Effect (all such jurisdictions being listed in Schedule 4.01
annexed hereto). The Borrower has the corporate power to execute, deliver and
perform its obligations under this Agreement and the other Loan Documents to
which it is a party, and to borrow hereunder and to execute and deliver the
Notes.
SECTION 4.02 Authorization. The execution, delivery and performance
by the Borrower of this Agreement and each of the other Loan Documents to which
it is a party, the borrowings hereunder by the Borrower, the execution and
delivery by the Borrower of the Notes, the grant of security interests in the
Collateral created by the Security Documents and the transactions contemplated
to occur under or in connection with the Acquisition Documents (collectively,
the "Transactions") (a) have been duly authorized by all requisite corporate
and, if required, stockholder action and (b) will not (i) violate (A) any
provision of law, statute, rule or regulation or the certificate or articles of
incorporation or other applicable constitutive documents or the by-laws of the
Borrower, or its subsidiaries, as the case may be, (B) any order of any court,
or any rule, regulation or order of any other agency of government binding upon
the Borrower, or its subsidiaries, or (C) any provisions of any material
indenture, agreement or other instrument to which the Borrower, or its
subsidiaries, or any of their respective properties or assets are or may be
bound (which violation would not have a Material Adverse Effect), (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any material indenture, agreement or
other instrument referred to in (b)(i)(C) above (which conflict, breach or
default would have a Material Adverse Effect) or (iii) result in the creation or
imposition of any Lien of any nature whatsoever (other than in favor of the
Agent, for its own benefit and for the benefit of the Lenders, as contemplated
by this Agreement and the Security Documents) upon any property or assets of the
Borrower, or its subsidiaries.
SECTION 4.03 Governmental Approvals. No registration or filing
(other than the filings necessary to perfect the Liens created by the Security
Documents) with
41
<PAGE> 48
consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required in
connection with the Transactions, other than any which have been made or
obtained or will be made or obtained.
SECTION 4.04 Binding Effect. This Agreement and each of the other
Loan Documents to which it is a party constitutes, and each of the Notes when
duly executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable in accordance with its terms, subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and the application of
general principles of equity.
SECTION 4.05 Material Adverse Change. Except as set forth in
Schedule 4.05 annexed hereto, there has been no material adverse change in the
business, assets, operations or financial condition of the Borrower or any of
its subsidiaries since December 31, 1996 or with respect to the Crispaire
Corporation since October 31, 1996.
SECTION 4.06 Litigation; Compliance with Laws; etc. (a) Except as
set forth in Schedule 4.06(a) annexed hereto, there are not any actions, suits
or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now pending or, to the
knowledge of any Responsible Officer of the Borrower, threatened against or
affecting the Borrower or any of its subsidiaries or the businesses, assets or
rights of the Borrower or any of its subsidiaries (i) which involve any of the
Transactions or (ii) as to which it is probable (within the meaning of Statement
of Financial Accounting Standards No. 5) that there will be an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, materially impair the ability of the Borrower to conduct business
substantially as now conducted, or have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) annexed hereto, neither
the Borrower nor any of its subsidiaries is in violation of any law, or in
default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court or governmental agency or instrumentality, except where
such non-compliance, either individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 4.07 Financial Statements. (a) The Borrower has heretofore
furnished to the Agent Consolidated balance sheets and statements of income and
cash flows of Crispaire Corporation and its subsidiaries dated as of October 31,
1996 (audited by and accompanied by the opinion of independent public
accountants) and July 31, 1997 (unaudited for the nine-month period ended on
such date). Such balance sheets and statements of income and cash flows present
fairly the Consolidated financial condition and results of operations of
Crispaire Corporation and its subsidiaries as of the dates and for the periods
indicated, and such balance sheets and
42
<PAGE> 49
the notes thereto disclose all material liabilities, direct or contingent, of
Crispaire Corporation and its subsidiaries, as of the dates thereof.
(b) The Borrower has heretofore furnished to the Agent projected
income statements, balance sheets and cash flows of the Borrower on a
Consolidated basis on a quarterly basis for the 12 month period ending September
30, 1997 and on an annual basis thereafter through the Final Maturity Date,
together with a schedule confirming the ability of the Borrower to consummate
the Transactions and demonstrating prospective compliance with all financial
covenants contained in this Agreement, such projections disclosing all
assumptions made by the Borrower in formulating such projections and giving
effect to the Transactions. The projections are based upon reasonable estimates
and assumptions, all of which are reasonable in light of the conditions which
existed at the time the projections were made, have been prepared on the basis
of the assumptions stated therein, and reflect as of the Closing Date the
reasonable estimate of the Borrower of the results of operations and other
information projected therein.
(c) The Borrower has heretofore furnished to the Agent a
Consolidated pro forma balance sheet of the Borrower and which sets forth
information before and after giving effect to the Transactions.
(d) The financial statements referred to in this Section 4.07 have
been prepared in accordance with GAAP.
SECTION 4.08 Federal Reserve Regulations. (a) Neither the Borrower
nor any of its subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation G, T, U or X thereof. If requested by
any Lender, the Borrower or any of its subsidiaries shall furnish to such Lender
a statement on Federal Reserve Form U-1 referred to in said Regulation .
SECTION 4.09 Taxes. The Borrower and each of its subsidiaries have
filed or caused to be filed all Federal, state, local and foreign tax returns
which are required to be filed by them, on or prior to the date hereof, other
than tax returns in respect of taxes that (x) are not franchise, capital or
income taxes, (y) in the aggregate are not material and (z) would not, if
unpaid, result in the imposition of any material Lien on any property or assets
of the Borrower or any its subsidiaries. The Borrower and its
43
<PAGE> 50
subsidiaries have paid or caused to be paid all taxes shown to be due and
payable on such filed returns or on any assessments received by them, other than
(i) any taxes or assessments the validity of which the Borrower or such
subsidiary is contesting in good faith by appropriate proceedings, and with
respect to which the Borrower or such subsidiary shall, to the extent required
by GAAP have set aside on its books adequate reserves and (ii) taxes other than
income, capital or franchise taxes that in the aggregate are not material and
which would not, if unpaid, result in the imposition of any material Lien on any
property or assets of the Borrower or any of its subsidiaries. No Federal income
tax returns of the Borrower or any of its subsidiaries have been audited by the
United States Internal Revenue Service and neither the Borrower nor any of its
subsidiaries has as of the date hereof requested or been granted any extension
of time to file any Federal, state, local or foreign tax return.
SECTION 4.10 Employee Benefit Plans. With respect to the provisions
of ERISA:
(i) No Reportable Event has occurred or is continuing with respect
to any Pension Plan.
(ii) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Plan subject
to Part 4 of Subtitle B of Title I of ERISA.
(iii) Neither the Borrower nor any ERISA Affiliate is now, or has
been during the preceding five years, obligated to contribute to a Pension Plan
or a Multiemployer Plan. Neither the Borrower nor any ERISA Affiliate has (A)
ceased operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA, (B) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, (C) ceased making
contributions to any Pension Plan subject to the provisions of Section 4064(a)
of ERISA to which the Borrower, any subsidiary of the Borrower or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a "partial
withdrawal" (within the meaning of Section 4205 of ERISA) from a Multiemployer
Plan that is a Pension Plan so as to incur withdrawal liability under Sec tion
4201 of ERISA (without regard to subsequent reduction or waiver of such
liability under Section 4207 or 4208 of ERISA), or (E) been a party to any
transaction or agreement under which the provisions of Section 4204 of ERISA
were applicable.
(iv) No notice of intent to terminate a Pension Plan has been filed,
nor has any Plan been terminated pursuant to the provisions of Section 4041(e)
of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan and no event has occurred or
condition exists which might constitute grounds under the provisions of Section
4042 of ERISA for the
44
<PAGE> 51
termination of (or the appointment of a trustee to administer) any such Plan.
(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan (other than the Multiemployer Plans) are at least equal to the
present value of the greater of (i) accrued benefits (both vested and
non-vested) under such Plan, or (ii) "benefit liabilities" (within the meaning
of Sec tion 4001(a)(16) of ERISA) under such Plan, in each case as of the latest
actuarial valuation date for such Plan (determined in accordance with the same
actuarial assumptions and methods as those used by the Plan's actuary in its
valuation of such Plan as of such valuation date). No such Pension Plan has
incurred any "accumulated funding deficiency" (as defined in Section 412 of the
Code), whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Borrower or any ERISA
Affiliate, which could reasonably be expected to be asserted, against any Plan
or the assets of any such Plan. No civil or criminal action brought pursuant to
the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or threatened
against any fiduciary or any Plan. None of the Plans or any fiduciary thereof
(in its capacity as such) has been the direct or indirect subject of any audit,
investigation or examination by any governmental or quasi-governmental agency.
(viii) All of the Plans comply in all material respects currently,
and have complied in the past, both as to form and operation, with their terms
and with the provisions of ERISA and the Code, and all other applicable laws,
rules and regulations; all necessary governmental approvals for the Plans have
been obtained and a favorable determination as to the qualification under
Section 401(a) of the Code of each of the Plans which is an employee pension
benefit plan (within the meaning of Sec tion 3(2) of ERISA) has been made by the
Internal Revenue Service and a recognition of exemption from federal income
taxation under Section 501(c) of the Code of each of the funded employee welfare
benefit plans (within the meaning of Section 3(1) of ERISA) has been made by the
Internal Revenue Service, and nothing has occurred since the date of each such
determination or recognition letter that would adversely affect such
qualification.
SECTION 4.11 No Material Misstatements. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of the Borrower to the Agent or any Lender in connection with any of the
Transactions or this Agreement, the Security Documents, the Notes or any other
Loan Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact known to the
Borrower necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
45
<PAGE> 52
SECTION 4.12 Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any of its subsidiaries is an "investment company"
as defined in, or is otherwise subject to regulation under, the Investment
Company Act of 1940. Neither the Borrower nor any of its subsidiaries is a
"holding company" as that term is defined in or is otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13 Security Interest. Each of the Security Documents
creates and grants to the Agent, for its own benefit and for the benefit of the
Lenders, a security interest in the Collateral identified therein and, upon the
due filing of the financing statements, the due filing and recording of
assignments for security in the United States Patent and Trademark Office, the
Canadian Patent Office and the Canadian Trademarks Office and the delivery to
the Agent of the Pledged Stock, will grant to the Agent, for its own benefit and
for the benefit of the Lenders, a legal, valid and perfected first (except as
permitted pursuant to Section 7.01 hereof) priority security interest in the
collateral identified therein, except to the extent permitted by such Security
Documents. Such collateral or property is not subject to any other Liens
whatsoever, except Liens permitted by Section 7.01 hereof and except where
releases of such Liens have been delivered to the Agent.
SECTION 4.14 Use of Proceeds.
All proceeds of each borrowing under the Revolving Credit Commitment
shall be used to provide for working capital and general corporate purposes of
the Borrower.
SECTION 4.15 Subsidiaries. As of the Closing Date, Schedule 4.15
annexed hereto sets forth each subsidiary of the Borrower, its jurisdiction of
incorporation, its capitalization and ownership of capital stock of each such
subsidiary.
SECTION 4.16 Title to Properties; Possession Under Leases;
Trademarks. (a) The Borrower and each of its subsidiaries have good and
marketable title to, or valid leasehold interest in, all of their respective
properties and assets shown on the most recent balance sheet referred to in
Section 4.07(a) hereof and all assets and properties acquired since the date of
such balance sheet, except for such properties as are no longer used or useful
in the conduct of its business or as have been disposed of in the ordinary
course of business, and except as set forth on Schedule 4.16(a) annexed hereto
and for minor defects in title, which scheduled defects do not interfere with
the ability of the Borrower or any of its subsidiaries to conduct its business
as now conducted. All such assets and properties are free and clear of all Liens
other than those permitted by Section 7.01 or as described on Schedule 4.16(b)
hereto.
(b) The Borrower and each of its subsidiaries have complied with all
material obligations under all leases to which they are a party and under which
they are
46
<PAGE> 53
in occupancy, and all such leases are in full force and effect and the Borrower
and each of its subsidiaries enjoy peaceful and undisturbed possession under all
such leases.
(c) The Borrower and each of its subsidiaries own or have a valid
license to use all material trademarks, trademark rights, trade names, trade
name rights, copyrights, patents and patent rights which are necessary for the
conduct of the business of the Borrower and each of its subsidiaries. Neither
the Borrower nor any of its subsidiaries is infringing upon or otherwise acting
adversely to any of such trademarks, trademark rights, trade names, trade name
rights, copyrights, patent rights or licenses owned by any other person or
persons, which infringements or actions could reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 4.16(c) annexed hereto,
there is no claim or action by any such other person pending, or to the
knowledge of any Responsible Officer of the Borrower or any subsidiary thereof,
threatened, against the Borrower or any of its subsidiaries with respect to any
of the rights or property referred to in this Section 4.16(c).
SECTION 4.17 Solvency. (a) The fair salable value of the assets of
the Borrower and its Consolidated subsidiaries is not less than the amount that
will be required to be paid on or in respect of the probable liability on the
existing debts and other liabilities (including contingent liabilities) of the
Borrower and its Consolidated subsidiaries, as they become absolute and mature.
(b) The assets of the Borrower and its Consolidated subsidiaries do
not constitute unreasonably small capital for the Borrower and its Consolidated
subsidiaries to carry out their business as now conducted and as proposed to be
conducted including the capital needs of the Borrower and its Consolidated
subsidiaries, taking into account the particular capital requirements of the
business conducted by the Borrower and its Consolidated subsidiaries and
projected capital requirements and capital availability thereof.
(c) Neither the Borrower nor any of its subsidiaries intends to
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by the Borrower and any of
its subsidiaries, and of amounts to be payable on or in respect of debt of the
Borrower and any of its subsidiaries). The cash flow of the Borrower and its
Consolidated subsidiaries, after taking into account all anticipated uses of the
cash of the Borrower and its Consolidated subsidiaries, will at all times be
sufficient to pay all such amounts on or in respect of debt of the Borrower and
its Consolidated subsidiaries when such amounts are required to be paid.
(d) Neither the Borrower nor any of its subsidiaries believes that
final judgments against them in actions for money damages presently pending will
be rendered at a time when, or in an amount such that, they will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the
47
<PAGE> 54
maximum reasonable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered). The cash flow of the
Borrower and its Consolidated subsidiaries, after taking into account all other
anticipated uses of the cash of the Borrower and its Consolidated subsidiaries
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section), will at all times be sufficient to pay all such judgments
promptly in accordance with their terms.
SECTION 4.18 Permits, etc. The Borrower and each of its subsidiaries
possess all licenses, permits, approvals and consents, including, without
limitation, all environmental, health and safety licenses, permits, approvals
and consents (collectively, "Permits") of all Federal, state and local
governmental authorities as required to conduct properly their business, except
for those the absence of which could not reasonably be expect to have a Material
Adverse Effect; each such Permit is and will be in full force and effect, the
Borrower and each of its subsidiaries are in compliance in all material respects
with all such Permits, and no event (including, without limitation, any
violation of any law, rule or regulation) has occurred which would reasonably be
expected to result in the revocation or termination of any such Permit or any
restriction thereon.
SECTION 4.19 Compliance with Environmental Laws. Except as disclosed
in Schedule 4.19 hereto: (i) the operations of the Borrower and its subsidiaries
comply with all applicable Environmental Laws, except as such would not
reasonably be likely to result in liability, either individually or in the
aggregate, to the Borrower or any subsidiary thereof in excess of $100,000; (ii)
the Borrower and its subsidiaries and all of their present facilities or
operations, as well as to the knowledge of the Borrower and its subsidiaries
their past facilities or operations, are not subject to any judicial proceeding
or administrative proceeding or any outstanding written order or agreement with
any governmental authority or private party respecting (a) any Environmental
Law, (b) any Remedial Work, or (c) any Environmental Claims arising from the
Release of a Hazardous Material into the environment; (iii) to the best of the
knowledge of the Borrower and its subsidiaries, none of their operations is the
subject of any Federal or state investigation evaluating whether any Remedial
Work is needed to respond to a Release of any Hazardous Material into the
environment in violation of any Environmental Law; (iv) neither the Borrower nor
to the best knowledge of the Borrower, any of its subsidiaries nor any
predecessor of the Borrower or any of its subsidiaries has filed any notice
under any Environmental Law indicating past or present treatment, storage, or
disposal of a Hazardous Material or reporting a spill or Release of a Hazardous
Material into the environment; (v) to the best of the knowledge of the Borrower
and its subsidiaries, neither the Borrower nor any of its subsidiaries has any
contingent liability in connection with any Release of any Hazardous Material
into the environment, except as such would not reasonably be likely to result in
liability, either individually or in the aggregate, to the Borrower or any
subsidiary thereof in excess of $100,000; (vi) none of the operations of the
Borrower or any of its subsidiaries involves
48
<PAGE> 55
the generation, transportation, treatment or disposal of Hazardous Materials;
(vii) neither the Borrower nor any of its subsidiaries has disposed of any
Hazardous Material by placing it in or on the ground or waters of any premises
owned, leased or used by any of them and to the knowledge of the Borrower and
its subsidiaries neither has any lessee, prior owner, or other person, except as
such would not reasonably be likely to result in liability, either individually
or in the aggregate, to the Borrower or any subsidiary thereof in excess of
$100,000; (viii) no underground storage tanks or surface impoundments are on any
property of the Borrower and its subsidiaries; and (ix) no Lien in favor of any
governmental authority for (A) any liability under any Environmental Law or
regulation, or (B) damages arising from or costs incurred by such governmental
authority in response to a Release of a Hazardous Material into the environment,
has been filed or attached to the property of the Borrower and its subsidiaries.
SECTION 4.20 No Change in Credit Criteria or Collection Policies.
There has been no material change in credit criteria or collection policies
concerning account receivables of the Borrower since December 31, 1995. Without
duplication, all Eligible Receivables at the time of their classification as an
Eligible Receivable) of the Borrower are valid, binding and enforceable
obligations of account debtors and are not subject to any claims, defenses or
setoffs, subject to applicable laws of bankruptcy, insolvency and similar laws
affecting creditors' rights generally.
SECTION 4.21 Acquisition. (a)(i) The execution, delivery and
performance by the Borrower and Holdings of the Acquisition Documents have been
duly authorized by all necessary corporate action on the part of the Borrower
and Holdings, (ii) the Acquisition Documents constitute the valid, binding and
enforceable obligation of each such party thereto, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and are in full force and effect without
default or waiver of any of the conditions thereunder and (iii) there are no
governmental consents, filings, approvals or notices required to be made or
obtained in connection with the execution, delivery and performance of the
Acquisition Documents except such as have been duly made, obtained or delivered
or will be obtained, made or delivered.
(b) To the best of Borrower's knowledge, each of the representations
and warranties made by the sellers in the Acquisition Documents is true and
correct in all material respects.
SECTION 4.22 Bank Accounts. Schedule 4.22 hereto sets forth as of
the Closing Date a list of all of the Borrower's bank accounts.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and extend other Credits
hereunder shall be subject to the following conditions precedent:
49
<PAGE> 56
SECTION 5.01 All Credit Events. On each date on which a Credit Event
is to occur:
(a) The Agent shall have received a notice of borrowing as required
by Section 2.03 hereof or a request for the issuance of a Letter of Credit
pursuant to Section 2.17 hereof.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all material
respects with the same effect as though made on and as of such date
(except insofar as such representations and warranties relate expressly to
an earlier date).
(c) The Borrower shall be in compliance with all the terms and
provisions contained herein on its part to be observed or performed, and
at the time of and immediately after such Credit Event no Default or Event
of Default shall have occurred and be continuing.
(d) The Agent shall have received a certificate signed by the
Financial Officer of the Borrower (i) as to the compliance with (b) and
(c) above and (ii) with respect to each Revolving Credit Loan and each
Letter of Credit, demonstrating that after giving effect thereto
Availability is zero or greater.
SECTION 5.02 First Borrowing. The obligations of the Lenders in
respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written opinion of
counsel for the Borrower and each of the Guarantors and Grantors,
substantially in the form of Exhibit C hereto, dated the Closing Date,
addressed to the Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the certificate or
articles of incorporation or constitutive documents, in each case as
amended to date, of each of the Borrower, the Grantors and the Guarantors,
certified as of a recent date by the Secretary of State or other
appropriate official of the state of its organization, and a certificate
as to the good standing of each from such Secretary of State or other
official, in each case dated as of a recent date; (ii) a certificate of
the Secretary of each of the Borrower, Grantor and Guarantor, dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of such person's By-laws as in effect on the date of such
certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a
true and complete copy of a resolution adopted by such person's Board of
Directors authorizing the
50
<PAGE> 57
execution, delivery and performance of this Agreement, the Security
Documents, the Notes, the other Loan Documents and the Credit Events
hereunder, as applicable, and that such resolution has not been modified,
rescinded or amended and is in full force and effect, (C) that such
person's certificate or articles of incorporation or constitutive
documents has not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
(i) above, and (D) as to the incumbency and specimen signature of each of
such person's officers executing this Agreement, the Notes, each Security
Document or any other Loan Document delivered in connection herewith or
therewith, as applicable; (iii) a certificate of another of such person's
officers as to incumbency and signature of its Secretary; and (iv) such
other documents as the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the Closing
Date and signed by the Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and
(c) of Section 5.01 hereof and the conditions set forth in this Section
5.02.
(d) Each Lender shall have received its Revolving Credit Note (which
Notes shall replace the Revolving Credit Notes issued in connection with
the Original Credit Agreement, such replaced Notes, together with the Term
Notes issued in connection with the Original Credit Agreement, to be
returned to the Borrower by the Lenders holding same, marked "cancelled"
promptly after the Closing Date), each duly executed by the Borrower,
payable to its order and otherwise complying with the provisions of
Section 2.04 hereof.
(e) The Agent shall have received (x) such amendments or
confirmations (as requested by the Agent) of the Security Documents
existing as of the Closing Date, and (y) such additional Security
Documents (as requested by the Agent, including, but not limited to, an
Assignment of Contract relating to the Acquisition Documents) to be
executed and delivered in connection with the Transactions, each duly
executed by the applicable Grantors.
(f) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or reasonably
requested by the Agent to be filed, registered or recorded in order to
create in favor of the Agent for its own benefit and for the benefit of
the Lenders a first priority perfected security interest in the Collateral
acquired pursuant to the Acquisition, except to the extent permitted by
the Security Documents, shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested. The Agent shall have
received an acknowledgment copy, or other evidence satisfactory to it, of
each such filing, registration or recordation.
51
<PAGE> 58
(g) The Agent shall have received the results of a search of tax and
other Liens, and judgments and of the Uniform Commercial Code filings made
with respect to the Borrower and each Grantor in the jurisdictions in
which the Borrower is doing business and/or in which any Collateral
acquired pursuant to the Acquisition is located, and in which Uniform
Commercial Code filings have been made against the Borrower, each
Guarantor and each Grantor pursuant to paragraph (f) above. With respect
to any Liens not permitted pursuant to Section 7.01 hereof, the Agent
shall have received termination statements in form and substance
satisfactory to it.
(h) The Agent shall have received such Uniform Commercial Code
financing statements as reasonably requested by the Agent to be filed,
registered or recorded in order to evidence the Borrower's name change.
(i) The Lenders and the Agent shall have received and determined to
be in form and substance satisfactory to them:
(i) schedules listing (w) the stock ownership of Holdings, (x)
all contingent liabilities of the Borrower and its subsidiaries, as
reportable under GAAP, (y) all pending litigation involving the
Borrower or its subsidiaries or any of their respective businesses,
assets or rights and (z) all operating and capital leases;
(ii) evidence that, immediately after giving effect to the
Credit Events on the Closing Date, the Total Term Loan Commitment is
$0;
(iii) evidence that the Borrower shall have received not less
than $90,000,000 as gross cash proceeds in consideration for the
issuance of the Subordinated Notes;
(iv) a copy of a field examination of the books and records of
Crispaire Corporation;
(v) evidence of the compliance by the Borrower with Section
6.03 hereof;
(vi) the financial statements described in Section 4.07
hereof;
(vii) evidence that the Transactions are in compliance with
all applicable laws and regulations;
(viii) evidence that the Borrower and its subsidiaries are in
compliance with all Environmental Laws;
52
<PAGE> 59
(ix) evidence of payment of all fees owed to the Agent and the
Lenders by the Borrower under this Agreement or otherwise;
(x) evidence that all requisite third party consents
(including, without limitation, consents with respect to the
Borrower and each of the Grantors and Guarantors) to the
Transactions have been received;
(xi) evidence that there has been no material adverse change
in the business, assets, operations or financial condition of (x)
the Borrower and its subsidiaries since December 31, 1996 or (y)
Crispaire Corporation and its subsidiaries since October 31, 1996;
and
(xii) evidence that there are no actions, suits or proceedings
at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or threatened
against or affecting the Borrower or any of its subsidiaries or any
of their respective businesses, assets or rights which involve any
of the Transactions.
(j) The Agent and the Lenders shall have had the opportunity, if
they so choose, to examine the books of account and other records and
files related to Crispaire Corporation and to make copies thereof, to
conduct customer and supplier checkings and to conduct a pre-closing audit
which shall include, without limitation, verification of Eligible
Receivables related to Crispaire Corporation and formulation of an opening
Borrowing Base, and the results of such examination, checkings and audit
shall have been satisfactory to the Agent and Lenders in all respects.
(k) Messrs. Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to
the Agent, shall have received payment in full for all legal fees charged,
and all costs and expenses incurred, by such counsel through the Closing
Date in connection with the transactions contemplated under this
Agreement, the Security Documents and the other Loan Documents and
instruments in connection herewith and therewith.
(l) The Agent and the Lenders shall have:
(i) received copies of each of the Acquisition Documents,
including all amendments and schedules thereto, each certified by a
Responsible Officer of the Borrower;
(ii) received evidence that the Acquisition Agreement is in
full force and effect and all consents, filings and approvals
required by applicable law in connection therewith shall have been
obtained and made;
53
<PAGE> 60
(iii) received evidence that simultaneously with the
occurrence of the Credit Events on the Closing Date, the Acquisition
has been duly and validly consummated, without modification,
amendment or waiver (except for such as shall have been approved in
writing by the Agent), in accordance with the terms, conditions and
provisions of the Acquisition Agreement and the other Acquisition
Documents; and
(iv) determined that the terms and provisions of all
agreements and documents in connection with the Acquisition,
including without limitation the Acquisition Documents, are
satisfactory in form and substance and the Agent shall have received
such legal opinions, certificates and copies of necessary
governmental filings and consents as the Agent shall have requested
in connection therewith, and shall have determined to its
satisfaction that the consummation of the Acquisition and other
transactions contemplated by the Acquisition Documents are in
compliance with all applicable laws and regulations.
(m) The corporate structure and capitalization of the Borrower shall
be satisfactory to the Lenders in all respects.
(n) All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel in
their sole discretion.
(o) The Borrower shall have executed and delivered to the Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of the Credit Events made on the Closing Date, in form and
substance satisfactory to the Agent.
(p) The Borrower shall have obtained landlords' waivers and bailee's
letters pursuant to documentation satisfactory in form and substance to
the Agent.
(q) A lockbox or other cash management arrangement with respect to
the collection account maintained at NationsBank, N.A. shall be entered
into pursuant to documentation satisfactory in form and substance to the
Agent.
(r) The Agent shall have received such other documents as the
Lenders or the Agent or Agent's counsel shall reasonably deem necessary.
VI. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that until the
principal and interest on all Notes delivered hereunder are paid in full and all
fees,
54
<PAGE> 61
expenses or amounts then being due and payable hereunder or in connection with
any of the Transactions shall be paid in full and the Total Revolving Credit
Commitment shall be terminated, it will, and will cause each of its
subsidiaries, to:
SECTION 6.01 Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.02 Businesses and Properties. At all times do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect the rights, licenses, Permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; maintain
and operate such businesses in the same general manner in which they are
presently conducted and operated; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to public and employee health and safety and all
Environmental Laws) and with any and all other applicable laws, rules,
regulations and governmental orders, the lack of compliance with which would
have a Material Adverse Effect; take all actions which may be required to
obtain, preserve, renew and extend all Permits and other authorizations which
are material to the operation of such businesses; and at all times maintain,
preserve and protect all property material to the conduct of such businesses and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times.
SECTION 6.03 Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, (b) maintain
such other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as in effect and approved by
the Agent on the Closing Date; provided, however, that such insurance shall
insure the property of the Borrower against all risk of physical damage,
including, without limitation, loss by fire, explosion, theft, fraud and such
other casualties as may be reasonably satisfactory to the Agent, but in no event
at any time in an amount less than the replacement value of the Collateral, (c)
maintain in full force and effect public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by the
Borrower or any of its subsidiaries, in such amount as the Agent shall
reasonably deem necessary, (d) maintain business interruption insurance to such
extent as in effect and approved by the Agent on the Closing Date, and (e)
maintain such other insurance as may be required by law or as may be reasonably
requested by the Agent for purposes of assuring compliance with this Section
6.03. All insurance covering tangible personal property subject to a Lien in
favor of the Agent for its own benefit and for the benefit of
55
<PAGE> 62
the Lenders granted pursuant to the Security Documents shall provide that, in
the case of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof.
SECTION 6.04 Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, except those which are being diligently contested in
good faith by appropriate proceedings and as to which adequate cash reserves
therefor have been established in an amount at least equal to the Lien permitted
by Section 7.01(c), as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof.
SECTION 6.05 Financial Statements, Reports, etc. Furnish to the
Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i)
Consolidated and consolidating balance sheets and Consolidated and
consolidating income state ments showing the financial condition of the
Borrower and its subsidiaries as of the close of such Fiscal Year and the
results of their operations during such year, and (ii) a Consolidated and
consolidating statement of shareholders' equity and a Con solidated and
consolidating statement of cash flow, as of the close of such Fiscal Year,
comparing such financial condition and results of operations to such
financial condition and results of operations for the comparable period
during the immediately preceding Fiscal Year, all the foregoing
Consolidated financial statements to be audited by a "Big Six" accounting
firm or other independent public accountants acceptable to the Agent
(which report shall not contain any qualification except with respect to
new accounting principles mandated by the Financial Accounting Standards
Board), and to be in form and substance acceptable to the Agent;
(b) within 45 days after the end of each of the first three (3)
fiscal quarters of each Fiscal Year the Borrower, (i) unaudited
Consolidated and consolidating balance sheets and Consolidated and
consolidating income statements showing the financial condition and
results of operations of the Borrower and its subsidiaries as of the end
of each such quarter, (ii) a Consolidated and consolidating statement of
shareholders' equity and (iii) a Consolidated and consolidating statement
of cash flow, in each case for the fiscal quarter just ended and for the
period commencing at the end of the immediately preceding Fiscal Year and
ending with the last day of such quarter, and comparing such financial
condition and results of operations to the projections for the applicable
period provided under paragraph (h) below and to the results for the
comparable period during the immediately preceding Fiscal
56
<PAGE> 63
Year, in each case prepared and certified by the Financial Officer of the
Borrower as presenting fairly the financial condition and results of
operations of the Borrower and its subsidiaries and as having been
prepared in accordance with GAAP, in each case subject to normal year-end
audit adjustments;
(c) within 30 days after the end of each month, (i) unaudited
Consolidated and consolidating balance sheets and income statements
showing the financial condition and results of operations of the Borrower
and its subsidiaries as of the end of each such month, (ii) a Consolidated
and consolidating statement of shareholders' equity and (iii) a
Consolidated and consolidating statement of cash flow, in each case for
the month just ended and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the last day of such
month, and comparing such financial condition and results of operations to
the projections for the applicable period provided under paragraph (h)
below and to the results for the comparable period during the immediately
preceding Fiscal Year, prepared and certified by the Financial Officer of
the Borrower as presenting fairly the financial condition and results of
operations of the Borrower and its subsidiaries and as having been
prepared in accordance with GAAP, in each case subject to normal year-end
audit adjustments;
(d) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and other reports, and such
proxy statements and other information, if any, as shall be filed by the
Borrower or any subsidiaries with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934;
(e) concurrently with any delivery under (a) or (b) above, a
certificate of the firm or person referred to therein (x) which
certificate shall, in the case of the certificate of the Financial Officer
of the Borrower, certify that to the best of his or her knowledge no
Default or Event of Default has occurred (including calculations
demonstrating compliance, as of the dates of the financial statements
being furnished, with the covenants set forth in Sections 7.09 and 7.10
hereof) and, if such a Default or Event of Default has occurred, specify
the nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto and (y) which certificate, in the case of
the certificate furnished by the independent public accountants referred
in paragraph (a) above, may be limited to accounting matters and disclaim
responsibility for legal interpretations, but shall in any event certify
that to the best of such accountants' knowledge, as of the dates of the
financial statements being furnished no Default or Event of Default has
occurred under any of the covenants set forth in Sections 7.09 and 7.10
hereof (such certificate to include calculations demonstrating compliance
with such covenants), and shall in addition certify that
57
<PAGE> 64
in the course of preparing the audit and the certificate referred to
herein, such accountants have not become aware of the occurrence of any
other Default or Event of Default and, if such a Default or Event of
Default has occurred, specify the nature thereof; provided, however, that
any certificate delivered concurrently with (a) above shall be signed by
the Financial Officer of the Borrower;
(f) concurrently with any delivery under (a) above, a management
letter prepared by the independent public accountants who reported on the
financial statements delivered under (a) above, with respect to the
internal audit and financial controls of the Borrower and its
subsidiaries;
(g) within 15 days of the end of each fiscal month, an aging
schedule of the Receivables substantially in the form of the aging
schedule of Receivables dated July 31, 1996 previously furnished to the
Agent and a certificate substantially in the form of Schedule 6.05(g)
hereto executed by the Financial Officer of the Borrower with respect to
inventory designations;
(h) within 30 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, with respect to capital expenditures) for the Borrower
and its respective subsidiaries for such Fiscal Year (including monthly
balance sheets, statements of income and of cash flow) and annual
projections through the Final Maturity Date prepared by management and in
form, substance and detail (including, without limitation, principal
assumptions) satisfactory to the Agent;
(i) as soon as practicable, copies of all reports, forms, filings,
loan documents and financial information submitted to governmental
agencies and/or its shareholders or the holders of any of the Borrower's
Subordinated Indebtedness;
(j) within 15 days after the end of each fiscal month, a certificate
substantially in the form of Schedule 6.05(j) hereto executed by the
Financial Officer of the Borrower demonstrating compliance as at the end
of each month with the Availability requirements;
(k) immediately upon becoming aware thereof, notice to the Agent of
the breach by any party of any material agreement with the Borrower; and
(l) such other information as the Agent or any Lender may reasonably
request.
58
<PAGE> 65
SECTION 6.06 Litigation and Other Notices. Give the Agent prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having
the effect of prohibiting, the making of the Loans or occurrence of other
Credit Events, or invalidating, or having the effect of invalidating, any
provision of this Agreement, the Notes or the other Loan Documents, or the
initiation of any litigation or similar proceeding seeking any such
injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Borrower or any of its subsidiaries, whether at law or in
equity or by or before any court or any Federal, state, municipal or other
governmental agency or authority, (i) which is material and is brought by
or on behalf of any governmental agency or authority, or in which
injunctive or other equitable relief is sought or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which, if
adversely determined, would (A) reasonably be expected to result in
liability of one or more Borrower or a subsidiary thereof in an aggregate
amount of $250,000 or more, not reimbursable by insurance, or (B)
materially impair the right of the Borrower or a subsidiary thereof to
perform its obligations under this Agreement, any Note or any other Loan
Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto; and
(d) any development in the business or affairs of the Borrower or
any of its subsidiaries which has had or which is likely to have, in the
reasonable judgment of any Responsible Officer of the Borrower, a Material
Adverse Effect.
SECTION 6.07 ERISA. (a) Pay and discharge promptly any liability
imposed upon it pursuant to the provisions of Title IV of ERISA; provided,
however, that neither the Borrower nor any ERISA Affiliate shall be required to
pay any such liability if (1) the amount, applicability or validity thereof
shall be diligently contested in good faith by appropriate proceedings, and (2)
such person shall have set aside on its books reserves which, in the opinion of
the independent certified public accountants of such person, are adequate with
respect thereto.
(b) Deliver to the Agent, promptly, and in any event within 30 days,
after (i) the occurrence of any Reportable Event, a copy of the materials that
are filed with the PBGC, or the materials that would have been required to be
filed if the 30-day notice requirement to the PBGC was not waived, (ii) the
Borrower or any ERISA Affiliate
59
<PAGE> 66
or an administrator of any Pension Plan files with participants, beneficiaries
or the PBGC a notice of intent to terminate any such Plan, a copy of any such
notice, (iii) the receipt of notice by the Borrower or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention to
terminate any Pension Plan or to appoint a trustee to administer any such Plan,
a copy of such notice, (iv) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on Treasury Form 5500 with
respect to any Plan, together with certified financial statements (if any) for
the Plan and any actuarial statements on Schedule B to such Form 5500, (v) the
Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to administer) any
Pension Plan, an explanation of such event or condition, (vi) the receipt by the
Borrower or any ERISA Affiliate of an assessment of withdrawal liability under
Section 4201 of ERISA from a Multiemployer Plan, a copy of such assessment,
(vii) the Borrower or any ERISA Affiliate knows or has reason to know of any
event or condition which might cause any one of them to incur a liability under
Section 4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code,
an explanation of such event or condition, and (viii) the Borrower or any ERISA
Affiliate knows or has reason to know that an application is to be, or has been,
made to the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy of such
application, and in each case described in clauses (i) through (iii) and (v)
through (vii) together with a statement signed by the Financial Officer setting
forth details as to such Reportable Event, notice, event or condition and the
action which the Borrower or such ERISA Affiliate proposes to take with respect
thereto.
SECTION 6.08 Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Lender may request,
permit any authorized representative designated by such Lender to visit and
inspect the properties and financial records of the Borrower and its
subsidiaries and to make extracts from such financial records at such Lender's
expense, and permit any authorized representative designated by such Lender to
discuss the affairs, finances and condition of the Borrower and its subsidiaries
with the appropriate Financial Officer and such other officers as the Borrower
shall deem appro priate and the Borrower's independent public accountants, as
applicable. The Agent agrees that it shall schedule any meeting with any such
independent public accountant through the Borrower and a Responsible Officer of
the Borrower shall have the right to be present at any such meeting. At the
Borrower's expense, the Agent shall have the right to audit, during any
twelve-month period, not more often than once during such period (unless a
Default or an Event of Default has occurred and is continuing in which case as
often as the Agent may request), the existence and condition of the accounts
receivables, inventory, books and records of the Borrower and its subsidiaries
and to review their compliance with the terms and conditions of this Agreement
and the other Loan Documents.
60
<PAGE> 67
SECTION 6.09 Use of Proceeds. Use the proceeds of the Credit Events
only for the purposes set forth in Section 4.14 hereof.
SECTION 6.10 Fiscal Year-End. Cause its Fiscal Year to end on
December 31 in each year.
SECTION 6.11 Further Assurances. Execute any and all further
documents and take all further actions which may be required under applicable
law, or which the Agent may reasonably request, to grant, preserve, protect and
perfect the first priority security interest created by the Security Documents
in the Collateral.
SECTION 6.12 Additional Grantors and Guarantors. Promptly inform the
Agent of the creation or acquisition of any direct or indirect subsidiary
(subject to the provisions of Section 7.06 hereof) and cause each direct or
indirect subsidiary not in existence on the date hereof (except any Foreign
Subsidiary), to enter into a Guarantee in form and substance satisfactory to the
Agent, and to execute the Security Documents, as applicable, as a Grantor, and
cause the direct parent of each such subsidiary to pledge all of the capital
stock of such subsidiary (or, in the case of a Foreign Subsidiary, 65%) pursuant
to the Pledge Agreement and cause each such subsidiary to pledge its accounts
receivable and all other assets pursuant to the Security Agreement (except any
Foreign Subsidiary).
SECTION 6.13 Environmental Laws. (a) Comply, and cause each of its
subsidiaries to comply, in all material respects with the provisions of all
Environmental Laws, and shall keep its properties and the properties of its
subsidiaries free of any Lien imposed pursuant to any Environmental Law. The
Borrower shall not cause or suffer or permit, and shall not suffer or permit any
of its subsidiaries to cause or suffer or permit, the property of the Borrower
or its subsidiaries to be used for the generation, production, processing,
handling, storage, transporting or disposal of any Hazardous Material, except
for Hazardous Materials used in the ordinary course of business of the Borrower
and in material compliance with Environmental Laws.
(b) Supply to the Agent copies of all material submissions by the
Borrower or any of its subsidiaries to any governmental body and of the reports
of all environmental audits and of all other environmental tests, studies or
assessments (including the data derived from any sampling or survey of asbestos,
soil, or subsurface or other materials or conditions) that have been conducted
or performed (by or on behalf of the Borrower or any of its subsidiaries) on or
regarding the properties owned, operated, leased or occupied by the Borrower or
any of its subsidiaries in response to violations of Environmental Law or
Releases of Hazardous Materials that would reasonably be expected to give rise
to an Environmental Claim in excess of $100,000. The Borrower shall also permit
and authorize, and shall cause its subsidiaries to permit and authorize, the
consultants, attorneys or other persons that prepare such submissions or reports
or perform such audits, tests, studies or assessments to discuss
61
<PAGE> 68
such submissions, reports or audits with the Agent and the Lenders.
(c) Promptly (and in no event more than ten Business Days after the
Borrower becomes aware or is otherwise informed of such event) provide oral and
written notice to the Agent upon the happening of any of the following:
(i) the Borrower, any subsidiary of the Borrower, or any
tenant or other occupant of any property of the Borrower or such
subsidiary receives written notice of any claim, complaint, charge
or notice of a violation or potential violation of any Environmental
Law that would reasonably be expected to give rise to a liability or
cost in excess of $30,000;
(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of the properties
owned, operated, leased or occupied by the Borrower or any of its
subsidiaries, in amounts that may have to be reported under
Environmental Law or Hazardous Materials at levels or in amounts
that may have to be reported, remedied or responded to under
Environmental Law are detected on or in the soil or groundwater such
that would reasonably be expected to give rise to a liability or
cost in excess of $30,000;
(iii) the Borrower or any of its subsidiaries is or may be
liable for any costs of cleaning up or otherwise responding to a
Release of Hazardous Materials such that would reasonably be
expected to give rise to a liability or cost in excess of $30,000;
(iv) any part of the properties owned, operated, leased or
occupied by the Borrower or any of its subsidiaries is or may be
subject to a Lien under any Environmental Law; or
(v) the Borrower or any of its subsidiaries undertakes any
Remedial Work with respect to any Hazardous Materials such that
would reasonably be expected to give rise to a liability or cost in
excess of $30,000.
(d) Without in any way limiting the scope of Section 11.04(c) and in
addition to any obligations thereunder, the Borrower hereby indemnifies and
agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any Environmental Law or under tort, contract or common
law, except to the extent any such liability or loss is found by a court of
final adjudication to have been due to the gross negligence or willful
62
<PAGE> 69
misconduct of the Agent or any Lender. To the extent laws of the United States
or any applicable state or local law in which property owned, operated, leased
or occupied by the Borrower or any of its subsidiaries is located provide that a
Lien upon such property of the Borrower or such subsidiary may be obtained for
the removal of Hazardous Materials which have been or may be Released, no later
than sixty days after notice that a Release has occurred is given by the Agent
to the Borrower or such subsidiary, the Borrower or such subsidiary shall
deliver to the Agent a report issued by a qualified third party engineer
assessing the existence and extent of any Hazardous Materials located upon or
beneath the specified property. To the extent any Hazardous Materials located
therein or thereunder either subject the property to Lien or require removal to
safeguard the health of any persons, the removal thereof shall be an affirmative
covenant of the Borrower hereunder.
(e) In the event that any Remedial Work is required to be performed
by the Borrower or any of its subsidiaries under any applicable Environmental
Law, any judicial order, or by any governmental entity, the Borrower or such
subsidiary shall commence all such Remedial Work at or prior to the time
required therefor under such Environmental Law or applicable judicial orders and
thereafter diligently prosecute to completion all such Remedial Work in
accordance with and within the time allowed under such applicable Environmental
Laws or judicial orders.
SECTION 6.14 Pay Obligations to Lenders and Perform Other Covenants.
(a) Make full and timely payment of the Obligations, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained in
this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) in each of the other
Loan Documents, all at the times and places and in the manner set forth therein,
and (c) except for the filing of continuation statements and the making of other
filings by the Agent as secured party or assignee, at all times take all actions
necessary to maintain the Liens and security interests provided for under or
pursuant to this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all information to the Agent
necessary for such maintenance.
SECTION 6.15 Maintain Operating Accounts. Maintain its principal
disbursement accounts, operating accounts and other depository accounts as set
forth on Schedule 4.22 or as otherwise contemplated by Section 10.01, and notify
the Agent promptly of the closing of any account specified in Schedule 4.22 and
the opening up of any new accounts, in detail satisfactory to the Agent and with
respect to any such new account, provide the Agent with such agreements, in form
and substance satisfactory to the Agent, as the Agent shall request. The
Borrower agrees that if at any time the outstanding balance of the account
maintained by RVPI with the Royal Bank of Canada (or any financial institution
with an office in Barbados) exceeds $10,000.00, the Borrower will provide, or
will cause to be provided. to the Agent such agreements, in
63
<PAGE> 70
form and substance satisfactory to the Agent, as the Agent shall request.
SECTION 6.16 Amendments. Promptly supply to the Agent certified
copies of any amendments to the Acquisition Documents.
SECTION 6.17 Lock-Box Accounts. Within 60 days of the Closing Date,
enter into lockbox or other cash management arrangements with respect to
accounts acquired or opened in connection with the Acquisition pursuant to
documentation satisfactory in form and substance to the Agent.
VII. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that until the
principal and interest on all Notes delivered hereunder are paid in full and all
fees, expenses or amounts then being due and payable hereunder or in connection
with any of the Transactions shall be paid in full and the Total Revolving
Credit Commitment shall be terminated, it will not and will not cause or permit
any of its subsidiaries to, either directly or indirectly:
SECTION 7.01 Liens. Incur, create, assume or permit to exist any
Lien on any of its property or assets (including the stock of any direct or
indirect subsidiary), whether owned at the date hereof or hereafter acquired, or
assign or convey any rights to or security interests in any future revenues,
except:
(a) Liens incurred and 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 (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations which are not overdue for a period of more than 15 days or
which are being contested in good faith by appropriate proceedings as to
which the Borrower or any of its subsidiaries, as the case may be, shall,
to the extent required by GAAP, have set aside on its books adequate
reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as to
which adequate reserves have been established in accordance with GAAP;
provided, however, that in no event shall the aggregate amount of such
reserves be less than the aggregate amount secured by such Liens;
64
<PAGE> 71
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregulari ties of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property, with or without consent of the
lessee) which do not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof in the
operation of its business;
(e) Liens upon any equipment acquired through the purchase or lease
(including Capitalized Lease Obligations) by the Borrower or any of its
subsidiaries which are created or incurred contemporaneously with such
acquisition to secure or provide for the payment of any part of the
purchase price of, or lease payments on, such equipment and expenses
relating thereto (but no other amounts and not in excess of the purchase
price or lease payments); provided, however, that any such Lien shall not
apply to any other property of the Borrower or any of its subsidiaries;
and provided, further, that after giving effect to such purchase or lease,
compliance is maintained with Section 7.07 hereof;
(f) Liens existing on the date of this Agreement and set forth in
Schedule 7.01 annexed hereto but not the extension, renewal or refunding
of the Indebtedness secured thereby;
(g) Liens created in favor of the Agent for its own benefit and for
the benefit of the Lenders;
(h) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business; or
(i) Liens securing Indebtedness permitted under clause (x) of
Section 7.03 hereof; provided, that such Lien shall be promptly disclosed
to the Agent.
SECTION 7.02 Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby the Borrower or any
of its subsidiaries shall sell or transfer any property, real or personal, and
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which the Borrower or
such subsidiary intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
SECTION 7.03 Indebtedness. Incur, create, assume or permit to exist
any Indebtedness other than (i) Indebtedness secured by Liens permitted under
Sec-
65
<PAGE> 72
tion 7.01, (ii) Indebtedness (including, without limitation, Guarantees)
existing on the date hereof and listed in Schedule 7.03 annexed hereto, but not
the extension, renewal or refunding thereof, (iii) Indebtedness incurred
hereunder, (iv) Indebtedness to trade creditors incurred in the ordinary course
of business, (v) Guarantees constituting the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, (vi)
Guarantees of the Obligations, (vii) purchase money Indebtedness to the extent
permitted by Sections 7.01(e) and 7.07 hereof, (viii) Subordinated Indebtedness,
(ix) Indebtedness for judgments which do not constitute a Default or an Event of
Default under Article VIII(j), (x) contingent obligations (fully reimbursable by
insurance) incurred in respect of product warranties which are provided to
customers of the Borrower or any subsidiary in the ordinary course of business
and (xi) other Indebtedness not to exceed $100,000 in the aggregate at any time
outstanding.
SECTION 7.04 Dividends, Distributions and Payments. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose, except that
(i) any subsidiary of the Borrower may pay cash dividends to the Borrower, (ii)
so long as no Default or Event of Default shall have occurred and be continuing,
the Borrower may pay cash dividends to Holdings solely for the purpose of paying
taxes not otherwise immediately payable pursuant to tax sharing arrangements and
which arise from consolidated return filings by Holdings but only as and when
due and payable, and (iii) so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may pay cash dividends to Holdings to
repurchase shares pursuant to written shareholders agreements or employment
arrangements relating to the death, disability, resignation or termination of
employment of any officer or employee; provided, that the aggregate amount
expended for such repurchases during the term of this Agreement shall not,
without the consent of the Required Lenders, exceed $500,000.
SECTION 7.05 Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer or
assign to any persons or otherwise dispose of (whether in one transaction or a
series of transactions) any portion of its assets (whether now owned or
hereafter acquired), or sell any of its inventory, aggregating in excess of
$50,000 in any Fiscal Year, other than (i) sales of inventory in the ordinary
course of business, (ii) sales or other dispositions of obsolete equipment,
(iii) the license of trademarks and other intellectual property for fair value
in the ordinary course of business to third parties and (iv) Qualified Sales, or
permit another person to merge into it, or acquire all or substantially all the
capital stock or assets of any other person.
SECTION 7.06 Investments. Own, purchase or acquire any stock,
66
<PAGE> 73
obligations, assets (not in the ordinary course of business) or securities of,
or any interest in, or make any capital contribution or loan or advance to, any
other person, or make any other investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose long-term
debt rating is at least investment grade as determined by either Standard
& Poor's Ratings Group or Moody's Investors Service, Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States;
(c) investments in money market mutual funds having assets in excess
of $2,500,000,000;
(d) commercial paper at the time of acquisition having the highest
rating obtainable from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.;
(e) federally tax exempt securities rated A or better by either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc.;
(f) loans and advances to officers and employees for business
purposes in an aggregate amount not to exceed $50,000 in the aggregate
outstanding at any time for all loans and advances under this clause (f);
(g) investments in the stock of RVPI existing on the Original
Closing Date, but not any additional investments therein; and
(h) current assets arising from the sale or lease of goods or the
rendition of services in the ordinary course of business of the Borrower;
provided that, in each case mentioned in (a), (b), (d), (e) and (g) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.
SECTION 7.07 [Intentionally Omitted.]
SECTION 7.08 [Intentionally Omitted.]
SECTION 7.09 Leverage Ratio. Permit the Leverage Ratio of the
Borrower and its subsidiaries at the end of each fiscal quarter, commencing the
fiscal quarter ending December 31, 1998 to be greater than 6.25:1.00.
67
<PAGE> 74
SECTION 7.10 Interest Coverage Ratio. Permit the Interest Coverage
Ratio of the Borrower and its subsidiaries at the end of each fiscal quarter to
be less than:
Date of Determination Ratio
--------------------- -----
December 31, 1997 1.20:1.00
March 31, 1998 1.20:1.00
June 30, 1998 1.20:1.00
September 30, 1998 1.20:1.00
Each December 31, March 31, 1.25:1.00
June 30 and September 30 thereafter
SECTION 7.11 Business. Alter the nature of its business as operated
on the date of this Agreement other than any businesses or activities
substantially similar or related thereto.
SECTION 7.12 Sales of Receivables. Sell, assign, discount, transfer,
or otherwise dispose of any accounts receivable, promissory notes, drafts or
trade acceptances or other rights to receive payment held by it, with or without
recourse, except (i) for the purpose of collection or settlement in the ordinary
course of business or (ii) the sale of any such accounts to The Chase Manhattan
Bank.
SECTION 7.13 Use of Proceeds. Permit the proceeds of any Credit
Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation G, T, U or X of the Board, or for any purpose
other than those set forth in Section 4.14 hereof.
SECTION 7.14 ERISA. (a) Engage in any transaction in connection with
which the Borrower or any ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to the provisions of Section 502 of ERISA or a
material tax imposed under the provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under Sec
tion 4041 of ERISA, or take any other action which could result in a material
liability of the Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, the Borrower or any ERISA Affiliate is required to pay
as contributions thereto, or, with respect to any Pension Plan, permit to exist
any material "accumulated funding deficiency" (within the meaning of Section 302
of ERISA and
68
<PAGE> 75
Section 412 of the Code), whether or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision
of security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.15 Accounting Changes. Make, or permit any subsidiary to
make, any change in their accounting treatment or financial reporting practices
except as required or permitted by GAAP.
SECTION 7.16 Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Other than Indebtedness incurred
hereunder, directly or indirectly prepay, redeem, purchase or retire any
Indebtedness, including, without limitation, any Subordinated Indebtedness.
(b) Modify, amend or otherwise alter the terms and provisions of any
Subordinated Indebtedness.
(c) Modify, amend or alter their certificates or articles of
incorporation.
(d) Modify, amend or otherwise alter in any material respect the
terms and provisions of the Coast Distribution Agreement without the consent of
the Agent.
SECTION 7.17 Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement, including the transactions
contemplated by the Acquisition Documents and the Subordinated Notes, directly
or indirectly purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or enter into any other transaction with, any
stockholder, Affiliate or agent of the Borrower, except at prices and on terms
not less favorable to it than that which would have been obtained in an
arm's-length transaction with a non-affiliated third party.
SECTION 7.18 Consulting Fees. Pay any management, consulting or
other fees of any kind to Holdings, any subsidiary thereof or any subsidiary of
the Borrower, or to any Affiliate of Holdings, any of its subsidiaries or of the
Borrower or any of the Borrower's subsidiaries.
SECTION 7.19 Negative Pledges, Etc. Enter into any agreement
(other than this Agreement, any other Loan Document) which (a) prohibits the
creation or assumption of any Lien upon any of the Collateral, including,
without limitation, any hereafter acquired property, or (b) specifically
prohibits the amendment or other modification of this Agreement or any other
Loan Document.
69
<PAGE> 76
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the Security Documents, the Notes
or other Loan Documents or any Credit Events hereunder, shall prove to
have been incorrect in any material respect when made or deemed to be
made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, or any fee or any other amount payable hereunder, or under the
Notes, Letters of Credit, or any other Loan Document or in connection with
any other Credit Event or the Transactions when and as the same shall
become due and payable, and such default shall continue for five (5)
consecutive days;
(d) default shall be made in the due observance or performance of
any covenant, condition or agreement to be observed or performed on the
part of any Loan Party pursuant to the terms of this Agreement, any of the
Notes, any of the Security Documents or any other Loan Document (and with
respect to defaults under Sections 6.04, 6.06 and 6.07, such default shall
continue for ten (10) consecutive days);
(e) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code
or any other Federal, state or foreign bankruptcy, insolvency, liquidation
or similar law, (ii) consent to the institution of, or fail to contravene
in a timely and appropriate manner, any such proceeding or the filing of
any such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for any
Loan Party or for a substantial part of its property or assets, (iv) file
an answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Loan Party, or of a substantial part of the
property or assets of
70
<PAGE> 77
any Loan Party, under Title 11 of the United States Code or any other
Federal state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator
or similar official for any Loan Party or for a substantial part of the
property of any Loan Party or (iii) the winding-up or liquidation of any
Loan Party; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall continue unstayed and in effect for 60 days;
(g) default shall be made with respect to any Indebtedness (other
than Subordinated Indebtedness) or obligations under a capitalized lease
of any Loan Party (excluding Indebtedness outstanding hereunder), whose
unpaid principal amount exceeds (together with all other Indebtedness or
capitalized leases in default under this clause (g)) $250,000 in the
aggregate at any time, or default shall be made with respect to any
Subordinated Indebtedness, in either case, if the effect of any such
default shall be to accelerate, or to permit the holder or obligee of any
such Indebtedness or obligations under a capitalized lease (or any trustee
on behalf of such holder or obligee) at its option to accelerate, the
maturity of such Indebtedness or obligations under a capitalized lease;
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Loan Party, any ERISA Affiliate, or
an administrator of any Plan of a notice of intent to terminate such a
Plan in a "distress termination" under the provisions of Section 4041 of
ERISA, (iii) the receipt of notice by any Loan Party, any ERISA Affiliate,
or an administrator of a Plan that the PBGC has instituted proceedings to
terminate (or appoint a trustee to administer) such a Pension Plan, (iv)
any other event or condition exists which might, in the opinion of the
Agent, constitute grounds under the provisions of Section 4042 of ERISA
for the termination of (or the appointment of a trustee to administer) any
Pension Plan by the PBGC, (v) a Pension Plan shall fail to maintain the
minimum funding standard required by Section 412 of the Code for any plan
year or a waiver of such standard is sought or granted under the
provisions of Section 412(d) of the Code, (vi) any Loan Party or any ERISA
Affiliate has incurred, or is likely to incur, a liability under the
provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) any Loan
Party or any ERISA Affiliate fails to pay the full amount of an
installment required under Section 412(m) of the Code, (viii) the
occurrence of any other event or condition with respect to any Plan which
would constitute an event of default under any other agreement entered
into by any Loan Party or any ERISA Affiliate, and in each case in clauses
(i) through (viii) of this subsection (h), such event or condition,
together with all other such events or conditions, if any, could subject
any Loan Party or any ERISA Affiliate to any taxes, penalties or other
liabilities which, in the opinion of the Agent, could have a Material
Adverse Effect on the financial condition of any Loan Party or any ERISA
Affiliate;
71
<PAGE> 78
(i) any Loan Party or any ERISA Affiliate (i) shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred any
material with drawal liability to such Multiemployer Plan, and (ii) does
not have reasonable grounds for contesting such withdrawal liability and
is not in fact contesting such withdrawal liability in a timely and
appropriate manner;
(j) a judgment (not reimbursed by insurance policies of any Loan
Party) or decree for the payment of money, a fine or penalty which when
taken together with all other such judgments, decrees, fines and penalties
shall exceed $500,000 shall be rendered by a court or other tribunal
against any Loan Party and (i) shall remain undischarged or unbonded for a
period of 60 consecutive days during which the execution of such judgment,
decree, fine or penalty shall not have been stayed effectively or (ii) any
judgment creditor or other person shall legally commence actions to
collect on or enforce such judgment, decree, fine or penalty;
(k) this Agreement, any Note, any of the Security Documents, any
Guarantee or other Loan Documents shall for any reason cease to be, or
shall be asserted by any Loan Party not to be, a legal, valid and binding
obligation of any Loan Party, enforceable in accordance with its terms, or
the security interest or Lien purported to be created by any of the
Security Documents shall for any reason cease to be, or be asserted by any
Loan Party not to be, a valid, first priority perfected security interest
in any Collateral (except to the extent otherwise permitted under this
Agreement or any of the Security Documents); or
(l) a Change of Control shall occur;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrower, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of the Lenders to issue Letters of Credit hereunder; (ii)
declare the Notes and any amounts then owing to the Lenders on account of
drawings under any Letters of Credit to be forthwith due and payable, and (iii)
require that the Borrower remit to the Agent cash collateral in an amount equal
to the aggregate undrawn amount of all outstanding Letters of Credit at such
time, such cash collateral to be held by the Agent for its own benefit and the
benefit of the Lenders in a cash collateral account on terms and conditions
satisfactory to the Agent, whereupon the principal of such Notes, together with
accrued interest and fees thereon and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit and other liabilities of the
Borrower accrued hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the
72
<PAGE> 79
Borrower, anything contained herein or in the Notes to the contrary
notwithstanding; provided, however, that with respect to a default described in
paragraph (e) or (f) above, the Total Commitment and the obligation of the
Lenders to issue Letters of Credit shall automatically terminate and the
principal of the Notes, together with accrued interest and fees thereon and any
amounts then owing to the Lenders on account of drawings under any Letters of
Credit and any other liabilities of the Borrower accrued hereunder shall
automatically become due and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in the
Notes to the contrary notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as Agent on
behalf of the Lenders. Each of the Lenders and each subsequent holder of any
Note or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents as
are specifically delegated to or required of the Agent by the terms hereof and
the terms thereof together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be taken by it
or them hereunder or under any of the Security Documents and other Loan
Documents or in connection herewith or therewith (a) at the request or with the
approval of the Required Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders) or (b) in the absence
of its or their own gross negligence or willful misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of each
of the Lenders any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder paid to the Agent, and
promptly to distribute to each Lender its proper share of all payments so
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the Security Documents
and other Loan Documents as received by such Agent and (c) to take all actions
with respect to this Agreement and the Security Documents and other Loan
Documents as are specifically delegated to the Agent.
In the event that (a) the Borrower fails to pay when due the
principal of or interest on any Note, any amount payable under any Letter of
Credit, or any fee payable hereunder or (b) the Agent receives written notice of
the occurrence of a Default or an Event of Default, the Agent within a
reasonable time shall give written notice thereof to the Lenders, and shall take
such action with respect to such Event of Default or other condition or event as
it shall be directed to take by the Required
73
<PAGE> 80
Lenders; provided, however, that, unless and until the Agent shall have received
such directions, the Agent may take such action or refrain from taking such
action hereunder or under the Security Documents or other Loan Documents with
respect to a Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of the Borrower and, without
limiting the generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate furnished
pursuant to this Agreement or any of the other Loan Documents as conclusive
evidence of the facts stated therein and shall be entitled to rely on any note,
notice, consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons. It
is understood and agreed that the Agent may exercise its rights and powers under
other agreements and instruments to which it is or may be a party, and engage in
other transactions with the Borrower, as though it were not Agent of the Lenders
hereunder.
The Agent shall promptly give notice to the Lenders of the receipt
or sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender.
Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrower on account of the failure
or delay in performance or breach by any Lender other than the Agent of any of
its obligations hereunder or to any Lender on account of the failure of or delay
in performance or breach by any other Lender or the Borrower of any of their
respective obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
74
<PAGE> 81
The Agent and the Borrower may deem and treat the payee of any Note
as the holder thereof until written notice of transfer shall have been delivered
as provided herein by such payee to the Agent and the Borrower.
With respect to the Loans made hereunder, the Notes issued to it and
any other Credit Event applicable to it, the Agent in its individual capacity
and not as an Agent shall have the same rights, powers and duties hereunder and
under any other agreement executed in connection herewith as any other Lender
and may exercise the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or other affiliate thereof as if it were not
the Agent. Each of the Lenders hereby acknowledges that the Agent and/or one or
more Affiliates of the Agent may at any time and from time to time be a holder
of equity interests in a Loan Party.
Each Lender agrees (i) to reimburse the Agent in the amount of such
Lender's pro rata share (based on its Commitment hereunder) of any expenses
incurred for its own benefit and for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrower and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata share,
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 be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any action
taken or omitted by it or any of them under this Agreement or any of the other
Loan Documents, to the extent not reimbursed by the Borrower; provided, however,
that no Lender shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgment, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges 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 credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges 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 the time, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the
75
<PAGE> 82
Borrower. Upon any such resignation, the Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by such
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office (or an affiliate with an office) in New York, New York, having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder and under each of the other Loan Documents.
After any Agent's resignation hereunder, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by the Agent pursuant to
the provisions of this Agreement or any of the other Loan Documents unless it
shall be requested in writing to do so by the Required Lenders. The Lenders
hereby further acknowledge that the Agent is not acting as the fiduciary of, or
the trustee for, any of the Lenders.
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES
AND OTHER COLLATERAL
SECTION 10.01 Collection of Receivables; Management of Collateral.
(a) At the request of the Agent, upon the occurrence and continuance of an Event
of Default, the Borrower will, at its own cost and expense, (i) arrange for
remittances on Receivables to be made directly to lockboxes designated by the
Agent or in such other manner as the Agent may direct, and (ii) promptly deposit
all payments received by the Borrower on account of Receivables, whether in the
form of cash, checks, notes, drafts, bills of exchange, money orders or
otherwise, in one or more accounts designated by the Agent in precisely the form
received (but with any endorsements of the Borrower necessary for deposit or
collection), subject to withdrawal by the Agent only, as hereinafter provided,
and until such payments are deposited, such payments shall be deemed to be held
in trust by the Borrower for and as the Lenders' property and shall not be
commingled with the Borrower's other funds. All remittances and payments that
are deposited in accordance with the foregoing will, after two Business Days (or
three Business Days in the case of deposits that are made after 1:00 p.m. (New
York time), be applied by the Agent to reduce the outstanding balance of the
Revolving Credit Loans, subject to final collection in cash of the item
deposited.
Upon the occurrence and continuance of an Event of Default, the
Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all Customers or any third party holding or otherwise
concerned with any of the
76
<PAGE> 83
Collateral, and thereafter the Agent shall have the sole right to collect the
Receivables and/or take possession of the Collateral and the books and records
relating thereto. The Borrower shall not, without the Agent's prior written
consent, grant any extension of the time of payment of any Receivable,
compromise or settle any Receivable for less than the full amount thereof,
release, in whole or in part, any person or property liable for the payment
thereof, or allow any credit or discount whatsoever thereon except, prior to the
occurrence and continuance of an Event of Default, as permitted by Sec tion
10.03 hereof.
(b) (i) The Borrower hereby constitutes the Agent or the Agent's
designee as the Borrower's attorney-in-fact with power to endorse the Borrower's
name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral that may come into its possession; upon the
occurrence and continuance of an Event of Default, to sign the Borrower's name
on any invoice or bill of lading relating to any Receivables, drafts against
Customers, assignments and verifications of Receivables and notices to
Customers; to send verifications of Receivables; upon the occurrence of an Event
of Default, to notify the Postal Service authorities to change the address for
delivery of mail addressed to the Borrower to such address as the Agent may
designate; and to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission, for any error of judgment or for any mistake of fact or
law, provided that the Agent or its designee shall not be relieved of liability
to the extent it is determined by a final judicial decision that its act, error
or mistake constituted gross negligence or willful misconduct. This power of
attorney being coupled with an interest is irrevocable until all of the
Obligations are paid in full and this Agreement and the Total Commitment is
terminated.
(ii) The Agent, without notice to or consent of the Borrower,
upon the occurrence and during the continuance of an Event of Default, (A) may
sue upon or otherwise collect, extend the time of payment of, or compromise or
settle for cash, credit or otherwise upon any terms, any of the Receivables or
any securities, instruments or insurance applicable thereto and/or release the
obligor thereon; (B) is authorized and empowered to accept the return of the
goods represented by any of the Receivables; and (C) shall have the right to
receive, endorse, assign and/or deliver in its name or the name of the Borrower
any and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and the Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute the
Borrower as agent of the Agent for any purpose whatsoever, and the Agent shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (except to the extent it is determined by a
final judicial decision that the Agent's
77
<PAGE> 84
or a Lender's act or omission constituted gross negligence or willful
misconduct). The Agent and the Lenders shall not, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof or for any damage
resulting therefrom (except to the extent it is determined by a final judicial
decision that the Agent's or such Lender's error, omission or delay constituted
gross negligence or willful misconduct). The Agent and the Lenders do not, by
anything herein or in any assignment or otherwise, assume the Borrower's
obligations under any contract or agreement assigned to the Agent or the
Lenders, and the Agent and the Lenders shall not be responsible in any way for
the performance by the Borrower of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for any tax payable
to any governmental tax authority, the Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of the Borrower and to charge the Borrower's
account therefor. The Borrower shall notify the Agent if any Receivables include
any tax due to any such taxing authority and, in the absence of such notice, the
Agent shall have the right to retain the full proceeds of such Receivables and
shall not be liable for any taxes that may be due from the Borrower by reason of
the sale and delivery creating such Receivables.
SECTION 10.02 Receivables Documentation. The Borrower will, in
addition to the monthly Receivables agings delivered pursuant to this Agreement,
at such intervals as the Agent may require, furnish such further schedules
and/or information as the Agent may require relating to the Receivables,
including, without limitation, sales invoices. In addition, the Borrower shall
notify the Agent of any non-compliance in respect of the representations,
warranties and covenants contained in Section 10.03 hereof. The items to be
provided under this Section 10.02 are to be in form satisfactory to the Agent
and are to be executed and delivered to the Agent from time to time solely for
its convenience in maintaining records of the Collateral; the Borrower's failure
to give any of such items to the Agent shall not affect, terminate, modify or
otherwise limit the Agent's Lien or security interest in the Collateral.
SECTION 10.03 Status of Receivables and Other Collateral. The
Borrower covenants, represents and warrants that: (a) it shall be the sole
owner, free and clear of all Liens except in favor of the Agent or otherwise
permitted hereunder, of and fully authorized to sell, transfer, pledge and/or
grant a security interest in each and every item of said Collateral owned by it;
(b) each Receivable shall be a good and valid account representing an undisputed
bona fide indebtedness incurred or an amount indisputably owed by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect to an absolute sale and delivery upon the specified terms of goods sold
by the Borrower, or work, labor and/or services theretofore rendered by the
Borrower; (c) no Receivable is or shall be subject to any defense,
78
<PAGE> 85
offset, counterclaim, discount or allowance (as of the time of its creation)
except as may be stated in the invoice relating thereto or discounts and
allowances as may be customary in the Borrower's business; (d) none of the
transactions underlying or giving rise to any Receivable shall violate any
applicable state or federal laws or regulations, and all documents relating to
any Receivable shall be legally sufficient under such laws or regulations and
shall be legally enforceable in accordance with their terms; (e) all documents
and agreements relating to Receivables shall be true and correct and in all
respects what they purport to be; (f) to the best of its knowledge, all
signatures and endorsements that appear on all documents and agreements relating
to Receivables shall be genuine and all signatories and endorsers with respect
thereto shall have full capacity to contract; (g) it shall maintain books and
records pertaining to the Collateral in such detail, form and scope as the Agent
shall require; (h) it will immediately notify the Agent if any accounts arise
out of contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any steps
required by the Agent in order that all monies due or to become due under any
such contract shall be assigned to the Agent and notice thereof given to the
United States Government under the Federal Assignment of Claims Act; (i) it
will, immediately upon learning thereof, report to the Agent any material loss
or destruction of, or substantial damage to, any of the Collateral, and any
other matters affecting the value, enforceability or collectability of any of
the Collateral; (j) if any amount payable under or in connection with any
Receivable is evidenced by a promissory note or other instrument, as such terms
are defined in the Uniform Commercial Code, such promissory note or instrument
shall be immediately pledged, endorsed, assigned and delivered to the Agent as
additional collateral; (k) it shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in the industry; (l) it shall
conduct a physical count of its inventory at such intervals as the Agent may
request and promptly supply the Agent with a copy of such counts accompanied by
a report of the value (based on the lower of cost (on a FIFO basis) or market
value) of such inventory; provided, that the Agent shall not request a physical
count for any twelve-month period, more frequently than once during such period
(unless a Default or an Event of Default has occurred and is continuing in which
case as often as the Agent may request) and (m) it is not nor shall it be
entitled to pledge the Lenders' credit on any purchases or for any purpose
whatsoever.
SECTION 10.04 Monthly Statement of Account. The Agent shall render
to the Borrower each month a statement of the Borrower's account, which shall
constitute an account stated and shall be deemed to be correct and accepted by
and be binding upon the Borrower unless the Agent receives a written statement
of the Borrower's exceptions within 30 days after such statement was rendered to
the Borrower.
SECTION 10.05 Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrower a custodian selected by
the Agent who shall have full authority to do all acts necessary to protect the
Agent's and Lenders' interests
79
<PAGE> 86
and to report to the Agent thereon. The Borrower hereby agrees to cooperate with
any such custodian and to do whatever the Agent may reasonably request to pre
serve the Collateral. All costs and expenses incurred by the Agent by reason of
the employment of the custodian shall be charged to the Borrower's account and
added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01 Notices. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered or mailed (or in
the case of telex or facsimile communication, delivered by telex, graphic
scanning, telecopier or other telecommunications equipment, with receipt
confirmed) addressed,
(a) if to the Borrower, Guarantors, or Grantors, at 3050 St.
Francis, Wichita, Kansas 67204, Attention: Melvin L. Adams, Chief
Executive Officer, with a copy to Kirkland & Ellis, 153 East 53rd Street,
New York, New York 10022, Attention: Kirk A. Radke, Esq.
(b) if to the Agent, at The Chase Manhattan Bank, Middle Market
Structured Finance Division, 633 Third Avenue, New York, New York 10017,
Attention: Credit Deputy, with a copy to Kaye, Scholer, LLP, et al., at
425 Park Avenue, New York, New York 10022, Attention: Jeffrey M. Epstein,
Esq.; and
(c) if to any Lender, at the address set forth below its name in
Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telex, facsimile or other telecommunications equipment,
in each case addressed to such party as provided in this Section 11.01 or in
accordance with the latest unrevoked direction from such party.
SECTION 11.02 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or any of its subsidiaries
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents, any Guarantee or
any other Loan Document, shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of the Notes and occurrence of any other
Credit Event and shall continue in full force and effect as long as the
principal of or any accrued interest on the Notes or any other fee or amount
payable under the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Commitment has not
80
<PAGE> 87
been terminated.
SECTION 11.03 Successors and Assigns; Participations. (a) 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, promises and agreements by or on behalf of the Borrower, any
Guarantor, any Grantor, any ERISA Affiliate, any subsidiary of any thereof, the
Agent or the Lenders, that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. Without limiting the
generality of the foregoing, the Borrower specifically confirms that any Lender
may at any time and from time to time pledge or otherwise grant a security
interest in any Loan or any Note (or any part thereof) to any Federal Reserve
Bank. The Borrower may not assign or transfer any of its rights or obligations
hereunder without the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrower or the Agent,
may sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment or Term Loan
Commitment) and the Loans owing to it and undrawn Letters of Credit and the
Notes held by it); provided, however, that (i) such Lender's obligations under
this Agreement (including, without limitation, its Revolving Credit Commitment
and Term Loan Commitment) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the banks or other entities buying participations shall be
entitled to the cost protection provisions contained in Sections 2.10, 2.12 and
2.15 hereof, but only to the extent any of such Sections would be available to
the Lender which sold such participation, and (iv) the Borrower, 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;
provided, further, however, that each Lender shall retain the sole right and
responsibility to enforce the obligations of the Borrower, Grantors and the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement, other than amendments, modifications or waivers with respect to
decreasing any fees payable hereunder or the amount of principal or the rate of
interest payable on, or the dates fixed for any payment of principal of or
interest on, the Loans or changing or extending the Commitments or the release
of all Collateral.
(c) Each Lender may assign by novation, to any one or more banks or
other entities with the prior written consent of the Borrower (such consent not
to be unreasonably withheld) and with the prior written consent of the Agent,
all or a portion of its interests, rights and obligations under this Agreement
and the other Loan Documents (including, without limitation, all or a portion of
its Revolving Credit Commitment and Term Loan Commitment and the same portion of
the Loans and undrawn Letters of Credit at the time owing to it and the Note or
Notes held by it), provided, however, that (i) each such assignment shall be of
a constant, and not a
81
<PAGE> 88
varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement, which shall include the same percentage interest in the
Loans, Letters of Credit and Notes, (ii) the amount of the Revolving Credit
Commitment and Term Loan Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall be
in a minimum principal amount of $5,000,000 in the aggregate for the Revolving
Credit Commitment and Term Loan Commitment of such Lender and the amount of the
Revolving Credit Commitment and Term Loan Commitment of such Lender shall not be
less than $5,000,000 or shall be zero, (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with any
Note subject to such assignment and a processing and recordation fee of $3,500
and (iv) the assignee, if it shall not be a Lender, shall deliver to the Agent
an Administrative Questionnaire in the form provided to such assignee by the
Agent. Upon such execution, delivery, acceptance and recording and after receipt
of the written consent of the Agent, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (x) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.10, 2.12, 2.15 and 11.04,
as well as any fees accrued for its account hereunder and not yet paid).
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to, and
agree with, each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, and that
its Commitment and the outstanding balance of its Loans and participations in
Letters of Credit, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance, such Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, perfection, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any Collateral with respect thereto or
any other instrument or document furnished pursuant hereto or thereto; (ii) such
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, or any Grantor or Guarantor
or the performance or observance by the Borrower or any Grantor or Guarantor of
any of their respective
82
<PAGE> 89
obligations under this Agreement, any Guarantees or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance and confirms that it has
received a copy of this Agreement, any Guarantees and of the other Loan
Documents, together with copies of financial statements 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 the Agent, such 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 the Agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof, 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.
(e) The Agent shall maintain at its address referred to in Section
11.01 hereof a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment or Term Loan Commitment, as the case may be, of, and
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes subject to such
assignment, any processing and recordation fee and, if required, an
Administrative Questionnaire and the written consent to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is
precisely in the form of Exhibit F annexed hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders and the Borrower. Within
five (5) Business Days after receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for each surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to its portion of the Term Loan Commitment and Revolving Credit
Commitment, assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained any Term Loan Commitment and Revolving Credit
Commitment hereunder, a new Note or Notes to the order of the assigning Lender
in an amount equal to the Term Loan Commitment and Revolving Credit Commitment,
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal
83
<PAGE> 90
amount equal to the aggregate principal amount of such surrendered Note or
Notes, or, with respect to the Term Notes, the principal amount of the Term
Notes outstanding at such time as evidenced by the Term Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit A and Exhibit B. Notes surrendered to
the Borrower shall be canceled by the Borrower.
Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrower furnished to such
Lender by or on behalf of the Borrower in connection with this Agreement;
provided, however, that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential Information relating to the Borrower
received from such Lender.
SECTION 11.04 Expenses; Indemnity. (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Agent in connection with
the preparation of this Agreement and the other Loan Documents or with any
amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the Agent or any of the
Lenders in connection with the enforcement or protection of its rights in
connection with this Agreement or any of the other Loan Documents or with the
Loans made or the Notes or Letters of Credit issued hereunder, or in connection
with any pending or threatened action, proceeding, or investigation relating to
the foregoing, including but not limited to the reasonable fees and
disbursements of counsel for the Agent and ongoing field examination expenses
and charges, and, in connection with such enforcement or protection, the
reasonable fees and disbursements of counsel for the Lenders. The Borrower
further indemnifies the Lenders from and agrees to hold them harmless against
any documentary taxes, assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement or the Notes.
(b) The Borrower indemnifies the Agent and each Lender and their
respective directors, officers, employees and agents against, and agrees to hold
the Agent, each Lender and each such person harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees and expenses, incurred by or asserted against the Lender or any such person
arising out of, in any way connected with, or as a result of (i) the use of any
of the proceeds of the Loans, (ii) this Agreement, the Guarantees, any of the
Security Documents, Acquisition Documents or the other documents contemplated
hereby or thereby, (iii) the performance by the parties hereto and thereto of
their respective obligations hereunder and thereunder (including but not limited
to the making of the Total Commitment) and
84
<PAGE> 91
consummation of the transactions contemplated hereby and thereby, (iv) breach of
any representation or warranty, or (v) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not the Agent, any
Lender or any such person is a party thereto; provided, however, that such
indemnity shall not, as to the Agent or any Lender, apply to any such losses,
claims, damages, liabilities or related expenses to the extent that they result
from the gross negligence or willful misconduct of the Agent or any Lender.
(c) The Borrower indemnifies, and agrees to defend and hold harmless
the Agent and the Lenders and their respective officers, directors,
shareholders, agents and employees (collectively, the "Indemnitees") from and
against any loss, cost, damage, liability, lien, deficiency, fine, penalty or
expense (including, without limitation, reasonable attorneys' fees and
reasonable expenses for investigation, removal, cleanup and remedial costs)
arising from a violation of, or failure to comply with any Environmental Law and
to remove any Lien arising therefrom except to the extent caused by the gross
negligence or willful misconduct of any Indemnitee, which any of the Indemnitees
may incur or which may be claimed or recorded against any of the Indemnitees by
any person.
(d) The provisions of this Section 11.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of the Agent or any Lender. All amounts due under this Section 11.04
shall be payable on written demand therefor.
SECTION 11.05 Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06 Right of Setoff. If an Event of Default shall have
occurred and be continuing, upon the request of the Required Lenders each Lender
shall and 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 such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and the Notes held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the Borrower
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section are in addition to other rights and
remedies (including, without
85
<PAGE> 92
limitation, other rights of setoff) which may be available to such Lender.
SECTION 11.07 Payments on Business Days. (a) Should the principal of
or interest on the Notes or any fee or other amount payable hereunder become due
and payable on other than a Business Day, payment in respect thereof may be made
on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
(b) All payments by the Borrower hereunder and all Loans made by the
Lenders hereunder shall be made in lawful money of the United States of America
in immediately available funds at the office of the Agent set forth in Section
11.01 hereof.
SECTION 11.08 Waivers; Amendments. (a) No failure or delay of any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lenders hereunder are cumulative
and not exclusive of any rights or remedies which they may otherwise have. No
waiver of any provision of this Agreement or the Notes nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be authorized as provided in paragraph (b) below, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) change the principal amount of, or extend or advance
the maturity of or the dates for the payment of principal of or interest on, any
Note or reduce the rate of interest on any Note, (ii) increase the Revolving
Credit Commitment or Term Loan Commitment of any Lender or amend or modify the
provisions of this Section, Section 2.06, Section 2.13, Section 4.14 or Section
11.04 hereof or the defini tion of "Required Lenders," or (iii) release any
material portion of Collateral (except permitted dispositions provided for in
Section 7.05 hereof), in each case without the prior written consent of each
Lender affected thereby and provided, further, however, that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Agent under
this Agreement or the other Loan Documents without the written consent of the
Agent. Each Lender and holder of any Note shall be bound by any
86
<PAGE> 93
modification or amendment authorized by this Section regardless of whether its
Notes shall be marked to make reference thereto, and any consent by any Lender
or holder of a Note pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall be so marked.
(c) In the event that the Borrower requests, with respect to this
Agreement or any other Loan Document, an amendment, modification or waiver and
such amendment, modification or waiver would require the unanimous consent of
all of the Lenders in accordance with Section 11.08(b) above, and such
amendment, modification or waiver is agreed to in writing by the Borrower and
the Required Lenders but not by all of the Lenders, then notwithstanding
anything to the contrary in Sec tion 11.08(b) above, with the written consent of
the Borrower and such Required Lenders, the Borrower and Required Lenders may,
but shall not be obligated to, amend this Agreement without the consent of the
Lender or Lenders who did not agree to the proposed amendment, modification or
waiver (the "Minority Lenders") solely to provide for (i) the termination of the
Revolving Credit Commitment and Term Loan Commitment of each Minority Lender,
(ii) the assignment in accordance with Section 11.03 hereof to one or more
persons of each Minority Lender's interests, rights and obligations under this
Agreement (including, without limitation, all of such Minority Lender's
Revolving Credit Commitment and Term Loan Commitment as well as its portion of
all outstanding Loans and the Note or Notes held by such Minority Lender) and
the other Loan Documents and/or an increase in the Revolving Credit Commitment
and Term Loan Commitment of one or more Required Lenders, in each case so that
after giving effect thereto the Total Revolving Credit Commitment and Total Term
Loan Commitment shall be in the same amounts as prior to the events described in
this paragraph, (iii) the repayment to the Minority Lenders in full of all Loans
outstanding and accrued interest thereon at the time of the assignment and/or
increase in Commitments described in clause (ii) above with the proceeds of
Loans made by such persons who are to become Lenders by assignment or with the
proceeds of Loans made by Required Lenders who have agreed to increase their
Revolving Credit Commitment and/or Term Loan Commitment, (iv) the payment to the
Minority Lenders by the Borrower of all fees and other compensation due and
owing such Minority Lenders under the terms of this Agreement and the other Loan
Documents and (v) such other modifications as the Required Lenders and Borrower
shall deem necessary in order to effect to changes specified in clauses (i)
through (iv) hereof.
SECTION 11.09 Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby.
SECTION 11.10 Entire Agreement; Waiver of Jury Trial, etc. (a) This
Agreement, the Notes and the other Loan Documents constitute the entire contract
87
<PAGE> 94
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the Notes or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives any
right it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Agreement, the
Notes, any of the other Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto hereby waives any
right it may have to claim or recover in any litigation referred to in paragraph
(b) of this Section 11.10 any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages.
(d) Each party hereto (i) certifies that no representative, agent or
attorney of any Lender has represented, expressly or otherwise, that such Lender
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that it has been induced to enter into this Agreement, the
Notes or the other Loan Documents, as applicable, by, among other things, the
mutual waivers and certifications herein.
SECTION 11.11 Confidentiality. The Agent and the Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents furnished to the Agent or any Lender (the "Information").
Notwithstanding the foregoing, the Agent and each Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this Agreement
or the other Loan Documents (subject to confidentiality obligations equivalent
to those set forth herein); (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Agreement,
(B) becomes available to the Agent or such Lender on a non-confidential basis
from a source other than the Borrower, any Guarantor, any Grantor or any of
their respective subsidiaries or (C) was available to the Agent or such Lender
on a non-confidential basis prior to its disclosure to the Agent or such Lender
by the Borrower, any Guarantor, any Grantor or any of their respective
subsidiaries; (iv) to the extent the Borrower, any Guarantor or any of their
respective subsidiaries shall have consented to such disclosure in writing;
88
<PAGE> 95
(v) in connection with the sale of any Collateral pursuant to the provisions of
any of the other Loan Documents; or (vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12 Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower and each of the Guarantors hereby
accept for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrower and each of the Guarantors hereby irrevocably
waive, in connection with any such action or proceeding, any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which they may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(c) The Borrower and each of the Guarantors hereby irrevocably
consent to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each such person, as the case may be, at its
address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any Lender
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower or any Guarantor in any
other jurisdiction.
SECTION 11.13 Counterparts; Facsimile Signature. This Agreement may
be executed in counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered to the Agent. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed signature page hereto.
SECTION 11.14 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and
not merely as a surety, jointly and severally with each other Guarantor, the due
and punctual payment of the principal of and interest on each of the Notes, when
and as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the
89
<PAGE> 96
due and punctual performance of all other Obligations. Each Guarantor further
agrees that the Obligations may be extended and renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
any Lender or the Agent to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Guarantor under the provisions of this
Agreement, the Notes or any of the other Loan Documents or otherwise; (b) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Agreement, the Notes, any of the other Loan Documents, any guarantee or
any other agreement; (c) the release of any security held by the Agent for the
Obligations or any of them; or (d) the failure of any Lender to exercise any
right or remedy against any other Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender to any security (including, without
limitation, any Collateral) held for payment of the Obligations or to any
balance of any deposit account or credit on the books of any Lender in favor of
the Borrower or any other person.
The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agent
or any Lender to assert any claim or demand or to enforce any remedy under this
Agreement, the Notes or under any other Loan Document, any guarantee or any
other agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner or
to any extent vary the risk of such Guarantor or otherwise operate as a
discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of the Borrower or otherwise.
90
<PAGE> 97
Each Guarantor hereby waives and releases all rights of subrogation
against the Borrower and its property and all rights of indemnification,
contribution and reimbursement from the Borrower and its property, in each case
in connection with this guarantee and any payments made hereunder, and
regardless of whether such rights arise by operation of law, pursuant to
contract or otherwise.
XIII. CONFIRMATION OF SECURITY DOCUMENTS
Each of the Loan Parties hereby irrevocably and unconditionally
confirms in favor of the Agent that it consents to the terms and conditions of
this Agreement as it has been amended and restated as of the date hereof, and
that each Security Document to which such Loan Party is a party shall continue
in full force and effect and is and shall continue to be applicable to all of
the Obligations and to this Agreement.
IN WITNESS WHEREOF, the Borrower, the Guarantors, the Agent and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
AIRXCEL, INC.
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Lender
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By:
-------------------------------------
Name:
Title:
91
<PAGE> 98
SCHEDULE 2.01(a)
TERM LOAN COMMITMENTS
Approximate
Term Loan Percentage of Total
Lender Commitment Term Loan Commitment
- ------ ---------- --------------------
The Chase Manhattan Bank $ 0
633 Third Avenue
New York, NY 10017
Attention: Credit Deputy
<PAGE> 99
SCHEDULE 2.01(b)
Revolving Credit Commitments
Approximate
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
- ------ ---------- -----------------
The Chase Manhattan Bank
633 Third Avenue
New York, New York 10017 $15,000,000 100%
Attention: Credit Deputy
<PAGE> 100
SCHEDULE 2.02
Domestic Lending Offices
Lender Domestic Lending Office
- ------ -----------------------
The Chase Manhattan Bank The Chase Manhattan Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy
<PAGE> 101
SCHEDULE 2.03
Eurodollar Lending Offices
Lender Eurodollar Lending Office
- ------ -------------------------
The Chase Manhattan Bank The Chase Manhattan Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy
<PAGE> 102
SCHEDULE 6.05(g)
INVENTORY DESIGNATION
The Chase Manhattan Bank, as Agent
633 Third Avenue
New York, New York 10017
Ladies and Gentlemen:
We certify, represent to you and agree with you as follows:
1) As of _____________, the value of our Eligible Inventories was as follows:
(DATE)
______________
(a) Raw materials $______ | __% = ___
(b) Finished goods held for sale to
customers $______ | __% = ___
(c) Eligible WIP $______ | __% = ___
Total $______ | __% = ___ (Loan |____________Value)
and/or as shown on attached schedule(s) or paper(s).
2) Such figures are taken from our inventory records, kept in accordance with
generally accepted accounting principles and used in our business or, if so
indicated, taken from a physical inventory. Such figures are at the lower of
cost or market (unless otherwise indicated), with appropriate allowances for
slow moving, returned or second quality goods. This certificate and agreement is
mailed to you upon the understanding that you will rely upon it in making or
continuing loans to us under the Amended and Restated Credit Agreement dated as
of ________ __, 1997 (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein being used herein as therein
defined) among the undersigned, the Lenders named therein, the Guarantors named
therein and The Chase Manhattan Bank, as Agent, and/or advances upon our
receivables, or in otherwise extending credit to us.
3) We confirm that the agreements, warranties and representations contained in
such Credit Agreement apply to all such inventories. We hereby pledge and
consign to you, grant you a continuing general lien upon and designate as
subject to your continuing general lien and security interest all of our
inventories, confirming any lien statements or security agreements given you in
respect to same.
4) Your lien and security interest shall attach to such inventories through all
stages of manufacture to and including the finished product, to all accounts
receivable or other proceeds resulting from the sale thereof, to any merchandise
returned to us, and to all inventories acquired by us from time to time in the
future, whether in substitution for or in addition to this merchandise.
<PAGE> 103
5) Such inventories are located at the following addresses:
Dated: _____________, 19__ AIRXCEL, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 104
SCHEDULE 6.05(k)
BORROWING BASE CERTIFICATE
TO: The Chase Manhattan Bank, as Agent Date________________
633 Third Avenue
New York, New York 10017
SUBJECT: ______________________________________________________
Borrowing Base Certificate #_________________
We hereby certify the following information:
1. Accounts Receivable as of the
date of the last submitted certificate $_____________
+ Sales $_____________
- Collections $_____________
- Credits $_____________
Accounts Receivable as of __/__/__ $_____________
2. Accounts Receivable Aging as of __/__/__
Total A/R Current 31-60 61-90 Over 90
3. Computation of Borrowing Base:
A. Total Accounts Receivable as of __/__/__ $____
Accounts Receivable Over 60 Days $(____)
Contra Receivables $(____)
Receivables from Affiliated
Companies $(____)
Foreign Receivables (excluding $(____)
Canadian receivables or receivables
secured by L/C, insurance or
receivables covered under
guaranty)
Chargebacks, Debit Memos $(____)
Credits in Past Due $(____)
COD Accounts $(____)
Unassigned Accounts $(____)
Rebate Reserves per GL $(____)
<PAGE> 105
Total Deductions $(____)
B. Net Eligible Receivables $____
Availability (85% Advance) $____
C. Total Eligible Raw Materials/Finished
Goods Inventory (as of __/__/__) $____
Less: Slow Moving/Obsolete (past
Six months) $(____)
Decals/ Labels Due $(____)
Packaging $(____)
Other Locations not covered
under Credit Documents
(Schedule I of Security Agreement) $(____)
Reworks $(____)
Instruction/Warranty Cards $(____)
GL Reserves $(____)
Net Eligible Raw Materials/
Finished Goods Inventory $_____
Availability (60% Advance) $_____
D. Total Eligible WIP Inventory $_____
(comprised solely of WIP
consisting of component parts
used in assembly of air
conditioning units)
Net Eligible WIP Inventory $_____
(65% of Net)
Availability (lesser of $7,500,000
or 60% Advance) $_____
E. Cash Collateral $_____
F. Total Availability on Accounts Receivable,
Inventory and Cash $_____
F. Loans and Letters of Credit
Presently Outstanding $_____
Amount Requested/Paid $_____
Total Outstanding Loans and
Letters of Credit of this Date $_____
Net Available (if negative, our
check for said amount is attached) $_____
<PAGE> 106
4. Comments or Other Information:
The undersigned hereby represents and warrants that this is a correct statement
regarding the status of accounts receivable and inventory assigned to The Chase
Manhattan Bank, as Agent, and that the figures set forth herein are completely
accurate. The undersigned further warrants and represents that the Borrower is
in complete compliance with all the terms and conditions contained in the
agreements between us. The undersigned further understands that your loans to
the Borrower will be based upon your reliance on the information contained
herein.
AIRXCEL, INC.
By:
------------------------------------
Name:
Title:
ATTEST:
- --------------------------- ----------------------------
(Title) (Title)
<PAGE> 1
EXHIBIT 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of August 22, 1996 (this "Agreement"),
among Recreation Vehicle Products, Inc., a Delaware corporation (the
"Borrower"), each subsidiary of the Borrower which enters into this Agreement
after the date hereof pursuant to Section 6.12 of the Credit Agreement referred
to below (the "Subsidiary Grantors"; the Subsidiary Grantors and the Borrower
are each sometimes referred to herein as a "Grantor" and collectively as the
"Grantors"), and The Chase Manhattan Bank, a New York banking corporation, as
agent ("Agent") for (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Credit Agreement dated as of August 22, 1996 among the
Borrower, the Guarantors at any time party thereto, the Lenders and the Agent
(as amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement") and (ii) itself as issuer of the Letters of
Credit and party to the Rate Agreements.
The Agent and the Lenders have agreed to extend Loans and certain
other financial accommodations, including, without limitation, the issuance of
the Letters of Credit to the Borrower pursuant to, and subject to the terms and
conditions of, the Credit Agreement. In addition, The Chase Manhattan Bank has
agreed to extend certain financial accommodations to the Borrower pursuant to
the Rate Agreements. The obligation of the Lenders to extend such Loans and of
the Agent to issue the Letters of Credit under the Credit Agreement and of The
Chase Manhattan Bank to extend such financial accommodations under the Rate
Agreements is conditioned on the execution and delivery by the Grantors of a
security agreement in the form hereof to secure the following (collectively, the
"Secured Obligations"): (i) all Obligations (such Obligations to include,
without limitation, the due and punctual payment and performance of (a) all
obligations at any time and from time to time under the Rate Agreements, (b) the
principal of and interest on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (c)
Indebtedness at any time and from time to time under the Letters of Credit, (d)
all obligations of the Grantors at any time and from time to time under this
Agreement and (e) all other obligations of the Borrower and the Guarantors at
any time and from time to time under the Credit Agreement and the other Loan
Documents), and (ii) all obligations of Holdings at any time and from time to
time under the Holdings Guarantee.
Accordingly, the Grantors and the Agent hereby agree as follows:
1. Definitions of Terms Used Herein. All capitalized terms used
herein but not defined herein shall have the meanings set forth in the Credit
Agreement. As used herein, the following terms shall have the following
meanings:
(a) "Accounts Receivable" shall mean (i) all of the Grantors'
present and future accounts, general intangibles, chattel paper and instruments,
as such terms are defined in the Uniform Commercial Code as in effect in the
State of New
1
<PAGE> 2
York ("NYUCC"), (ii) all moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, or in transit to, the Agent from
or for any Grantor, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of the deposits (general or special) of any
Grantor, balances, sums and credits with, and all of the Grantors' claims
against the Agent at any time existing, (iii) all of the Grantors' right, title
and interest, and all of the Grantors' rights, remedies, security and Liens, in,
to and in respect of any accounts receivable, including, without limitation,
rights of stoppage in transit, replevin, repossession and reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party, guaranties or
other contracts of suretyship with respect to accounts receivable, deposits or
other security for the obligation of any account debtor, and credit and other
insurance, (iv) all of the Grantors' right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in, accounts
receivable, including, without limitation, all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any account receivable, and all returned, reclaimed or repossessed
goods.
(b) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Documents, (iii) Equipment, (iv) General Intangibles, (v) Inventory, (vi)
Investment Property, and (vii) Proceeds; excluding (x) all of the Borrower's
right, title and interest in and to the Coast Distribution Agreement, (y) any
property and/or rights of the Grantors in countries other than the United States
or Canada in which the grant of a security interest or mortgage would invalidate
such property or rights and (z) any property and/or rights of the Grantors
listed on Schedule II attached hereto.
(c) "Documents" shall mean all instruments, files, records,
ledger sheets and documents covering or relating to any of the Collateral.
(d) "Equipment" shall mean all of the Grantors' machinery,
equipment, vehicles, furniture and fixtures and all attachments, accessories and
equipment now or hereafter owned or acquired in the Grantors' business or used
in connection therewith, and all substitutions and replacements thereof,
wherever located, whether now owned or hereafter acquired by any Grantor.
(e) "General Intangibles" shall mean all of the Grantors'
present and future general intangibles of every kind and description, including
(without limitation) patents, patent applications, trade names and trademarks
and the goodwill of the business symbolized thereby, Federal, State and local
tax refund claims of all kinds.
(f) "Inventory" shall mean all of the Grantors' right, title
and interest in and to raw materials, work in process, finished goods and all
other inventory (as such term is defined in the NYUCC), whether now owned or
hereafter acquired, and all wrapping, packaging, advertising and shipping
materials, and any documents relating thereto.
2
<PAGE> 3
(g) "Investment Property" shall mean all of the Grantors'
right, title and interest in and to all present and future securities, security
entitlements and securities accounts.
(h) "Proceeds" shall mean any consideration received from the
sale, exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by any of the Lenders pursuant to any
lockbox or similar arrangement relating to the payment of Accounts Receivable.
2. Security Interests. As security for the payment or performance,
as the case may be, of the Secured Obligations, the Grantors hereby create and
grant to the Agent, its successors and its assigns, for its own benefit and for
the pro rata benefit of the Lenders, their successors and their assigns, a
security interest in the Collateral (the "Security Interest"). Without limiting
the foregoing, the Agent is hereby authorized to file one or more financing
statements, continuation statements or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest, naming the Grantors as debtors and the Agent as secured party, except
as otherwise provided under the Security Agreement - Patents and Trademarks.
The Grantors agree at all times to keep in all material respects
accurate and complete accounting records with respect to the Collateral,
including, but not limited to, a record of all payments and Proceeds received.
3. Further Assurances. Each Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Agent may from time
to time reasonably request for the assuring and preserving of the Security
Interest (except as otherwise provided under the Security Agreement - Patents
and Trademarks) and the rights and remedies created hereby, including, without
limitation, the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements or other documents in connection
herewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Agent, duly endorsed in a manner satisfactory to the Agent. Each Grantor
agrees to notify promptly the Agent of any change in its corporate name or in
the location of its chief executive office, its chief place of business or the
office where it keeps its records relating to the Accounts Receivable owned by
it and the location of any Collateral. Each Grantor agrees promptly to notify
the Agent if any material portion of the Collateral is damaged or destroyed.
3
<PAGE> 4
4. Inspection and Verification. Subject to the provisions of Section
6.08 of the Credit Agreement, the Agent and such persons as the Agent may
designate shall have the right, at any reasonable time or times during a
Grantor's usual business hours, and upon reasonable notice (which may be
telephonic), to inspect the Collateral owned by such Grantor, all records
related thereto (and to make extracts and copies from such records), and the
premises upon which any such Collateral is located, to discuss such Grantor's
affairs with the officers of such Grantor and its independent accountants and to
verify under reasonable procedures the validity, amount, quality, quantity,
value, and condition of or any other matter relating to, such Collateral,
including, upon the occurrence and continuance of an Event of Default, in the
case of Accounts Receivable or Collateral in the possession of a third person,
contacting account debtors and third persons possessing such Collateral. Subject
to the provisions of Section 11.11 of the Credit Agreement, the Agent shall have
the absolute right to share any information it gains from such inspection or
verification with any or all of the Lenders.
5. Taxes; Encumbrances. At its option, the Agent may discharge past
due taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted under the Credit Agreement, and may
pay for the maintenance and preservation of the Collateral to the extent a
Grantor fails to do so as required by the Credit Agreement, and each Grantor
agrees to reimburse the Agent on demand for any payment made or any expense
incurred by it pursuant to the foregoing authorization; provided, however, that
nothing in this Section 5 shall be interpreted as excusing a Grantor from the
performance of any covenants or other promises with respect to taxes, liens,
security interests or other encumbrances and maintenances as set forth herein or
in the Credit Agreement.
6. Assignment of Security Interest. If at any time a Grantor shall
take and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account Receivable, such
Grantor shall promptly assign such security interest to the Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the account debtor or other person granting the security interest.
7. Representations and Warranties. Each Grantor represents and
warrants to the Agent that:
(a) Title and Authority. It has (i) rights in and good title
to the Collateral in which it is granting a security interest hereunder and (ii)
the requisite power and authority to grant to the Agent the Security Interest in
such Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other person other than any consent or approval which has
been obtained.
4
<PAGE> 5
(b) Filing. Fully executed Uniform Commercial Code financing
statements containing a description of the Collateral shall have been, or shall
be delivered to the Agent in a form such that they can be, filed of record in
every govern mental, municipal or other office in every jurisdiction in which
any portion of the Collateral is located necessary to publish notice of and
protect the validity of and to establish a valid, legal and perfected security
interest in favor of the Agent in respect of the Collateral in which a security
interest may be perfected by filing in the United States and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of Uniform Commercial Code continuation statements.
(c) Validity of Security Interest. The Security Interest
constitutes a valid, legal and perfected first priority security interest in all
of the Collateral for payment and performance of the Secured Obligations, except
as otherwise permitted under the Credit Agreement or under the Security
Agreement Patents and Trademarks.
(d) Information Regarding Names. To the best of its knowledge,
it has disclosed in writing to the Agent any trade names used to identify it in
its business or in the ownership of its properties.
(e) Absence of Other Liens. The Collateral is owned by it free
and clear of any Lien of any nature whatsoever, except as granted pursuant to
this Agreement and as permitted by the Credit Agreement, and, except as provided
by paragraph (b) of this Section 7, no financing statement has been filed, under
the Uni form Commercial Code as in effect in any state or otherwise, covering
any Collateral except as indicated on Schedule 7.01 to the Credit Agreement and
except where releases have been delivered to the Agent.
(f) Additional Representations for Accounts Receivable. (i)
All representations and warranties with respect to the Receivables contained in
Article X of the Credit Agreement are hereby incorporated herein in their
entirety and shall be deemed made by the Grantors hereunder as if set forth at
length herein.
(ii) Each Account Receivable arising after the Closing Date
shall be on the date of its creation a good and valid account representing an
undisputed bona fide indebtedness incurred or an amount indisputably owed by the
Customer therein named, for a fixed sum, to the extent, set forth in the invoice
relating thereto, with respect to an absolute sale and delivery upon the
specified terms of goods sold by such Grantor, or work, labor and/or services
theretofore rendered by such Grantor; no such Account Receivable is or shall at
any time be subject to any defense, offset, counterclaim, discount or allowance
except as may be stated in the invoice relating thereto or discounts and
allowances as may be customary in such Grantor's business, and such Grantor has
no reason to believe such Accounts Receivable will not be paid when due; none of
the transactions underlying or giving rise to any such Account
5
<PAGE> 6
Receivable shall violate any applicable State or Federal laws or regulations,
and all documents relating to any such Account Receivable shall be legally
sufficient under such laws or regulations and are legally enforceable in
accordance with their terms; to the best knowledge of such Grantor, each
customer, guarantor or endorser is solvent and will continue to be fully able to
pay all such Accounts Receivable on which it is obligated in full when due; no
agreement under which any deduction or offset of any kind, other than normal
trade discounts and discounts granted by a Grantor in the ordinary course of its
business in accordance with its historical practices, have been granted by such
Grantor, at or before the time such Account Receivable was created; all
documents and agreements relating to such Accounts Receivable shall be true and
correct and in all respects what they purport to be; to the best of each
Grantor's knowledge, all signatures and endorsements that appear on all
documents and agreements relating to such Accounts Receivable are genuine and
all signatories and endorsers shall have full capacity to contract.
(g) Survival of Representations and Warranties. All
representations and warranties of the Grantors contained in this Agreement shall
survive the execution, delivery and performance of this Agreement until the
termination of this Agreement pursuant to Section 28.
8. Records of Accounts Receivable. Each Grantor shall keep or cause
to be kept records of its Accounts Receivable which are accurate in all material
respects. In addition, each Grantor will provide the Agent with such further
schedules and/or information respecting each Account Receivable as the Agent may
reasonably require.
9. Supplemental Documentation. In connection with the execution and
delivery of this Agreement, each Grantor shall furnish or cause to be furnished
to the Agent on or prior to the Closing Date a certificate, signed by a
Responsible Officer of such Grantor dated the Closing Date, certifying that, as
of the date of such certificate, all representations and warranties of such
Grantor in Section 7 are true and correct and that such Grantor is in compliance
with all conditions, agreements and covenants to be observed or performed
hereunder.
10. Protection of Security. Each Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to the
Collateral owned by it against all persons and to defend the Security Interest
of the Agent in such Collateral, and the priority thereof, against any adverse
mortgage, pledge, security interest, Lien, charge or other encumbrance of any
nature whatsoever except for Liens permitted pursuant to Section 7.01 of the
Credit Agreement.
11. Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement, interest or
obligation relating to the Collateral, all in accordance with the terms and
conditions thereof, and shall indemnify and hold harmless the Agent, and the
Lenders from any and all such liabilities.
6
<PAGE> 7
12. Use and Disposition of Collateral. Except as set forth in Sec
tion 7.19 of the Credit Agreement, no Grantor shall make or permit to be made
any assignment, pledge or hypothecation of the Collateral, or grant any security
interest in the Collateral except for the Security Interest. No Grantor shall
make or permit to be made any transfer of any Collateral, except Inventory in
the ordinary course of business and as otherwise permitted by the Credit
Agreement, and each Grantor shall remain at all times in possession of the
Collateral owned by it other than transfers to the Agent pursuant to the
provisions hereof and as otherwise provided in this Agreement or the Credit
Agreement.
13. Limitation on Modifications of Accounts Receivable. No Grantor
will, without the Agent's prior written consent, grant any extension of the time
of payment of any of its Accounts Receivable, compromise, or settle the same for
less than the full amount thereof, release, in whole or in part, any person or
property liable for the payment thereof, or allow any credit or discount
whatsoever thereon, except, prior to the occurrence and continuance of an Event
of Default, extensions, credits, discounts, compromises or settlements granted
or made in the ordinary course of business.
14. Collections. The provisions of Article X of the Credit Agreement
with respect to the collection of the Receivables and the management of the
Collateral are hereby incorporated herein in their entirety and shall be binding
on the Grantors as if set forth at length herein.
15. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Agent on demand, and it is agreed that the Agent shall have
the right to take any or all of the following actions at the same or different
times: with or without legal process and with or without previous notice or
demand for performance, to take possession of the Collateral and without
liability for trespass (except for actual damage caused by the Agent's gross
negligence or willful misconduct) to enter any premises where the Collateral may
be located for the purpose of taking possession of or removing the Collateral
and, generally, to exercise any and all rights afforded to a secured party
under, and subject to its obligations contained in, the Uniform Commercial Code
as in effect in any state or other applicable law. Without limiting the
generality of the foregoing, each Grantor agrees that the Agent shall have the
right, subject to the mandatory requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Agent shall deem appropriate. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of the applicable Grantor, and such Grantor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
appraisal which such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted.
7
<PAGE> 8
The Agent shall give the applicable Grantor 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the NYUCC) of the Agent's intention to make any sale of Collateral.
Such notice, in the case of a public sale, shall state the time and place for
such sale and, in the case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be made and
the day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the Agent
may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of any Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
of such Collateral shall have been given. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 15, The Chase Manhattan
Bank or any Lender may bid for or purchase, free (to the extent permitted by
law) from any right of redemption, stay or appraisal on the part of any Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), with respect to the Collateral or any part thereof offered for sale and
The Chase Manhattan Bank or any such Lender may make payment on account thereof
by using any claim then due and payable to The Chase Manhattan Bank or any such
Lender from such Grantor as a credit against the purchase price, and The Chase
Manhattan Bank or any such Lender may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to such
Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale and purchase pursuant to such agreement,
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Secured Obligations paid in full and/or the Total Commitment
shall have been terminated. As an alternative to exercising the power of sale
herein conferred upon it, the Agent may proceed by a suit or suits at law or in
equity to foreclose this Agreement and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
16. Application of Proceeds. The proceeds of any collection or sale
of Collateral, as well as any Collateral consisting of cash, shall be applied by
the Agent as follows:
8
<PAGE> 9
FIRST, to the Agent to reimburse the Agent for that portion of
the payments, if any, made by it with respect to Letters of Credit for which a
Lender, as a participant in such Letter of Credit pursuant to Section 2.18 of
the Credit Agreement, failed to pay its pro rata share thereof as required
pursuant to such Section 2.18;
SECOND, to the payment of all reasonable costs and expenses
incurred by the Agent in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Secured Obligations, including, but
not limited to, all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made by the Agent
hereunder on behalf of the Grantors and any other reasonable costs or expenses
incurred in connection with the exercise of any right or remedy hereunder;
THIRD, to the Agent to be held as cash collateral to the
extent of the undrawn amounts, if any, of outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of (i) principal and
interest in respect of any Loans outstanding (pro rata as among the Lenders in
accordance with the amounts of the Loans made by them pursuant to the Credit
Agreement) and (ii) all unpaid monetary obligations of any Grantor to The Chase
Manhattan Bank under the Rate Agreements;
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
SIXTH, to the Grantors, their successors and assigns, or as a
court of competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Agent (including, without limitation,
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Agent or such officer or be
answerable in any way for the misapplication thereof.
17. Locations of Collateral; Place of Business. (a) Each Grantor
hereby represents and warrants that all the Collateral is located at the
locations listed on Schedule I hereto. The Grantors agree not to establish, or
permit to be established, any other location for Collateral unless all filings
under the Uniform Commercial Code as in effect in any state or otherwise which
are required by this Agreement or the Credit Agreement to be made with respect
to the Collateral have been made and the Agent has a valid, legal and perfected
first priority security interest in the Collateral.
(b) Each Grantor confirms that its chief executive office is
located as indicated on Schedule I hereto. Each Grantor agrees not to change, or
9
<PAGE> 10
permit to be changed, the location of its chief executive office unless all
filings under the Uniform Commercial Code or otherwise which are required by
this Agreement or the Credit Agreement to be made have been made and the Agent
has a valid, legal and perfected first priority security interest.
18. Security Interest Absolute. All rights of the Agent hereunder,
the Security Interest, and all obligations of the Grantors hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any other
agreement with respect to any of the Secured Obligations or any other agreement
or instrument relating to any of the foregoing, (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (iii) any exchange, release or nonperfection of any
other Collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Secured Obligations, or (iv)
any other circumstance which might otherwise constitute a defense available to,
or discharge of, the Grantors, any of the Guarantors or any other obligor in
respect of the Secured Obligations or in respect of this Agreement.
19. No Waiver. No failure on the part of the Agent to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by such parties.
20. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints
the Agent the attorney-in-fact of such Grantor solely for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument which the Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest.
21. Agent's Fees and Expenses. The Grantors shall be jointly and
severally obligated to, upon demand, pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts or agents which the Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Agent hereunder,
or (iv) the failure of any representation or warranty of a Grantor hereunder to
be true and correct in all material respects or the failure by any Grantor to
perform or observe any of the provisions hereof. In addition, the Grantors
jointly and severally indemnify and hold the Agent and the Lenders harmless from
and against any and all liability incurred by the Agent or the
10
<PAGE> 11
Lenders hereunder or in connection herewith, unless such liability shall be due
to the gross negligence or willful misconduct of the Agent or the Lenders, as
the case may be. Any such amounts payable as provided hereunder or thereunder
shall be additional Secured Obligations secured hereby and by the other Security
Documents.
22. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantors shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Agent as Collateral under this Agreement, except as contemplated by this
Agreement or the Credit Agreement.
23. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, 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 NEW YORK.
24. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
25. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.
26. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
27. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Grantors shall
have been delivered to the Agent.
28. Termination. This Agreement and the Security Interest shall
terminate when (a) all the Secured Obligations have been fully paid in cash, (b)
the Lenders have no further commitment to make any Loans under the Credit
Agreement, (c) the Agent shall have no further obligation to issue any Letters
of Credit, and (d) The Chase Manhattan Bank has no further obligation to extend
financial accommodations under any Rate Agreement, at which time the Agent shall
execute and deliver to the Grantors all Uniform Commercial Code termination
statements and similar documents which the Grantors shall reasonably request to
evidence such termination; provided, however, that all indemnities of the
Grantors contained in this Agreement shall survive,
11
<PAGE> 12
and remain operative and in full force and effect regardless of, the termination
of this Agreement.
[The remainder of this page is intentionally left blank.]
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.
RECREATION VEHICLE PRODUCTS, INC.
By:
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By:
---------------------------------
Name:
Title:
13
<PAGE> 14
Schedule I to the
Security Agreement
Locations of Collateral
Chief Executive Office of each Grantor
Trade names of each Grantor
<PAGE> 15
Schedule II to the
Security Agreement
Excluded Collateral
None
<PAGE> 1
EXHIBIT 10.3
SECURITY AGREEMENT AND MORTGAGE -
TRADEMARKS AND PATENTS
AGREEMENT made this 22nd day of August, 1996 (this "Agreement")
among Recreation Vehicle Products, Inc., a Delaware corporation (the
"Borrower"), having an office at 3050 N. St. Francis, Wichita, Kansas 67219, and
each subsidiary of the Borrower which enters into this Agreement after the date
hereof pursuant to Section 6.12 of the Credit Agreement referred to below (the
"Subsidiary Debtors"; the Subsidiary Debtors and the Borrower are each sometimes
referred to herein as a "Debtor" and collectively as the "Debtors"), and The
Chase Manhattan Bank, a New York banking corporation, having an office at 633
Third Avenue, New York, New York 10017, as agent (referred to herein as the
"Secured Party") for (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Credit Agreement dated as of August 22, 1996 among the
Borrower, the Guarantors at any time party thereto, the Lenders and the Secured
Party (as amended, modified or supplemented from time to time in accordance with
its terms, the "Credit Agreement") and (ii) for itself as issuer of the Letters
of Credit and party to the Rate Agreements.
A. On the date hereof, each of the Debtors has adopted or been
assigned the respective Trademarks (as hereinafter defined), described directly
below its name in Schedule A annexed hereto and made a part hereof.
B. On the date hereof, each of the Debtors is the owner and holder
or assignee of the respective Patents (as hereinafter defined) set forth
directly below its name listed on Schedule B hereto.
C. The Secured Party and the Lenders have agreed to extend Loans and
certain other financial accommodations including, without limitation, the
issuance of Letters of Credit to the Borrower pursuant to, and subject to the
terms and conditions of, the Credit Agreement. In addition, The Chase Manhattan
Bank has agreed to extend certain financial accommodations to the Borrower
pursuant to the Rate Agreements. The obligation of the Lenders to extend such
Loans and of the Secured Party to issue Letters of Credit under the Credit
Agreement and of The Chase Manhattan Bank to extend such financial
accommodations under the Rate Agreements is conditioned on the execution and
delivery by the Debtor of a security agreement in the form hereof to secure the
following (the "Secured Obligations"): (i) all Obligations (such Obligations to
include, without limitation, the due and punctual payment and performance of (a)
all obligations at any time and from time to time under the Rate Agreements, (b)
the principal of and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (c) Indebtedness at any time and from time to time under the Letters
of Credit, (d) all obligations of the Debtors at any time and from time to time
under this Agreement and (e) all other obligations of the Borrower and the
Debtors at any time and from time to time under the Credit Agreement and the
other Loan Documents) and (ii) all obligations of Holdings at any time and from
time to time under the Holdings Guarantee.
<PAGE> 2
NOW, THEREFORE, IT IS AGREED that, as security for the full and
prompt payment and performance of the Secured Obligations, the Debtors hereby
mortgage to the Secured Party for its own benefit and the benefit of the
Lenders, and grant to the Secured Party a security interest in, all of its
right, title and interest in and to (i) each of its Trademarks (as hereinafter
defined), and the goodwill of the business symbolized by each of its Trademarks,
all of its customer lists and other records relating to the distribution of
products bearing its Trademarks; (ii) each of its Patents (as herein after
defined); and (iii) any and all proceeds of the foregoing, including, without
limitation, any of its claims against third parties for infringement of the
Trademarks or the Patents (collectively, the "Collateral").
1. Definitions of Terms Used Herein. Terms defined in the Credit
Agreement and not otherwise defined herein, shall have the meaning set forth in
the Credit Agreement. As used in this Agreement, unless the context otherwise
requires:
"Patents" shall mean (i) all letters patent of the United
States or Canada or any other country, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office, the Canadian Patent Office or in any similar office
or agency of the United States or Canada, any State or Province thereof, as
applicable, or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by the Debtors, including, but not
limited to, those described in Schedule B annexed hereto and made a part hereof,
(ii) all reissues, continuations, continuations-in-part, extensions or
divisionals thereof and (iii) all licenses thereof; in each case, excluding (x)
any such property and/or rights in countries other than the United States or
Canada in which the grant of a security interest or mortgage would invalidate
such property or rights and (y) Canadian Patent No. 4,146,250 (Stabilizer Unit
for Parked Vehicle).
"Trademarks" shall mean (i) all trademarks, trade names, trade
styles, service marks, prints and labels on which said trademarks, trade names,
trade styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all registrations and
recordings thereof, including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office, the Canadian
Trade-marks Office or in any similar office or agency of the United States or
Canada, any State or Province thereof, as applicable, or any other country or
any political subdivision thereof, all whether now owned or hereafter acquired
by the Debtors, including, but not limited to, those described in Schedule A
annexed hereto and made a part hereof, together with the goodwill of the
business relating thereto, (ii) all reissues, extensions or renewals thereof and
(iii) all licenses thereof; in each case, excluding any such property and/or
rights in countries other than the United States or Canada in which the grant of
a security interest or mortgage would invalidate such property or rights.
2
<PAGE> 3
2. Representations, Warranties and Covenants. Each Debtor hereby
represents, warrants, covenants and agrees as follows:
(a) It owns in its own name, or is the assignee of, each of its
respective Trademarks shown under its name on Schedule A hereto (except with
respect to those Trademarks for which it has delivered documents evidencing a
name change to its current name to the Secured Party, such documents to be in
form and substance satisfactory to the Secured Party) for the goods and services
covered by the registrations thereof and such registrations are subsisting and
in full force and effect.
(b) It will perform all acts and execute all documents, including,
except without limitation, assignments for security in form suitable for filing
with the United States Patent and Trademark Office, substantially in the forms
of Exhibits 1 and 2 hereof, respectively, or such other form as may reasonably
be required by the Secured Party at any time to evidence, perfect, maintain,
record and enforce the Secured Party's interest in the Collateral in the United
States and Canada or otherwise in furtherance of the provisions of this
Agreement, and it hereby authorizes the Secured Party to execute and file one or
more financing statements (and similar documents) or copies thereof or of this
Security Agreement with respect to the Collateral in the United States and
Canada signed only by the Secured Party.
(c) Except to the extent that the Secured Party, upon prior written
notice by such Debtor, shall consent, it (either itself or through licensees)
will continue to use the Trademarks material to its business on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademarks
in full force free from any claim of abandonment for nonuse and it will not (and
will not permit any licensee thereof to) do any act or knowingly omit to do any
act whereby any Trademark could reasonably be expected to become invalidated.
(d) It owns in its own name, or is the assignee of, each of its
respective Patents shown under its name on Schedule B hereto (except with
respect to those Patents for which it has delivered documents evidencing a name
change to its current name to the Secured Party, such documents to be in form
and substance satisfactory to the Secured Party) and the registrations thereof
are subsisting and in full force and effect. None of the Patents has been
abandoned, and, except to the extent that the Secured Party, upon prior written
notice by such Debtor, shall consent, it will not do any act, or knowingly omit
to do any act, whereby the Patents may become abandoned and shall notify the
Secured Party promptly if it knows of any reason or has reason to know that any
application or registration may become abandoned.
(e) It shall be obligated to, upon demand, pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts or agents which the Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the
3
<PAGE> 4
Collateral, (iii) the exercise or enforcement of any of the rights of the
Secured Party hereunder, or (iv) the failure of any representation or warranty
of such Debtor hereunder to be true and correct in all material respects or the
failure by such Debtor to perform or observe any of the provisions hereof. In
addition, it indemnifies and holds the Secured Party and the Lenders harmless
from and against any and all liability incurred by the Secured Party or the
Lenders hereunder or in connection herewith, unless such liability shall be due
to the gross negligence or willful misconduct of the Secured Party or the
Lenders, as the case may be. Any such amounts payable as provided hereunder or
thereunder shall be additional Secured Obligations secured hereby and by the
other Security Documents.
(f) In no event shall any Debtor, either itself or through any
agent, employee, licensee or designee, (i) file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office, the Canadian Patent Office, the Canadian Trade-marks Office or
any similar office or agency of the United States or Canada, any State or
Province thereof, as applicable, any other country or any political subdivision
thereof or (ii) file any assignment of any patent or trademark, which such
Debtor may acquire from a third party, with the United States Patent and
Trademark Office, the Canadian Patent Office, the Canadian Trade-marks Office or
any similar office or agency of the United States, any State or Province
thereof, as applicable, any other country or any political subdivision thereof,
unless such Debtor shall, promptly upon such filing, notify the Secured Party
thereof, and, upon request of the Secured Party, execute and deliver any and all
agreements, instruments, documents and papers as the Secured Party may
reasonably request to evidence the Secured Party's security interest in such
Patent or Trademark and the goodwill and general intangibles of such Debtor
relating thereto or represented thereby (provided, that nothing in this
Agreement shall require any Debtor to file or record any documents, agreements
or instruments in any jurisdiction outside the United States or Canada), and
each Debtor hereby constitutes the Secured Party its attorney-in-fact to execute
and file all such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power being coupled with an interest
is irrevocable until the Secured Obligations are paid in full.
(g) It has the right and power to make the assignment and to grant
the security interest herein granted; and the Collateral is not now, and at all
times hereafter will not be, subject to any liens, mortgages, assignments,
security interests or en cumbrances of any nature whatsoever, except in favor of
the Secured Party or with respect to which a release in form and substance
satisfactory to the Secured Party has been delivered to the Secured Party, and
to its best knowledge, none of the Collateral is subject to any other claim.
(h) Except to the extent permitted under the Credit Agreement, it
will not assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a
security interest in or lien upon, encumber, grant an exclusive or non-exclusive
license, or otherwise dispose of any of the Collateral, and nothing in this
Agreement shall be deemed a consent by the Secured Party to any such action
except as expressly permitted herein.
4
<PAGE> 5
(i) As of the date hereof, none of the Debtors nor any affiliate or
subsidiary thereof owns any Patents or Trademarks or has any Patents or
Trademarks registered in, or the subject of pending applications in, the United
States Patent and Trademark Office, the Canadian Patent Office, the Canadian
Trade-marks Office or any similar office or agency of the United States or
Canada, any State or Province thereof, as applicable, any other country or any
political subdivision thereof, other than those described in Schedules A and B
hereto.
(j) It will take all necessary steps in any proceeding before the
United States Patent and Trademark Office, the Canadian Patent Office, the
Canadian Trademarks Office or any similar office or agency of the United States
or Canada, any State or Province thereof, any other country or any political
subdivision thereof, to maintain each application and registration of the
Trademarks and Patents material to its business, including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings (except to the extent that
dedication, abandonment or invalidation is permitted under paragraphs 2(c) and
2(d) hereof).
(k) It assumes all responsibility and liability arising from its use
of its Trademarks, and it hereby indemnifies and holds the Secured Party
harmless from and against any claim, suit, loss, damage or expense (including
reasonable attorneys' fees) arising out of any alleged defect in any product
manufactured, promoted or sold by it (or any affiliate or subsidiary thereof) in
connection with any of its Trademark or out of the manufacture, promotion,
labeling, sale or advertisement of any such product by it (or any affiliate or
subsidiary thereof). It agrees that the Secured Party does not assume, and shall
have no responsibility for, the payment of any sums due or to become due under
any agreement or contract included in the Collateral or the performance of any
obligations to be performed under or with respect to any such agreement or
contract by it, and it hereby agrees to indemnify and hold the Secured Party
harmless with respect to any and all claims by any person relating thereto.
(l) The Secured Party may, in its sole discretion, pay any amount or
do any act either required of any Debtor hereunder or reasonably requested by
the Secured Party hereunder to preserve, defend, protect, maintain, record or
enforce such Debtor's obligations contained herein, the Secured Obligations, the
Collateral, or the right, title and interest granted Secured Party herein, and
which such Debtor fails to do or pay, and any such payment shall be deemed an
advance by the Secured Party to such Debtor and shall be payable on demand
together with interest at the highest rate then payable on the Secured
Obligations.
(m) It agrees that if it, learns of any use by any person of any
term or design as a trademark or a trade name likely to cause confusion with any
Trademark, it shall promptly notify Secured Party of such use and, shall take
such actions, at its own expense, as are necessary, in its commercially
reasonable business judgment exercised in good faith, for the protection of such
Trademarks and the Secured Party's interest in and to such Trademarks.
5
<PAGE> 6
(n) All licenses of its Trademarks and Patents which it has granted
to third parties are set forth in Schedule C hereto.
3. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, in addition to all other rights and remedies
of the Secured Party, whether under law, the Credit Agreement or otherwise, all
such rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently, without (except as provided herein)
notice to, or consent by, any Debtor, the Secured Party shall have the following
rights and remedies: (a) no Debtor shall make any further use of the Patents or
the Trademarks or any mark similar thereto for any purpose; (b) the Secured
Party may, at any time and from time to time, upon 10 days' prior notice to the
applicable Debtor, license, whether general, special or otherwise, and whether
on an exclusive or nonexclusive basis, any of the Patents or Trademarks,
throughout the world for such term or terms, on such conditions, and in such
manner, as the Secured Party shall in its sole discretion determine; (c) the
Secured Party may (without assuming any obligations or liability thereunder), at
any time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of the applicable Debtor in, to
and under any one or more license agreements with respect to the Collateral, and
take or refrain from taking any action under any thereof, and each Debtor hereby
releases the Secured Party from, and agrees to hold the Secured Party free and
harmless from and against any claims arising out of, any action taken or omitted
to be taken with respect to any such license agreement (other than any claims to
the extent that they result from the gross negligence or willful misconduct of
the Secured Party); (d) the Secured Party may, at any time and from time to
time, upon 10 days' prior notice to the applicable Debtor, assign, sell, or
otherwise dispose of, the Collateral or any of it, either with or without
special or other conditions or stipulations, with power to buy the Collateral or
any part of it, and with power also to execute assurances, and do all other acts
and things for completing the assignment, sale or disposition which the Secured
Party shall, in its sole discretion, deem appropriate or proper; and (e) in
addition to the foregoing, in order to implement the assignment, sale or other
disposal of any of the Collateral pursuant to subparagraph 3(d) hereof, the
Secured Party may, at any time, pursuant to the authority granted in the Powers
of Attorney described in paragraph 4 hereof (such authority becoming effective
on the occurrence or continuation as hereinabove provided of an Event of
Default), execute and deliver on behalf of the applicable Debtor, one or more
instruments of assignment of the Patents or Trademarks (or any application or
registration thereof), in form suitable for filing, recording or registration in
any country. Each Debtor agrees to pay when due all reasonable costs incurred in
any such transfer of its Patents or Trademarks, including any taxes, fees and
reasonable attorneys' fees, and all such costs shall be added to the Secured
Obligations. The Secured Party may apply the proceeds actually received from any
such license, assignment, sale or other disposition to the reasonable costs and
expenses thereof, including, without limitation, reasonable attorneys' fees and
all legal, travel and other expenses which may be incurred by the Secured Party,
and then to the Secured Obligations, in such order as to principal or interest
as the Secured Party may desire; and the applicable Debtor shall remain liable
and will pay the Secured Party on demand any deficiency remaining,
6
<PAGE> 7
together with interest thereon at a rate equal to the highest rate then payable
on the Secured Obligations and the balance of any expenses unpaid. Nothing
herein contain ed shall be construed as requiring the Secured Party to take any
such action at any time. In the event of any such license, assignment, sale or
other disposition of the Collateral, or any of it, after the occurrence or
continuation as hereinabove provided of an Event of Default, the applicable
Debtor shall supply its know-how and expertise relating to the manufacture and
sale of the products bearing or in connection with the Trademarks or Patents,
and its customer lists and other records relating to the Trademarks or Patents
and to the distribution of said products, to the Secured Party or its designee.
The proceeds of any sale of Collateral, as well as any Collateral
consisting of cash, shall be applied by the Secured Party as follows:
FIRST, to the Secured Party to reimburse the Secured Party for that
portion of the payments, if any, made by it with respect to Letters of Credit
for which a Lender, as a participant in such Letter of Credit pursuant to
Section 2.18 of the Credit Agreement, failed to pay its pro rata share thereof
as required pursuant to such Section 2.18;
SECOND, to the payment of all reasonable costs and expenses incurred
by the Secured Party in connection with such sale or otherwise in connection
with this Agreement or any of the Secured Obligations, including, but not
limited to, all court costs and the reasonable fees and expenses of its agents
and legal counsel, the repayment of all advances made by the Secured Party
hereunder on behalf of the Debtors and any other reasonable costs or expenses
incurred in connection with the exercise of any right or remedy hereunder;
THIRD, to the Secured Party to be held as cash collateral to the
extent of the undrawn amount, if any, or outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of (i) principal and
interest in respect of any Loans outstanding (pro rata as among the Lenders in
accordance with the amounts of the Loans made by them pursuant to the Credit
Agreement) and (ii) all unpaid monetary obligations of any Debtor to The Chase
Manhattan Bank under the Rate Agreements;
FIFTH, pro rata to the payment in full of all Secured Obligations
(other than those referred to above) owed to the Lenders (pro rata as among the
Lenders in accordance with their respective Commitments); and
SIXTH, to the Debtors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
4. Powers of Attorney. Concurrently with the execution and delivery
hereof, each Debtor is executing and delivering to the Secured Party, in the
form of
7
<PAGE> 8
Exhibit 3 hereto, five originals of a Power of Attorney for the implementation
of the assignment, sale or other disposal of the Trademarks and Patents as
permitted by paragraphs 3(d) and (e) hereof and each Debtor hereby releases the
Secured Party from any claims, causes of action and demands at any time arising
out of or with respect to any actions taken or omitted to be taken by the
Secured Party under the powers of attorney granted herein, other than actions
taken or omitted to be taken through the gross negligence or willful misconduct
of the Secured Party.
5. Security Interest Absolute. All rights of the Secured Party
hereunder, the security interest granted to the Secured Party hereunder, and all
obligations of the Debtors hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any other agreement with respect to any of
the Secured Obligations or any other agreement or instrument relating to any of
the foregoing, (ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or consent to any departure from the Credit Agreement, any other
Loan Document or any other agreement or instrument, (iii) any exchange, release
or nonperfection of any other Collateral, or any release or amendment or waiver
of or consent to or departure from any guarantee, for all or any of the Secured
Obligations, or (iv) any other circumstance which might otherwise constitute a
defense available to, or discharge of, the Debtors, any of the Guarantors or any
other obligor in respect of the Secured Obligations or in respect of this
Agreement.
6. No Waiver. No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Secured Party preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law. The Secured Party and the Lenders shall not be deemed to have
waived any rights hereunder or under any other agreement or instrument unless
such waiver shall be in writing and signed by such parties.
7. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Debtors shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Secured Party as Collateral under this Agreement, except as contemplated
by this Agreement or the Credit Agreement.
8. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, 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
8
<PAGE> 9
JURISDICTION OTHER THAN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH DEBTOR HEREBY CONSENTS AND AGREES THAT THE STATE
OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT
EACH DEBTOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, NEW YORK; AND FURTHER PROVIDED,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
SECURED PARTY OR ANY LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE SECURED PARTY OR ANY LENDER. EACH DEBTOR EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH DEBTOR HEREBY WAIVES ANY OBJECTION WHICH
SUCH PERSON MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH DEBTOR HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
PERSON AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON SUCH PERSON'S ACTUAL RECEIPT THEREOF.
9. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
10. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.
11. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a
9
<PAGE> 10
counterpart which bears the signature of the Debtors shall have been delivered
to the Secured Party.
13. Termination. This Agreement and the security interest granted
hereunder shall terminate when (a) all the Secured Obligations have been fully
paid in cash, (b) the Lenders have no further commitment to make any Loans under
the Credit Agreement, (c) the Secured Party shall have no further obligation to
issue any Letters of Credit, and (d) The Chase Manhattan Bank has no further
obligation to extend financial accommodations under any Rate Agreement, at which
time the Secured Party shall execute and deliver to the Debtors all Uniform
Commercial Code termination statements, terminations of assignment and similar
documents which the Debtors shall reasonably request to evidence such
termination; provided, however, that all indemnities of the Debtors contained in
this Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement.
10
<PAGE> 11
IN WITNESS WHEREOF, the Debtors and the Secured Party have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
RECREATION VEHICLE PRODUCTS, INC.
By
------------------------------------
Name:
-------------------------------
Title:
- ----------------------- ------------------------------
Witness
<PAGE> 12
Schedule A to Security Agreement
UNITED STATES TRADEMARKS
Trademark Reg. Date Reg. No.
- --------- --------- --------
<PAGE> 13
CANADA
REGISTERED TRADE-MARKS
Application Registration
Trade-mark Number Number Registration Date
- ---------- ----------- ------------ -----------------
<PAGE> 14
Schedule B to Security Agreement
UNITED STATES PATENTS
Title Date Issued Patent No.
- ----- ----------- ----------
CANADIAN PATENTS
Title Date Issued Patent No.
- ----- ----------- ----------
<PAGE> 15
Schedule C to Security Agreement
LICENSES
NONE
<PAGE> 16
Exhibit 1 to
Security Agreement
CONDITIONAL ASSIGNMENT FOR SECURITY
(PATENTS)
WHEREAS, [Name of Debtor], a Delaware corporation (herein referred
to as "Debtor"), owns the letters patent, and/or applications for letters
patent, of the United States, more particularly described on Schedule 1-A
annexed hereto as part hereof (the "Patents");
WHEREAS, Debtor is obligated to The Chase Manhattan Bank, a New York
banking corporation, as agent (referred to herein as the "Secured Party") for
(i) the lenders (the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the
Credit Agreement dated as of August 22, 1996 among Recreation Vehicle Products,
Inc., the Guarantors at any time party thereto, the Lenders and the Secured
Party (as amended, modified or supplemented from time to time in accordance with
its terms, the "Credit Agreement"; capitalized terms used herein and undefined
shall have the respective meanings assigned to such terms in the Credit
Agreement) and (ii) for itself as issuer of the Letters of Credit and party to
the Rate Agreements, and Debtor has entered into a Security Agreement and
Mortgage-Trademarks and Patents dated the date hereof (the "Agreement") in favor
of Secured Party; and
WHEREAS, pursuant to the Agreement, Debtor has granted to Secured
Party, a security interest in, mortgage on, and conditional assignment of, all
right, title and interest of Debtor in and to the Patents, together with any
reissue, continuation, continuation-in-part or extension thereof, and all
proceeds thereof, including, without limitation, any and all causes of action
which may exist by reason of infringement thereof for the full term of the
Patents (the "Collateral"), to secure the prompt payment, performance and
observance of the Secured Obligations, as defined in the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Debtor does hereby further grant to Secured Party
a security interest in, and mortgage on, the Collateral and effective upon the
occurrence and during the continuance of an Event of Default, to secure the
prompt payment, performance and observance of the Secured Obligations.
Debtor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in, mortgage
on, and conditional assignment of, the Collateral made and granted hereby are
more fully set forth in the Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
<PAGE> 17
Secured Party's address is 633 Third Avenue, New York, New York
10017.
IN WITNESS WHEREOF, Debtor has caused this Conditional Assignment to
be duly executed by its officer thereunto duly authorized as of the ____ day of
________, 199_.
[Name of Debtor]
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
2
<PAGE> 18
SCHEDULE 1-A TO CONDITIONAL ASSIGNMENT FOR SECURITY
PATENTS
Title Date Issued Patent No.
- ----- ----------- ----------
<PAGE> 19
Exhibit 2 to
Security Agreement
CONDITIONAL ASSIGNMENT FOR SECURITY
(TRADEMARKS)
WHEREAS, [Name of Debtor], a Delaware corporation (herein referred
to as "Debtor"), has adopted, used and is using the trademarks listed on the
annexed Schedule 2-A, which trademarks are registered in the United States
Patent and Trademark Office (the "Trademarks");
WHEREAS, Debtor is obligated to The Chase Manhattan Bank, a New York
banking corporation, as agent (referred to herein as the "Secured Party") for
(i) the lenders (the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the
Credit Agreement dated as of August 22, 1996 among Recreation Vehicle Products,
Inc., the Guarantors at any time party thereto, the Lenders and the Secured
Party (as amended, modified or supplemented from time to time in accordance with
its terms, the "Credit Agreement"; capitalized terms used herein and undefined
shall have the respective meanings assigned to such terms in the Credit
Agreement) and (ii) for itself as issuer of the Letters of Credit and party to
the Rate Agreements, and Debtor has entered into a Security Agreement and
Mortgage-Trademarks and Patents dated the date hereof (the "Agreement") in favor
of Secured Party; and
WHEREAS, pursuant to the Agreement, Debtor has granted to Secured
Party a security interest in, mortgage on, and conditional assignment of, all
right, title and interest of Debtor in and to the Trademarks, together with the
goodwill of the busi ness symbolized by the Trademarks and the applications and
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
(the "Collateral"), to secure the payment, performance and observance of the
Secured Obligations, as defined in the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Debtor does hereby further assign unto Secured
Party and grant to Secured Party a security interest in, and mortgage on, the
Collateral and effective upon the occurrence and during the continuance of an
Event of Default, to secure the prompt payment, performance and observance of
the Secured Obligations.
Debtor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to security interest in, mortgage on,
and conditional assignment of, the Collateral made and granted hereby are more
fully set forth in the Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
<PAGE> 20
Secured Party's address is 633 Third Avenue, New York, New York
10017.
IN WITNESS WHEREOF, Debtor has caused this Conditional Assignment to
be duly executed by its officer thereunto duly authorized as of the ____ day of
_______, 199_.
[Name of Debtor]
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
2
<PAGE> 21
SCHEDULE 2-A TO CONDITIONAL ASSIGNMENT FOR SECURITY
TRADEMARKS
Trademark Reg. Date Reg. No.
- --------- --------- --------
<PAGE> 22
Exhibit 3 to
Security Agreement
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT [Name of Debtor], a
Delaware corporation with its principal office at [ ] (hereinafter called
"Debtor") hereby appoints and constitutes The Chase Manhattan Bank, a New York
banking corporation, as agent (referred to herein as the "Secured Party") for
(i) the lenders (the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the
Credit Agreement dated as of August 22, 1996 among Recreation Vehicle Products,
Inc., the Guarantors at any time party thereto, the Lenders and the Secured
Party (as amended, modified or supplemented from time to time in accordance with
its terms, the "Credit Agreement"; capitalized terms used herein and undefined
shall have the respective meanings assigned to such terms in the Credit
Agreement) and (ii) for itself as issuer of the Letters of Credit and party to
the Rate Agreements, its true and lawful attorney, with full power of
substitution, and with full power and authority to perform the following acts on
behalf of Debtor and upon the occurrence and during the continuance of an Event
of Default:
1. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Debtor in
and to any letters patent of the United States or Canada, any State
or Province thereof, as applicable, or any other country or
political subdivision thereof, and all registrations, recordings,
reissues, continuations, continuations-in-part and extensions
thereof, and all pending applications therefor, and for the purpose
of the recording, registering and filing of, or accomplishing any
other formality with respect to, the foregoing, to execute and
deliver any and all agree ments, documents, instruments of
assignment or other papers necessary or advisable to effect such
purpose;
2. For the purpose of assigning, selling, licensing or
otherwise disposing of all right, title and interest of Debtor in
and to any trademarks, trade names, trade styles and service marks,
and all registrations, recordings, reissues, extensions and renewals
thereof, and all pending applications there- for, and for the
purpose of the recording, registering and filing of, or
accomplishing any other formality with respect to, the foregoing, to
execute and deliver
<PAGE> 23
any and all agreements, documents, instruments of assignment or
other papers necessary or advisable to effect such purpose;
3. To execute any and all documents, statements, certificates
or other papers necessary or advisable in order to obtain the
purposes described above as Secured Party may in its sole discretion
determine.
This power of attorney is made pursuant to a Security Agreement and
Mortgage - Trademarks and Patents, dated as of August 22, 1996, between Debtor
and Secured Party and takes effect solely for the purposes of paragraphs 3(d)
and (e) thereof and is subject to the conditions thereof and may not be revoked
until the payment in full of all "Secured Obligations" as defined in such
Security Agreement and Mortgage.
Dated: __________, 199_
[Corporate Seal] [Name of Debtor]
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
2
<PAGE> 24
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this day of ________, 199_, before me personally appeared ,
to me known, who, being by me duly sworn, did depose and say that he resides at
and that he is of [Name of Debtor], the Delaware corporation described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was affixed pursuant to authority of the Board of Directors of said
corporation, and that he signed his name thereto pursuant to such authority.
---------------------------
Notary Public
[Seal]
3
<PAGE> 1
EXHIBIT 10.4
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of August 22, 1996 among Recreation
Vehicle Products, Inc., a Delaware corporation (the "Borrower"), RV Products
Holding Corp., a Delaware corporation ("Holdings") (the Borrower and Holdings
are each sometimes referred to herein as a "Grantor" and collectively as the
"Grantors") and The Chase Manhattan Bank, a New York banking corporation, as
agent (the "Agent") for (i) the lenders (the "Lenders") named in Schedules
2.01(a) and 2.01(b) of the Credit Agreement dated as of the date hereof, among
the Borrower, the Guarantors at any time party thereto, the Lenders and the
Agent (as amended, modified or supplemented from time to time in accordance with
its terms, the "Credit Agreement") and (ii) for itself as issuer of the Letters
of Credit and party to the Rate Agreements.
A. The Agent and the Lenders have agreed to extend Loans and certain
other financial accommodations including, without limitation, the issuance of
Letters of Credit to the Borrower pursuant to, and subject to the terms and
conditions of, the Credit Agreement. In addition, The Chase Manhattan Bank or
other financial institutions have agreed to extend certain financial
accommodations to the Borrower pursuant to the Rate Agreements. The obligation
of the Lenders to extend such Loans and of the Agent to issue Letters of Credit
under the Credit Agreement and of The Chase Manhattan Bank to extend such
financial accommodations under the Rate Agreements is conditioned on the
execution and delivery by the Grantors of a pledge agreement in the form hereof
to secure the following (collectively, the "Secured Obligations"): (i) all
Obligations (such Obligations to include, without limitation, the due and
punctual payment and performance of (a) all obligations at any time and from
time to time under the Rate Agreements, (b) the principal of and interest on the
Loans, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (c) Indebtedness at any time and from
time to time under the Letters of Credit, (d) all obligations of the Grantors at
any time and from time to time under this Pledge Agreement and (e) all other
obligations of the Borrower and the Guarantors at any time and from time to time
under the Credit Agreement and the other Loan Documents); and (ii) all
obligations of Holdings at any time and from time to time under the Holdings
Guarantee.
B. Capitalized terms used herein and not defined herein shall have
the respective meanings assigned to such terms in the Credit Agreement.
Accordingly, the Grantors and the Agent hereby agree as follows:
1. Pledge. As security for the payment and performance in full of
the Secured Obligations, each Grantor hereby pledges unto and grants to the
Agent, for its own benefit and for the benefit of the Lenders, a security
interest in, (a) the shares of capital stock listed in Schedule I annexed hereto
next to such Grantor's name (the "Initial Pledged Stock") and any additional
shares of common stock of the issuers listed in Schedule I annexed hereto
obtained in the future by the Grantors (collectively, the
1
<PAGE> 2
Initial Pledged Stock together with all such additional shares pledged in the
future, the "Pledged Stock"), (b) all instruments of indebtedness (whether now
existing or hereinafter arising) by any of the issuers listed in Schedule I
annexed hereto which name any Grantor as payee thereunder (the "Pledged Debt")
and (c) subject to Section 5 below, all proceeds of the Pledged Stock and
Pledged Debt, including, without limitation, all cash, securities or other
property at any time and from time to time receivable or otherwise distributed
in respect of or in exchange for any of or all such Pledged Stock or Pledged
Debt (the items referred to in clauses (a) through (c) being collectively called
the "Collateral"). Upon delivery to the Agent, any securities now or hereafter
included in the Collateral including, without limitation, the Pledged Stock (the
"Pledged Securities") shall be accompanied by undated stock powers duly executed
in blank or other instruments of transfer satisfactory to the Agent and by such
other instruments and documents as the Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule showing a
description of the securities theretofore and then being pledged hereunder,
which schedule shall be attached hereto as Schedule I and made a part hereof.
Each schedule so delivered shall supersede any prior schedules so delivered.
2. Delivery of Collateral. Each Grantor agrees to deliver promptly
or cause to be delivered to the Agent any and all Pledged Securities, and any
and all certi ficates or other instruments or documents representing any of the
Collateral (together with any necessary endorsement).
3. Representations, Warranties and Covenants. Each Grantor hereby
represents, warrants and covenants to and with the Agent that:
(a) except for the security interest granted to the Agent, each
Grantor (i) is and, subject to the provisions of the Credit Agreement, will at
all times continue to be the direct owner, beneficially and of record, of the
Pledged Securities that it is pledging hereunder and is and will continue to be
the holder of the Pledged Debt that it is pledging hereunder except for the
delivery and endorsement over of such Pledged Debt to the Agent as contemplated
hereunder, (ii) holds the Collateral that it is pledging hereunder free and
clear of all Liens, charges, encumbrances and security interests of every kind
and nature, and the Pledged Stock is subject to no options to purchase or any
similar or other rights of any person, (iii) will make no assignment, pledge,
hypothecation or, subject to the provisions of the Credit Agreement, transfer
of, or create any security interest in, the Collateral that it is pledging
hereunder including, without limitation, by virtue of becoming bound by any
agreement which restricts in any manner the rights of any present or future
holder of any Pledged Stock with respect thereto, and (iv) subject to Section 5
below, will cause any and all Collateral, whether for value paid by a Grantor or
otherwise, to be forthwith deposited with the Agent and pledged or assigned
hereunder;
(b) each Grantor (i) has good right and legal authority to pledge
the Collateral it is pledging hereunder in the manner hereby done or
contemplated, (ii) will not amend, modify or supplement any Pledged Security
(including, without limitation,
2
<PAGE> 3
any Pledged Debt) without the prior written consent of the Agent, nor forgive
any Indebtedness evidenced by any Pledged Security, and (iii) will defend its
title or interest thereto or therein against any and all attachments, Liens,
claims, encumbrances, security interests or other impediments of any nature,
however arising, of all persons whomsoever;
(c) no consent or approval of any governmental body or regulatory
authority or any securities exchange was or is necessary to the validity of the
pledge effected hereby;
(d) by virtue of the execution and delivery by each Grantor of this
Agreement, when the certificates, instruments or other documents representing or
evidencing the Collateral are delivered to the Agent in accordance with this
Agreement, the Agent will obtain a valid and perfected first Lien upon and
security interest in such Collateral as security for the repayment of the
Secured Obligations, prior to all other Liens and encumbrances thereon and
security interests therein;
(e) the pledge effected hereby is effective to vest in the Agent the
rights of the Agent in the Collateral as set forth herein; and
(f) all of the Pledged Stock has been duly authorized and validly
issued and as at the date hereof, the Initial Pledged Stock constitutes all of
the issued and outstanding shares of capital stock of the issuers listed on
Schedule I annexed hereto.
All representations, warranties and covenants of the Grantors contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 14 hereof.
4. Registration in Nominee Name; Denominations. Upon the occurrence
and during the continuance of an Event of Default, the Agent shall have the
right (in its sole and absolute discretion with subsequent notice to the
Grantors) to transfer to or to register the Pledged Securities in its own name
or the name of its nominee. In addition, the Agent shall at all times have the
right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
5. Voting Rights; Dividends; etc. (a) Unless and until an Event of
Default hereunder shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to an owner of Pledged Securities
or any part thereof for any purpose not inconsistent with the terms of this
Agreement and the Credit Agreement provided that such action would not adversely
affect the rights inuring to the Agent or the Lenders under this Agreement or
the Credit Agreement or adversely affect
3
<PAGE> 4
the rights and remedies of the Agent or the Lenders under this Agreement or the
Credit Agreement or the ability of the Agent or the Lenders to exercise the
same.
(ii) The Agent shall execute and deliver to the Grantors, or cause to
be executed and delivered to the Grantors, all such proxies, powers of attorney,
and other instruments as the Grantors may reasonably request for the purpose of
enabling the Grantors to exercise the voting and/or consensual rights and powers
which they are entitled to exercise pursuant to subparagraph (i) above.
(iii) The Grantors shall be entitled to receive and retain any and all
cash dividends paid on the Pledged Securities only to the extent that such cash
dividends are permitted by, and otherwise paid in accordance with the terms and
conditions of, Section 7.04 of the Credit Agreement and applicable laws. Any and
all
a. noncash dividends,
b. stock or dividends paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in property,
return of capital, capital surplus or paid-in surplus or other distributions
made on or in respect of Pledged Securities (other than dividends permitted by
this Section 5(a)(iii)), whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the outstanding
capital stock of the issuer of any Pledged Securities or received in exchange
for Pledged Securities or any part thereof, or in redemption thereof, as a
result of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise,
shall be and become part of the Collateral, and, if received by any Grantor,
shall not be commingled by such Grantor with any of its other funds or property
but shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Agent and the Lenders and shall be forthwith delivered to the
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Grantor to receive any dividends which such Grantor
is authorized to receive pursuant to paragraph (a)(iii) of this Section 5 shall
cease, and all such rights shall thereupon become vested in the Agent, which
shall have the sole and exclusive right and authority to receive and retain such
dividends. All dividends which are received by any Grantor contrary to the
provisions of this Section 5(b) shall be received in trust for the benefit of
the Agent, shall be segregated from other property or funds of such Grantor and
shall be forthwith delivered to the Agent as Collateral in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Agent pursuant to the provisions of this Section
5 shall be retained by the Agent in an account to be established by the Agent
4
<PAGE> 5
upon receipt of such money or other property and shall be applied in accordance
with the provisions of Section 9 hereof.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Grantor to exercise the voting and consensual rights
and powers which it is entitled to exercise pursuant to Section 5(a)(i) shall
cease, and all such rights shall thereupon become vested in the Agent, which
shall have the sole and exclusive right and authority to exercise such voting
and consensual rights and powers.
(d) As long as the Credit Agreement remains in effect and until all
of the Secured Obligations have been paid fully, any payments made in respect of
the Pledged Debt shall be and become part of the Collateral, and, if received by
any Grantor, shall not be commingled by such Grantor with any of its other funds
or property but shall be held separate and apart therefrom, shall be held in
trust for the benefit of the Agent and the Lenders and shall be forthwith
delivered to the Agent in the same form as so received.
6. Issuance of Additional Stock. Each Grantor agrees that it will
cause each of its subsidiaries not to issue any stock or other securities,
whether in addition to, by stock dividend or other distribution upon, or in
substitution for, the Pledged Securities or otherwise, except as delivered to
the Agent as contemplated hereunder.
7. Supplemental Documentation. In connection with the execution and
delivery of this Agreement, each Grantor shall furnish or cause to be furnished
to the Agent on or prior to the Closing Date a certificate signed by a
Responsible Officer of such Grantor dated the Closing Date, certifying that, as
of the date of such certificate, all representations and warranties of such
Grantor in Section 3 hereof are true and correct and that such Grantor is in
compliance with all conditions, agreements and covenants to be observed or
performed hereunder.
8. Remedies upon Event of Default. If an Event of Default shall have
occurred and be continuing, the Agent may sell or otherwise dispose of all or
any part of the Collateral, at public or private sale or at any broker's board
or on any securities exchange, for cash, upon credit or for future delivery as
the Agent shall deem appropriate. Each such purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Agent shall give the applicable Grantor 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in New York) of the Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities
5
<PAGE> 6
exchange, shall state the board or exchange at which such sale is to be made and
the day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the Agent
may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of any Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
of such Collateral shall have been given. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 8, The Chase Manhattan
Bank or any Lender may bid for or purchase, free (to the extent permitted by
law) from any right of redemption, stay or appraisal on the part of any Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), with respect to the Collateral or any part thereof offered for sale and
The Chase Manhattan Bank or any such Lender may make payment on account thereof
by using any claim then due and payable to The Chase Manhattan Bank or any such
Lender from such Grantor as a credit against the purchase price, and The Chase
Manhattan Bank or any such Lender may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to such
Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale and purchase pursuant to such agreement,
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Secured Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
9. Application of Proceeds of Sale. The proceeds of any sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Agent as follows:
FIRST, to the Agent to reimburse the Agent for that portion of the
payments, if any, made by it with respect to Letters of Credit for which a
Lender, as a participant in such Letter of Credit pursuant to Section 2.18 of
the Credit Agreement, failed to pay its pro rata share thereof as required
pursuant to such Section 2.18;
6
<PAGE> 7
SECOND, to the payment of all reasonable costs and expenses incurred
by the Agent in connection with such sale or otherwise in connection with this
Agreement or any of the Secured Obligations, including, but not limited to, all
court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all advances made by the Agent hereunder on behalf of
the Grantors and any other reasonable costs or expenses incurred in connection
with the exercise of any right or remedy hereunder;
THIRD, to the Agent to be held as cash collateral to the extent of
undrawn amounts, if any, of outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of (i) principal and
interest in respect of any Loans outstanding (pro rata as among the Lenders in
accordance with the amounts of the Loans made by them pursuant to the Credit
Agreement) and (ii) all unpaid monetary obligations of any Grantor to The Chase
Manhattan Bank under the Rate Agreements;
FIFTH, pro rata to the payment in full of all Secured Obligations
(other than those referred to above) owed to the Lenders (pro rata as among the
Lenders in accordance with their respective Commitments); and
SIXTH, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
10. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints
the Agent its attorney-in-fact for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Agent's name or in the name of such Grantor, to ask
for, demand, sue for, collect, receive receipt and give acquittance for any and
all moneys due or to become due and under and by virtue of any Collateral, to
endorse checks, drafts, orders and other instruments for the payment of money
payable to the applicable Grantor representing any interest or dividend, or
other distribution payable in respect of the Collateral or any part thereof or
on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; provided, however, that nothing
herein contained shall be construed as requiring or obligating the Agent, The
Chase Manhattan Bank or the Lenders to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the Agent,
The Chase Manhattan Bank or the Lenders, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any
7
<PAGE> 8
property covered thereby, and no action taken by the Agent, The Chase Manhattan
Bank or the Lenders or omitted to be taken with respect to the Collateral or any
part thereof shall give rise to any defense, counterclaim or offset in favor of
any Grantor or to any claim or action against the Agent or the Lenders in the
absence of the gross negligence or wilful misconduct of the Agent or the
Lenders.
11. No Waiver. No failure on the part of the Agent to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by such parties.
12. Security Interest Absolute. All rights of the Agent hereunder,
the grant of a security interest in the Collateral and all obligations of the
Grantors hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, any agreement with
respect to any of the Secured Obligations or any other agreement or instrument
relating to any of the foregoing, (ii) any change in time, manner or place of
payment of, or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from the Credit
Agreement or any other agreement or instrument, (iii) any exchange, release or
nonperfection of any other collateral, or any release or amendment or waiver of
or consent to or departure from any guarantee, for all or any of the Secured
Obligations or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the Secured
Obligations or in respect of this Agreement.
13. Agent's Fees and Expenses. The Grantors shall be jointly and
severally obligated to, upon demand, pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts or agents which the Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Agent hereunder or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof. In addition, the Grantors indemnify, jointly and severally, and hold the
Agent and the Lenders harmless from and against any and all liability incurred
by the Agent or the Lenders hereunder or in connection herewith, unless such
liability shall be due to the gross negligence or wilful misconduct of the Agent
or the Lenders, as the case may be. Any such amounts payable as provided
hereunder or thereunder shall be additional Secured Obligations secured hereby
and by the other Security Documents.
14. Termination. This Agreement shall terminate when (a) all the
Secured Obligations have been fully paid in cash, (b) the Lenders have no
further
8
<PAGE> 9
commitment to make any Loans under the Credit Agreement, (c) the Agent shall
have no further obligation to issue any Letters of Credit, and (d) The Chase
Manhattan Bank has no further obligation to extend financial accommodations
under any Rate Agreement, at which time the Agent shall reassign and deliver to
the Grantors, or to such person or persons as the Grantors shall designate,
against receipt, such of the Collateral (if any) as shall not have been sold or
otherwise still be held by it hereunder, together with appropriate instruments
of reassignment and release; provided, however, that all indemnities of the
Grantors contained in this Agreement shall survive, and remain operative and in
full force and effect regardless of, the termination of this Agreement. Any such
reassignment shall be without recourse to or warranty by the Agent and at the
expense of the Grantors.
15. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
16. Further Assurances. Each Grantor agrees to do such further acts
and things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Agent may at any time reasonably request in
connection with the administration and enforcement of this Agreement or with
respect to the Collateral or any part thereof or in order better to assure and
confirm unto the Agent its rights and remedies hereunder.
17. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
no Grantor shall be permitted to assign this Agreement or any interest herein or
in the Collateral, or any part thereof, or otherwise pledge, encumber or grant
any option with respect to the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Agreement.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (EXCEPT CONFLICTS OF LAWS
PRINCIPLES THEREOF), EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND
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 NEW YORK.
19. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken
9
<PAGE> 10
together, shall constitute but one instrument. This Agreement shall be effective
when a counterpart which bears the signature of the Grantors shall have been
delivered to the Agent.
21. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have duly executed this
Pledge Agreement as of the day and year first above written.
RECREATION VEHICLE PRODUCTS, INC.
By:
--------------------------------------------
Name:
Title:
RV PRODUCTS HOLDING CORP.
By:
--------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By:
--------------------------------------------
Name:
Title:
<PAGE> 12
SCHEDULE I
to Pledge Agreement
<TABLE>
<CAPTION>
percentage
of
Class of Stock Number Outstanding
Owner Stock Issuer Stock Certificate No(s). Par Value of Shares Shares
- ----- ------------ ----- ------------------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
RV Products Holding Recreation Vehicle Common 5 $1.00 per 1,000 100%
Corp. Products, Inc. share
Recreation Vehicle RVP International Sales Common 1 1,000 65%
Products, Inc. Corporation
</TABLE>
Description of Pledged Debt:
<TABLE>
<CAPTION>
Obligation Issuer Description of Obligation Maturity Date Original Principal Amount
- ----------------- ------------------------- ------------- -------------------------
<S> <C> <C> <C>
None
</TABLE>
<PAGE> 1
EXHIBIT 10.5
EXECUTIVE SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT is made as of November 10, 1997
by and between the persons named on Schedule A hereto (the "Purchasers"), and
Airxcel Holdings, Inc., a Delaware corporation (the "Company") pursuant to
Section 5.8 of an Asset Purchase Agreement among Crispaire Corporation as
Seller, and Airxcel, Inc. and Airxcel Holdings, Inc. with an effective date of
October 17, 1997 (the "Asset Purchase Agreement").
WHEREAS each of the Purchasers agrees to purchase from the Company
the number of shares of Series A Preferred Shares, par value $0.01 per share,
and the number of shares of Class A Common Stock par value $0.01 per share set
forth opposite such Purchaser's name on Schedule A (together the "Securities").
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties to this agreement agree as follows:
SECTION 1 DEFINITIONS. When used in this Agreement:
"Acquisition" means the transactions contemplated by the Asset
Purchase Agreement and the Related Documents referred to therein.
"Governmental Body" means any government entity, department, agency
or political subdivision of any federal, state, local or municipal government.
"Parties" means the Company and the Purchasers.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a government entity (or any department, agency or political
subdivision thereof.)
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement Amendment" means the Stockholders Agreement
Amendment No. 1 dated the date hereof among Airxcel Holdings, Inc. and its
stockholders.
"Subsidiary" means, with respect to any Person, any corporation of
which in excess of 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether any other class or classes of capital stock of such
corporation may have such voting power by reason of the happening of any
contingency) is directly or indirectly owned by such Person and/or one or more
Subsidiaries of such Person.
SECTION 2 SALE AND PURCHASE OF SECURITIES.
2.1 Authorization. On or prior to the Closing Date (as defined
herein), the Company shall have authorized the issuance and sale of the
Securities to the Purchasers.
<PAGE> 2
2.2 Sale of Securities. Subject to the terms and conditions of this
Agreement each of the Purchasers agrees to purchase from the Company, and the
Company agrees to sell to each such Purchaser the Securities set forth opposite
such Purchaser's name on Schedule A, for the aggregate purchase price set forth
opposite such Purchaser's name on Schedule A (the "Purchase Price").
SECTION 3 CLOSING.
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kirkland & Ellis,
Citicorp Center, 153 East 53rd Street, New York, New York 10022-4675, at 10:00
a.m. local time, on the date on which the Closing (as defined in the Asset
Purchase Agreement) occurs (the "Closing Date").
3.2 Closing Deliveries. Subject to the terms and conditions of this
Agreement, the Parties agree to consummate the following transactions (the
"Closing Transactions") on the Closing Date:
(a) The Company shall deliver to each Purchaser stock certificates
representing the Securities purchased by such Purchaser;
(b) Each Purchaser shall pay to the Company the Purchase Price
payable by such Purchaser by wire transfer of immediately available funds to an
account designated by the Company or by such other method of payment as the
Company and any Purchaser shall mutually agree;
(c) The Purchasers shall execute and deliver to the Company the
Stockholders Agreement Amendment.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material
inducement to the Purchasers to enter into this Agreement and purchase the
Securities, the Company hereby represents and warrants to the Purchasers as
follows. Each of the representations and warranties will be deemed repeated by
the maker thereof on the Closing Date by reference to the facts and
circumstances then existing.
4.1 Organization and Corporate Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and is qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires it to qualify. The Company has all
requisite corporate power and authority to carry out the transactions
contemplated by this Agreement.
4.2 Authorization; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by the Company. This
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms. The execution and delivery by the Company of this
Agreement, the offering, sale and issuance of the Securities hereunder and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company, do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Company's capital stock or assets pursuant to, (iv) give any third
-2-
<PAGE> 3
party the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative or
Governmental Body pursuant to, the charter or bylaws of the Company, or any law,
statute, rule or regulation to which the Company is subject, or any agreement,
instrument, order, judgment or decree to which the Company is subject.
4.3 Capitalization of Company. The authorized, issued and
outstanding capital stock of Company immediately after giving effect to the
Acquisition is and will be as set forth on Schedule 4.3.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. As a material
inducement to the Company to enter into this Agreement and issue the Securities
to the Purchasers, each Purchaser individually represents and warrants (with
respect to such individual Purchaser only) to the Company as follows. Each of
the representations and warranties will be deemed repeated by the maker thereof
on the Closing Date by reference to the facts and circumstances then existing.
5.1 Binding. The execution, delivery and performance of this
Agreement is within the capacity of the Purchaser and does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which the Purchaser is a party or any judgment, order or decree to
which the Purchaser is subject. Upon execution, this Agreement will constitute a
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms.
5.2 Investment. (a) The Securities will be acquired for the
Purchaser's own account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act or any applicable state securities
laws and will not be disposed of in contravention of the Securities Act or any
applicable state securities laws.
(b) The Purchaser has knowledge of and has had access to
information concerning the business, financial condition, properties, operations
and prospects of the Company, is sophisticated in financial matters, is able to
evaluate the risks and benefits of the investment in the Securities, and has
determined that such investment in the Securities is suitable for the Purchaser,
based upon the Purchaser's financial situation and needs, as well as the
Purchaser's other securities holdings.
(c) The Purchaser is able to bear the economic risk of the
Purchaser's investment in the Securities for an indefinite period of time and
the Purchaser understands that the Securities have not been registered under the
Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available. The
Purchaser further understands that the Securities are subject to certain
restrictions set forth in the Stockholders Agreement as amended by the
Stockholders Agreement Amendment.
(d) The Purchaser has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Securities and has had full access to such other information concerning the
Company as the Purchaser has requested.
-3-
<PAGE> 4
(e) The Purchaser acknowledges that: Rule 144 under the
Securities Act is not available for resale of the Securities by him because the
Company does not satisfy certain conditions of that Rule; for so long as such
Rule is not available, any resale or other transfer of such Securities under
circumstances in which the seller or the person through whom the sale is made
may be deemed to be an underwriter, as that term is used in the Securities Act,
may require compliance with some other exemption under the Securities Act or the
rules and regulations of the Securities and Exchange Commission; and any resale
or other transfer of such Securities at such time in the future as Rule 144 may
be available which is made in reliance upon Rule 144 can be made only in limited
amounts in accordance with the terms and conditions of said Rule (including the
fact that such Securities must be held for minimum periods of time).
(f) No commission, fee or other remuneration is to be paid or
given, directly or indirectly, to any Person for soliciting the Purchaser to
purchase the Securities.
5.3 Employee Relationship. As an inducement to the Company to issue
the Securities to the Purchaser, and as a condition thereto, the Purchaser
acknowledges and agrees that neither the issuance of the Securities to the
Purchaser nor any provision contained herein shall entitle the Purchaser to
remain in the employment of the Company and its Subsidiaries or affect any
rights of the Company to terminate the Purchaser's employment. This Agreement
shall not impair the rights of any Purchaser under any written employment
contract between such Purchaser and the Company, or the rights of any Purchaser
under the Stockholders Agreement Amendment.
SECTION 6 MISCELLANEOUS PROVISIONS.
6.1 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
6.2 Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
6.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Company and the Purchasers.
6.4 Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
-4-
<PAGE> 5
6.5 Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company:
Airxcel Holdings, Inc.
3050 North St. Francis Street
Wichita, KS 67215
Attention: Melvin Adams
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esq.
To the Purchasers:
George D. Wyers
5105 Lakeside Drive
Atlanta, GA 30360
Paul Mechler
645 Lytham Court
Roswell, GA 30075
David Shuford
1044 Mt. Paran Road
Atlanta, GA 30327
T.K. Sellers, Jr.
1833 Lullwater Road
Atlanta, GA 31707
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
6.6 Remedies. The Purchasers shall have all rights and remedies set
forth in this Agreement and the Certificate of Incorporation and all rights and
remedies which the Purchasers have been granted at any time under any other
agreement or contract and all of the rights which the
-5-
<PAGE> 6
Purchasers have under any law. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any Person having any rights under this Agreement may in
its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
6.7 Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
6.8 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AIRXCEL HOLDINGS, INC.
By:
-----------------------------------
Name:
Title:
---------------------------------------
GEORGE D. WYERS
---------------------------------------
DAVID L. SHUFORD
---------------------------------------
T.K. SELLERS, JR.
---------------------------------------
PAUL MECHLER
-7-
<PAGE> 8
SCHEDULE A
Class A
Name Class A Common Preferred Purchase Price
- ------------------ -------------- ------------- --------------
George P. Wyers 30,836.497 737,704.92 $2,250,000.00
David Shuford 6,852.555 163,934.43 $500,000.00
T.K. Sellers, Jr. 3,426.277 81,967.21 $250,000.00
Paul Mechler 685,256 16,393.44 $50,000.00
-------------- ------------- --------------
TOTALS 41,800.585 1,000,000.00 $3,050,000.00
-8-
<PAGE> 1
EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of August 22, 1996 by and
among RV Products Holding Corp., a Delaware corporation (the "Company"),
Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), Citicorp
Mezzanine Partners, L.P. ("CMP"), CCT III Partners, L.P., a Delaware limited
partnership, upon signing a counterpart hereof after the date hereof ("CCT"),
each of the executives of the Company or its subsidiaries as set forth on the
attached Schedule A (each an "Executive," and together the "Executives"), and
such of the Persons set forth on Schedule B, who have signed counterparts hereof
after the date hereof (each an "Individual Investor," and together the
"Individual Investors").
The Executives hold Class A Common Stock, par value $.01 per share
(the "Class A Common"), and have acquired certain other securities of the
Company pursuant to the Agreement and Plan of Merger, dated August 5, 1996 (the
"Merger Agreement"), by and among the Company, RVP Acquisition Corp. and the
stockholders of the Company.
CVC has acquired, by virtue of the merger consummated pursuant to
the Merger Agreement, Class A Common, shares of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common"), and certain other
securities of the Company.
CVC intends to sell some of its shares after the date hereof to CCT
and the Individual Investors, at which time CCT and the Individual Investors, as
a condition to such sales, will execute a counterpart of this Agreement and
become parties hereto.
CMP has received stock purchase warrants to purchase Common Stock
pursuant to the Warrant Agreement, dated the date hereof (the "CMP Warrants").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
following meanings.
"Common Stock" means, collectively, (i) the Class A Common and the
Class B Common, (ii) any other class of common stock, and (iii) any capital
stock of the Company issued or issuable with respect to the securities referred
to in clauses (i) or (ii) by way of stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
"Company Registrable Securities" has the meaning set forth in
Section 5(b).
<PAGE> 2
"CMP Registrable Securities" means (i) any shares of Common Stock
issued or issuable to CMP or its affiliates upon exercise of the CMP Warrants or
otherwise after the date hereof and any Common Stock into which they convert,
and (ii) any shares of capital stock of the Company issued or issuable with
respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of CMP Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such CMP Registrable Securities (upon conversion or exercise in connection with
a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"CVC Registrable Securities" means (i) any shares of Common Stock
acquired by, or issued or issuable to, CVC or its affiliates on or after the
date hereof and any Common Stock into which they convert, (ii) any capital stock
of the Company acquired by CVC or its affiliates on or after the date hereof,
and (iii) any shares of capital stock of the Company issued or issuable with
respect to the securities referred to in clause (i) or (ii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of CVC Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such CVC Registrable Securities (upon conversion or exercise in connection with
a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Management Option Plan" means a plan approved by the Company's
board of directors pursuant to which the management of the Company may be issued
up to 75,032 shares of the Common Stock of the Company.
"Other Registrable Securities" means (i) any shares of Class A
Common issued or issuable to CCT, the Executives, and the Individual Investors
on the date hereof or acquired by (x) CCT and the Individual Investors and (y)
the Executives after the date hereof, including with regard to the Executives
pursuant to the Management Option Plan and (ii) any shares of capital stock of
the Company issued or issuable with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to be a
holder of Other Registrable Securities whenever such Person has the right to
acquire directly or indirectly such Other Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
- 2 -
<PAGE> 3
"Registrable Securities" means, collectively, the CMP Registrable
Securities, the CVC Registrable Securities, and the Other Registrable Securities
but excludes securities issued pursuant to the Management Option Plan.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by the Company.
"Rule 144" means Rule 144 under the Securities Act (or any similar
rule then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
2. Demand Registrations.
(a) Requests for Registration. Subject to Sections 2(b) and (c)
below, (i) at any time and from time to time, the holders of a majority of the
CVC Registrable Securities and (ii) at any time after the earlier to occur of
the 5th anniversary of this Agreement or the expiration of six months from the
date of an initial public offering of the Company's Common Stock registered
under the Securities Act, the holders of a majority of CMP Registrable
Securities and the holders of a majority of the Other Registrable Securities may
each request registration, whether underwritten or otherwise, under the
Securities Act of all or part of their Registrable Securities on Form S-1 or any
similar long-form registration ("Long-Form Registrations") or on Form S-2 or S-3
or any similar short-form registration ("Short-Form Registrations"), if
available. In addition, subject to Section 2(g) below, the holders of a majority
of the CVC Registrable Securities may request that the Company file with the SEC
a registration statement under the Securities Act on any applicable form
pursuant to Rule 415 under the Securities Act (a "415 Registration"). Each
request for a Long-Form Registration or Short-Form Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of any such request for a Long-Form Registration or Short-Form
Registration, the Company will give written notice of such requested
registration to all other holders of Registrable Securities and will include
(subject to the provisions of this Agreement) in such registration, all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within twenty (20) days after the receipt of the
Company's notice. All registrations requested pursuant to this Section 2(a) are
referred to herein as "Demand Registrations".
(b) Long-Form Registrations. The holders of a majority of the CVC
Registrable Securities will be entitled to request up to five (5) Long-Form
Registrations in which the Company
- 3 -
<PAGE> 4
will pay all Registration Expenses. The holders of a majority of the CMP
Registrable Securities and the holders of a majority of the Other Registerable
Securities will each be entitled to request one (1) Long-Form Registration in
which the Company will pay all Registration Expenses. A registration will not
count as the permitted Long-Form Registration until it has become effective and
unless the holders of Registrable Securities are able to register and sell at
least 90% of the Registrable Securities requested to be included in such
registration.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), the holders of a majority of
the CVC Registrable Securities will be entitled to request an unlimited number
of Short-Form Registrations in which the Company will pay all Registration
Expenses. Further, the holders of a majority of the CMP Registrable Securities
and the holders of a majority of the Other Registerable Securities will each be
entitled to request an unlimited number of Short-Form Registrations in which the
Company will pay all Registration Expenses. Demand Registrations (other than 415
Registrations) will be Short-Form Registrations whenever the Company is
permitted to use any applicable short form. After the Company has become subject
to the reporting requirements of the Exchange Act, the Company will use its best
efforts to make Short-Form Registrations available for the sale of Registrable
Securities.
(d) Priority on Demand Registrations. The Company will not include
in any Long-Form Registration or Short-Form Registration any securities (other
than Company Registrable Securities) which are not Registrable Securities
without the prior written consent of the holders of at least a majority of the
Registrable Securities included in such registration. If a Long-Form
Registration or a Short-Form Registration is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
number of Registrable Securities (and, if permitted hereunder, other securities
requested to be included in such offering) exceeds the number of Registrable
Securities and other securities, if any, which can be sold therein without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, (x) if no Company Registrable Securities are
requested to be included in such registration, the number of Registrable
Securities requested to be included in such registration pro rata, if necessary,
among the holders of Registrable Securities based on the number of shares of
Registrable Securities owned by each such holder, and (y) if Company Registrable
Securities are requested to be included in such registration, the number of
Registrable Securities and Company Registrable Securities requested to be
included in such registration pro rata, if necessary, among the Company
Registrable Securities and the holders of Registrable Securities based on the
number of shares of Registrable Securities and Company Registrable Securities
requested to be included therein, and (ii) second, any other securities of the
Company requested to be included in such registration pro rata, if necessary, on
the basis of the number of shares of such other securities owned by each such
holder. Any Persons other than holders of Registrable Securities who participate
in Demand Registrations which are not at the Company's expense must pay their
share of the Registration Expenses as provided in Section 6 hereof.
(e) Restrictions on Demand Registrations. The Company will not be
obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration.
- 4 -
<PAGE> 5
(f) Selection of Underwriters. In the case of a Demand Registration
for an underwritten offering, the holders of a majority of the Registrable
Securities to be included in such Demand Registration will have the right to
select the investment banker(s) and manager(s) to administer the offering, which
investment banker(s) and manager(s) will be nationally recognized.
(g) 415 Registrations.
(i) The holders of a majority of the CVC Registrable
Securities will be entitled to request one (1) 415 Registration in which the
Company will pay all Registration Expenses. Subject to the availability of
required financial information, within 45 days after the Company receives
written notice of a request for a 415 Registration, the Company shall file with
the SEC a registration statement under the Securities Act for the 415
Registration. The Company shall use its best efforts to cause the 415
Registration to be declared effective under the Securities Act as soon as
practical after filing and, once effective, the Company shall (subject to the
provisions of clause (ii) below) cause such 415 Registration to remain effective
for such time period as is specified in such request, but for no time period
longer than the period ending on the earlier of (i) the third anniversary of the
date of filing of the 415 Registration, (ii) the date on which all CVC
Registrable Securities have been sold pursuant to the 415 Registration, or (iii)
the date as of which there are no longer any CVC Registrable Securities in
existence.
(ii) If the holders of a majority of the CVC Registrable
Securities notify the Company in writing that they intend to effect the sale of
all or substantially all of the CVC Registrable Securities held by such holders
pursuant to a single integrated offering pursuant to a then effective
registration statement for a 415 Registration (a "Takedown"), the Company and
each holder of Registrable Securities (other than the Individual Investors)
shall not effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for its equity
securities, during the 90-day period beginning on the date such notice of a
Takedown is received.
(iii) If in connection with any Takedown, the managing
underwriters (selected in accordance with clause (iv) below) advise the Company
that, in its opinion, the inclusion of any other securities other than CVC
Registrable Securities in the Takedown would adversely affect the marketability
of the offering, then no such securities shall be permitted to be included.
Additionally, if in connection with such an offering, the number of CVC
Registrable Securities and other securities (if any) requested to be included in
such Takedown exceeds the number of CVC Registrable Securities and other
securities which can be sold in such offering without adversely affecting the
marketability of the offering, the company shall include in such Takedown (i)
first, the CVC Registrable Securities requested to be included in such Takedown,
pro rata among the holders of such Registrable Securities on the basis of the
number of CVC Registrable Securities owned by each such holder, and (ii) second,
other securities requested to be included in such Takedown to the extent
permitted hereunder.
(iv) The holders of a majority of the CVC Registrable
Securities shall have the right to retain and select an investment banker and
manager to administer the 415 Registration
- 5 -
<PAGE> 6
and any Takedown pursuant thereto, subject to the Company's approval which will
not be unreasonably withheld.
(v) In addition to the provisions in Section 6 below, all
expenses incurred in connection with the management of the 415 Registration
(whether incurred by the Company or the holders of the CVC Registrable
Securities) shall be borne by the Company (including, without limitation, all
fees and expenses of the investment banker and manager) (excluding discounts and
commissions).
(h) No Other Registration Rights. Except as provided in this
Agreement, the Company will not grant to any Persons the right to request the
Company to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities, without the
prior written consent of the holders of a majority of the CVC Registrable
Securities.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its Common Stock under the Securities Act (other than pursuant to a
Demand Registration, and other than pursuant to a registration statement on Form
S-8 or S-4 or any similar form or in connection with a registration the primary
purpose of which is to register debt securities (i.e., in connection with a
so-called "equity kicker")) and a registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), the
Company will give prompt written notice to all holders of Registrable Securities
of its intention to effect such a registration and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within twenty (20) days after
the receipt of the Company's notice. Notwithstanding the foregoing, no
Registrable Securities shall be included in an initial registered public
offering of the Company's securities, which is a primary offering, without the
prior written consent of the holders of a majority of CVC Registrable
Securities. In the event the holders of the majority of CVC Registerable
Securities consent to the inclusion of Registerable Securities in an initial
public offering, then the holders of Registerable Securities shall be entitled
to include securities in such registration as provided in this Section 3.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities in all Piggyback Registrations will be paid by the
Company.
(c) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, the Company
will include in such registration all securities requested to be included in
such registration; provided, that if the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities requested to be
included in such registration pro rata among the holders of such Registrable
Securities on the
- 6 -
<PAGE> 7
basis of the number of shares of Registrable Securities owned by each such
holder, and (iii) third, other securities, if any, requested to be included in
such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (which registration was consented to pursuant to Section 2(h) above),
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities
requested to be included in such registration not covered by clause (i) above.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the investment banker(s) and manager(s) for the offering
will be selected by the Company.
(f) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Section 3, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Forms S-4 or S-8 or any successor forms), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least six months has elapsed from the effective date of such
previous registration.
4. Holdback Agreements.
(a) Each holder of Registrable Securities (other than the Individual
Investors) hereby agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 180-day period beginning on
the effective date of any Demand Registration (other than a 415 Registration) or
Piggyback Registration for a public offering to be underwritten on a firm
commitment basis in which Registrable Securities are included (except as part of
such underwritten registration), unless the underwriters managing the registered
public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration (other than a 415 Registration) or Piggyback
Registration (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor forms), unless the
underwriters managing the registered public
- 7 -
<PAGE> 8
offering otherwise agree, and (ii) to cause each holder of Registrable
Securities (other than the Individual Investors) and each other holder of at
least 5% (on a fully diluted basis) of Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed);
(b) if requested by the holders of a majority of the CVC Registrable
Securities in connection with any Demand Registration, use its best efforts to
cause to be included in such registration statement shares of the Company's
Common Stock having an aggregate value (based on the midpoint of the proposed
offering price range specified in the registration statement used to offer such
securities) of up to $20 million ("Company Registrable Securities") to be
offered in a primary offering of the Company's securities contemporaneously with
such offering of Registrable Securities;
(c) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than six months and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(d) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
- 8 -
<PAGE> 9
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process (i.e., service of
process which is not limited solely to securities law violations) in any such
jurisdiction);
(f) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the Nasdaq National Market System
("Nasdaq Market") and, if listed on the Nasdaq Market, use its best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure Nasdaq Market
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the National
Association of Securities Dealers;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
- 9 -
<PAGE> 10
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of at
least twelve months beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(l) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(n) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
and
(o) obtain a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a majority of
the Registrable Securities being sold reasonably request.
If any such registration statement or comparable statement refers to any holder
by name or otherwise as the holder of any securities of the Company and if, in
its sole and exclusive judgment, such holder is or might be deemed to be a
controlling person of the Company, such holder shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory to
such holder and presented to the Company in writing, to the effect that the
holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force, the
deletion of the reference to such holder; provided, that with respect to this
clause (ii) such holder shall furnish to the Company an opinion of counsel to
such effect, which opinion and counsel shall be reasonably satisfactory to the
Company.
- 10 -
<PAGE> 11
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company will be borne by the Company.
(b) In connection with each Demand Registration, each Piggyback
Registration and each 415 Registration, the Company will reimburse the holders
of Registrable Securities covered by such registration for the reasonable fees
and disbursements of one counsel chosen by the holders of a majority of the
Registrable Securities initially requesting such registration.
7. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors, and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such holder, director, officer or
controlling person for any legal or other expenses reasonably incurred by such
holder, director, officer or controlling person in connection with the
investigation or defense of such loss, claim, damage, liability or expense,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will severally, and not joint
and severally, indemnify the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such
- 11 -
<PAGE> 12
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided, that the obligation to indemnify
will be individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution.
9. Rule 144 Reporting. With a view to making available to the
holders of Registrable Securities the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees to use its best efforts to:
(a) make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
- 12 -
<PAGE> 13
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act
(after it has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable Securities,
furnish to such Person forthwith upon request, a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time commencing 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as such Person may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
10. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient. Such notices, demands and other communications will
be sent to the address indicated below:
To the Company:
RV Products Holding Corp.
3050 North St. Francis Street
Wichita, KS 67215
Attention: President
Telecopy No.: (316) 832-3493
With a copy to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Thomas F. McWilliams
Telecopy No.: (212) 888-2940
- 13 -
<PAGE> 14
To CVC:
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Thomas F. McWilliams
Telecopy No.: (212) 888-2940
With a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To any of the Executives:
c/o RV Products Holding Corp.
3050 North St. Francis Street
Wichita, KS 67215
Attention: [Executive]
Telecopy No.: (316) 832-3493
To any of the Individual Investors:
c/o Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: [Individual Investor]
Telecopy No.: (212) 888-2940
With a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
- 14 -
<PAGE> 15
To CMP
Citicorp Mezzanine Partners, L.P.
399 Park Avenue
New York, New York 10043
Attention: Noelle Doumar
Telecopy No.: (212) 888-2940
With a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not enter into any
agreement which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
(b) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities (which majority must include a majority of the CVC Registrable
Securities); provided that any amendments which modify the rights of the holders
of Other Registerable Securities cannot be effected without the consent of the
holders of a majority of the Other Registerable Securities..
(d) Waiver of Jury Trial. The parties to this Agreement each hereby
waives, to the fullest extent permitted by law, any right to trial by jury of
any claim, demand, action, or cause of action (i) arising under this Agreement
or (ii) in any way connected with or related or incidental
- 15 -
<PAGE> 16
to the dealings of the parties hereto in respect of this Agreement or any of the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity, or otherwise. The parties to
this Agreement each hereby agrees and consents that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury and
that the parties to this Agreement may file an original counterpart of a copy of
this Agreement with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(f) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(h) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(i) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
* * * * *
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
RV PRODUCTS HOLDING CORP.
By:
----------------------------------
Its:
CITICORP VENTURE CAPITAL, LTD.
By:
----------------------------------
Its:
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:
----------------------------------
Its:
<PAGE> 18
SCHEDULE A
EXECUTIVE SIGNATURE PAGE
FOR
REGISTRATION RIGHTS AGREEMENT
@@
MELVIN ADAMS PHIL ROBINSON
- ------------------------ ------------------------
PIERRE BRIGLIO GREGORY SCAFE
- ------------------------ ------------------------
RON EYRES RICHARD SCHREK
- ------------------------ ------------------------
GREGORY GUINN LONNIE SNOOK
- ------------------------ ------------------------
KENNETH HOLT LINDA STUART
- ------------------------ ------------------------
DEBRA JONES DON WARD
- ------------------------ ------------------------
JOHN JONES JAMES WOODRUFF
- ------------------------ ------------------------
WARREN LEINEN DONALD YELEY
- ------------------------ ------------------------
SCOTT LEISTER STEVEN GOKIE
- ------------------------ ------------------------
SHERYLL McCLENNY KIM EMMERT
- ------------------------ ------------------------
<PAGE> 19
PHILIP PECHIN DENNY KING
- ------------------------ ------------------------
STEPHEN CASEY
- ------------------------
PETER ROSATI
- ------------------------
@@
<PAGE> 20
SCHEDULE B
INDIVIDUAL PURCHASERS
SIGNATURE PAGE FOR
REGISTRATION RIGHTS AGREEMENT
- -----------------------------------
NATASHA PARTNERSHIP
- -----------------------------------
RICHARD M. CASHIN
- -----------------------------------
DAVID F. THOMAS
- -----------------------------------
ALCHEMY, L.P.
- -----------------------------------
THOMAS F. MCWILLIAMS
- -----------------------------------
JAMES A. URRY
<PAGE> 1
EXHIBIT 10.7
JOINDER TO REGISTRATION RIGHTS AGREEMENT
This Joinder is dated as of November 10, 1997 by and among Airxcel
Holdings, Inc. (formerly RV Products Holding Corp.), a Delaware corporation (the
"Company"), Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), the
several existing stockholders of the Company signing below (the "Existing
Stockholders") and George D. Wyers, David L. Shuford, T.K. Sellers and Paul
Mechler (together, the "New Executives").
The Company, CVC and the persons set forth on Schedule A are parties
to a Registration Rights Agreement dated August 22, 1996 (the "Registration
Rights Agreement"). The New Executives have on the date hereof acquired shares
in the common stock of the Company and in connection with that acquisition have
been offered certain rights set forth in the Registration Rights Agreement. The
parties hereto are executing this Joinder to record the New Executives formally
becoming party to the Registration Rights Agreement.
Each of the New Executives and the other parties hereto hereby agree
that upon execution of this Joinder, each of the New Executives shall become a
party to the Registration Rights Agreement and shall be fully bound by, and
subject to, all of the covenants, terms and conditions of the Registration
Rights Agreement as though an original party thereto and shall be deemed an
Executive for all purposes thereof. However, the New Executives shall not be
responsible for any breaches or defaults that may have occurred with respect to
the Registration Rights Agreement prior to the execution of this Joinder. In
addition, each of the New Executives and the other parties hereto hereby agree
that all of the shares of stock of the Company now or hereafter held by any of
the New Executives shall be deemed Other Registerable Securities for all
purposes of the Registration Rights Agreement.
The current parties to the Registration Rights Agreement represent
and warrant to the New Executives that to the best of their knowledge the
Registration Rights Agreement submitted to the New Executives with this Joinder
is a true and correct copy thereof, that it is in full force and effect, that it
has not been modified or amended, and that no party is in default thereunder.
In accordance with Section 11(c) of the Registration Rights
Agreement CVC and the Existing Stockholders, being the holders of a majority of
the Registrable Securities and the CVC Securities (as those terms are defined in
the Registration Rights Agreement), are entitled to execute this Joinder on
behalf of all stockholders party to the Registration Rights Agreement.
This Joinder shall be governed by and construed in accordance with
the domestic laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
* * * * *
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as
of the date first above written.
EXISTING STOCKHOLDERS
MELVIN ADAMS AIRXCEL HOLDINGS, INC.
By:
- ------------------------------------- -----------------------------------
Its:
RICHARD SCHRECK GEORGE D. WYERS
- ------------------------------------- ----------------------------------------
CITICORP VENTURE CAPITAL, LTD. DAVID L. SHUFORD
By:
--------------------------------- ----------------------------------------
Its:
T.K. SELLERS
----------------------------------------
PAUL MECHLER
----------------------------------------
<PAGE> 3
SCHEDULE A
MELVIN ADAMS
ALCHEMY, L.P.
PIERRE BRIGLIO
CCT PARTNERS III, L.P.
CITICORP MEZZANINE PARTNERS, L.P.
STEPHEN CASEY
RICHARD M. CASHIN
KIM EMMERT
RON EYRES
STEVEN GOKIE
GREGORY GUINN
KENNETH HOLT
JOHN JONES
DEBRA JONES
DENNY KING
WARREN LEINEN
SCOTT LEISTER
SHERYLL McCLENNY
THOMAS F. McWILLIAMS
NATASHA PARTNERSHIP
PHILIP PECHIN
PHIL ROBINSON
PETER ROSATI
GREGORY SCAFE
RICHARD SCHRECK
LONNIE SNOOK
LINDA STUART
DAVID F. THOMAS
JAMES A. URRY
DON WARD
JAMES WOODRUFF
DONALD YELEY
<PAGE> 1
EXHIBIT 10.8
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of August 22, 1996 by and among RV
Products Holding Corp., a Delaware corporation (the "Company"), Citicorp Venture
Capital, Ltd., a New York corporation ("CVC"), Citicorp Mezzanine Partners, L.P.
("CMP"), CCT III Partners, L.P., a Delaware limited partnership, upon signing a
counterpart hereof after the date hereof ("CCT"), each of the executives of the
Company or its subsidiaries as set forth on the attached Schedule A (each an
"Executive," and together the "Executives"), and such of the Persons set forth
on Schedule B, who have signed counterparts hereof after the date hereof (each
an "Individual Investor," and together the "Individual Investors"). CVC, CMP,
CCT, the Executives, the Individual Investors and their respective Permitted
Transferees are each referred to herein as a "Stockholder" and together the
"Stockholders".
The Executives hold Class A Common Stock, par value $.01 per share
(the "Class A Common"), and have acquired certain other securities of the
Company pursuant to the Agreement and Plan of Merger, dated August 5, 1996 (the
"Merger Agreement"), by and among the Company, RVP Acquisition Corp. and the
stockholders of the Company.
CVC has acquired, by virtue of the merger consummated pursuant to
the Merger Agreement, Class A Common, shares of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common"), and certain other
securities of the Company.
CVC intends to sell some of its shares after the date hereof to CCT
and the Individual Investors, at which time CCT and the Individual Investors, as
a condition to such sales, will execute a counterpart of this Agreement and
become parties hereto.
CMP has received stock purchase warrants to purchase Common Stock
pursuant to the Warrant Agreement, dated the date hereof (the "CMP Warrants").
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the Board
of Directors of the Company (the "Board") and the Board of Directors of each of
its Subsidiaries, (ii) assuring the continuity in the management and ownership
of the Company and (iii) limiting the manner and terms by which the Stockholder
Shares may be transferred.
The Executives, in consideration of the issuance of Class A Common
and preferred stock to each of them pursuant to the terms of the Merger
Agreement, have agreed to undertake certain obligations vis-a-vis
confidentiality and non-competition with the Company as more fully set out
below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
<PAGE> 2
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Approved Sale" means a sale of the Company to an Independent Third
Party (whether by merger, consolidation, sale of all or substantially all of its
consolidated assets (including, without limitation, the capital stock of its
Subsidiaries) or sale of all of the Common Stock of the Company (whether in a
private or public transaction and including by way of recapitalization or
reorganization)) approved by the Board and the holders of a majority of the
shares of Common Stock then outstanding to the extent applicable, pursuant to
which all holders of Common Stock receive with respect thereto (whether in such
transaction or, with respect to an asset sale, upon a subsequent liquidation)
the same form and amount of consideration per share of Common Stock or, if any
holders are given an option as to the form and amount of consideration to be
received, all holders are given the same option.
"Board" means the Company's board of directors.
"Cause" means (i) a material breach of this Agreement by Executive,
(ii) a breach of Executive's duty of loyalty to the Company or any of its
Subsidiaries or any act of dishonesty or fraud with respect to the Company or
any of its Subsidiaries or any of their customers or suppliers, (iii) the
commission by Executive of a felony, a crime involving moral turpitude or other
act or omission causing material harm to the standing and reputation of the
Company and its Subsidiaries, or (iv) Executive's failure to perform his duties
to the Company and its Subsidiaries or as reasonably directed by the Board,
which, in the case of a failure which is the first failure of its kind and which
is capable of being cured, has been notified to the Executive by the Board in
writing and has not been cured within 10 days of the date of notification.
"Common Stock" means, collectively, the Class A Common and the Class
B Common.
"Common Stock Deemed Outstanding" means the number of shares of
Common Stock, determined on a fully diluted basis giving effect to all
outstanding securities convertible into or exchangeable for Common Stock
(collectively, "Common Stock Equivalents") or any options, warrants (including,
without limitation, the Management Option Plan and the CMP Warrants) or other
rights to acquire Common Stock or Common Stock Equivalents.
"CVC Stock" means (i) the shares of Class A Common and Class B
Common held by CVC on the date hereof, (ii) any Class A Common into which any
such Class B Common is converted, (iii) capital stock of Company acquired after
the date hereof by CVC, and (iv) any shares of capital stock of the Company
issued or issuable with respect to stock referred to in (i), (ii), and
-2-
<PAGE> 3
(iii) whether by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
"Executive Representative" means as at the date hereof and for so
long as he holds that position, the Chief Executive Officer of the Company, and
thereafter such Executive as the holders of a majority of the Stockholder Shares
held by the Executives may elect.
"Fair Market Value" of the Securities being purchased means the
price, as determined by the Board in good faith, at which an informed and
willing seller would sell such Securities (valued on an aggregated basis) to an
informed and willing buyer, neither being under any compulsion to buy nor to
sell, taking into consideration the number and liquidity of the Securities being
sold, the privately held nature of the Company and any other factors which the
Board in its sole discretion deems relevant.
"Family Group" means, with respect to any natural person, such
person's spouse, siblings and descendants (whether natural or adopted) and any
trust or other entity solely for the benefit of such person and/or such person's
spouse, their respective ancestors and/or descendants.
"Independent Third Party" means any Person who, prior to the
contemplated transaction, does not own in excess of 5% of the Common Stock
Deemed Outstanding, who is not controlling, controlled by or under common
control with any such 5% owner of the Common Stock Deemed Outstanding and who is
not a member of the Family Group of any such 5% owner of the Common Stock Deemed
Outstanding.
"Management Option Plan" means a plan approved by the Board pursuant
to which the management of the Company may be issued up to 75,032 shares of the
Common Stock of the Company.
"Permitted Issuance" means (i) any issuance of Common Stock upon the
conversion of any other class of Common Stock in accordance with the Company's
certificate of incorporation, (ii) any issuance of Common Stock pursuant to the
exercise of any of the Warrants, (iii) any issuance of Common Stock pursuant to
the Management Option Plan, or (iv) any issuance of Common Stock with respect to
the Common Stock issued pursuant to clauses (i), (ii) and (iii) above, by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
effected through a broker, dealer or market maker pursuant to the provisions of
Rule 144 or Rule 144A (if such rule is available) under the Securities Act (or
any similar rule or rules then in effect).
-3-
<PAGE> 4
"Qualified Public Offering" means the sale, in an underwritten
public offering registered under the Securities Act, of shares of the Company's
Common Stock or other voting securities having an aggregate value of at least
$20 million.
"Regulatory Problem" means, with respect to any holder of the
Company's securities, any set of facts or circumstances wherein it has been
asserted by any governmental regulatory agency (or the holder of the Company's
securities reasonably believes that there is a substantial risk of such
assertion) that such holder is not entitled to hold, or exercise any significant
right with respect to such securities.
"Securities" means all common stock, preferred stock, other equity
securities and debt securities and interests therein issued by the Company or
any of its Subsidiaries and held by an Executive or any permitted transferee of
the Executive.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Stockholder Shares" means (i) any Common Stock issued to or
acquired by the Stockholders, (ii) any Common Stock issued or issuable upon
exercise of the CMP Warrants or on the exercise of any option pursuant to the
Management Option Plan, and (iii) any equity securities issued or issuable
directly or indirectly with respect to the securities referred to in clauses (i)
and (ii) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares constituting Stockholder Shares,
such shares will cease to be Stockholder Shares when they have been sold in a
Public Sale. For purposes of this Agreement, a Person will be deemed to be a
holder of Stockholder Shares whenever such Person has the right to acquire
directly or indirectly such Stockholder Shares (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or a general partner of such partnership, association or other business
entity.
"Transfer" means any sale, transfer, assignment, pledge or other
disposal.
-4-
<PAGE> 5
"Voting Common Stock" means the Class A Common Stock and any other
Common Stock which in the ordinary course carries the right to vote at the
Company's annual stockholders meetings.
2. Board of Directors.
(a) Until the provisions of this Section 2 cease to be effective,
each Stockholder shall vote all voting securities of the Company over which such
Stockholder has voting control, and shall take all other necessary or desirable
actions within such Stockholder's control (whether in such Stockholder's
capacity as a stockholder, director, member of a board committee or officer of
the Company or otherwise, and including, without limitation, attendance at
meetings in Person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Company shall take all
necessary and desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that:
(i) the Board shall be comprised of three (3) or five (5)
directors;
(ii) the following persons will be elected to the Board:
1. The then duly elected and acting chief executive officer
of the Company shall be designated as a director.
2. The holders of the majority of the CVC Stock will
designate one (1) or two (2) directors (the "CVC
Directors").
3. The Stockholders holding a majority of the Voting Common
Stock, voting together as a single class, will designate
the same number of directors as designated by CVC.
(iii) at all times, the composition of the board of directors of each
of the Company's Subsidiaries (a "Sub Board") shall be the same as that of
the Board;
(iv) at all times, the Board and each Sub Board shall create a
Compensation Committee, which shall consist of no more than three members;
provided, that at least one such member shall be a CVC Director (who shall
also be Chairman) and no more than one such member shall be a member of
the Company's management or an affiliate or designee of management. The
Compensation Committee shall also administer the Management Option Plan
and shall have authority to allocate to new or existing management Common
Stock repurchased by the Company pursuant to the terms of this Agreement;
(v) any committees of the Board or a Sub Board (other than the
Compensation Committee) shall be created only upon the approval of a
majority of the votes cast by the members of the Board (and shall include
the approval of at least one CVC Director).
(vi) any director shall be removed from the Board, a Sub Board or
any committee thereof (with or without cause) at the written request of
the Stockholder or Stockholders
-5-
<PAGE> 6
which have the right to designate such a director hereunder, but only upon
such written request and under no other circumstances (in each case,
determined on the basis of a vote or consent of the relevant
Stockholder(s)); provided, that the holders of a majority of the
Stockholder Shares may remove any director for cause but a replacement
director may only be designated by the Stockholders which have the right
to designate such director hereunder.
(vii) in the event that any representative designated hereunder for
any reason ceases to serve as a member of the Board or a Sub Board or any
committee thereof during such representative's term of office, the
resulting vacancy on the Board or such Sub Board or committee shall be
filled by a representative designated by the Stockholders which have the
right to designate the director who ceases to serve; and
(viii) so long as CMP holds any Stockholder Shares, the Company shall
give CMP written notice of each meeting of the Board (and any committees
thereof) and each meeting of each Sub Board (and any committees thereof),
at the same time and in the same manner as notice is given to the
directors of the Board or the Sub Board, as the case may be, and the
Company shall permit a representative of CMP to attend, as an observer,
all such meetings unless attendance at such meeting, in the Company's
reasonable judgment, would create a conflict of interest for CMP;
provided, that in the case of telephonic meetings, CMP need receive only
actual notice thereof at the same time and in the same manner as notice is
given to the directors of the Board or the Sub Board, as the case may be,
and CMP's representative shall be given the opportunity to listen to such
telephonic meetings. Each representative shall be entitled to receive all
written materials and other information (including, without limitation,
copies of meeting minutes) given to directors of the Board and each Sub
Board in connection with such meetings at the same time such materials and
information are given to such directors unless in the Company's reasonable
judgment receipt of such materials would create a conflict of interest by
CMP. The Company shall give written notice of any action by written
consent in lieu of a meeting of directors of the Company or any of its
Subsidiaries to CMP prior to the effective date of such consent describing
in reasonable detail the nature and substance of such action.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the Board
or any Sub Board and any committee thereof. Prior to the consummation of a
Qualified Public Offering, the Company shall not pay any compensation to
directors who are not employees of the Company or any of its Subsidiaries.
(c) The provisions of this Section 2 shall terminate automatically
and be of no further force and effect upon the occurrence of a Qualified Public
Offering.
(d) In the event that any provision of the Company's bylaws or
certificate of incorporation is inconsistent with any provision of this Section
2, the Stockholders shall take such action as may be necessary to amend any such
provision in the Company's bylaws or certificate of incorporation to remedy such
inconsistency.
-6-
<PAGE> 7
3. Conflicting Agreements. Each Stockholder represents that such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
4. Restrictions on Transfer by Stockholders/Other Rights.
(a) Tag Along Rights. Subject to Sections 4(c) and 4(e), at least 15
days prior to any Transfer of more than 1% of the total number of Stockholder
Shares, the Stockholder making such Transfer (the "Transferring Stockholder"),
shall deliver a written notice (the "Sale Notice") to the Company and the other
Stockholders ("Other Stockholders"), specifying in reasonable detail the
identity of the prospective transferee(s) and the terms and conditions of the
Transfer; provided that this Section 4(a) shall not apply to any Transfer made
with respect to the Sale of the Company pursuant to Section 5. The Other
Stockholders may elect to participate in the contemplated Transfer by delivering
written notice to the Transferring Stockholder within 10 days after delivery of
the Sale Notice. If any Other Stockholders have elected to participate in such
Transfer, each of the Transferring Stockholder and such Other Stockholders shall
be entitled to sell in the contemplated Transfer, at the same price and on the
same terms, a number of Stockholder Shares of any class equal to the product of
(i) the quotient determined by dividing (A) the percentage of Stockholder Shares
of such class or series owned by such Stockholder by (B) the aggregate
percentage of Stockholder Shares of such class or series owned by the
Transferring Stockholder and the Other Stockholders participating in such
Transfer, and (ii) the aggregate number of Stockholder Shares of such class or
series to be sold in the contemplated Transfer.
(b) First Offer Rights. Subject to Sections 4(c) and 4(e), at least
60 days prior to any Transfer of Stockholder Shares by any Stockholder or any of
their Permitted Transferees, the Person making such Transfer (the "Offering
Stockholder") shall deliver a written notice (the "Transfer Notice") to the
Company (unless the Offering Stockholder is CVC, in which case the Transfer
Notice shall be delivered to the Company Secretary on behalf of the Executives)
specifying in reasonable detail the number of shares proposed to be transferred,
the proposed purchase price (which shall be payable solely in cash) and the
other terms and conditions of the Transfer; provided that this Section 4(b)
shall not apply to any Transfer made with respect to the Sale of the Company
pursuant to Section 5. In the case of a Transfer by a Person other than CVC, the
Company may elect to purchase all (but not less than all) of the Stockholder
Shares to be transferred, upon the same terms and conditions as those set forth
in the Transfer Notice, by delivering a written notice of such election to the
Offering Stockholder within 30 days after the Transfer Notice has been delivered
to the Company. If the Offering Stockholder is CVC, each of the Executives (or
such of the Executives as the Management Representative determines may
participate) may elect to purchase upon the same terms and conditions as those
set forth in the Transfer Notice, by giving written notice of such election to
CVC within 30 days after the Transfer Notice has been given to the Company
Secretary, a number of the Stockholder Shares to be transferred equal to such
number as the Management Representative determines or in the absence of any such
determination the product of (i) the quotient determined by dividing (A) the
number of Stockholder Shares owned by such Executive by (B) the aggregate number
of Stockholder Shares owned by the other Executives participating in the
purchase, and (ii) the aggregate number of Stockholder Shares to be sold in the
contemplated
-7-
<PAGE> 8
Transfer. If, neither the Company nor the Executives, as the case may be, has
elected to purchase all of the Stockholder Shares to be transferred in
accordance with the preceding sentences, each of the Stockholders to whom such
shares have not previously been offered may elect to purchase upon the same
terms and conditions as those set forth in the Transfer Notice, by giving
written notice of such election to the Offering Stockholder within 30 days after
the Transfer Notice has been given to the Company (the "Option Period"), a
number of the Stockholder Shares to be transferred equal to the product of (i)
the quotient determined by dividing (A) the number of Stockholder Shares owned
by such Stockholder by (B) the aggregate number of Stockholder Shares owned by
the other Stockholders electing to purchase, and (ii) the aggregate number of
Stockholder Shares to be sold in the contemplated Transfer. If no Stockholder
elects to purchase Stockholder Shares specified in the Transfer Notice and if
the terms and conditions of Section 4(a) above have been met, then the Offering
Stockholder may transfer the Stockholder Shares specified in the Transfer Notice
at a price and on terms no more favorable to the transferee(s) thereof than
specified in the Transfer Notice during the 60-day period immediately following
the expiration of the Option Period. Any Stockholder Shares not transferred
within such 60-day period will be subject to the provisions of this Section 4(b)
upon subsequent transfer.
(c) Permitted Transfers. The restrictions contained in this Section
4 shall not apply with respect to any Transfer of Stockholder Shares by any
Stockholder (i) in the case of an individual Stockholder, pursuant to applicable
laws of descent and distribution or to any member of such Stockholder's Family
Group, and (ii) in the case of CVC and its Permitted Transferees, (A) to CCT or
any Individual Investor, (B) among their Affiliates, employees and consultants,
(C) to any employee, prospective employee, director or prospective director of
the Company or any Affiliate of the Company, (D) to any former or prospective
employee, director or prospective director of CVC or any Affiliate of CVC, (E)
to any Person in order to resolve a Regulatory Problem or (F) in the case of
CMP, as a distribution in kind to its general partner or its limited partners
pro rata in accordance with their respective partnership interests; provided,
that the restrictions contained in this Section 4 shall continue to be
applicable to such Stockholder Shares after any such Transfer; provided further,
that the transferees of such Stockholder Shares shall have agreed in writing to
be bound by the provisions of this Agreement which affect the Stockholder Shares
so transferred by executing a joinder in substantially the form attached hereto
as Exhibit A. All transferees permitted under this Section 4(c) are collectively
referred to herein as "Permitted Transferees."
(d) Repurchase Option. Each of the Executives hereby grants to the
Company or its nominee or assignee (the "Purchasing Entity") an option to
repurchase all or some of his or her Securities (but with respect to a purchase
of less than all Securities the Company shall repurchase Securities pursuant
hereto in the same ratios as such Securities are held the Executive) at Fair
Market Value pursuant to the terms and conditions set forth in this Section
4(d), such option to be exercisable in the event that the Executive's Employment
is terminated by resignation (other than retirement at age 65, or 62 in the case
of Lonnie Snook), death, disability or by the Company for Cause (the "Repurchase
Option"). The Company may make its election to repurchase by delivering a
written notice (the "Repurchase Notice") to the Executive within 15 days of the
date at which the termination, resignation, or retirement becomes effective. The
Repurchase Notice must set forth a date and time during normal business hours of
not more than 30 days from the delivery date on which closing of the Repurchase
Option will occur. The closing of the purchase of Executive's Securities
pursuant to the Repurchase Option shall take place on the date designated by the
-8-
<PAGE> 9
Purchasing Entity in the Repurchase Notice, which must be no earlier than the
date of such Repurchase Notice. The Purchasing Entity will pay for Executive's
Securities to be purchased pursuant to the Repurchase Option by delivery of a
check in the aggregate amount of the purchase price therefor. The Purchasing
Entity will be entitled to receive customary representations and warranties from
Executive regarding authority to sell his or her Securities and free and
unencumbered title thereto. Executives shall not transfer or attempt to transfer
any Securities while the Repurchase Option remains unexercised. Any transfer or
attempted transfer in violation of this provision shall be null and void, and
the Company shall not record such transfer on its books or treat any purported
transferee of such Securities as the owner of such Securities for any purpose.
The Company may assign any of it rights under this Section 4(d). If the Company
(or its assignee) elects not to exercise its rights under this Section 4(d) such
rights shall be exercisable by CVC or its nominee.
(e) Termination of Restrictions. The restrictions set forth in this
Section 4 shall continue with respect to each Stockholder Share until the
earlier of (i) the Transfer of such Stockholder Share in a Public Sale or an
Approved Sale, or (ii) the consummation of a Qualified Public Offering.
(f) Company Buy-back. In the event the Executive retires having
reached an age of 65 (or 62 in the case of Lonnie Snook) or is terminated
without Cause (as determined by the Board in its sole discretion), the Executive
may request the Company to repurchase at Fair Market Value all, but not less
than all, of his or her Securities. The Company will use its commercially
reasonable efforts to repurchase the Securities, but will not do so if the
repurchase would result in the violation of or cause a default under any credit
agreement or if the Board determines in good faith that it would not be in the
best interests of the Company to repurchase the Securities or that the
repurchase would impose a materially adverse economic burden on the Company or
any Stockholder. If the repurchase would result in the violation of or cause a
default under any credit agreement, the Company agrees to use commercially
reasonable efforts to obtain appropriate waivers of such violations or defaults
to permit the Company to repurchase such Securities.
5. Sale of the Company.
(a) In the event of an Approved Sale, each Stockholder will (i)
consent to and raise no objections against the Approved Sale or the process
pursuant to which the Approved Sale was arranged, (ii) waive any dissenter's
rights and other similar rights, and (iii) if the Approved Sale is structured as
a sale of stock, each Stockholder will agree to sell its Stockholder Shares on
the terms and conditions of the Approved Sale. Each Stockholder will take all
necessary and desirable actions as directed by the Board and the holders of a
majority of the Company's Common Stock in connection with the consummation of
any Approved Sale, including without limitation executing the applicable
purchase agreement and granting identical indemnification rights. Each
Stockholder required to make indemnification payments in connection with any
Approved Sale shall have a right to recover from the Other Stockholders to the
extent that the amount required to be paid by such Stockholder was
disproportionate to the proportion of the total consideration received by all
Stockholders, compared to the consideration actually received by such
Stockholder.
-9-
<PAGE> 10
(b) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) under the Securities Act may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Other Stockholders will, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to the Company. If any Other Stockholder appoints a
purchaser representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if any Other Stockholder declines to
appoint the purchaser representative designated by the Company such holder will
appoint another purchaser representative (reasonably acceptable to the Company),
and such holder will be responsible for the fees of the purchaser representative
so appointed.
(c) All Stockholders will bear their pro rata share (based upon the
number of shares sold) of the reasonable costs of any sale of Stockholder Shares
pursuant to an Approved Sale to the extent such costs are incurred for the
benefit of all selling Stockholders and are not otherwise paid by the Company or
the acquiring party. Costs incurred by any Stockholder on its own behalf will
not be considered costs of the transaction hereunder.
(d) This Section 5 shall automatically terminate upon a Qualified
Public Offering.
6. Legend. In addition to any legend required by any other document,
each certificate evidencing Stockholder Shares and each certificate issued in
exchange for or upon the transfer of any Stockholder Shares (if such shares
remain Stockholder Shares as defined herein after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS CONTAINED IN A STOCKHOLDERS' AGREEMENT DATED AS OF
AUGUST 22, 1996 BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND THE COMPANY'S STOCKHOLDERS AS SUCH AGREEMENT MAY BE
AMENDED FROM TIME TO TIME. A COPY OF SUCH STOCKHOLDERS' AGREEMENT
WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares.
7. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
-10-
<PAGE> 11
8. Transfer of Stockholder Shares.
(a) Stockholder Shares are transferable only (i) in a Public Sale
and (ii) subject to Section 8(b) below, by any other legally available means of
Transfer; provided that any Transfer must also comply with the terms of Section
4.
(b) In connection with the Transfer of any Stockholder Shares other
than a Transfer described in clause (i) of Section 8(a) above or any Transfer
between CVC, any Individual Investor or any of their respective Affiliates, the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer, together with an opinion of
counsel reasonably acceptable to the Company to the effect that such Transfer of
Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Stockholder Shares which do not bear the legend set forth
in Section 6 above. If the Company is not required to deliver new certificates
for such Stockholder Shares not bearing such legend, the holder thereof shall
not Transfer the same until the prospective transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained herein,
as provided in section 4(c) above.
(c) Upon the request of a holder of Stockholder Shares, the Company
shall promptly supply to such Person or its prospective transferees all
information regarding the Company required to be delivered in connection with a
Transfer pursuant to Rule 144A (or any similar rule or rules then in effect) of
the Securities and Exchange Commission.
(d) Upon the request of any holder of Stockholder Shares, the
Company shall remove the legend set forth in Section 6 above from the
certificates for such holder's Stockholder Shares; provided, that such
Stockholder Shares are eligible for sale pursuant to Rule 144 (or any similar
rule or rules then in effect) of the Securities and Exchange Commission.
9. Confidential Information. References in this Section 9 and in
Sections 10 and 11 below to the Company and its Subsidiaries include any of
their respective predecessors. The Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company, or any
Subsidiary ("Confidential Information") are the property of the Company or such
Subsidiary. Therefore, the Executive agrees not to disclose to any unauthorized
person or use for the Executive's own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of the Executive's acts or omissions. The
Executive shall deliver to the Company at the termination of the Executive's
Employment, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which the Executive may then possess or have under his or her
control.
-11-
<PAGE> 12
10. Inventions and Patents. The Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its Subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by the Executive while
employed by the Company and its Subsidiaries ("Work Product") belong to the
Company or such Subsidiary. The Executive shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
11. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to the
Executive hereunder, the Executive acknowledges that in the course of his
employment with the Company he or she has become familiar and shall become
familiar with the Company's trade secrets and with other Confidential
Information concerning the Company and its Subsidiaries and that his or her
services have been and shall be of special, unique and extraordinary value to
the Company and its Subsidiaries. Therefore, the Executive agrees that, during
the Executive's Employment and for a period thereafter equivalent to the maximum
period for which the Executive would, if the Executive's employment were
terminated for Cause, be entitled to severance (the "Noncompete Period"), he
shall not directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries,
as such businesses exist or are in process on the date of the termination of the
Executive's employment, within any geographical area in which the Company or its
Subsidiaries engage or plan to engage in such businesses. Nothing herein shall
prohibit the Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as the Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, the Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of the Company or any Subsidiary to leave the employ of the Company or
such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any Subsidiary at any time during the 12 month
period immediately prior to the Executive's termination of employment or (iii)
induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company or any Subsidiary to cease
doing business with the Company or such Subsidiary, or in any way interfere with
the relationship between any such customer, supplier, licensee or business
relation and the Company or any Subsidiary (including, without limitation,
making any negative statements or communications about the Company or its
Subsidiaries).
12. Enforcement. If, at the time of enforcement of Sections 9, 10 or
11 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area. Because
the
-12-
<PAGE> 13
Executive's services are unique and because Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
not be an adequate remedy for any breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other
security). In addition, in the event of a breach or violation by the Executive
of Section 11, the Noncompete Period shall be tolled until such breach or
violation has been duly cured. The Executive agrees that the restrictions
contained in Section 11 are reasonable.
13. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of a
majority of the Stockholder Shares, provided that, no modification, amendment or
waiver which adversely or prejudicially affects any one Stockholder (the
"Affected Stockholder") vis-a-vis the other Stockholders or the Company shall be
effective without the approval in writing of the Affected Stockholder; no
amendment to Sections 2, 4 or 5 which adversely affects the rights of the
Executives shall be effective without the consent of Executives holding a
majority of the Stockholder Shares held by the Executives; and no amendment to
Sections 4(d), 9, 10, or 11 shall be effected without the consent of the
Executive affected thereby. For avoidance of doubt, adding additional Parties to
this Agreement shall not be, in and of itself, an amendment which adversely or
prejudicially affects any one Stockholder. The failure of any party to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
15. Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
16. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
-13-
<PAGE> 14
17. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
18. Remedies. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any Stockholder may in its sole discretion apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
19. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally, 3
days after mailing by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address indicated below:
To the Company:
RV Products Holding Corp.
3050 North St. Francis Street
Wichita, KS 67215
Attn: Melvin L. Adams
Facsimile No.: (316)832-3493
With a copy to CVC.
To CVC:
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Thomas F. McWilliams
Facsimile No.: (212) 888-2940
-14-
<PAGE> 15
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To CMP
Citicorp Mezzanine Partners, L.P.
399 Park Avenue
New York, New York 10043
Attention: Noelle Doumar
Telecopy No.: (212) 888-2940
To the Executives:
c/o RV Products Holding Corp.
3050 North St. Francis Street
Wichita, KS 67215
Attention: [Executive]
Telecopy No.: (316)832-3493
With copies to:
To Individual Investors:
c/o Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Thomas F. McWilliams
Facsimile No.: (212) 888-2940
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
20. Governing Law. The corporate law of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other provisions of this Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to principles of conflicts of laws or choice of law of the State
of New York or any other jurisdiction which would result in the application of
the law of any jurisdiction other than the State of New York.
-15-
<PAGE> 16
21. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
-16-
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first above written.
RV PRODUCTS HOLDING CORP.
By:
---------------------------------
Its:
CITICORP VENTURE CAPITAL, LTD.
By:
---------------------------------
Its:
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:
---------------------------------
Its:
<PAGE> 18
SCHEDULE A
EXECUTIVE SIGNATURE PAGE
FOR
STOCKHOLDERS AGREEMENT
MELVIN ADAMS SCOTT LEISTER
- ------------------------- -------------------------
PIERRE BRIGLIO SHERYLL McCLENNY
- ------------------------- -------------------------
CASEY PECHIN
- ------------------------- -------------------------
KIM EMMERT PHIL ROBINSON
- ------------------------- -------------------------
RON EYRES ROSATI
- ------------------------- -------------------------
STEVEN GOKIE GREGORY SCAFE
- ------------------------- -------------------------
GREGORY GUINN RICHARD SCHREK
- ------------------------- -------------------------
KENNETH HOLT LONNIE SNOOK
- ------------------------- -------------------------
DEBRA JONES DON WARD
- ------------------------- -------------------------
JOHN JONES JAMES WOODRUFF
- ------------------------- -------------------------
WARREN LEINEN DONALD YELEY
- ------------------------- -------------------------
<PAGE> 19
SCHEDULE B
INDIVIDUAL PURCHASERS
SIGNATURE PAGE FOR
STOCKHOLDERS AGREEMENT
- -----------------------------------
NATASHA PARTNERSHIP
- -----------------------------------
RICHARD M. CASHIN
- -----------------------------------
DAVID F. THOMAS
- -----------------------------------
ALCHEMY, L.P.
- -----------------------------------
THOMAS F. MCWILLIAMS
- -----------------------------------
JAMES A. URRY
<PAGE> 20
STOCKHOLDERS AGREEMENT
AMENDMENT NO. 1
This Agreement is dated as of November 10, 1997 and made by and
among Airxcel Holdings, Inc. (formerly RV Products Holding Corp.), a Delaware
corporation (the "Company"), Citicorp Venture Capital, Ltd., a New York
corporation ("CVC"), Citicorp Mezzanine Partners, L.P. ("CMP"), CCT Partners
III, L.P., a Delaware limited partnership, upon signing a counterpart hereof
after the date hereof ("CCT"), each of the executives of the Company or its
subsidiaries as set forth on the attached Schedule A (each an "Executive," and
together the "Executives"), and such of the Persons set forth on Schedule B, who
have signed counterparts hereof after the date hereof (each an "Individual
Investor," and together the "Individual Investors"). CVC, CMP, CCT, the
Executives, the Individual Investors and their respective Permitted Transferees
are each referred to herein as a "Stockholder" and together the "Stockholders".
The Stockholders, other than George D. Wyers, David L. Shuford, T.K.
Sellers and Paul Mechler (the "Crispaire Stockholders"), are parties to a
Stockholders Agreement dated August 22, 1996 (the "Stockholders Agreement").
The Company, its wholly-owned subsidiary Airxcel, Inc. (formerly
Recreation Vehicle Products, Inc.), Crispaire Corporation and the Crispaire
Stockholders are parties to an Asset Purchase Agreement dated as of October 17,
1997 (the "Agreement").
Pursuant to the Agreement, the Crispaire Stockholders have agreed to
subscribe for an aggregate of 41,800.585 shares of the Company's Class A Common
Stock, par value $.01 per share (the "New Shares").
It is a condition precedent to the effectiveness of the Agreement
that the Crispaire Stockholders become party to the Stockholders Agreement and
effect certain changes therein by entering into and executing this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
SECTION I. DEFINITIONS. Terms used but not defined herein have the
meaning given to those terms in the Agreement. In addition, in this Agreement
the term "Existing Stockholders" means the Stockholders other than the Crispaire
Stockholders.
SECTION II. JOINDER. Each of the Company, the Existing Stockholders
and the Crispaire Stockholders hereby agree that upon execution of this
Agreement, each of the Crispaire Stockholders shall become a party to the
Stockholders Agreement and shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Stockholders Agreement as though an
original party thereto and shall be deemed an Executive and a Stockholder for
all purposes thereof. In addition, each of the Existing Stockholders and the
Crispaire Stockholders hereby agrees that all
<PAGE> 21
New Shares held by such Crispaire Stockholder shall be deemed Stockholder Shares
for all purposes of the Stockholders Agreement. The Crispaire Shareholders shall
not be responsible for any breaches or defaults that may have occurred under the
Stockholders Agreement prior to the execution of this Amendment.
SECTION III. WAIVER. The Stockholders and the Company hereby
irrevocably waive for the benefit of the New Stockholders compliance with
Section 4 of the Stockholders Agreement with respect to the issuance of the New
Shares and agree that any subsequent transfer of the New Shares by George Wyers
to not more than 2 transferees and of not more than 5,000.00 New Shares in total
shall be considered a Permitted Transfer pursuant to Section 4(c) of the
Stockholders Agreement, subject to the provisos contained in Section 4(c).
SECTION IV. AMENDMENTS. As of the date hereof, and for all times
subsequent to the date hereof, the following provisions of the Stockholders
Agreement are hereby amended as follows:
4.1 By the addition to Section 1 of the following definitions:
"Crispaire Stockholders" means George D. Wyers, David L. Shuford,
T.K. Sellers and Paul Mechler.
"Crispaire Stockholder Stock" means (i) the shares of Class A Common
held by the Crispaire Stockholders on the date hereof, (ii) any
capital stock of Company acquired after the date hereof by the
Crispaire Stockholders, and (iii) any shares of capital stock of the
Company issued or issuable with respect to stock referred to in (i)
and (ii) whether by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
4.2 By the amendment in Section 1 thereof of the definition of
Management Option Plan to read as follows:
"Management Option Plan" means a plan approved by the Board pursuant
to which the management of the Company may be issued up to
77,678.205 shares of the Common Stock of the Company, as the same
may be amended from time to time.
4.3 By the deletion of the existing Sections 2(a)(ii) and (iii)
thereof and their replacement with the following:
"(i) the Board shall be comprised of six (6) directors;
<PAGE> 22
(ii) the following persons will be elected to the Board:
1. The then duly elected and acting chief executive officer
of the Company shall be designated as a director.
2. George D. Wyers, who shall hold office for so long as he
remains employed by the "Crispaire" division of Airxcel,
Inc.
3. The holders of the majority of the CVC Stock will
designate one (1) or two (2) directors (the "CVC
Directors").
4. The Stockholders holding a majority of the Voting Common
Stock, voting together as a single class, will designate
the remaining directors."
SECTION V. MISCELLANEOUS
The provisions contained in Section 13 to 21 of the Stockholders
Agreement shall be incorporated herein by reference with all necessary
amendments. Sections 9, 10 and 11 of the Stockholders Agreement shall not apply
with respect to the Crispaire Stockholders. The current parties to the
Stockholders Agreement represent and warrant to the Crispaire Stockholders that
to the best of their knowledge the Stockholders Agreement submitted to the
Crispaire Stockholders is a true and correct copy thereof, that it is in full
force and effect, that it has not been modified or amended, and that no party is
in default thereunder.
* * * * *
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
in accordance with Section 13 of the Stockholders Agreement as in the date first
above written.
AIRXCEL HOLDINGS, INC.
By:
-----------------------------------
Its:
CITICORP VENTURE CAPITAL, LTD.
By:
-----------------------------------
Its:
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:
-----------------------------------
Its:
CCT PARTNERS III, L.P.
By:
-----------------------------------
Its:
<PAGE> 24
SCHEDULE A
EXECUTIVE SIGNATURE PAGE
FOR
STOCKHOLDERS AGREEMENT
MELVIN ADAMS SCOTT LEISTER
- ------------------------- -------------------------
PIERRE BRIGLIO SHERYLL McCLENNY
- ------------------------- -------------------------
CASEY PECHIN
- ------------------------- -------------------------
KIM EMMERT PHIL ROBINSON
- ------------------------- -------------------------
RON EYRES ROSATI
- ------------------------- -------------------------
STEVEN GOKIE GREGORY SCAFE
- ------------------------- -------------------------
GREGORY GUINN RICHARD SCHRECK
- ------------------------- -------------------------
KENNETH HOLT T.K. SELLERS
- ------------------------- -------------------------
DEBRA JONES DAVID SHUFORD
- ------------------------- -------------------------
JOHN JONES LONNIE SNOOK
<PAGE> 25
WARREN LEINEN DON WARD
- ------------------------- -------------------------
PAUL MECHLER JAMES WOODRUFF
- ------------------------- -------------------------
GEORGE WYERS
-------------------------
<PAGE> 26
SCHEDULE B
INDIVIDUAL PURCHASERS
SIGNATURE PAGE FOR
STOCKHOLDERS AGREEMENT
- -----------------------------------
NATASHA PARTNERSHIP
- -----------------------------------
RICHARD M. CASHIN
- -----------------------------------
DAVID F. THOMAS
- -----------------------------------
ALCHEMY, L.P.
- -----------------------------------
THOMAS F. MCWILLIAMS
- -----------------------------------
JAMES A. URRY
<PAGE> 1
EXHIBIT 10.9
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OR STATE SECURITIES OR AN OPINION OF COUNSEL,
SATISFACTORY TO HOLDINGS, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT BY AND AMONG
HOLDINGS AND THE STOCKHOLDERS SPECIFIED THEREIN, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICE OF HOLDINGS. THE SALE, TRANSFER OR
OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH
AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF
COMPLIANCE THEREWITH.
STOCK PURCHASE WARRANT
Date of Issuance: August 22, 1996 Certificate No. W-1
For value received, RV PRODUCTS HOLDING CORP., a Delaware
corporation (the "Holdings"), hereby grants to CITICORP MEZZANINE PARTNERS,
L.P., a Delaware limited partnership, or its permitted transferees and assigns,
the right to purchase from Holdings a total of 65,882 Warrant Shares (as defined
herein) at a price per share of $.02 (the "Initial Exercise Price"). The
exercise price and number of Warrant Shares (and the amount and kind of other
securities) for which this Warrant is exercisable shall be subject to adjustment
as provided herein. Certain capitalized terms used herein are defined in Section
5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on August 22, 2006
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to Holdings (the "Exercise
Time"):
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
<PAGE> 2
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to Holdings in an amount
equal to the product of the Exercise Price (as such term is defined in
Section 2) multiplied by the number of Warrant Shares being purchased upon
such exercise (the "Aggregate Exercise Price"), (y) the surrender to
Holdings of securities of the Company or Holdings having a value equal to
the Aggregate Exercise Price of the Warrant Shares being purchased upon
such exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of shares of Common Stock shall
be the Fair Market Value thereof), or (z) the delivery of a notice to
Holdings that the Purchaser is exercising the Warrant by authorizing
Holdings to reduce the number of Warrant Shares subject to the Warrant by
the number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price.
(ii) Certificates for Warrant Shares purchased upon exercise
of this Warrant shall be delivered by Holdings to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 14 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
Holdings shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by Holdings in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that Holdings shall not be required to pay any tax or
-2-
<PAGE> 3
taxes which may be payable in respect of any Warrants or any Warrant Shares,
with respect to any transfer of the Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
(v) Holdings shall not close its books against the transfer of
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. Holdings shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect. In the event that Holdings fails to comply
with its obligations set forth in the foregoing sentence, the Purchaser may (but
shall not be obligated to) purchase Warrant Shares hereunder at par value, and
Holdings shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) Holdings shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a sale of Holdings (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) Holdings shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the applicable Exercise
Price, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. Holdings shall take all such actions as may be
necessary to ensure that all such Warrant Shares may be so issued without
violation by Holdings of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock or other
-3-
<PAGE> 4
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by Holdings upon each such
issuance). Holdings will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of Holdings, Holdings shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) Holdings shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, Holdings shall (a) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable Holdings to perform its
obligations under this Warrant and (b) not undertake any reverse stock split,
combination, reorganization or other reclassification of its capital stock which
would have the effect of making this Warrant exercisable for less than one share
of Common Stock.
(xi) No stockholder of Holdings has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Purchaser shall deliver to Holdings an Exercise Agreement in substantially the
form set forth in Exhibit I hereto, except that if the Warrant Shares are not to
be issued in the name of the Registered Holder, the Exercise Agreement shall
also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
-4-
<PAGE> 5
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (as so adjusted, the "Exercise Price"), and the number of Warrant
Shares obtainable upon exercise of this Warrant shall be subject to adjustment
from time to time, each as provided in this Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
of Common Stock. If and whenever, on or after the date hereof, Holdings issues
or sells, or in accordance with Section 2B is deemed to have issued or sold,
other than pursuant to a Permitted Issuance, as described in Section 2C, any
shares of Common Stock for a consideration per share less than the Fair Market
Value per share of the Common Stock determined as of the date of such issuance
or sale, then immediately upon such issuance or sale the Exercise Price shall be
reduced to equal the amount determined by multiplying the Exercise Price in
effect immediately prior to such issuance or sale by a fraction, the numerator
of which will be the sum of (1) the number of shares of Common Stock Deemed
Outstanding immediately prior to such issuance or sale multiplied by the Fair
Market Value per share of the Common Stock determined as of the date of such
issuance or sale, plus (2) the consideration, if any, received by Holdings upon
such issuance or sale, and the denominator of which will be the product derived
by multiplying such Fair Market Value per share of the Common Stock by the
number of shares of Common Stock Deemed Outstanding immediately after such
issuance or sale. Upon each such adjustment of the Exercise Price hereunder, the
number of Warrant Shares acquirable upon exercise of this Warrant shall be
adjusted to equal the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
(i) Issuance of Rights or Options. If Holdings in any manner
grants any rights or options (other than the Purchase Rights covered by Section
4 hereof, pursuant to the Option Plan, or a Permitted Issuance) to subscribe for
or to purchase Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (including, without limitation, convertible common
stock) (such rights or options being herein called "Options" and
-5-
<PAGE> 6
such convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the Fair Market Value per share of the
Common Stock then in effect, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to be outstanding and to have been
issued and sold by Holdings for such price per share. For purposes of this
paragraph, the "price per share for which Common Stock is issuable upon exercise
of such Options or upon conversion or exchange of such Convertible Securities"
is determined by dividing (A) the total amount, if any, received or receivable
by Holdings as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to Holdings upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to Holdings upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such Options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options. No further adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) Issuance of Convertible Securities. If Holdings in any
manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon such conversion or exchange is less than the
Fair Market Value per share of the Common Stock then in effect, then the maximum
number of shares of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have been issued
and sold by Holdings for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable upon such
conversion or exchange" is determined by dividing (A) the total amount received
or receivable by Holdings as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to Holdings upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the
-6-
<PAGE> 7
Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Exercise Price have been or are to be made pursuant to
other provisions of this Section 2B, no further adjustment of the Exercise Price
shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If either the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock shall change at any time, the Exercise Price in
effect at the time of such change shall be adjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
(v) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount of cash received by Holdings therefor. In case any
Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than the
net amount of cash received by Holdings shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by Holdings shall
be the market price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger or other business combination in which
-7-
<PAGE> 8
Holdings is the surviving entity, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or marketable securities shall be determined by Holdings in good
faith, unless such consideration is paid by an Affiliate of Holdings, in which
case fair value of such consideration shall be determined jointly by Holdings
and the Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by Holdings and the Required Holders, whose determination shall
be final and binding on Holdings and all Registered Holders of Warrants (as
defined in Section 8 below). The fees and expenses of such appraiser shall be
paid by Holdings.
(vi) Integrated Transactions. Other than in connection with
and to the extent of Permitted Issuances, in case any Option is issued in
connection with the issue or sale of other securities of Holdings, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Option shall be deemed to
have been issued for no consideration
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of Holdings or any subsidiary of Holdings and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If Holdings takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If Holdings at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Common Stock into a greater number of shares or pays a dividend
or makes a distribution to holders of the Common Stock in the form of shares of
Common
-8-
<PAGE> 9
Stock, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares obtainable upon
exercise of this Warrant shall be proportionately increased. If Holdings at any
time combines (by reverse stock split or otherwise) the Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of
Holdings' assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change". Prior to
the consummation of any Organic Change, Holdings shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place. In
any such case, Holdings shall make appropriate provision with respect to such
Registered Holder's rights and interests to insure that the provisions hereof
(including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than Holdings, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). Holdings shall not effect any such
Organic Change unless, prior to the consummation thereof, the successor entity
(if other than Holdings) resulting from such Organic Change (including a
purchaser of all or substantially all Holdings' assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
-9-
<PAGE> 10
2E. Management Issuances.
(i) Upon the vesting of Options issued pursuant to the Option
Plan (a "Management Issuance"), the number of Warrant Shares obtainable upon
exercise of this Warrant shall be increased by a number of shares of Common
Stock (either Class A Common or Class B Common) equal to the number determined
by a fraction,(i) the numerator of which is equal to the difference between (A)
the Vested Stock Deemed Outstanding immediately after such Management Issuance
multiplied by the Warrant Share Ratio immediately prior to the applicable
Management Issuance and (B) the number of Warrant Shares immediately prior to
the applicable adjustment under this Section 2E, and (ii) the denominator of
which is one minus the Warrant Share Ratio immediately prior to the applicable
Management Issuance.
(ii) If there is a Management Issuance after exercise of this
Warrant, in whole or in part, the Registered Holder shall be given the right to
purchase from Holdings, at the Exercise Price which would be in effect after
giving effect to such Management Issuance had this Warrant not been exercised, a
number of additional Warrant Shares equal to the difference between (a) the
number of Warrant Shares that would have been obtainable after giving effect to
such Management Issuance had this Warrant not been exercised and (b) the number
of Warrant Shares outstanding as of such Management Issuance. Holdings shall
give the Registered Holder written notice of such Management Issuance within 10
business days of such Management Issuance and the Registered Holder shall have
20 business days in which to notify Holdings of their desire to exercise their
rights pursuant to this Section 2E and such exercise shall be consummated within
5 days of such notice in accordance with the procedure set forth in Section 1.
2F. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then
Holdings' Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2G. Notices.
(i) Immediately upon any adjustment of the Exercise
Price, Holdings shall give written notice thereof to the Registered
-10-
<PAGE> 11
Holder, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) Holdings shall give written notice to the Registered
Holder at least 30 days prior to the date on which Holdings closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock, or (C) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(iii) Holdings shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If Holdings pays a
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then Holdings shall pay to the Registered
Holder of this Warrant, at the time of payment thereof, such dividend or
distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Other Rights.
4A. Purchase Rights. If at any time Holdings' grants, issues or
sells any options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of the Common Stock
(the "Purchase Rights"), then Holdings shall grant, issue or sell (as the case
may be) to the Registered Holder the aggregate Purchase Rights which such
Registered Holder would have acquired if such Registered Holder had held the
maximum number of Warrant Shares acquirable upon complete exercise of this
Warrant immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.
4B. Limited Preemptive Rights. Except for the issuance of shares of
Class A Common upon the conversion of shares of Class B Common, prior to any
issuance by Holdings to CVC of any shares of Common Stock or any securities
containing options or rights to acquire any shares of Common Stock or any
securities convertible or
-11-
<PAGE> 12
exchangeable for Common Stock in each case, after the date hereof ("Proposed
Issuance"), Holdings will offer to sell to each Registered Holder a number of
such securities ("Offered Shares") so that the Ownership Ratio immediately after
the issuance of such securities for each Registered Holder would be equal to the
Ownership Ratio for such Registered Holder immediately prior to such issuance of
securities to CVC. Holdings shall give each Registered Holder at least 30 days
prior written notice of any Proposed Issuance to CVC, which notice shall
disclose in reasonable detail the proposed terms and conditions of such issuance
(the "Issuance Notice"). Each Registered Holder will be entitled to purchase
such securities at the same price, on the same terms, and at the same time as
the securities are issued to CVC by delivery of written notice to Holdings of
such election within 15 days after delivery of the Issuance Notice (the
"Election Notice"); provided, that if more than one type of security was issued
to CVC, each Registered Holder shall, if it exercises its rights pursuant to
this Section 4B, purchase such securities in the same ratio as issued to CVC. If
any of the Registered Holders have elected to purchase any Offered Shares, the
sale of such shares shall be consummated as soon as practical (but in any event
within 10 days) after the delivery of the Election Notice. In the event that any
Registered Holder elects to purchase Offered Shares, at such Registered Holder's
request (which request shall be included in the Election Notice), Holdings shall
issue to such Registered Holder, in lieu of the securities constituting Offered
Shares, nonvoting securities which shall otherwise be identical in all respects
to such securities constituting Offered Shares, except that it (i) shall be
nonvoting, (ii) shall be convertible into a voting security (including the
securities constituting Offered Shares) on such terms as are requested by such
Registered Holder in light of the applicable regulatory considerations then
prevailing, and (iii) may not, at Registered Holder's request, be a common
equity security. In the event any Registered Holder elects not to exercise its
rights pursuant to this Section 4B, no other Registered Holder shall have the
right to purchase the securities offered to such Registered Holder. This Section
4B will terminate automatically, and be of no further force and effect, upon the
consummation of an underwritten public offering registered under the Securities
Act of the Common Stock.
SECTION 5. Definitions. The following terms have the meanings set
forth below:
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this
-12-
<PAGE> 13
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly, indirectly or beneficially, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Class A Common" means Holdings' Class A Common Stock, $.01 par
value per share, or any securities into which such Common Stock is hereafter
converted or exchanged.
"Class B Common" means Holdings' Class B Common Stock, $.01 par
value per share, and any securities into which such Class B Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common and the Class
B Common, and any securities into which such Common Stock is hereafter converted
or exchanged.
"Common Stock Deemed Outstanding" means, at any given time, the
number of shares of all classes of Holdings' common stock actually outstanding
at such time, plus the number of shares of Holdings' common stock deemed to be
outstanding pursuant to Section 2B(i) or 2B(ii) hereof.
"Company" means Recreational Vehicle Products, Inc., a Delaware
corporation.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Fair Market Value" means (i) the average of the closing sales
prices of the Common Stock on all domestic securities exchanges on which the
Common Stock is listed, or (ii) if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 P.M., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 P.M., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to
-13-
<PAGE> 14
such day. Notwithstanding the foregoing, if at any time of determination either
(x) the Common Stock is not registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, and either listed on a national securities
exchange or authorized for quotation in the Nasdaq system, or (y) less than 25%
of the outstanding Common Stock is held by the public free of transfer
restrictions under the Securities Act of 1933, as amended, then Fair Market
Value shall mean the price that would be paid per share of Common Stock Deemed
Outstanding in connection with a sale of the entire common equity interest in
Holdings in an orderly sale transaction between a willing buyer and a willing
seller, taking into account the appropriate lack of liquidity of Holdings'
securities, using valuation techniques then prevailing in the securities
industry and assuming full disclosure of all relevant information and a
reasonable period of time for effectuating such sale. Fair Market Value shall be
determined by Holdings' Board of Directors in its good faith judgment. The
Required Holders shall have the right to require that an independent investment
banking firm mutually acceptable to Holdings and the Required Holders determine
Fair Market Value, which firm shall submit to Holdings and the Warrant holders a
written report setting forth such determination. The expenses of such firm will
be borne by Holdings, and the determination of such firm will be final and
binding upon all parties.
"Option Plan" means the RV Products Holding Corp. 1996 Stock Option
Plan, as in effect on the date hereof.
"Ownership Ratio" means, as to Registered Holders at the time of
determination, the percentage obtained by dividing the amount of Warrant Shares
(assuming full exercise of the Warrant) and any other shares of Common Stock
Deemed Outstanding held by such holders on a fully-diluted basis at such time by
the aggregate amount of shares of Common Stock Deemed Outstanding held by CVC on
a fully-diluted basis at such time.
"Permitted Issuance" means any issuance by Holdings of shares of
Common Stock or Options (a) upon exercise of this Warrant, (b) upon the
conversion or exchange of any shares of any class of Common Stock, (c) upon
exercise of the limited preemptive rights described in Section 4B by a
Registered Holder and (d) upon exercise of any Options granted pursuant to the
Option Plan.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
-14-
<PAGE> 15
"Registered Holder" means, prior to exercise of this Warrant, the
holder of this Warrant, and after exercise of this Warrant, the holder of
Warrant Shares, each as reflected in the records of Holdings maintained pursuant
to Section 13.
"Required Holders" means the holders of a majority of the purchase
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as
of August 22, 1996 by and among Purchaser, Holdings and its stockholders, as
such agreement may be amended or modified from time to time.
"Warrant Share Ratio" means, as to Registered Holders at the time of
determination, the percentage obtained by dividing the amount of Warrant Shares
(assuming full exercise of the Warrant) and any other shares of Common Stock
Deemed Outstanding held by such holders on a fully-diluted basis at such time by
the aggregate amount of shares of Common Stock Deemed Outstanding on a
fully-diluted basis at such time.
"Vested Stock Deemed Outstanding" means, at any given time, the
number of shares of Common Stock Deemed Outstanding less the number of shares
issuable upon exercise of any Options issued pursuant to the Option Plan which
have not vested as of the time of such calculation pursuant to the terms
thereof.
"Warrant Shares" means shares of the Class B Common issued or
issuable upon exercise of the Warrant; provided, that if the securities issuable
upon exercise of the Warrants are issued by an entity other than Holdings or
there is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of Holdings. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of Holdings.
-15-
<PAGE> 16
SECTION 7. Restrictions. Subject to the provisions of this Section
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of
Holdings. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Shares and each Warrant issued upon such
transfer shall bear the restrictive legends required by the Stockholders
Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of Holdings, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. At the request of the Registered Holder (pursuant
to a transfer of Warrants or otherwise), this Warrant may be exchanged for one
or more Warrants to purchase Common Stock. The date Holdings initially issues
this Warrant shall be deemed to be the date of issuance hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
SECTION 9. Exchange. In the event that it becomes unlawful or, in
the reasonable judgment of any Registered Holder of this Warrant, unduly
burdensome by reason of a change in legal or regulatory considerations or the
interpretation thereof affecting the ability of financial institutions or their
affiliates to hold equity securities, or any material change (including a
reduction in the number of shares of Common Stock outstanding) in the capital
structure of Holdings, to hold any or all of the Warrants or Warrant Shares, the
Registered Holder of this Warrant shall have the right to require Holdings to
use its best efforts to permit all or part of such Registered Holder's Warrants
or Warrant Shares to be exchanged for nonvoting stock or similar interests that
convey equivalent economic benefits to such Warrants or Warrant Shares and
-16-
<PAGE> 17
include equivalent anti-dilution protection. To the extent that Holdings may
lawfully do so after the exercise of its best efforts, any such exchange shall
occur as soon as practicable but in any event within 60 days after written
notice by the Registered Holder of this Warrant to Holdings (or such earlier
date if required to comply with applicable law).
SECTION 10. Replacement. Upon receipt of evidence reasonably
satisfactory to Holdings (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to Holdings
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, Holdings shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 11. Notices. Except as otherwise expressly provided herein,
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
Holdings, at its principal executive offices and (ii) to a Registered Holder, at
such Registered Holder's address as it appears in the records of Holdings
(unless otherwise indicated by any such Registered Holder).
SECTION 12. Amendment and Waiver. Except as otherwise provided
herein, the provisions of the Warrants may be amended and Holdings may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if Holdings has obtained the prior written consent of the
Registered Holder.
SECTION 13. Warrant Register. Holdings shall maintain at its
principal executive offices books for the registration and the registration of
transfer of Warrants. Holdings may deem and treat the Registered Holder as the
absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
-17-
<PAGE> 18
SECTION 14. Fractions of Shares. Holdings may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which Holdings elects
not to issue, Holdings shall make a cash payment in respect of such fraction in
an amount equal to the same fraction of the Fair Market Value of a Warrant Share
on the date of such exercise.
SECTION 15. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
* * * * *
-18-
<PAGE> 19
IN WITNESS WHEREOF, Holdings has caused this Warrant to be signed
its duly authorized officer and to be dated as of the date hereof.
RV PRODUCTS HOLDING CORP.
By:
----------------------------
Name:
Title:
-19-
<PAGE> 20
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-____), hereby agrees to subscribe for the
purchase of ______ Warrant Shares covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
----------------------------
Address ------------------------------
-20-
<PAGE> 21
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_____) with respect to the number of the Warrant
Shares covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- ----------------- ------- -------------
Dated: Signature
--------------------------
--------------------------
Witness
--------------------------
-21-
<PAGE> 1
EXHIBIT 10.10
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This Agreement is effective as of October 17, 1997, and made among
CRISPAIRE CORPORATION, a Georgia corporation (the "Seller"), AIRXCEL, INC., a
Delaware corporation (the "Buyer") and AIRXCEL HOLDINGS, INC. ("Holdco"), a
Delaware corporation.
RECITALS:
WHEREAS, the Seller is engaged in the business of designing,
manufacturing and selling specialty heating, air conditioning and water heating
products (the "Business");
WHEREAS, the Seller wishes to sell, and the Buyer wishes to acquire
the Business by purchasing the Assets (as hereinafter defined) and assuming
certain liabilities of the Seller comprising the Assumed Liabilities (as
hereinafter defined) upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein Holdco, the Buyer and the Seller hereby agree
as follows:
SECTION I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions. When used in this Agreement:
"Accounts Receivable" means all trade accounts receivable and all
notes, bonds and other evidences of indebtedness of and rights to receive
payments arising out of sales occurring in the conduct of the Business and the
security agreements related thereto, including any rights of the Seller with
respect to any third party collection proceedings or any other Actions which
have been commenced in connection therewith.
"Actual Fraud" means knowing concealment or failure to disclose with
intent to mislead or defraud.
"Action" means any action, suit, proceeding or arbitration by any
Person or any investigation or audit by any Governmental Body.
"Affiliate" of any Person means (i) any other Person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with that Person and includes (a) any partner, shareholder,
officer, director or employee of that Person, and (b) any individual related by
blood, marriage or adoption to that Person or any partner, shareholder, officer,
director or employee of that Person, (ii) any Person in which any of the
foregoing owns a beneficial interest or (iii) any corporation or other business
organization of which that Person is an officer or partner or is the beneficial
owner, directly or indirectly, of ten percent (10%) or more of any class
<PAGE> 2
EXECUTION COPY
of equity securities, any trust or estate in which that Person has a substantial
beneficial interest or as to which that Person serves as a trustee or in a
similar capacity. For purposes of this definition, 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 securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Assets" means all of the assets, properties and rights owned by the
Seller, or used or usable by the Seller in the operation of the Business of
every type and description, real, personal and mixed, tangible and intangible,
wherever located and whether or not reflected on the Books and Records of the
Seller, other than the Excluded Assets.
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Bard Litigation" means the civil action Bard Manufacturing Company
and Airxchange, Inc. (plaintiffs) v. Crispaire Corporation d/b/a Marvair
(defendant) in the US District Court for the Northern District of Ohio, #3:95 CV
7103 (CARR, J.) and any associated suits and proceedings.
"Base Rate" means the rate of interest announced from time to time
by Nationsbank, N.A. as its prime commercial lending rate.
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
conditions of (financial or other), results of operations and assets and
properties of such Person, including financial statements, Tax Returns and
related work papers and letters from accountants, budgets, pricing guidelines,
ledgers, journals, deeds, title policies, minute books, stock certificates and
books, stock transfer ledgers, contracts and other agreements, licenses,
customer and supplier lists, employee information, computer files and programs,
retrieval programs, operating data and plans and environmental studies and
plans.
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banks are authorized or required by law to close in New York.
"Cash Payment" has the meaning specified in Section 2.5(a).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Closing" has the meaning specified in Section 2.7.
"Closing Balance Sheet" has the meaning specified in Section 2.6(a).
"Closing Date" has the meaning specified in Section 2.7.
-2-
<PAGE> 3
EXECUTION COPY
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means all legally binding arrangements, including
executory contracts, agreements, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, plans, permits, licenses or commitments (whether
written or oral, express or implied).
"Documents" means any document, agreement, instrument, certificate,
notice, consent, affidavit, letter, telegram, telex, statement, schedule
(including any Schedule to this Agreement) or exhibit (including any Exhibit to
this Agreement).
"Earnest Deposit" means an amount of $50,000.00 to be deposited by
the Buyer with Nationsbank, N.A. pursuant to Section 5.4.
"Environmental Lien" means a Lien, either recorded or unrecorded, in
favor of any Governmental Body, relating to any Liability of the Seller arising
under Environmental Requirements.
"Environmental Requirements" shall mean federal, state and local
statutes, regulations, ordinances and similar provisions having the force or
effect of law, all judicial and administrative orders and determinations and all
contractual obligations and all common law existing on or prior to the Closing
Date applicable to the Seller, the Business or the Assets concerning pollution
or protection of the environment, including without limitation all those
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, Release, threatened Release, control, or cleanup of any hazardous
materials, substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Agreement" has the meaning specified in Section 2.5(a).
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Financial Statements" means the financial statements delivered
pursuant to Section 3.6(a).
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Body" means court, tribunal, arbitrator or any
government or political subdivision thereof, whether federal, state, county,
local or foreign, or any agency, authority, official or instrumentality of any
such government or political subdivision or any entity exercising executive
legislative, judicial, regulatory or administrative function of government.
-3-
<PAGE> 4
EXECUTION COPY
"Improvements" means all buildings, structures, facilities, fixtures
and other improvements.
"Indebtedness" means indebtedness for borrowed money incurred or
accrued before the Closing Date including bank lines of credit, the current
portions of any long-term debt, capitalized lease obligations (except to the
extent specifically included in the Assets), overdrafts, principal interest,
premium and penalties and includes any guarantee of or indemnity obligation for
any of the foregoing.
"Intellectual Property" means all patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); all trademarks, service marks, logos, slogans, trade
dress, trade names and corporate names and all goodwill associated therewith;
all copyrights; all registrations, applications and renewals for any of the
foregoing; all product formulations, trade secrets, confidential information,
research information, technical and computer data, documentation and software,
financial, business and marketing plans, customer and supplier lists, training
materials (including films, brochures and printed materials), catalogs and other
advertising and promotional material) and related information and all other
proprietary rights; and all copies and tangible embodiments of the foregoing,
along with all income, royalties, damages and payments due or payable as of the
Closing Date or thereafter (including damages and payments for past, present or
future infringements or misappropriations thereof), the right to sue and recover
for past infringements and misappropriations thereof, and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world, in each case together with all books, records, drawings, recipes,
application or other indicia thereof, and in each case together with goodwill
associated therewith.
"Inventory" means inventory, raw materials, work-in-process,
finished goods, consigned goods, merchandise, products under research and
development, demonstration equipment, packaging materials and other accessories
related thereto which are held at, or are in transit from or to, the locations
at which the Business is conducted, or located at suppliers' premises or
customers' premises on consignment, in each case, which are used or held for use
in the conduct of the Business, including any of the foregoing purchased subject
to any conditional sales or title retention agreement in favor of any other
Person, together with all rights against suppliers of such inventories.
"IRS" means the Internal Revenue Service.
"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental Body.
"Leased Real Property" means the real property (and Improvements
thereon) the subject of the Real Property Leases.
-4-
<PAGE> 5
EXECUTION COPY
"Liabilities" means any indebtedness, liability, claim, loss,
damage, deficiency or legal obligation, whether direct or indirect, fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise.
"Lien" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any stockholder or similar agreement,
encroachment, encumbrance or any other restriction, limitation or defect in
title whatsoever.
"Loss" or "Losses" has the meaning specified in Section 8.2.
"Material Adverse Effect" means, in the case of any Person, any
change or changes or effect or effects that individually or in the aggregate
(with respect to similar events) are or may reasonably be expected to be
materially adverse to (i) the business, assets, properties, operations, income,
prospects, condition (financial or otherwise) or customer, employee, distributor
or supplier relations of such Person or the transactions contemplated by this
Agreement or (ii) the ability of such Person to perform its obligations under
this Agreement.
"Note" has the meaning specified in Section 2.5(a).
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental Body, in each case whether preliminary or final.
"Owned Property" means all real property owned by the Seller,
together with all easements, licenses, interests, all of the rights arising out
of the ownership thereof or appurtenant thereto, and Improvements thereon.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, orders, registrations, certificates, variances, consents and
similar rights (including applications therefor), utilized in the conduct of the
Business and the rights to all data and records held by any Governmental Body or
other agency with respect thereto.
"Permitted Liens" means (i) purchase money security interests in
inventory, supplies and equipment, (ii) precautionary liens filed by lessors
with respect to leased equipment, and (iii) encumbrances which are not
substantial in amount, do not materially detract from the value of the property
subject thereto and do not materially impair the use of the property subject
thereto or the operation of the Business.
"Person" means any individual, corporation, partnership, firm,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
"Plan" means any (i) employee benefit plan (as defined in Section
3(3) of ERISA), whether or not funded or terminated, (ii) employment agreement
or (iii) personnel policy, fringe
-5-
<PAGE> 6
EXECUTION COPY
benefit plan, program or arrangement, whether or not subject to ERISA, qualified
under the Code or not, funded or terminated, including any stock bonus, deferred
compensation, pension, severance, bonus, incentive and health, life, sick-pay,
disability or other welfare plan.
"Property Plans" means all site plans, surveys, soil substratus
studies, architectural drawings, plans and specifications, engineering,
electrical and mechanical plans and studies, floor plans, landscape plans,
appraisals, feasibility studies, and other plans and studies of any kind if
existing and in the possession or control of the Seller relating to the Real
Estate.
"Purchase Price" has the meaning specified in Section 2.5(a).
"Purchase Price Adjustment" has the meaning specified in Section
2.6(b).
"Real Estate" means the Owned Property and the Leased Real Property.
"Real Property Leases" means all leases and subleases of real
property as to which the Seller is the lessee or sublessee, together with any
options to purchase the underlying property and leasehold improvements thereon
set forth on Schedule 3.12(b) hereto, and in each case all other rights,
subleases, licenses, permits, deposits and profits appurtenant to or related to
such leases and subleases.
"Related Documents" means all documents and instruments to be
executed by the Seller, the Buyer or Holdco in connection herewith.
"Release" has the meaning set forth in CERCLA.
"Safety Requirements" shall mean such federal, state and local
statutes, regulations, ordinances and similar provisions having the force or
effect of law, all judicial and administrative orders and determinations and all
contractual obligations existing on the Closing Date, applicable to the Seller,
the Business or the Assets, and concerning public health or safety, workplace
health or the safety.
"Seller's Knowledge" means the actual knowledge of all current
directors and officers of the Seller and the knowledge which those persons
should have had after conducting all inquiries and investigations which should
have been made by any of them in the ordinary course of conduct of their
employment or appointment and otherwise in the active performance of the normal
duties and obligations of such a person bearing in mind that person's position
with the Seller; provided that the aforementioned person is not hereby required
to conduct any investigation outside the ordinary course.
"Stockholders Agreement" means the Stockholders Agreement dated as
of August 22, 1996 and made by and among Holdco and its stockholders.
-6-
<PAGE> 7
EXECUTION COPY
"Tax Return" means with respect to any person, any return, report,
information return, or other document (including any related or supporting
information) filed or required to be filed by that person with any federal,
state, local, or foreign governmental entity or other authority in connection
with the determination, assessment or collection of any Tax (whether or not such
Tax is imposed on that person) or the administration of any laws, regulations or
administrative requirements relating to any Tax.
"Tax" and "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing authority,
whether disputed or not, including, without limitation, income, capital,
estimated, excise, property, sales, transfer, withholding, employment, payroll,
and franchise taxes and such terms shall include any interest, penalties or
additions attributable to or imposed on or with respect to such assessments.
"Working Capital" means the current assets less the current
liabilities of the Seller adjusted to exclude (i) from current assets, cash,
prepaid expenses, income tax refunds receivable and the current portion of
deferred income tax charges and (ii) from current liabilities, bank debt,
federal and state income taxes payable for the period through the Closing Date
and the current portion of deferred income tax credits. Working Capital shall be
calculated in accordance with Sections 1.2 and 2.6.
1.2 Accounting Principles. Each accounting term used herein shall
have the meaning that is applied thereto in accordance with GAAP and each
account included in the Closing Balance Sheet shall be calculated in accordance
with GAAP and shall be consistent with the books and records of the Seller
(which books and records shall be correct and complete); provided, that all
known errors and adjustments shall be taken into account in the calculation of
each account set forth above. With respect to the calculation of the levels of
the accounts set forth in Section 2, no change in accounting principles shall be
made from those utilized in preparing the Financial Statements including,
without limitation, with respect to the nature or classification of accounts,
closing proceedings, levels of reserves or levels of accruals other than as a
result of objective changes in the underlying business. For purposes of the
preceding sentence, "changes in accounting principles" includes all changes in
accounting principles, policies, practices, procedures or methodologies with
respect to financial statements, their classification or their display, as well
as all changes in practices, methods, conventions or assumptions utilized in
making accounting estimates.
1.3 Interpretation. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement. All pronouns
and any variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require. References to statutes and agreements
include all amendments, extensions, restatements and waivers thereof. The
Exhibits and Schedules are a part of this Agreement as if fully set forth
herein. All references herein to Sections, subsections, clauses, Exhibits and
Schedules shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require. Any item disclosed on any Schedule to this
Agreement shall only be deemed to be disclosed in connection with (a) the
specific representation and warranty to which such Schedule is expressly
referenced, (b) any specific
-7-
<PAGE> 8
EXECUTION COPY
representation and warranty which expressly cross-references such Schedule and
(c) any specific representation and warranty to which any other Schedule to this
Agreement is expressly referenced if such other Schedule expressly
cross-references such Schedule. Any representation in this Agreement as to the
enforceability of any Contract or other obligation or the collectibility of any
receivable is to be read as being limited by general equitable principles and by
all applicable laws relating to bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally.
SECTION II
ACQUISITION OF THE ASSETS; ASSUMPTION OF THE
ASSUMED LIABILITIES AND PURCHASE PRICE
2.1 Purchase of the Assets. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, the Seller agrees
to sell, transfer, assign, convey and deliver to the Buyer, and the Buyer agrees
to purchase, acquire and accept from the Seller, all of the right, title and
interest as of the Closing Date of the Seller in and to the Assets. Except as
specifically excluded pursuant to Section 2.2, the Assets include, without
limitation, all of the right, title and interest of the Seller in or to (a) all
securities and other investments (other than bank account balances, money market
securities or similar short-term investments or other cash equivalents), rights
in any funds, safe deposits and security deposits made by or on behalf of the
Seller; (b) all Real Estate, Real Property Leases, Inventory, Accounts
Receivable, Intellectual Property, Permits, Property Plans, Contracts and Books
and Records which are used or useful in the conduct of the Business or otherwise
relate to the Seller or its assets; (c) all prepaid expenses and other
prepayments (excluding insurance premium refunds relating to the insurance
policies to be retained by the Seller as set forth on Schedule 3.21 hereto)
relating to the Business; (d) all tangible and other assets, properties and
rights of the Seller reflected on the Financial Statements, subject to changes
in the ordinary course of business through the Closing Date; (e) all rights of
the Seller under or pursuant to all warranties, representations and guarantees
made by suppliers, manufacturers and contractors in connection with products
sold to or services provided to the Seller, or affecting the Real Estate,
property, machinery or equipment used in the conduct of the Business; (f) all
claims, deposits, warranties, guaranties, refunds (excluding Tax refunds due to
the Seller other than those reflected in the Closing Balance Sheet), causes of
action, rights of recovery, rights of set-off and rights of recoupment of every
kind and nature; and (g) all transferable telephone exchange numbers and the
right to receive and retain mail and other communications (directed to the
Seller and not concerning Excluded Assets or Excluded Liabilities) and
collections, including mail and communications from customers, suppliers,
distributors, agents and others.
2.2 Excluded Assets. The Buyer shall not acquire and there shall be
excluded from the Assets, the Seller's interest in each of the following (the
"Excluded Assets"):
(a) The minute books, stock transfer books, corporate seals and
other similar corporate records of the Seller;
-8-
<PAGE> 9
EXECUTION COPY
(b) All rights of the Seller under this Agreement and the
Documents delivered to the Seller pursuant to this Agreement;
(c) Insurance policies identified on Schedule 3.21 hereto as being
retained by the Seller and all claims and rights of the Seller
thereunder;
(d) All claims related to the Excluded Liabilities or Excluded
Assets;
(e) The deposit of $265,181.00 made by the Seller with the IRS
representing payments required by the Code Section 7519 for
entities electing not to have a required taxable year; and
(f) Cash, bank account balances, money market securities or
similar short-term investments or other cash equivalents and
Tax refunds due to the Seller (except to the extent the same
are reflected in the Closing Balance Sheet).
2.3 Assumed Liabilities. Subject to the terms and conditions set
forth herein, the Buyer agrees that, on the Closing Date, the Buyer shall assume
and thereafter pay, perform or discharge out of its own funds, with no recourse
to the Seller or the Seller's shareholders except as in the case of Actual Fraud
or as provided in Section VIII, as and when due or required to be performed, as
the case may be, all undischarged Liabilities of the Seller which relate to
conduct of the Business prior to the Closing Date to the extent such liabilities
have been incurred in the ordinary course of business without violation of this
Agreement other than the Excluded Liabilities (the "Assumed Liabilities").
In the event of any claim against the Buyer with respect to any of the
Assumed Liabilities hereunder, the Buyer shall have, and the Seller hereby
assigns to the Buyer, any defense, counterclaim, or right of setoff which would
have been available to any the Seller if such claim had been asserted against
the Seller. The assumption by the Buyer of said liabilities shall not expand the
rights and remedies of any third party against the Buyer beyond those such third
party would have had but for the assumption.
2.4 Excluded Liabilities. The Buyer will not assume or discharge,
and shall have no liability for any of the following Liabilities of the Seller
or relating to the Business (collectively, the "Excluded Liabilities").
(a) any liabilities with respect to income or other Taxes imposed
on the Seller for any period and any Taxes otherwise imposed
in relation to the Business prior to the Closing Date (except
to the extent such Taxes are accrued for in the Statement of
Working Capital (as defined in Section 2.6));
(b) any liabilities with respect to Indebtedness;
-9-
<PAGE> 10
EXECUTION COPY
(c) any liabilities to any shareholder of the Seller or to any
Affiliate of the Seller or of any of the Seller's shareholders
(other than wages and other compensation in the ordinary
course of business and bonuses in accordance with the policy
set forth on Schedule 3.15);
(d) to the extent of coverage by the Seller's insurance policies,
any liabilities (whether asserted before or after the Closing
Date) for injury to or death of persons or damage to or
destruction of property (including, without limitation, any
worker's compensation claim) including any claim for
consequential damages in connection with the foregoing arising
from acts or omissions by the Seller which occur before the
Closing Date;
(e) to the extent of coverage, if any, by the Seller's insurance
policies, any liabilities arising out of any tort,
infringement, claim or lawsuit including any infringement,
misappropriation or other conflict with the Intellectual
Property rights of any Person (it is agreed that the Seller's
failure to adequately or timely notify its insurer(s) may
result in no coverage and in that event the matters referred
to shall not be Excluded Liabilities);
(f) any liabilities or investigatory, corrective or remedial
obligations arising under any Environmental Requirements, in
each case to the extent arising out of facts or circumstances
existing or acts or omissions occurring prior to the Closing
Date;
(g) legal fees and disbursements through the Closing Date
associated with the Bard Litigation;
(h) the brokers fees referred to in Section 3.28;
(i) any liabilities relating to the Excluded Assets; and
(j) any liabilities relating to the capital stock of the Seller or
any shareholders' agreements pertaining to the capital stock
of the Seller.
The Seller shall pay and discharge as and when due or required to be
performed out of its own funds, with no right of contribution or recourse
against the assets of the Buyer or its Affiliates, or contest in good faith at
no cost or expense to the Buyer or its Affiliates, all of the Excluded
Liabilities. The Seller acknowledges that the fact of disclosure of any
Liability in any Schedule hereto does not affect the status of such Liability as
an Excluded Liability for all purposes hereunder.
-10-
<PAGE> 11
EXECUTION COPY
2.5 Purchase Price.
(a) Subject to adjustment pursuant to Section 2.6, the aggregate
purchase price (the "Purchase Price") for the Assets to be acquired by the Buyer
from the Seller hereunder shall be the sum of: (i) $38,700,00.00 (the "Cash
Payment"), plus (ii) subordinated promissory notes of Holdco substantially in
the form of Exhibit A in an aggregate initial principal amount of $5,175,142.00
(collectively the "Note"), plus (iii) the assumption by the Buyer of the Assumed
Liabilities, less (iv) the amount of the Earnest Deposit. An amount of
$1,000,000 shall be deducted from the Cash Payment and deposited into escrow
pursuant to the terms of an escrow agreement substantially in the form of
Exhibit B (the "Escrow Agreement").
(b) The Cash Payment shall be paid to the Seller by the Buyer on the
Closing Date by cashiers check or by wire transfer of immediately available
funds to an account designated by Seller not less than three (3) Business Days
prior to Closing by notice to the Buyer. In addition, the Note shall be issued
to the Seller by Holdco on the Closing Date.
(c) The Purchase Price will be allocated for all purposes (including
Tax and financial accounting purposes) (x) among the Buyer and Holdco in the
manner shown in the allocation schedule attached hereto as Schedule 2.5(c) and
agreed to by the parties hereto on or before the Closing Date, and (y) among the
Assets in a manner to be agreed upon in writing by the Buyer, Holdco and the
Seller (consistent with Schedule 2.5(c)) (such written agreement the "Allocation
Schedule") as soon as practicable following the preparation of the Statement of
Working Capital (as defined below). Such allocations shall be consistent with
Section 1060 of the Code. Each of the parties hereto will not take a position on
any Tax Return, before any governmental agency charged with the collection of
any Tax, or in any judicial proceeding, that is in any way inconsistent with the
Allocation Schedule and will cooperate with each other in timely filing
consistent with such allocation on Forms 8594 with the IRS. For federal income
tax purposes, the Seller shall be deemed to have (i) sold to the Buyer an
undivided interest in the Assets transferred by it (which undivided portion will
correspond to the Cash Payment and the Assumed Liabilities, as shown on the
Allocation Schedules) and (ii) sold to Holdco an undivided interest in the
Assets transferred by it (which undivided portion will correspond to the amount
of the Note, shown on the Allocation Schedule), and Holdco shall contribute such
undivided portion to the Buyer immediately after such purchase.
2.6 Reduction of Purchase Price. (a) As promptly as practicable, but
in any event not later than sixty (60) days after the Closing, the Buyer shall
cause to be prepared and delivered to the Seller, an audited, consolidated
balance sheet of the Seller as of the Closing Date (the "Closing Balance
Sheet"), setting forth the Working Capital of the Business as at the Closing
Date (the "Statement of Working Capital"). The Closing Balance Sheet shall be
prepared from the Seller's Books and Records and in accordance with Section 1.2;
provided, however, that the Closing Balance Sheet shall not contain any accruals
or reserves for Excluded Liabilities and shall not include as an asset any
Excluded Assets. Working Capital shall be calculated and determined in a manner
consistent with the method illustrated on Schedule 2.6 and shall not include any
contingent liabilities associated with the Bard Litigation.
-11-
<PAGE> 12
EXECUTION COPY
(b) Subject to subsection (c) below, within twenty (20) days after
delivery to the Seller of the Closing Balance Sheet and the Statement of Working
Capital pursuant to subsection (a) above, the Seller agrees to pay to the Buyer
(i) the amount, if any, by which $9,631,766.00 exceeds the Working Capital of
the Business as at the Closing Date, plus (ii) interest on the amounts computed
pursuant to clause (i) above at the Base Rate for the period from the Closing
Date to the date of payment in full of such amount (the amounts payable pursuant
to clauses (i) and (ii) are hereinafter referred to collectively as the
"Purchase Price Adjustment"). Payments, if any, by the Seller pursuant to the
preceding sentence shall be made by wire transfer of immediately available funds
to an account or accounts designated by the Buyer. The parties shall treat any
payment made pursuant to this Section 2.6(b) as an adjustment to the Cash
Payment portion of the Purchase Price for all purposes.
(c) If the Seller in good faith disagrees with the Closing Balance
Sheet or the Statement of Working Capital, then the Seller shall notify the
Buyer in writing (the "Notice of Disagreement") of such disagreement within
twenty (20) days after delivery of the Closing Balance Sheet and the Statement
of Working Capital to the Seller. Thereafter, the Buyer and the Seller shall
attempt in good faith to resolve and finally determine the Closing Balance Sheet
and the Statement of Working Capital. If the Buyer and the Seller are unable to
resolve the disagreement within twenty (20) days after delivery of the Notice of
Disagreement, then the Buyer and the Seller shall select a mutually acceptable,
nationally recognized independent accounting firm (such accounting firm being
hereinafter referred to as the "Independent Accountant") to resolve the disputed
items and make a determination with respect thereto. Such determination will be
made, and written notice thereof given to the Buyer and the Seller, within
thirty (30) days after such selection. The determination by the Independent
Accountant shall be final, binding and conclusive upon the parties hereto. The
scope of such firm's engagement (which shall not be an audit) shall be limited
to the resolution of the items contained in the Notice of Disagreement, and the
recalculation, if any, of the Closing Balance Sheet and the Statement of Working
Capital in light of such resolution and shall be conducted in accordance with
the provisions of this Agreement and will use the definitions contained herein.
The fees, costs and expenses of the Seller and the Independent Accountant, if
any, in connection with the preparation of the Closing Balance Sheet and the
Statement of Working Capital shall be shared equally by the Buyer, on the one
hand, and the Seller, on the other hand. Within ten (10) days of delivery of a
notice of determination by the Independent Accountant as described above, any
adjustment shall be paid as provided in Section 2.6(b), and shall constitute
timely payment notwithstanding the lapse of the twenty (20) day time period set
forth in Section 2.6(b). Any portion of the Purchase Price Adjustment not in
dispute shall be paid when due in accordance with Section 2.6(b).
2.7 Closing. The consummation of the transactions contemplated
hereby (the "Closing") shall be held at 10:00 a.m. (E.S.T.) on the first
Business Day after all conditions to respective obligations of the parties have
been satisfied or waived or at such other time and date as shall be mutually
agreed to by the parties (such date and time of the Closing being herein
referred to as the "Closing Date") at the offices of Kirkland & Ellis, 153 East
53rd Street, New York, NY 10022.
-12-
<PAGE> 13
EXECUTION COPY
SECTION III
REPRESENTATIONS AND
WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows and only
as follows. The representations and warranties which follow are deemed repeated
on the Closing Date. The fact of making the following representations and
warranties does and did not in and of itself oblige the Seller to conduct or
have conducted any investigation.
3.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all requisite corporate power and authority to (i) own, lease
and operate its properties and assets as they are now owned, leased and
operated, (ii) carry on its business as now presently conducted and as proposed
to be conducted prior to the Closing Date and (iii) to execute and deliver this
Agreement and each Related Document to which it is a party and to carry out the
terms hereof and thereof. The Seller is duly qualified to do business in each
jurisdiction in which the nature of its business or properties makes such
qualification necessary, except where the failure to do so would not have a
Material Adverse Effect on the Seller or the Buyer. The jurisdictions in which
the Seller is so qualified are set forth on Schedule 3.1.
3.2 Validity and Execution of Agreement. Subject to approval of the
Seller's shareholders of the transactions contemplated hereby, the Seller has
the full legal right, capacity and power and the Seller has all requisite
corporate authority and approval required to enter into, execute and deliver
this Agreement and each other Related Document to which it is a party and to
perform fully its obligations hereunder and thereunder and to deliver the Assets
in accordance herewith. The board of directors of the Seller has approved the
transactions contemplated pursuant to this Agreement and each of the Related
Documents required to be entered into pursuant hereto by the Seller. Subject to
approval of the Seller's shareholders of the transactions contemplated hereby,
this Agreement has been duly executed and delivered by the Seller and
constitutes the valid and binding obligation of the Seller enforceable against
it in accordance with its terms. By proceeding with the Closing the Seller
represents and warrants that the Seller's shareholders have approved the
transactions contemplated by this Agreement and each of the Related Documents to
which the Seller is a party.
3.3 No Conflict. Except as set forth on Schedule 3.3, the execution,
delivery and performance by the Seller of this Agreement, the transactions
contemplated hereby or the Related Documents (to the extent the Seller is a
party thereto) will not: (a) violate or conflict with any of the provisions of
the Articles of Incorporation or By-Laws of the Seller; (b) violate, conflict
with, result in the acceleration of, or entitle any party to accelerate the
maturity or the cancellation of the performance of any obligation under, or
result in the creation or imposition of any Lien in or upon any of the
properties or assets of the Seller or constitute a default (or an event which
might, with the passage of time or the giving of notice, or both, constitute a
default) under any mortgage, indenture, deed of trust, lease, contract, loan or
credit agreement, license or other instrument to which the Seller
-13-
<PAGE> 14
EXECUTION COPY
is a party or by which it or any of its properties or assets may be bound or
affected; or (c) violate or conflict with any provision of any Law applicable to
the Seller, or require any consent or approval of or filing or notice with any
Governmental Body.
3.4 Capitalization/Subsidiaries. All of the issued and outstanding
shares of capital stock or other equity interests of the Seller are owned,
directly or indirectly, beneficially and of record by the shareholders of the
Seller as set forth on Schedule 3.4. Except as set forth on Schedule 3.4, the
Seller does not own, directly or indirectly, any capital stock of, or any other
interest in, any other Person.
3.5 Books and Records. Except as set forth on Schedule 3.5, each of
the Books and Records of the Seller as supplied to the Buyer is true, correct,
complete and current in all material respects and, as applicable, accurately
reflects all actions taken by its board of directors or other governing body and
committees thereof. The Seller has heretofore delivered to the Buyer true,
correct and complete copies of the Articles of Incorporation (certified by the
Secretary of State of Georgia) and By-Laws as in full force and effect on the
date hereof.
3.6 Financial Statements. (a) Except as set forth on Schedule
3.6(a), the balance sheets of the Seller as of fiscal year ending October 31,
1996, and the related statements of income, stockholders' equity and cash flows
for the years then ended, including the footnotes thereto, certified by Mauldin
& Jenkins, L.L.C., certified public accountants, true and complete copies of
which have heretofore been delivered to the Buyer, have been prepared from, and
are in accordance with, the Books and Records of the Seller, are correct and
complete and present fairly, in all material respects, the transactions, assets
and liabilities of the Seller and the financial position of the Seller as at
such dates and the results of operations and cash flows of the Seller for the
years then ended, in each case, in accordance with GAAP consistently applied for
the periods covered thereby.
(b) Except as set forth on Schedule 3.6(b), the unaudited balance
sheet of the Seller as of June 30, 1997 (the "Latest Balance Sheet") and the
related statements of income, stockholders' equity and cash flows for the period
then ended, true and complete copies of which have heretofore been delivered to
the Buyer, present fairly, in all material respects, the financial position of
the Seller as of such date and the results of operations of the Seller for the
period then ended, in each case in accordance with GAAP consistently applied for
the respective monthly periods covered thereby from the most recent fiscal year
end of the Seller.
3.7 Undisclosed Liabilities. Except as set forth on Schedule 3.7,
the Seller has no material Liability, whether or not of a kind required by GAAP
to be set forth on a financial statement, that is not fully and adequately
reflected or reserved against on the face of (as opposed to in the notes to) the
Financial Statements for the Seller, other than Liabilities incurred since the
date of the Latest Balance Sheet in the ordinary course of business without
violation of Sections 3.16 and 5.2, and fully reflected as Liabilities on the
Seller's Books and Records, none of which would have a Material Adverse Effect
on the Business.
-14-
<PAGE> 15
EXECUTION COPY
3.8 No Material Adverse Effect. Except as set forth on Schedule 3.8,
since the date of the Latest Balance Sheet there has been no change in the
assets, properties, business, operations, income or condition (financial or
otherwise) of the Seller, nor to the Seller's Knowledge is any such change
threatened, nor has there been any damage, destruction or loss which could have
a Material Adverse Effect on the Buyer or the Business, whether or not covered
by insurance.
3.9 Tax Matters. Except as disclosed on Schedule 3.9, for the
previous six (6) tax years the Seller has timely filed all Tax Returns required
to be filed by it, which Tax Returns are true, correct and complete in all
material respects. Except as set forth in Schedule 3.9, for the previous six (6)
tax years the Seller has timely paid all Taxes due or claimed to be due from it
by any taxing authority. There are no liens for Taxes upon the Assets or any
other assets, tangible or intangible, of the Seller. During the previous six (6)
tax years the Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, Shareholder, or other third party. The
reserves for Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and Tax income) shown on
the face of the Latest Balance Sheet (rather than in any notes thereto) are
sufficient for payment of all unpaid Taxes (whether or not currently disputed)
incurred with respect to the period ended June 30, 1997 and for all periods
ended prior thereto. With respect to periods commencing after June 30, 1997, the
Seller has not incurred any Liability for Taxes other than in the ordinary and
regular course of business. The Seller properly filed an election, in accordance
with the provisions of section 1362(a)(1) of the Code, to be an S corporation,
effective November 1, 1992, and all shareholder consents required by section
1362(a)(2) of the Code were properly filed. Such election has never been revoked
or otherwise terminated. Except as set forth in Schedule 3.9, there is no
examination or proceeding pending or, to the Seller's Knowledge, threatened by
any authority or agency relating to the assessment or collection of, or any
delinquencies in filing relating to, any Taxes from the Seller. Except as set
forth in Schedule 3.9, during the previous six (6) tax years the Seller has not
executed or filed any consent or agreement to extend the period of assessment or
collection of any Taxes. The Seller is not a party to any written Tax allocation
or sharing agreement.
3.10 Litigation. Except as set forth on Schedule 3.10, there are no
outstanding Orders by which the Seller, or any of its securities, assets,
properties or businesses are bound. Except as set forth on Schedule 3.10, there
is no Action pending or, to the Seller's Knowledge, threatened (whether or not
the defense thereof or liabilities in respect thereof are covered by insurance)
against or affecting the Seller or any of its assets, properties or businesses,
nor are there any facts which are likely to give rise to any such Action which
if adversely decided, could have a Material Adverse Effect on the Seller or the
Buyer.
3.11 Contracts and Other Agreements. Schedule 3.11 sets forth all of
the following types of Contracts to which the Seller is a party or by or to
which the Seller, or its assets, properties or businesses is bound or subject
(collectively, the "Material Contracts"):
(a) all employment agreements and commitments, all consulting or
severance agreements or arrangements and all other contracts
or agreements, including
-15-
<PAGE> 16
EXECUTION COPY
indemnification agreements, with any current or former
officer, director, employee, consultant, agent, other
representative of the Seller or with any shareholder or
Affiliate of the Seller or of any shareholder of the Seller;
(b) contracts and other agreements with any labor union or
association representing any employee;
(c) contracts and other agreements for the sale of any of its
assets or properties or for the grant to any Person of any
preferential rights to purchase any of its assets or
properties, in each case in an amount exceeding $25,000;
(d) joint venture and partnership agreements;
(e) all capitalized leases, pledges, conditional sale or title
retention agreements involving the payment of more than
$100,000;
(f) any take or pay or requirements contracts or agreements or any
other contracts or agreements requiring the Seller to pay
regardless of whether products or services are received;
(g) contracts and other agreements not cancelable without penalty
by the Seller party thereto on sixty (60) or fewer days notice
calling for an aggregate purchase price or payments to or from
the Seller in any one year of more than $25,000 in any one
case (or in the aggregate, in the case of any related series
of contracts and other agreements);
(h) contracts and other agreements with clients, customers or any
other Person for the sharing of fees, the rebating of charges
or purchase price or other similar arrangements;
(i) contracts and other agreements containing covenants pertaining
to the right to compete or not compete in any line of business
or similarly restricting the ability to conduct business with
any Person or in any geographical area;
(j) contracts and other agreements relating to the acquisition by
the Seller of any operating business or the capital stock of
any other Person;
(k) all agreements relating to the consignment or lease of
personal property (whether the Seller is lessee, sublessee,
lessor, or sublessor), other than such agreements that provide
for annual payments of less than $25,000;
(l) all licences and franchise agreements involving an amount in
excess of $25,000;
-16-
<PAGE> 17
EXECUTION COPY
(m) all mortgages, indentures, notes, bonds, letter of credit and
other agreements relating to the borrowing of money, creation
of Liens, any indemnity, or the guarantee of the payment of
liabilities or performance of obligations to or by the Seller,
to or by any other Person;
(n) any stockholder agreement, registration rights agreement or
any arrangement relating to or affecting the ownership of the
common stock or other equity interests of the Seller; and
(o) any other contract and other agreement made outside the
ordinary course of business relating to any one or more of the
Seller and involving an amount in excess of $25,000.
True and complete copies of all of the written Material Contracts
have been delivered to the Buyer. Except as disclosed on Schedule 3.11, all of
the Material Contracts are valid, subsisting, in full force and effect and
binding upon the Seller party thereto and, to the Seller's Knowledge, the other
parties thereto in accordance with their terms and the Seller has satisfied in
full or provided for all of its liabilities and obligations thereunder requiring
performance prior to the date hereof in all material respects, is not in
material default under any such Material Contract, nor does any condition exist
that with notice or lapse of time or both would constitute such a default. To
the Seller's Knowledge, no other party to any such Material Contract is in
material default thereunder, nor does any condition exist that with notice or
lapse of time or both would constitute such a default. Except as disclosed on
Schedule 3.11, none of the other parties to any such Material Contracts has
given notice to the Seller that it intends to terminate or materially alter the
provisions of such Material Contract. Except as separately identified on
Schedule 3.11, no approval or consent of any Person is needed for all of the
Material Contracts to continue to be in full force and effect, and subject to
any necessary approval or consent all of the rights of the Seller under such
Material Contracts will be conveyed to the Buyer upon consummation of the
transactions contemplated by this Agreement.
3.12 Real Estate.
(a) Set forth on Schedule 3.12(a) is a complete and correct legal
description of each parcel of Owned Property. The Seller has good record and
marketable title to each parcel of Owned Property included in the Real Estate.
Except as set forth on Schedule 3.12(a), none of the Owned Property is subject
to any Lien.
(b) Set forth on Schedule 3.12(b) is a list of all Real Property
Leases (a true and correct copy of each applicable Real Property Lease as in
effect as of the Closing has been delivered by the Seller to the Buyer). Except
as set forth on Schedule 3.12(b), the Seller has valid and enforceable leasehold
interests in and to all of the Leased Real Property, free and clear of all
Liens. There exists no default (nor any condition or event which with notice,
lapse of time, or both would constitute a default) with respect to any such Real
Property Lease by any party thereto. Each such Real Property Lease is in full
force and affect and subsequent to the Seller's assignment of such Real
-17-
<PAGE> 18
EXECUTION COPY
Property Lease to the Buyer pursuant to this Agreement, will be enforceable
against the lessor or lessee, as the case may be, in accordance with their
terms.
(c) The Real Estate constitutes all of the real property owned,
leased, occupied or otherwise utilized in connection with the Business. Other
than the Seller, there are no parties in possession or, to the Seller's
Knowledge, parties having any current or future right to occupy any of the Real
Estate, other than the landlord's rights pursuant to the terms of any lease. The
Real Estate is in operating condition and repair and is sufficient and
appropriate for the conduct of the Business as presently conducted. The Real
Estate and all plants, buildings and Improvements located thereon conform to all
applicable building, zoning and other laws, ordinances, rules and regulations.
All permits, licenses and other approvals necessary to the current occupancy and
use of the Real Estate have been obtained, are in full force and effect, and the
Real Estate and the Business are conducted in conformity therewith. Except as
set forth on Schedule 3.12(c), there exists no violation of any covenant,
condition, restriction, easement, agreement or order affecting any portion of
the Real Estate. No Improvements located on the Real Estate or accessways
encroach on land not included in the Real Estate and no such Improvement is
dependent for its access, operation or utility on any land, building or other
improvement not included in the Real Estate. There is no pending or, to the
knowledge of the Seller, threatened condemnation proceeding affecting any
portion of the Real Estate.
(d) The Seller has delivered or made available to the Buyer true,
correct and complete copies of all permits, licenses, certificates,
authorizations, certificates of occupancy, deeds, mortgages and deeds of trust,
restrictive covenants, easements and other recorded agreements relating to the
Real Estate, all surveys, Property Plans, title reports and title insurance
policies of the Seller with respect thereto and all written licenses, permits,
certificates, authorizations, contracts and other agreements listed on Schedule
3.12(d). Except as set forth on Schedule 3.12(d), the Seller has not given or
received any citation, subpoena, summons or other notice alleging a violation
of, or asserting liability under, any applicable Laws with respect to the Real
Estate or the Improvements or the use or condition thereof. The Seller is not in
default under, and to the Seller's Knowledge, no condition exists which with the
giving of notice or the passage of time or both would constitute a default under
any material licenses, permits, certificates, authorizations, contracts or other
agreements listed or described on Schedule 3.12(d) and, except as separately
identified on Schedule 3.12(d), no approval or consent of any Person is needed
for any of the foregoing to continue to be in full force and effect, and such
documents will not become unenforceable by the Buyer following the consummation
of the transactions contemplated by this Agreement.
3.13 Transactions with Affiliates. Except as set forth on Schedule
3.13, no director, officer, shareholder or Affiliate of the Seller or any
shareholder of the Seller has since the date of the Latest Balance Sheet: (a)
borrowed money from or loaned money to the Seller which remains outstanding; (b)
had any contractual or other claim, express or implied, of any kind whatsoever
against the Seller excluding claims for wages and other compensation in the
ordinary course of business and bonuses in accordance with the policy set forth
on Schedule 3.15 and other employment benefits; (c) owned any interest in any
property or assets (tangible or intangible) used or useful by the Seller in the
Business; (d) engaged in any other transaction (other than employment)
-18-
<PAGE> 19
EXECUTION COPY
with the Seller or (e) owned, directly or indirectly, any interest in (except
not more than two percent (2%) stockholdings for investment purposes in
securities of publicly held and traded companies), or served as an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Person which is, or has engaged in business as, a competitor, lessor, lessee,
customer or supplier of the Seller. Each Contract set forth on Schedule 3.13 is
on terms no less favorable to the Seller party thereto than would otherwise be
available in an arm's length transaction with an unaffiliated third party.
3.14 Accounts Receivable and Inventory. Except as set forth on
Schedule 3.14, all Accounts Receivable reflected on the Latest Balance Sheet,
and all Accounts Receivable arising subsequent to the date of the Latest Balance
Sheet, (a) have arisen from bona fide sales transactions in the ordinary course
of business of the Seller on ordinary trade terms, (b) represent valid and
binding obligations due to the Seller, enforceable in accordance with their
terms, and (c) have been collected or are collectible in the ordinary course of
business of the Seller in the aggregate recorded amounts thereof in accordance
with their terms without valid set-off or counterclaim. Schedule 3.14 lists any
obligor which together with all of its Affiliates owes uncollected amounts to
the Seller in an aggregate amount of $25,000 or more. Except as set forth on
Schedule 3.14, all the Inventory consists of a quality and quantity usable and
salable in the ordinary course of business consistent with past practice,
subject to normal and customary allowances in the industry for spoilage, damage
and outdated items. Except as set forth on Schedule 3.14, all items included in
the Inventory are the property of the Seller, free and clear of any Lien, have
not been pledged as collateral, are not held by the Seller on consignment from
others and conform in all material respects to all standards applicable to such
Inventory or its use or sale imposed by any Law.
3.15 Compensation Arrangements. Schedule 3.15 sets forth: (a) the
name and current annual salary, including any bonus or commitment to pay any
other amount or benefit in connection with a termination of employment, if
applicable, of all present officers, directors and employees of the Seller whose
current annual salary, including any promised, expected or customary bonus or
such other amount or benefit, equals or exceeds $75,000 and (b) the Seller's
bonus policy for all other employees. Except as set forth on Schedule 3.15, the
Seller has not made a commitment or agreement (verbally or in writing) to
increase the compensation or to modify the conditions or terms of employment of
any Person listed on Schedule 3.15 or of any other Person if the increase would
cause such Person to be required to be listed on Schedule 3.15, other than in
the ordinary course of business consistent with past practices. To the Seller's
Knowledge none of such Persons has made a threat or otherwise indicated any
intent to the Seller, to any Shareholder or to any of the officers or directors
of the Seller to cancel or otherwise terminate such Person's relationship with
the Seller.
3.16 Operations. Except as disclosed on Schedule 3.16 or expressly
authorized by this Agreement, from the date of the Latest Balance Sheet through
the date hereof, the Seller has not:
-19-
<PAGE> 20
EXECUTION COPY
(a) amended its Articles of Incorporation or By-Laws or merged
with or into or consolidated with any other Person, or changed
or agreed to rearrange in any material manner the character of
its business;
(b) issued, sold or purchased options or rights to subscribe to,
or entered into any contracts or commitments to issue, sell or
purchase, any shares of its capital stock or other equity
interests;
(c) entered into, amended or terminated any (i) written employment
agreement or collective bargaining agreement, (ii) adopted,
entered into or amended any arrangement which is, or would be,
a Plan or (iii) made any change in any actuarial methods or
assumptions used in funding any Plan or in the assumptions or
factors used in determining benefit equivalences thereunder;
(d) issued, incurred or assumed any Indebtedness except for
revolving credit loans made by Nationsbank, N.A. (South)
pursuant to the Second Amended and Restated Loan and Security
Agreement dated May 1, 1996;
(e) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to shareholders or holders
of its equity interests, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any
shares of its capital stock or other equity interests other
than cash dividends paid to shareholders pro-rata;
(f) knowingly waived any right of material value to the Business;
(g) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of Inventory or
material write-off as uncollectible of Accounts Receivable;
(h) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments (including
wages and other compensation in the ordinary course of
business and bonuses in accordance with the policy set forth
on Schedule 3.15) to pay such Persons or its officers,
directors, employees in the ordinary course of business
consistent with past practice;
(i) (i) entered into any lease (as lessor or lessee), (ii) sold,
abandoned or made any other disposition of any of its assets
or properties other than in the ordinary course of business
consistent with past practice; (iii) granted or suffered any
Lien on any of its assets or properties; or (iv) except for
product warranties issued in the ordinary course of business
entered into or amended
-20-
<PAGE> 21
EXECUTION COPY
any contract or other agreement to which it is a party, or by
or to which it or its assets or properties are bound or
subject, or pursuant to which it agrees to indemnify any
Person or to refrain from competing with any Person, in each
case or type required to be disclosed pursuant to Section 3.11
hereof;
(j) except for Inventory, supplies or equipment acquired in the
ordinary course of business, made any acquisition of all or
any part of the assets, properties, capital stock or business
of any other Person;
(k) made any capital expenditures or commitments for capital
expenditures other than in the ordinary course of business
consistent with past practice; or
(l) except in the ordinary course of business, terminated, failed
to renew, amended or entered into any contract or other
agreement of a type required to be disclosed pursuant to
Section 3.11.
3.17 Intellectual Property.
(a) Set forth on Schedule 3.17(a) is a complete and correct and
complete list of all (i) patented and registered Intellectual Property and
pending patent applications and applications for the registration of
Intellectual Property, in each case owned by the Seller; (ii) trade or corporate
names used by the Seller; (iii) computer software and databases created or used
by the Seller (other than mass-marketed software with a license fee of less than
$1,000); (iv) material unregistered trademarks and copyrights owned or used by
the Seller; and (v) licenses and other rights granted by the Seller to any third
party or by any third party to the Seller, in each case with respect to
Intellectual Property.
(b) Except as set forth on Schedule 3.17(a), the Seller owns all
right, title and interest in and to, or has a valid and enforceable license to
use, all Intellectual Property necessary for the operation of the Business as
currently conducted and as currently proposed to be conducted, free and clear of
any Liens or adverse claims. Except as set forth on Schedule 3.17(b), no claim
by any third party contesting the validity, enforceability, ownership or use of
any of the Intellectual Property owned or used by the Seller has been made, is
currently outstanding or is threatened, and there are no grounds for the same.
Except as set forth on Schedule 3.17(b), the loss or expiration of any
individual Intellectual Property right or related group of Intellectual Property
rights owned or used by the Seller would not have a Material Adverse Effect, and
to the Seller's knowledge no such loss or expiration is threatened, pending or
reasonably foreseeable. Except as set forth on Schedule 3.17(b), the Seller has
not received any notice of, nor is the Seller aware of any facts which indicate
a likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to the Intellectual Property owned or used by the
Seller. Except as set forth on Schedule 3.17(b), the Seller has not infringed,
misappropriated or otherwise conflicted with any Intellectual Property of any
third party, and the Seller is not aware of any infringement, misappropriation
or conflict which will occur as a result of the continued operation of the
Business as currently conducted or as currently proposed to be conducted. All
Intellectual Property owned
-21-
<PAGE> 22
EXECUTION COPY
or used by Seller in the conduct of the Business, will be properly assigned or
licensed to the Buyer immediately subsequent to the Closing.
3.18 Employees.
(a) Except as set forth on Schedule 3.18(a), the Seller is not party
to or bound by any contract or agreement for the employment of any Person.
(b) Except as set forth on Schedule 3.18(b), since January 1, 1995,
no more than 30 employees of the Seller relating to the business have been
terminated, or to the knowledge of the Seller, plans to terminate, employment
with the Seller. Except as set forth on Schedule 3.18(b), the Seller is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strike, union grievance, claim of unfair labor practice or other collective
bargaining dispute relating to the Business. Except as set forth on Schedule
3.18(b), to the knowledge of the Seller there is no organizational effort being
made or threatened by or on behalf of any labor union with respect to employees
of the Seller relating to the Business. The Seller has not committed any unfair
labor practice or violated any federal, state or local law or regulation
regulating employers or the terms and conditions of its employees' employment,
including laws regulating employee wages and hours, employment discrimination,
employee civil rights, equal employment opportunity and employment of foreign
nationals other than such practice or violations which would not cause a
Material Adverse Effect as to the Seller.
(c) Any notice required under any law or collective bargaining
agreement has been given, and all bargaining obligations with any employee
representative have been satisfied. The Seller has not implemented any plant
closing or mass layoff of employees as those terms are defined in the Worker
Adjustment Retraining and Notification ("WARN") Act of 1988, as amended, or any
similar state or local law or regulation, and no layoffs that could implicate
such laws or regulations will be implemented before Closing without advance
notification to the Buyer.
3.19 Employee Benefits.
(a) Set forth on Schedule 3.19 is a list of all written Plans
contributed to, maintained or sponsored by the Seller, to which the Seller is
obligated to contribute or with respect to which the Seller has any liability or
potential liability, whether direct or indirect, including all Plans contributed
to, maintained or sponsored by a member of a controlled group of entities,
within the meaning of Section 414 of the Code (or with respect to which any such
controlled group member has any direct or indirect liability or potential
liability), of which the Seller is or was a member, to the extent the Seller has
any liability or potential liability with respect to such Plan.
(b) Except as set forth on Schedule 3.19, each Plan and all related
trusts, insurance contracts and funds have been maintained, funded, and
administered in compliance in all material respects with all applicable laws and
regulations, including ERISA and the Code. The Seller has complied in all
material respects with all applicable reporting and disclosure requirements with
respect to each Plan. Neither the Seller nor any trustee or administrator of any
Plan or other
-22-
<PAGE> 23
EXECUTION COPY
Person has engaged in any transaction with respect to any Plan which could
subject the Buyer or any trustee or administrator of such Plan, or any party
dealing with such Plan, to any material Tax, fine, penalty or other liability
(civil or otherwise) imposed by ERISA or the Code. No material actions, suits,
investigations or claims with respect to any Plan (other than routine claims for
benefits) or with respect to any fiduciary or other person dealing with any Plan
are pending or threatened and, to the knowledge of the Seller, there are no
facts which could give rise to or be expected to give rise to any such actions,
suits, investigations or claims. The Seller has complied in all material
respects with the requirements of COBRA (as defined in Section 7.6).
(c) No Plan that is subject to the minimum funding requirements of
Section 412 of the Code or Section 302 of ERISA has incurred any "accumulated
funding deficiency", as such term is defined in such Sections of ERISA and the
Code, whether or not waived. None of the assets of the Seller is the subject of
any Lien arising under Section 302(f) of ERISA or Section 412(n) of the Code,
and, to the best knowledge of the Seller there are no facts which could be
expected to give rise to such a Lien. Except as set forth on Schedule 3.19, the
assets of each employee pension benefit plan (as defined in Section 3(c) of
ERISA) exceed the benefit liabilities thereunder (as determined on a plan
termination basis). The Seller has no actual or potential liabilities under
Title IV of ERISA with respect to any Plan other than for the payment of PBGC
premiums.
(d) Each Plan that is intended to be qualified under Section 401(a)
of the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to the qualification under the
Code of such Plan and the tax exempt status of such related trust, and nothing
has occurred since the date of such determination letter that could reasonably
be expected to have a material adverse effect on the qualification of such Plan
or the tax exempt status of such related trust.
(e) Except as provided in Schedule 3.19(e), with respect to each
Plan relating to the Business, the Seller has provided the Buyer with copies, to
the extent applicable and requested by the Buyer, of all documents pursuant to
which the Plans are maintained, funded and administered, the most recent annual
report (Form 5500 series) filed with the IRS (with attachments), the most recent
financial statement, actuarial report and all governmental rulings,
determinations and opinions (including the most recent IRS favorable
determination letter) (and pending requests for governmental rulings,
determinations and opinions).
3.20 Environmental Health and Safety Matters.
(a) Except as set forth on Schedule 3.20(a), the Seller has not
violated any Environmental Requirements or Safety Requirements in the operation
of the Business.
(b) Except as set forth on Schedule 3.20(b), the Seller has obtained
and complied with, and is in compliance with, all permits, licenses or other
authorizations that may be required pursuant to Environmental Requirements or
Safety Requirements for the occupation of its facilities and the operation of
the Business.
-23-
<PAGE> 24
EXECUTION COPY
(c) Except as set forth on Schedule 3.20(c), the Seller has not
received any claim, complaint, citation, report or other written or oral notice
regarding any Liabilities, including any investigatory, remedial or corrective
obligations, arising under Environmental Requirements or Safety Requirements.
(d) Except as set forth on Schedule 3.20(d) to the Seller's
Knowledge, none of the following exists at any property owned or occupied by the
Seller:
(i) Underground storage tanks or surface impoundments;
(ii) Asbestos-containing material in any form or condition;
(iii) Materials or equipment containing polychlorinated
biphenyls; or
(iv) Landfills or other waste disposal areas;
(e) No Environmental Lien has attached to any property owned, leased
or operated by the Seller.
(f) Except as set forth on Schedule 3.20(f), the Seller has not
expressly assumed or undertaken any liability, including, without limitation,
any obligation for corrective or remedial action, of any other person relating
to Environmental Requirements.
(g) Except as set forth on Schedule 3.20(g), the Seller has not
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that has given or would give rise to liabilities, (including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, or any investigative, corrective or
remedial obligations), pursuant to CERCLA, as amended, or any other current
Environmental Requirements.
3.21 Insurance. Schedule 3.21 sets forth a list and brief
description (specifying the insurer, the policy number or covering note number
with respect to binders and the amount of any deductible, describing the pending
claims if such claims exceed applicable policy limits, setting forth the
aggregate amount paid out under each such policy through the date hereof and the
aggregate limit, if any, of the insurer's liability thereunder) of all policies
or binders of fire, liability, errors and omissions, workers' compensation,
vehicular, unemployment and other insurance held by or on behalf of the Seller.
Schedule 3.21 also designates which said policies shall be retained by Seller
and which shall be transferred to Buyer. Such policies and binders are valid and
enforceable in accordance with their terms in all material respects, are in full
force and effect, and insure against risks and liabilities to the extent and in
respect of amounts, types and risks insured, all as are customary in the
industries in which the Seller operates. All of such policies have been issued
by reputable insurance companies actively engaged in the insurance business.
Except as set forth on
-24-
<PAGE> 25
EXECUTION COPY
Schedule 3.21, the Seller is not in default with respect to any material
provision contained in any such policy or binder or has failed to give any
notice or present any claim under any such policy or binder in due and timely
fashion. Except for claims disclosed on Schedule 3.21, there are no outstanding
unpaid claims under any such policy or binder which have gone unpaid for more
than forty-five (45) days or as to which the carrier has disclaimed liability.
All known claims or circumstances likely to give rise to any claims, if any,
made against the Seller has been disclosed and tendered to the appropriate
insurance companies and are being defended by such appropriate insurance
companies in accordance with the policy terms and limits. Except as set forth on
Schedule 3.21, the Seller has not received any notice of cancellation or
non-renewal of any such policy or binder or any notice from any of its insurance
carriers that any insurance premiums will be materially increased in the future
or that any insurance coverage listed on Schedule 3.21 will not be available in
the future on substantially the same terms as now in effect. None of the
policies disclosed on Schedule 3.21 provides that premiums paid in respect of
periods may be adjusted or recomputed based on claims-paying experience of such
policies or otherwise. With regard to the policies to be transferred to Buyer,
except as separately disclosed on Schedule 3.21, all of such policies or binders
in the name of the Seller shall be in full force and effect and enforceable by
the Buyer following the consummation of the transactions contemplated by this
Agreement.
3.22 Permits. Schedule 3.22 sets forth a list of the Permits which
the Seller has obtained in connection with its assets, properties and the
Business. Except as set forth on Schedule 3.22 or Schedule 3.20(b), no Permits
are required to be obtained by the Seller in connection with its properties or
the Business. All such Permits are in full force and effect and in good
standing, except as otherwise provided on Schedule 3.22. The Seller has not
received any notice of any claim of revocation of any such Permits or has
knowledge of any event which might give rise to such a claim, nor is the Seller
aware of any fact or circumstances which would prevent the Buyer from obtaining
such Permits.
3.23 Title; Liens. The Seller owns outright and has good and
marketable title to all of its assets and properties (tangible and intangible),
including, without limitation, all of the assets and properties (except Real
Estate and capitalized leases) reflected on the Latest Balance Sheet, and, at
the Closing Date, the Seller will have good and marketable title to all such
assets and properties, in each case free and clear of any Lien, except for
Permitted Liens and Liens set forth on Schedule 3.23.
3.24 Compliance with Laws. Except as set forth in Schedule 3.24, the
Seller (a) is in material compliance with all, and not in material violation of
any, and has not received any claim or notice that it is not in compliance in
any material respect with, or that it is in violation in any material respect
of, any Law to which the Seller or any of its businesses, operations, assets or
properties (including the use and occupancy thereof) are subject which
non-compliance or violation could have a Material Adverse Effect and (b) the
Seller has not failed to obtain or to adhere to the requirements of any
governmental permit, license, registration and other governmental consent or
authorization necessary in connection with its assets, properties or business,
which failure could have a Material Adverse Effect on the Seller or the Buyer.
-25-
<PAGE> 26
EXECUTION COPY
3.25 Sufficiency of Assets. The sale of the Assets pursuant to this
Agreement will effectively convey to the Buyer all of the tangible and
intangible property used (whether owned, leased or held under license by the
Seller, its Affiliates or by others) in connection with the conduct of the
Business as heretofore conducted by the Seller (except for the Excluded Assets)
including, without limitation, all tangible assets and properties of the Seller
reflected in the Latest Balance Sheet and assets and properties acquired since
the Latest Balance Sheet Date in the conduct of the Business, other than the
Excluded Assets and assets and properties disposed of since such date without
violation of this Agreement. Except as disclosed in Schedule 3.25, there are no
material facilities, services, assets or properties shared with any other Person
which are used by the Seller and the Assets are in operating condition and
repair, normal wear and tear excepted.
3.26 Substantial Customers and Suppliers. Schedule 3.26 lists the
ten (10) largest customers of the Seller, on the basis of revenues for goods
sold or services provided for the most recently-completed fiscal year. Schedule
3.26 lists the five (5) largest suppliers of the Seller, on the basis of cost of
goods or services purchased as of August 31, 1997. Except as disclosed in
Schedule 3.26, no such customer or supplier has ceased or materially reduced its
purchases from, use of the services of, sales to or provision of services to the
Seller (as appropriate) since the Latest Balance Sheet date, or to the Seller's
Knowledge, has threatened to cease or materially reduce such purchases, use,
sales or provision of services to the Seller (as appropriate) after the date
hereof.
3.27 Banks, Brokers, and Proxies. Schedule 3.27 sets forth (a) the
name of each bank, trust company, securities or other broker or other financial
institution with which the Seller has an account, credit line or safe deposit
box or vault, or otherwise maintains relations; (b) the name of each person
authorized by the Seller to draw thereon or to have access to any safe deposit
box or vault; (c) the purpose of each such account, safe deposit box or vault;
and (d) the names of all persons authorized by proxies, powers of attorney or
other instruments to act on behalf of the Seller in matters concerning its
business or affairs. Except as set forth on Schedule 3.27, all such accounts,
credit lines, safe deposit boxes and vaults are maintained by the Seller for
normal business purposes, and no such proxies, powers of attorney or other like
instruments are irrevocable.
3.28 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Seller directly
with the Buyer without the intervention of any Person on behalf of the Seller in
such manner as to give rise to any valid claim by any Person against the Seller
or the Buyer for a finder's fee, brokerage commission or similar payment other
than to NationsBanc Capital Markets, Inc.
3.29 Disclosure. Neither this Agreement, nor any Schedule or Exhibit
to this Agreement, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. All information provided to the Buyer and its agents by the Seller
and its Affiliates or agents is true, complete and correct in all material
respects.
3.30 Investment Intent. The Seller is acquiring the Note for its own
account for the purpose of investment and not with a view to resale or any
distribution thereof except for a
-26-
<PAGE> 27
EXECUTION COPY
distribution to the Seller's shareholders after the Closing Date. The Seller
understands that (a) the Note has not been registered under the Securities Act
of 1933 by reason of its issuance in a transaction exempt from the registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof, (b)
the Note must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act of 1933, as amended, or is exempt from such
registration, (c) the Note will bear a legend to such effect and (d) Holdco will
make a notation on its transfer books to such effect. The Seller acknowledges
that it has had a full opportunity to request from the Buyer and to review and
has received all information which it deems relevant, in making a decision to
acquire the Note and the Seller will comply with the restrictions on
transferability of the Note contained therein. The Seller is an "accredited
investor" within the meaning of Rule 501 under the Securities Act of 1933, as
amended.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer and, with respect to Sections 4.1 through 4.6 and 4.8
through 4.11 only Holdco, represents and warrants to the Seller as follows. The
representations and warranties which follow are deemed repeated on the Closing
Date.
4.1 Organization and Qualification. Each of the Buyer and Holdco is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to (i) own, lease and operate its properties and assets as they are
now owned, leased and operated, (ii) carry on its business as now presently
conducted and as proposed to be conducted after giving effect to the purchase of
the Assets and (iii) to execute and deliver this Agreement and each Related
Document to which it is a party and to carry out the terms hereof and thereof.
Each of the Buyer and Holdco is duly qualified to do business in each
jurisdiction in which the nature of its business or properties makes such
qualification necessary, except where the failure to do so would not have a
Material Adverse Effect on the Buyer. The jurisdictions in which each of the
Buyer and Holdco is so qualified are set forth on Schedule 4.1.
4.2 Validity and Execution of Agreement. Each of the Buyer and
Holdco has the full legal right, capacity and power and has all requisite
corporate authority and approval required to enter into, execute and deliver
this Agreement and each other Related Document to which it is a party and to
perform fully its obligations hereunder and thereunder. The board of directors
of each of the Buyer and Holdco has approved the transactions contemplated
pursuant to this Agreement and each of the Related Documents required to be
entered into pursuant hereto by each such party. This Agreement has been duly
executed and delivered by them, the Buyer and Holdco and constitutes the valid
and binding obligation of each of them enforceable against them in accordance
with its terms.
4.3 No Conflict. Except as set forth on Schedule 4.3, neither the
execution, delivery nor performance by each of the Buyer and Holdco of this
Agreement, the transactions
-27-
<PAGE> 28
EXECUTION COPY
contemplated hereby or the Related Documents (to the extent such Person is a
party thereto) will: (a) violate or conflict with any of the provisions of the
Certificate of Incorporation or By-Laws (or similar governing documents) of the
Buyer or Holdco ; (b) violate, conflict with, result in the acceleration of, or
entitle any party to accelerate the maturity or the cancellation of the
performance of any obligation under, or result in the creation or imposition of
any Lien in or upon any of the properties or assets of the Buyer or Holdco or
constitute a default (or an event which might, with the passage of time or the
giving of notice, or both, constitute a default) under any mortgage, indenture,
deed of trust, lease, contract, loan or credit agreement, license or other
instrument to which the Buyer or Holdco is a party or by which they or any of
their properties or assets may be bound or affected; or (c) violate or conflict
with any provision of any Law applicable to the Buyer or Holdco, or require any
consent or approval of or filing or notice with any Governmental Body.
4.4 Capitalization/Subsidiaries. All of the issued and outstanding
shares of capital stock or other equity interests of the Buyer and Holdco are
owned, directly or indirectly, beneficially and of record as set forth on
Schedule 4.4. Neither the Buyer nor Holdco owns, directly or indirectly, any
capital stock of, or any other interest in, any other Person other than the
Buyer, in the case of Holdco, and RVP International Sales Corp., a Barbados
corporation, in the case of the Buyer.
4.5 No Material Adverse Effect. Except as set forth on Schedule 4.5,
since June 30, 1997 there has been no change in the assets, properties,
business, operations, income or condition (financial or otherwise) of the Buyer
or Holdco, nor to the Buyer's or Holdco's knowledge is any such change
threatened, nor has there been any damage, destruction or loss which could have
a Material Adverse Effect on the Buyer or Holdco, whether or not covered by
insurance.
4.6 Operations. Except as disclosed on Schedule 4.6 or expressly
authorized by this Agreement, from June 30, 1997 through the date hereof,
neither the Buyer nor Holdco has:
(a) amended its Certificate of Incorporation or By-Laws or
comparable instruments or merged with or into or consolidated
with any other Person, or changed or agreed to rearrange in
any material manner the character of its business;
(b) issued, sold or purchased options or rights to subscribe to,
or entered into any contracts or commitments to issue, sell or
purchase, any shares of its capital stock or other equity
interests other than pursuant to Section 5.0 hereof;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii) adopted,
entered into or amended any arrangement which is, or would be,
a Plan or (iii) made any change in any actuarial methods or
assumptions used in funding any Plan or in the assumptions or
factors used in determining benefit equivalences thereunder;
-28-
<PAGE> 29
EXECUTION COPY
(d) issued, incurred or assumed any Indebtedness, capitalized
lease or other absolute or contingent obligation except
pursuant to the Credit Agreement dated August 22, 1996 among
the Buyer (previously known as Recreation Vehicle Products,
Inc.) and the Chase Manhattan Bank, as Agent;
(e) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to its shareholders or
holders of its equity interests, or made any direct or
indirect redemption, retirement, purchase or other acquisition
of any shares of its capital stock or other equity interests;
(f) knowingly waived any right of material value to its business;
(g) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of Inventory or
material write-off as uncollectible of Accounts Receivable;
(h) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such Persons or its officers, directors, employees in the
ordinary course of business consistent with past practice;
(i) (i) entered into any lease (as lessor or lessee), (ii) sold,
abandoned or made any other disposition of any of its assets
or properties other than in the ordinary course of business
consistent with past practice; (iii) granted or suffered any
Lien on any of its assets or properties; or (iv) except
product warranties issued in the ordinary course of business
entered into or amended any contract or other agreement to
which it is a party, or by or to which it or its assets or
properties are bound or subject, or pursuant to which it
agrees to indemnify any Person or to refrain from competing
with any Person;
(j) except for Inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of
the assets, properties, capital stock or business of any other
Person;
(k) paid, directly or indirectly, any of its Liabilities before
the same became due in accordance with the terms thereof or
otherwise than in the ordinary course of business, except to
obtain the benefit of discounts available for early payment;
(l) made any capital expenditures or commitments for capital
expenditures other than in the ordinary course of business
consistent with past practice; or
-29-
<PAGE> 30
EXECUTION COPY
(m) except in the ordinary course of business, terminated, failed
to renew, amended or entered into any material contract or
other material agreement.
4.7 Employee Benefits.
(a) Set forth on Schedule 4.7 is a list of all Plans contributed to,
maintained or sponsored by the Buyer, to which the Buyer is obligated to
contribute or with respect to which the Buyer has any liability or potential
liability, whether direct or indirect, including all Plans contributed to,
maintained or sponsored by a member of a controlled group of entities, within
the meaning of Section 414 of the Code (or with respect to which any such
controlled group member has any direct or indirect liability or potential
liability), of which the Buyer is or was a member, to the extent the Buyer has
any liability or potential liability with respect to such Plan.
(b) Each Plan and all related trusts, insurance contracts and funds
have been maintained, funded, and administered in compliance in all material
respects with all applicable laws and regulations, including ERISA and the Code.
The Buyer has complied in all material respects with all applicable reporting
and disclosure requirements with respect to each Plan. Neither the Buyer nor any
trustee or administrator of any Plan or other Person has engaged in any
transaction with respect to any Plan which could subject the Buyer or any
trustee or administrator of such Plan, or any party dealing with such Plan, to
any material Tax, fine, penalty or other liability (civil or otherwise) imposed
by ERISA or the Code. No material actions, suits, investigations or claims with
respect to any Plan (other than routine claims for benefits) or with respect to
any fiduciary or other person dealing with any Plan are pending or threatened
and, to the knowledge of the Buyer, there are no facts which could give rise to
or be expected to give rise to any such actions, suits, investigations or
claims. The Buyer has complied in all material respects with the requirements of
COBRA (as defined in Section 7.6).
(c) No Plan that is subject to the minimum funding requirements of
Section 412 of the Code or Section 302 of ERISA has incurred any "accumulated
funding deficiency", as such term is defined in such Sections of ERISA and the
Code, whether or not waived. None of the assets of the Buyer is the subject of
any Lien arising under Section 302(f) of ERISA or Section 412(n) of the Code,
and, to the best knowledge of the Buyer there are no facts which could be
expected to give rise to such a Lien. Except as set forth on Schedule 4.7, the
assets of each employee pension benefit plan (as defined in Section 3(c) of
ERISA) exceed the benefit liabilities thereunder (as determined on a plan
termination basis). The Buyer has no actual or potential liabilities under Title
IV of ERISA with respect to any Plan other than for the payment of PBGC
premiums.
(d) Each Plan that is intended to be qualified under Section 401(a)
of the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to the qualification under the
Code of such Plan and the tax exempt status of such related trust, and nothing
has occurred since the date of such determination letter that could reasonably
be expected to have an adverse effect on the qualification of such Plan or the
tax exempt status of such related trust.
-30-
<PAGE> 31
EXECUTION COPY
(e) With respect to each Plan relating to the Business, the Buyer
has provided the Seller with copies, to the extent applicable, of all documents
pursuant to which the Plans are maintained, funded and administered, the most
recent annual report (Form 5500 series) filed with the IRS (with attachments),
the most recent financial statement, actuarial report and all governmental
rulings, determinations and opinions (including the most recent IRS favorable
determination letter) (and pending requests for governmental rulings,
determinations and opinions).
4.8 Permits. Schedule 4.8 sets forth a list of the Permits which the
Buyer or Holdco or has obtained in connection with its assets, properties and
business. Except as set forth on Schedule 4.8, no Permits are required to be
obtained by the Buyer or Holdco or in connection with its properties or
business. All such Permits are in full force and effect and in good standing,
except as separately identified on Schedule 4.8. Neither the Buyer nor Holdco
has received any notice of any claim of revocation of any such Permits or has
knowledge of any event which might give rise to such a claim.
4.9 Compliance with Laws. Except as set forth in Schedule 4.9, each
of the Buyer and Holdco (a) is in compliance with all, and not in violation of
any, and has not received any claim or notice that it is not in compliance in
any material respect with, or that it is in violation in any material respect
of, any Law to which the Buyer or Holdco or any of its businesses, operations,
assets or properties (including the use and occupancy thereof) are subject and
(b) neither the Buyer nor Holdco has failed to obtain or to adhere to the
requirements of any governmental permit, license, registration and other
governmental consent or authorization necessary in connection with its assets,
properties or business, which failure could have a Material Adverse Effect on
the Buyer or Holdco.
4.10 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Buyer and Holdco
directly with the Seller without the intervention of any Person on behalf of the
Buyer or Holdco in such manner as to give rise to any valid claim by any Person
against the Seller for a finder's fee, brokerage commission or similar payment.
4.11 Government Filings. Holdco and the Buyer have each made all
necessary government filings and registrations required to be made by each of
them in connection with this Agreement, the transactions contemplated hereby and
the financing thereof.
4.12 Operation of Business. The Buyer intends to operate the
Business as an ongoing concern and does not currently intend to sell or
otherwise transfer all or a material part of the Business, or discontinue any
material part or all of the Business.
-31-
<PAGE> 32
EXECUTION COPY
SECTION V
PRE-CLOSING COVENANTS
5.1 Corporate Examinations and Investigations. At or prior to the
Closing Date, each of the parties and financing sources shall be entitled,
through their respective representatives and agents, to make such investigation
of the assets, properties, business and operations of the other parties hereto
and such examination of the books, records, Tax Returns, financial condition and
operations of the other parties hereto as such party, the Buyer or its lenders
may wish. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances and the relevant party shall
cooperate fully therein. No investigation by any party shall diminish or obviate
any of the representations, warranties, covenants or agreements of the other
parties under this Agreement.
5.2 Conduct of Business. From the date hereof until the Closing
Date, each of the parties shall (a) conduct its business in the ordinary course
consistent with past custom and practice in and in substantially the same manner
as it was being conducted prior to June 30, 1997; (b) in the case of the Seller
only, without the prior written consent of the Buyer, and in the case of the
Buyer and Holdco, without prior written notice to the Seller, not undertake any
of the actions specified in Sections 3.16 or 4.6, as applicable, and (c) use its
best efforts to (i) preserve intact its business, assets, properties and
organizations; (ii) keep available the services of its present officers,
employees, consultants and agents; and (iii) maintain its present suppliers and
customers and (iv) preserve its goodwill.
5.3 Notice of Events. Each party hereto, to the extent it has
knowledge thereof, shall promptly notify the other parties hereto of (a) any
event, condition or circumstance occurring from the date hereof until the
Closing Date that would constitute a violation or breach of this Agreement, (b)
any event, occurrence, transaction or other item which would have been required
to have been disclosed on any Schedule or statement delivered hereunder had such
event, occurrence, transaction or item existed on the date hereof, other than
items arising in the ordinary course of business which would not render any
representation or warranty made by that party materially misleading.
5.4 Exclusivity. Until the earlier occurs of the Closing or the
termination of this Agreement, none of NationsBanc Capital Markets, Inc., the
Seller nor any of their respective directors, officers, employees, agents,
representatives, members or Affiliates shall initiate, solicit, entertain,
negotiate, accept or discuss, directly or indirectly, or encourage inquiries or
proposals (each, an "Acquisition Proposal") with respect to, or furnish any
information relating to or participate in any negotiations or discussions
concerning, or enter into any agreement with respect to, any acquisition or
purchase of all or a substantial portion of the assets of, or of a substantial
equity interest in, the Business or any business combination with the Seller or
any reorganizations, dissolution, recapitalization, merger or consolidation of
the Seller other than as contemplated by this Agreement (a "Third Party
Acquisition"). The Seller shall, and shall cause each of its Affiliates to,
immediately cease and cause to be terminated any existing activities, including
discussions or
-32-
<PAGE> 33
EXECUTION COPY
negotiations with any parties, conducted prior to the date hereof with respect
to any Acquisition Proposal. Notwithstanding the foregoing, the Seller may
furnish information or cause information to be furnished to, and may participate
in discussions and negotiations directly and through its representatives and
enter into an agreement relating to an Acquisition Proposal with, any third
party (including parties with whom the Seller or its representatives have had
discussions on any basis on or prior to the date hereof) who makes a bona fide
unsolicited proposal or offer to the Seller, if the Seller's Board determines in
good faith, after consultation with outside counsel, that the failure to take
any such actions could reasonably be deemed to cause the members of the Seller's
Board to breach their fiduciary duties under applicable law. In addition,
nothing contained in this Agreement shall prohibit the Seller and its directors
from making to its stockholders any recommendation and related filings with the
SEC as required by Rules 14e-2 and 14d-9 under the Securities Exchange Act of
1934, with respect to any tender offer. Each of the Seller and Shareholders
represent that it is not a party to or bound by any agreement with respect to an
Acquisition Proposal other than under this Agreement. The Seller shall cause its
officers, directors, agents and advisors to comply with the provisions of this
Section 5.4. In the event the Closing does not occur (other than by reason of
the failure to satisfy the condition set forth in Section 6.1(i), or by reason
of the willful conduct of the Buyers or Holdco) and all or substantially all of
the Business or the stock of the Seller is sold to or merged into a third party
on or prior to June 30, 1998, the Seller agrees to pay to the Buyer on demand
all of its costs and expenses (including the fees and costs of its professional
advisors and financiers but excluding incidental and consequential damages) in
connection with this Agreement and the attempted Closing not to exceed $500,000.
In consideration of the foregoing, the Buyer shall on the date of this Agreement
is entered into, deposit into an account with Nationsbank, N.A. the amount of
$50,000.00. If the Closing does not occur on or before November 10, 1997, by
reason of the failure to satisfy the condition set forth in Section 6.1(i), or
by reason of the willful conduct of the Buyer or Holdco then the Earnest Deposit
shall be paid to the Seller. In the event the Closing occurs on or prior to
November 10, 1997, the Earnest Amount shall be payable to the Seller on the
Closing Date in part satisfaction of the Cash Payment of the Purchase Price.
5.5 Mutual Assistance. The Seller and the Buyer agree that they will
cooperate in the expeditious filing of all notices, reports and other filings
with any Governmental Body required to be submitted jointly by the Seller and
the Buyer in connection with the execution and delivery of this Agreement, the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby, including any filings under any applicable state
tax statutes, in connection with the sale of the Assets to the Buyer.
Additionally, (i) to the extent a matter is the Seller's responsibility and/or
the Seller has a duty to cooperate with the Buyer and/or Holdco, the Seller will
use its best efforts to cause to be satisfied as soon as practicable, and prior
to the Closing Date, all of the conditions set forth in Section VI to the
obligation of the Buyer to enter into and complete the Closing; and (ii) to the
extent a matter is the Buyer's or Holdco's responsibility and/or either Buyer
and/or Holdco have a duty to cooperate with the Seller, Buyer and Holdco will
use their best efforts to cause to be satisfied as soon as practicable, and
prior to the Closing Date, all of the conditions set forth in Section VI to the
obligation of the Seller to enter into and complete the Closing.
-33-
<PAGE> 34
EXECUTION COPY
5.6 Name Changes. On or prior to the Closing, the Seller shall amend
its articles of incorporation to change its name to a name which does not
contain the word Crispaire, Marvair and E-Tech, or substantially or confusingly
similar words, and thereafter the Seller shall not use the name Crispaire,
Marvair and E-Tech in any capacity whatsoever in connection with the operation
of their respective businesses.
5.7 Public Announcements. None of the parties hereto shall make, nor
permit any agent or Affiliate to make, any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated hereby without the prior written consent of the other,
except any public disclosure (i) made to or by any of the Buyer's financing
sources, (ii) which either party in good faith believes is required by law (in
which case the disclosing party will consult with the other party prior to
making such disclosure) or (iii) in connection with a public offering of the
securities of the Buyer or any subsequent transferee of all or substantially all
of the Assets. The Buyer and the Seller shall jointly agree on the content and
substance of all public announcements concerning the transactions contemplated
hereby.
5.8 Holdco Equity. Holdco agrees to issue to certain employees of
the Seller pursuant to documents mutually agreed to on the Closing Date, in such
allocations as the Seller may elect, an aggregate of 833,334 shares of Holdco's
Series A Preferred Stock, par value $.01 per share ("A Preferred") and shares
representing 8.34% of Holdco's then outstanding Class A Common Stock, par value
$.01 per share ("A Common") for an aggregate consideration of $2,500,000.00
payable to Holdco by wire transfer on the Closing Date. Holdco agrees that for
an additional investment of $500,000.00, the shareholders shall be entitled to
be issued an additional 166,666 shares of A Preferred and shares representing an
additional 1.6% of the A Common. Holdco further agrees that for every additional
investment of $1,000,000.00 (after the $3,000,000.00 referred to above), the
shareholders shall be entitled to be issued additional shares representing an
additional 5% of the A Common. The percentages of A Common referred to in this
Section 5.8 are determined prior to dilution by issuances pursuant to Holdco's
RV Products Holding Corp. 1996 Stock Option Plan (as amended).
5.9 Transfer Taxes. Except for ad valorem taxes, the Seller and the
Buyer agree to each pay half of all sales, use, transfer, real property
transfer, recording, stamp, stock transfer and other similar taxes and fees
("Transfer Taxes") arising out of or in connection with the transactions
contemplated by this Agreement, and to deliver evidence of payment of, and
indemnify, defend and hold harmless each other with respect to, such Transfer
Taxes. The Seller and the Buyer shall each file all necessary documentation and
Tax Returns with respect to, such Transfer Taxes. All ad valorem taxes accrued
and owing on all real and personal property which are parts of the Assets shall
be apportioned between the Seller and Buyer based on the time period such real
and personal property was held by the Seller or Buyer.
-34-
<PAGE> 35
EXECUTION COPY
SECTION VI
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to the Obligations of the Buyer. The
obligations of the Buyer to enter into and complete the Closing are subject to
the fulfillment on or prior to the Closing Date of the following conditions, any
one or more of which may be waived by the Buyer:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Seller contained in this Agreement shall be true, complete
and correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date. The Seller shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date.
(b) Consents, Waivers, Licenses, Filings, etc. The consents,
approvals, authorizations, licenses, registrations, declarations or filings with
regard to the commercial lease contract listed on Schedule 3.3 hereto shall have
been obtained or made, as the case may be.
(c) Third Party Consents. Except as otherwise waived by the Buyer,
all consents, permits and approvals from parties to contracts or other
agreements with the Seller set forth on any Schedule to this Agreement, and any
other material consent, permit or approval that may be required in connection
with the performance by the Seller of its obligations under this Agreement or
the consummation of the transactions contemplated by this Agreement or the
continuance of the Seller's contracts or other agreements with the Buyer after
the Closing shall have been obtained.
(d) Injunction, etc. At the Closing, there shall not be any Order
outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
this Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Business or the Assets to be purchased by the Buyer hereunder.
(e) Opinion of Counsel. The Buyer shall have received the opinion of
Bovis, Kyle & Burch, LLC, counsel to the Seller.
(f) Closing Certificate of the Seller. The Seller shall have
delivered to the Buyer certificates signed by an authorized executive officer of
the Seller, dated the Closing Date, as to the matters set forth in Section
6.1(a) and in form and substance satisfactory to the Buyer.
(g) Other Agreements. The parties hereto shall have entered into the
Escrow Agreement, each of Mr. George D. Wyers, Mr. David L. Shuford and Mr. T.K.
Sellers, Jr. shall have entered into an executive employment agreement with the
Buyer in a form similar to that attached as Exhibit C, each of Mr. George D.
Wyers, Mr. David L. Shuford and Mr. T.K. Sellers, Jr. and Mr.
-35-
<PAGE> 36
EXECUTION COPY
Paul Mechler shall have executed Amendment No. 1 to the Stockholders Agreement
in a form similar to that attached as Exhibit D and the Joinder To Registration
Rights Agreement in a form similar to that attached as Exhibit E and the Seller
shall have terminated George D. Wyers from his employment with the Seller.
(h) New Equity. Certain shareholders and/or management of the Seller
shall have invested at least $2,500,000.00 in cash for equity securities of
Holdco pursuant to Section 5.8.
(i) Financing. The Buyer shall have received cash proceeds from its
financing sources in an amount sufficient to consummate the transactions
contemplated by this Agreement and to pay all fees and expenses in connection
therewith and to provide for the ongoing working capital needs of the Buyer, all
on terms and conditions reasonably satisfactory to the Buyer.
(j) Conveyancing Documents. The Seller shall have executed and
delivered to the Buyer a Transfer and Assumption Agreement in substantially the
form of Exhibit F hereto and such further instruments and documents as may be
reasonably requested by the Buyer in order to complete the transfer of the
Assets to the Buyer.
(k) Environmental. The Buyer shall have completed to its
satisfaction an environmental due diligence review with respect to the Real
Estate and with respect to the Business.
(l) Intellectual Property. With regard to the Intellectual Property
owned by the Seller, the Seller shall have delivered to the Buyer duly executed
patent, trademark and copyright assignment documents in a form acceptable to the
Buyer and suitable for filing in the U.S. Patent
and Trademark Office and the U.S. Copyright Office.
(m) Real Property Deeds. The Seller shall have delivered to the
Buyer a limited warranty deed for each parcel of Owned Property in the form
customary in the jurisdiction where such parcel is located and an assignment of
lease with respect to each Real Property Lease, in each case in form and
substance reasonably acceptable to the Buyer.
(n) Title Insurance. A title insurance company selected by the Buyer
(the "Title Company") shall be willing to insure at standard rates the Seller's
marketable title in and to the Owned Property in fee simple, the Seller's
leasehold estate in any financeable Leased Real Property (a "Financeable
Leasehold"), and the Buyer's lender's (the "Lender") mortgage lien on the Owned
Property and each Financeable Leasehold free and clear of all Liens, defects,
claims, leases, rights of possession or other encumbrances (other than as
described in Schedules 3.12(a) and (b)) and with such endorsements and
affirmative coverages as the Buyer and Lender shall reasonably require
(including non-imputation endorsements). The Seller shall provide all such
affidavits and indemnities as the Title Company reasonably shall require in
order to afford such coverages and shall bear 50% of the cost of obtaining such
title insurance.
(o) Surveys. The Buyer shall have the opportunity to have conducted
and shall receive a survey of each Owned Property and each Leased Real Property
to which the Seller holds
-36-
<PAGE> 37
EXECUTION COPY
a Financeable Leasehold conforming to the Minimum Standard Detail Requirements
jointly established and approved in 1992 by ALTA and ACSM certified to the
Seller, the Buyer, the Lender and the Title Company and showing no defects,
encroachments or encumbrances other than the matters disclosed in Schedule
3.12(a). The Seller shall bear 50% of the cost of obtaining such surveys.
(p) Real Estate. All Real Estate shall be in substantially the same
condition and repair as that on the date of this Agreement, reasonable wear and
tear excepted.
(q) Real Property Leases. The Buyer shall have received (i) from
each landlord under a Real Property Lease an estoppel, (ii) from each landlord
under a Real Property Lease identified in Schedule 3.12(b) as to which a consent
is required, a consent to the transactions contemplated by this Agreement and
(iii) from each mortgagee and ground lessor of any Leased Real Property a
nondisturbance agreement, in each case in form and substance reasonably
satisfactory to the Buyer and Lender. Lender shall have received from the
landlord under each Real Property Lease designated by the Lender an agreement
regarding the subordination to Lender of such landlord's lien against personal
property on the applicable premises and such other matters as the Lender
reasonably requires.
(r) Real Property Affidavits. The Buyer shall have received from the
Seller an affidavit (i) stating that the Seller is not a "foreign person", as
defined in Section 1445(f)(3) of the Internal Revenue Code, (ii) setting forth
the Seller's taxpayer identification number, (iii) stating that the Seller
intends to file a U.S. income tax return with respect to the sale of such Owned
Property, and (iv) granting the Buyer permission to furnish a copy of such
affidavit to the Internal Revenue Service.
6.2 Conditions Precedent to the Obligations of the Seller. The
obligations of the Seller to enter into and complete the Closing are subject to
the fulfillment on or prior to the Closing Date, of the following conditions,
any one or more of which may be waived by the Seller:
(a) Representations, Warranties and Covenants. The representations,
warranties and covenants of the Buyer and Holdco shall be true, complete and
correct in all material respects as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The Buyer and Holdco shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Buyer and Holdco on or prior to the Closing Date.
(b) Injunction, etc. At the Closing, there shall not be any Order
outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
this Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Business or the Assets to be purchased by the Buyer hereunder.
-37-
<PAGE> 38
EXECUTION COPY
(c) Closing Certificates of the Buyer and Holdco. The Buyer and
Holdco shall have tendered to the Seller a certificate signed by a duly
authorized officer of the Buyer or Holdco, as the case may be, dated the Closing
Date, as to the matters set forth in Section 6.2(a) and in form and substance
satisfactory to the Seller.
(d) Delivery of Consideration. The Buyer and Holdco shall have
tendered to the Seller the Cash Payment and the Non-Cash Consideration in
accordance with Section 2.5 hereof.
(e) Opinion of Counsel. The Seller shall have received the opinion
of Kirkland & Ellis, counsel to the Buyer and Holdco.
(f) Other Agreements. The parties hereto shall have entered into the
Escrow Agreement, each of Mr. George D. Wyers, Mr. David L. Shuford and Mr. T.K.
Sellers shall have entered into an employment agreement with the Buyer in a form
similar to that attached as Exhibit C agreed to by the respective parties
thereto and each of Mr. George D. Wyers, Mr. David L. Shuford, Mr. T.K. Sellers,
Jr. and Mr. Paul Mechler shall have executed Amendment No. 1 to the Stockholders
Agreement in a form similar to that attached as Exhibit D and the Joinder To
Registration in Rights Agreement in a form similar to that attached as Exhibit
E.
(g) Consents, Waivers, Licenses, Filings, etc. The consents,
approvals (including stockholder approval), authorizations, licenses,
registrations, declarations or filings listed on Schedule 4.3 hereto shall have
been obtained or made, as the case may be.
SECTION VII
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the Closing
Date:
7.1 Further Information. Following the Closing, each party will
afford to the other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and other data of the
Seller or relating to the Business, the Assets, the Assumed Liabilities or the
Seller in its possession with respect to periods prior to the Closing and the
right to make copies and extracts therefrom, to the extent that such access may
be reasonably required by the requesting party (a) to facilitate the
investigation, litigation and final disposition of any claims which may have
been or may be made against any party or its Affiliates and (b) in connection
with any Tax Return, audit, examination, proceeding or determination and (c) for
any other reasonable business purpose.
7.2 Record Retention. Each party agrees that for a period of not
less than seven (7) years following the Closing Date, it shall not destroy or
otherwise dispose of any of the Books and Records relating to the Business, the
Assets, the Assumed Liabilities, the Excluded Assets or the Seller in its
possession with respect to periods prior to the Closing. Each party shall have
the
-38-
<PAGE> 39
EXECUTION COPY
right to destroy all or part of such Books and Records after the seventh
anniversary of the Closing Date.
7.3 Tax Assistance. During the six years following the Closing, the
Seller and Shareholders, on the one hand, and the Buyer and Holdco, on the other
hand, will provide each other with such assistance as may reasonably be
requested in connection with the preparation of any Tax Return, any audit or
other examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes.
7.4 No Assignment Causing Breach. Neither this Agreement nor any
document or instrument delivered pursuant hereto shall constitute an assignment
of any claim, Contract, lease, commitment or sales or purchase order if an
attempted assignment thereof without the consent of any other Person would be
ineffective, constitute a breach thereof or in any way adversely affect the
rights thereunder. Until such consent is obtained, the Seller, the Buyer and
Holdco will cooperate with each other to provide for the Buyer the benefits of,
and to permit the Buyer to assume all liabilities under, any such claim,
Contract, lease, commitment or sales or purchase order, including enforcement at
the request and expense of the Buyer for the benefit of the Buyer of any and all
rights of the Seller against a third party thereto; and any transfer or
assignment to the Buyer by the Seller of any property or property rights or any
Contract which requires the consent or approval of any third party shall be made
subject to such consent or approval being obtained.
7.5 Insurance Coverage. Whether or not the insurance policies listed
on Schedule 3.21 are being assigned to the Buyer on or before the Closing Date,
the Seller (effective on the Closing Date) shall have the Buyer named as an
additional insured and loss payee, as its interest may appear, on all current
insurance policies maintained by the Seller covering time periods beginning
prior to the date hereof and extending beyond the date hereof, until the
expiration date of such policy or policies. With respect to any Liabilities of
the Seller which the Buyer has agreed to assume pursuant to this Agreement or to
indemnify the Seller pursuant to Section 8.3, the Seller agrees to prosecute
diligently any insurance claims which may be asserted by it in respect thereof
and to promptly notify the Buyer of the assertion of each such claim. In the
event that the Seller recovers insurance proceeds in respect of any such
amounts, the Seller shall promptly remit such proceeds to the Buyer; provided
that the Buyer provides assurances reasonably satisfactory to the Seller that
the Buyer is satisfying its obligations with regard to the Assumed Liability and
under Section VIII.
7.6 Employee Matters and Employee Benefit.
(a) Assumed Plans. Subject to the Buyer's review of the Plans prior
to the Closing Date, the Buyer, and the Seller shall cause the Buyer to assume
sponsorship of the Plans listed on Schedule 7.6 hereto. The Plans assumed by the
Buyer under the foregoing provision of this Section 7.6(a) shall be referred to
herein as the "Assumed Plans." The Buyer and the Seller shall use their
reasonable best efforts to cooperate in the execution of any documents, adoption
of any corporate resolutions or the taking of any other reasonable actions
necessary to effectuate such assumption of sponsorship and related transfers of
trust assets or other funding vehicles or insurance
-39-
<PAGE> 40
EXECUTION COPY
contracts. After the date hereof the Seller shall provide any information and
assistance reasonably requested by the Buyer in connection with the Buyer's
efforts to maintain the Assumed Plans in accordance with all applicable Laws,
and in connection with the fulfillment by the Buyer of any reporting, disclosure
or filing requirements arising after the date hereof with respect to the Assumed
Plans.
(b) Non-Transferred Employees. Nothing in this Section 7.6 shall be
deemed to impose upon the Buyer any liabilities or responsibilities for periods
prior to the Closing regarding individuals who do not become employees of the
Buyer pursuant to offers of employment made under Section 7.6(d) (including
without limitation individuals to whom offers are not required to be made under
Section 7.6(d)), including without limitation liabilities or responsibilities
for (i) pension, retirement, profit-sharing, savings, medical, dental,
disability income, life insurance or accidental death benefits, whether insured
or self-insured, whether funded or unfunded, (ii) workers' compensation (both
long term and short term) benefits, whether insured or self-insured, whether or
not accruing or based upon exposure to conditions prior to the date of this
Agreement or for claims incurred or for disabilities commencing prior to the
Closing Date, or (iii) severance benefits; provided that the Buyer shall be
responsible with respect to Assumed Plans that are intended to be qualified
under Section 401(a) of the Code to the extent that such Plans must be
administered with respect to pre-Closing benefits accrued thereunder, and the
Buyer shall be responsible for such obligations under Code Section 4980B and
ERISA Section 601 et seq. ("COBRA") as are set forth on Schedule 7.6 hereto.
(c) Severance Expressly Excluded. Without limiting the generality of
any other responsibilities of the Seller, the Seller shall be (prior to and
after the date hereof) solely responsible for any severance pay obligations
arising prior to or through the Closing Date.
(d) Offers of Employment. The parties agree that the Buyer will
offer as of the Closing Date employment at will to all employees of the Seller
that are actively employed by the Seller immediately prior to the Closing Date
(other than the employees referred to in Section 6.1(g)); provided that nothing
herein shall require the continuation of any employment or any terms of
employment after the Closing Date. The Seller shall be responsible for complying
with the notice requirements of COBRA and the Workers Adjustment and Retraining
Notification Act with respect to any event or condition on or prior to the
Closing Date. However, the Buyer and Holdco represent and warrant that the Buyer
has no current intention of terminating any employee of the Seller.
Notwithstanding any other provision of this Agreement, the Buyer shall not have
any responsibilities for any legally mandated continuation of health care
coverage, or for compliance with any related requirements, for employees or
their dependents or beneficiaries who incur a loss of health care coverage due
to a qualifying event occurring before or through the Closing. Notwithstanding
the foregoing, Buyer shall, with respect to all employees accepting employment
offered pursuant to this Section, be responsible for all COBRA notices and
coverage and all certificates of coverage required under the Health Insurance
Portability Act required subsequent to the Closing.
-40-
<PAGE> 41
EXECUTION COPY
7.7 Non-Compete and Confidentiality.
(a) Covenants Against Competition. The Seller acknowledges that the
Business (i) is national in scope, (ii) has been developed by a limited number
of persons who have received certain confidential information and trade secrets
of the Seller; and (iii) would not be the subject of this Agreement but for the
covenants of the Seller contained in this Section. Accordingly, the Seller
covenants and agrees not to (1) engage in the Business; (2) render any services
to any Person (other than the Buyer) engaged in such activities; or become
interested in any such Person as a partner, member, principal, agent, trustee,
consultant or in any other similar relationship or capacity; or (3) solicit or
encourage to leave the employment of the Buyer, any employee of the Buyer or
hire any employee who has left the employment of the Buyer after the date of
this Agreement within five (5) years of the termination of such employee's
employment with the Buyer; in the United States of America, directly or
indirectly, for a period commencing on the Closing Date and terminating 5 years
following the Closing Date.
(b) Confidentiality. From the date hereof the Seller shall keep
secret and retain in strictest confidence, and shall not use for the benefit of
itself or others all information about Holdco, the Buyer or the Buyer's business
learned by the Seller in the course of the negotiation of this Agreement and the
transactions contemplated hereby (the "Buyer Information"). As from the Closing,
the Seller shall keep secret and retain in strictest confidence, and shall not
use for the benefit of itself or others all confidential information with
respect to the Seller and its Business and the Assets, or learned by the Seller
heretofore or hereafter directly or indirectly from its own information or the
Buyer, including, without limitation, information with respect to (a)
prospective products and facilities, (b) sales figures, (c) profit or loss
figures, (d) customers, clients, suppliers, sources of supply and customer lists
(the "Confidential Company Information"), and shall not disclose such
Confidential Company Information except with the Buyer's express written
consent. This provision does not prohibit legally mandated disclosure or
disclosure or use of Buyer Information or Confidential Company Information which
becomes publicly known through no wrongful act of either the Buyer or Holdco or
the Seller or any of its shareholders, as the case may be. The parties
acknowledge that they remain bound by the documents referred to in Section 9.4
until Closing, whereupon such documents shall be superseded in their entirety by
the provisions hereof.
(c) Rights and Remedies. Upon the breach or threatened breach of any
of the covenants in this section (the "Restrictive Covenants"), the Buyer has
the right to have the Restrictive Covenants specifically enforced (without
posting any bond) by any court having equity jurisdiction, including, without
limitation, the right to an entry against the Seller of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Buyer and that money damages will not provide adequate
remedy to the Buyer. Further, the Buyer has the right to require the Seller to
account for and pay over to the Buyer all compensation, profits, monies,
accruals, increments or other benefits derived or received by such person the
result of any transactions constituting a breach of any of the Restrictive
Covenants. The aforementioned rights and remedies are severally
-41-
<PAGE> 42
EXECUTION COPY
enforceable and are in addition to, and not in lieu of, any other rights and
remedies available to the Buyer under law or in equity including pursuant to
Section VIII:
(d) Enforceability. The Buyer and the Seller intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of the Restrictive Covenants. If any
court determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions. Further, if any of the Restrictive Covenants, or any part
thereof, is found unenforceable because of the duration of such provision or the
area covered thereby, such court shall have the power to reduce the duration or
area of such provisions and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
7.8 Further Assurances. From and after the Closing, each of the
Buyer, Holdco and the Seller will, and will cause their respective Affiliates
to, execute and deliver such further instruments of sale, conveyance, transfer,
assignment and delivery and such consents, assurances, powers of attorney and
other instruments and take such other action as reasonably may be necessary to
in order to vest in the Buyer (and record and perfect) all right, title and
interest of the Seller in and to the Assets, to put the Buyer in actual
possession and control of the Business and to otherwise fully effectuate and
carry out the transactions contemplated by this Agreement and the Related
Documents. The parties shall use their commercially reasonable best efforts to
fulfill or obtain the fulfillment of the conditions to the Closing, including,
without limitation, the execution and delivery of any Document, the execution
and delivery of which are conditions precedent to the Closing.
7.9 Mail and Other Receipts. The Seller agrees to deliver to the
Buyer promptly upon receipt thereof of any mail, checks or documents which it
receives pertaining to the Business, the Assets (but not the Excluded Assets) or
the Assumed Liabilities. Further, if the Seller receives any payment of the
Accounts Receivable or other asset included in the Assets after the Closing
Date, the Seller will hold such amounts received or paid as trustee for and
remit such payments to the Buyer as soon as practicable. After the Closing Date
the Buyer is entitled (i) to receive and open mail addressed to the Seller and
(ii) to deal with the contents thereof in any manner the Buyer sees fit. The
Buyer agrees to deliver to the Seller promptly upon receipt thereof of any mail,
checks or documents which it receives pertaining to the Excluded Assets or the
Excluded Liabilities.
7.10 Business Operations. The Buyer agrees to operate the Business
as a business unit separate from its own operations until such time as the
Buyer's Board of Directors in good faith determines that it is no longer in the
Buyer's interests to do so.
7.11 Continued Management of the Seller. The current directors and
officers of the Seller shall not, by virtue of the transactions contemplated
hereby, be precluded from continuing to direct and operate the Seller after the
Closing Date.
-42-
<PAGE> 43
EXECUTION COPY
SECTION VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements of the
Seller, the Buyer and Holdco contained in this Agreement will survive the
Closing (a) for the applicable statutes of limitation (including all periods of
extension) with respect to the representations and warranties contained in
Sections 3.1 through 3.4, 3.9, 3.23 and 4.1 through 4.4, (b) for 3 1/2 years
from the Closing with respect to the representations and warranties contained in
Section 3.20, (c) until sixty (60) days after the receipt by the Buyer from its
independent accountants of its audited financial statements for the first full
fiscal year after the Closing in the case of all other representations and
warranties, and (d) with respect to each covenant or agreement contained in this
Agreement, until ninety (90) days following the last date on which such covenant
or agreement is to be performed, pursuant to this Agreement or, if no such date
is specified, indefinitely; provided however that any representation, warranty,
covenant or agreement that would otherwise terminate in accordance with clause
(a), (b), (c) and (d) above will continue to survive, if a Party gives notice to
another Party hereunder that it is aware of circumstances which may give rise to
a Claim Notice (as defined below) at, on or prior to such termination date,
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in this Section VIII.
8.2 Indemnification of the Buyer and Holdco. Subject to the
limitations contained in this Section VIII, the Seller agrees to indemnify,
defend and hold harmless the Buyer, Holdco, and their respective Affiliates,
directors, officers, partners, employees, successors and assigns from and
against any and all losses, Liabilities (including punitive or exemplary damages
and fines or penalties and any interest thereon), expenses (including fees and
disbursements of counsel and expenses of investigation and defense), claims,
liens or other obligations of any nature whatsoever (hereinafter individually, a
"Loss" and collectively, "Losses") which, directly or indirectly, arise out of,
result from or relate to (a) any inaccuracy in or any breach of any
representation and warranty, (b) any breach of any covenant or agreement, of the
Seller contained in this Agreement or in any Related Document, or (c) any
Excluded Liability.
8.3 Indemnification of the Seller. Subject to the limitations
contained in this Section VIII, Holdco and the Buyer, jointly and severally,
agree to indemnify, defend and hold harmless the Seller, its Affiliates and
their respective directors, officers, partners, shareholders, employees,
successors and assigns from and against any and all Losses which, directly or
indirectly, arise out of, result from or relate to (a) any inaccuracy in or any
breach of any representation and warranty, or any breach of any covenant or
agreement, of the Buyer contained in this Agreement, or (b) any Assumed
Liability assumed by the Buyer pursuant to Section 2.3.
8.4 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement, the Seller shall have no liability, nor be
subject to any claim or demand under this Section VIII, in each case in respect
of any inaccuracy in or any breach of any
-43-
<PAGE> 44
EXECUTION COPY
representation or warranty of the Seller contained in this Agreement only,
unless and until the amount of Losses exceeds $500,000 in the aggregate, and
then to the extent of such Losses; provided, however, that in no event shall
such liability for the recovery of any Losses from the Seller exceed the amount
of the funds held from time to time pursuant to the Escrow Agreement and
available for such Losses pursuant to the terms of the Escrow Agreement plus the
amount of $4,000,000.00 in the aggregate (in the manner and as provided below).
The first recourse of the Buyer and/or Holdco under Section 8.2 shall be to the
amounts held pursuant to the Escrow Agreement. To the extent the Losses of Buyer
and/or Holdco which are subject to indemnification by the Seller under Section
8.2 thereafter exceed the amounts held and available for such Losses pursuant to
the Escrow Agreement at that time, up and until the third anniversary of the
Closing Date, Buyer's and/or Holdco's second recourse for recovery from the
Seller shall only be a set-off against the principal amount of the Note, which
set-off shall not exceed $4,000,000 in the aggregate. No set-off against the
Note may occur prior to the delivery of the relevant Claim Notice. This second
recourse shall be the final recourse of Buyer and/or Holdco against the Seller
and shall be the final recourse of Buyer for all losses.
8.5 Method of Asserting Claims. The party making a claim under this
Section VIII is referred to as the "Indemnified Party" and the party against
whom such claims are asserted under this Section VIII is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this Section
VIII shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against or
sought to be collected from such Indemnified Party by a third party, said
Indemnified Party shall as soon as reasonably practicable notify in writing the
Indemnifying Party of such claim or demand, (the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced by such failure. Actually prejudiced,
when used in this Section 8.5(a), means prejudice resulting in an inability of
the Indemnifying Party to obtain any fact, evidence or witness, or which results
in an increase in cost or expense to the Indemnifying Party greater than would
likely have been incurred on the providing of prompt notice. The Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel (who shall be
reasonably acceptable to the Indemnified Party) to represent the Indemnified
Party and shall pay the reasonable fees and disbursements of such counsel with
regard thereto; provided, however, that any Indemnified Party is hereby
authorized prior to the date on which it receives written notice from the
Indemnifying Party designating such counsel, to retain counsel, whose reasonable
fees and expenses shall be at the expense of the Indemnifying Party, to file any
motion, answer or other pleading and take such other action which it reasonably
shall deem necessary to protect its interests or those of the Indemnifying Party
until the date on which the Indemnified Party receives such notice from the
Indemnifying Party. After the Indemnifying Party shall retain such counsel, the
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (x) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (y) the named parties of any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party
-44-
<PAGE> 45
EXECUTION COPY
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceedings or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior to
the selection of counsel by the Indemnifying Party). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may not be settled by the
Indemnifying Party without the prior written consent of the Indemnified Party
(which consent will not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and unconditional release
reasonably satisfactory to the Indemnified Party and provided that the
settlement does not impose a material impediment or obligation on the
Indemnified Party.
(b) In the event any Indemnified Party shall have a claim against
any Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Section VIII, the affected parties each
agree to retain all Books and Records related to such Claim Notice. In each
instance, the Indemnified Party shall have the right to be kept fully informed
by the Indemnifying Party and its legal counsel with respect to any legal
proceedings. Any information or documents made available to any party hereunder
and designated as confidential by the party providing such information or
documents and which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is provided
(unless otherwise covered by the confidentiality provisions of any other
agreement among the parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third Person (except
for the representatives of the party being provided with the information, in
which event the party being provided with the information shall request its
representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
(d) Notwithstanding that by virtue of the operation of the
$500,000.00 limitation in Section 8.4 a claim or demand (whether or not asserted
by a third party) would not result in a Loss with respect to which the Seller
would be an Indemnifying Party, nonetheless the Seller shall be provided with
notice of such claim or demand and may, by written notice, to the Buyer, elect
to undertake the responsibilities imposed on the Indemnifying Party in Section
8.5(a) above. Such undertaking shall not be deemed to be an assumption of any
liability or indemnification other than as set forth in this Agreement or a
waiver of any limitation on indemnification set forth in Section 8.4.
8.6 Remedies. The Parties acknowledge that money damages would not
be a sufficient remedy for any breach of any covenant in this Agreement and
agree that each of the parties shall be entitled to specific performance and
injunctive relief as remedies for any such breach (without any requirement of
posting a bond). The parties acknowledge that, other than injunctive
-45-
<PAGE> 46
EXECUTION COPY
relief, and in the absence of Actual Fraud, their sole and exclusive remedies
with respect to any inaccuracy in or breach of any representation, warranty or
covenant in this Agreement or any Related Document shall be as set forth in this
Section VIII, and that the representations, warranties and/or covenants in this
Agreement or any Related Document create no other rights among the parties
hereto or in favor of any third party.
8.7 Bard Litigation. The Seller hereby irrevocably agrees and
covenants with the Buyer and Holdco:
(a) to notify it insurers and make a request for coverage with
respect to the Bard Litigation and thereafter to take all possible actions to
make and preserve all claims thereunder with respect to the Bard Litigation;
provided, that the Seller's obligation to make any payment or financial
contribution for any legal fees or other costs associated with the Bard
Litigation is only as specifically provided in Section 8.7(c) below;
(b) to co-operate to the fullest degree practicable with the Buyer
in defending, appealing or settling the Bard Litigation or implementing any
redesign program to avoid or mitigate liability with respect to the products the
subject of the Bard Litigation; provided, that the Seller's obligation to make
any payment or financial contribution for any legal fees or other costs
associated with the Bard Litigation is only as specifically provided in Section
8.7(c) below;
(c) as a separate and independent indemnity, with respect to the
legal fees and disbursements associated with defending, appealing and/or
settling the Bard Litigation and all damages, settlement payments and/or
engineering, design and manufacturing fees, costs and expenses in relation to
any product redesign (including substitute product design) for the purpose of
liability avoidance or court order or settlement compliance with the respect to
the products the subject the Bard Litigation, in each case in excess of any
insurance coverage with respect thereto (together, the "Bard Costs"), that the
Seller will indemnify the Buyer as to 50% of all Bard Costs up to a maximum of
$1,000,000. The Buyer agrees that its first recourse with respect to such Bard
Costs is limited to $500,000 in cash held pursuant to the terms of the Escrow
Agreement and thereafter to a further $500,000 by way of set-off against the
Note; provided, that no set-off may occur without prior written notice thereof
to the Seller. This shall be the final recourse of Buyer and/or Holdco against
the Seller with regard to the Bard Litigation.
SECTION IX
MISCELLANEOUS
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing as follows:
(a) by the Buyer, on the one hand, or by the Seller, on the other
hand, by written notice to the other parties hereto, in the event that the
Closing shall not have occurred on or prior
-46-
<PAGE> 47
EXECUTION COPY
to the close of business on November 7, 1997 (unless such event has been caused
by a breach of this Agreement by the party seeking such termination); or
(b) at any time on or prior to the Closing Date, by written consent
of the Buyer and the Seller.
In the event this Agreement is terminated pursuant to this Section
9.1, (i) this Agreement shall become null and void and of no further force and
effect, except for the provisions of Section 5.4 and 5.7, and (ii) there shall
be no liability on the part of the Seller, the shareholders of the Seller or the
Buyer, their Affiliates or their respective partners, officers, directors,
employees or agents, provided, however, that if such termination shall result
from the wilful breach by a party of the provisions contained in this Agreement,
such party shall be fully liable for any and all damages, costs and expenses
sustained or incurred as a result of such breach by the other parties hereto.
9.2 Expenses. Subject only to the provisions of Sections 5.4, 5.9,
6.1(n) and (o), each of the parties hereto shall pay its own expenses
(including, without limitation, attorneys' and accountants' fees and
out-of-pocket expenses) incident to this Agreement and the transactions
contemplated hereby.
9.3 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, telegraphed, telexed, sent by facsimile transmission or sent
by prepaid air courier or certified, registered or express mail, postage
prepaid. Any such notice shall be deemed to have been given (a) when received,
if delivered in person, telegraphed, telexed, sent by facsimile transmission and
confirmed in writing within three (3) Business Days thereafter or sent by
prepaid air courier or (b) three (3) Business Days following the mailing
thereof, if mailed by certified first class mail, postage prepaid, return
receipt requested, in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided in this
Section 9.3):
If to the Seller:
Crispaire Corporation
Highway 41 North
Cordele, Georgia 31015
Attn.: George D. Wyers
Fax: (912) 273-5154
With a copy to (which shall not constitute notice):
Bovis, Kyle & Burch, LLC
53 Perimeter Center East, 3rd Floor
Atlanta, Georgia 30346-2298
Attn: Greg Gale
-47-
<PAGE> 48
EXECUTION COPY
Fax: (770) 668-0878
If to the Buyer and/or Holdco:
Airxcel, Inc.
3050 North St. Frances Street
Wichita, Kansas 67204
Attn.: Mel Adams
Fax: (316) 832-3482
With a copy to (which shall not constitute notice):
Kirkland & Ellis
153 East 53rd Street, 39th Floor
New York, NY 10022
Attn.: Kirk A. Radke, Esq.
Fax: (212) 446-4900
9.4 Entire Agreement. This Agreement (including the Exhibits and
Schedules) and the agreements, certificates and other documents delivered
pursuant to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto including the letter and
confidentiality agreement dated August 28, 1997 (to the extent provided in
Section 7.7(b) above).
9.5 Waivers and Amendments. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof. The
rights and remedies of any parties based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty, covenant
or agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties as to which there is no
inaccuracy or breach).
9.6 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement hereto shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
9.7 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable by any party hereto without
the prior written consent of the other parties
-48-
<PAGE> 49
EXECUTION COPY
hereto except by operation of law and any other purported assignment shall be
null and void; provided, however, that without the consent of the other parties
hereto the Buyer may assign this Agreement to any lenders to the Buyer or any
subsequent purchaser of all or any part of the Business, and the Seller may
assign the benefit of this Agreement pro-rata to its Shareholders in any
liquidation or similar distribution.
9.8 Severability of Provisions. If any provision or any portion of
any provision of this Agreement or the application of such provision or any
portion thereof to any Person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
9.9 Counterparts. This Agreement may be executed by the parties
hereto in one or more counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
9.10 Waiver of Jury Trial. Each of the parties hereto waives to the
fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
9.11 Bulk Transfer Laws. The Seller, Buyer and Holdco hereby agree
to waive compliance with the provisions of the Uniform Commercial Code - Bulk
Transfers, also known as the Bulk Sales Act, and the provisions of any similar
law.
* * * * *
-49-
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the date and year first above written.
CRISPAIRE CORPORATION
By:
-------------------------
Its:
AIRXCEL, INC.
By:
-------------------------
Its:
AIRXCEL HOLDINGS, INC.
By:
-------------------------
Its:
<PAGE> 1
EXHIBIT 10.11
DISTRIBUTION AGREEMENT
This AGREEMENT, made as of this 11th day of October 1995 (the
"Agreement"), by and between THE COAST DISTRIBUTION SYSTEM, a California
corporation having its principal offices at 1982 Zanker Road, San Jose,
California 95112 (hereinafter called "Distributor"), and RECREATION VEHICLE
PRODUCTS, INC., a Delaware corporation having its principal offices at 3050 N.
St. Francis, Wichita, Kansas 67204 (hereinafter called "RVP").
R E C I T A L S
A. RVP is the manufacturer of aftermarket accessories and parts for
recreational vehicles, including the accessories and parts listed in Exhibit A
hereto (the "RVP Products");
B. Distributor purchases and distributes and resells, at wholesale,
aftermarket accessories and parts of the types set forth in Exhibit A hereto, to
customers consisting primarily of retail dealers, supply stores and service
centers in the United States, and to other wholesale distributors of such
products that operate outside of the United States, that sell such products for
use in connection with the sale or lease, the use or operation or the servicing,
repair or reconditioning of recreation vehicles (hereinafter "After-Market
Customers").
C. Distributor has developed marketing and support programs for its
After-Market Customers that enhance the marketability and salability of the
products it distributes.
D. Distributor also has developed the tooling for the manufacture of
various proprietary recreational vehicle accessories and parts which are
manufactured for Distributor by third-party manufacturers on an exclusive basis
(which products are listed on Exhibit B hereto and are referred to hereinafter
as the "Coast Proprietary Products").
E. RVP desires to obtain more extensive distribution of the RVP Products,
both within and outside the United States and, at the same time, reduce the
costs of the distribution thereof by having such Products distributed through
Distributor's distribution channels in the geographic areas set forth in Exhibit
C hereto (the "Territories"), and to enhance the marketability of the RVP
Products by being able to offer to end-users of the RVP Products the marketing
and support programs developed by Distributor.
F. RVP also desires to be supplied with Coast Proprietary Products for the
purpose of re-selling the Coast Proprietary Products to manufacturers of
recreational vehicles (hereinafter "OEM's") solely for incorporation of such
Products in the vehicles at the time of their manufacture by such OEM's ("OEM
Sales").
G. Distributor desires to market the RVP Products to its customers, and is
willing to provide marketing support therefor, and to arrange for RVP to be
supplied with Coast Proprietary Products for OEM Sales by RVP, on the terms and
conditions hereinafter set forth in this Agreement.
<PAGE> 2
A G R E E M E N T:
NOW, THEREFORE, in consideration of the above premises and of the
respective promises of the parties hereinafter set forth, it is agreed as
follows:
1. SALES OF PRODUCTS TO DISTRIBUTOR
1.1 Commencing not later than October 11, 1995 and continuing through the
remainder of the term of this Agreement, RVP shall sell the RVP Products to
Distributor in the quantities thereof required by Distributor, and RVP hereby
appoints Distributor as a distributor of the RVP Products to sell the RVP
Products for re-sale in the Territories to After-Market Customers. For purposes
of this Agreement, the term "RVP Products" shall include, in addition to those
products specifically identified on Exhibit A hereto, any accessories, parts or
supplies for recreational vehicles that are introduced by RVP after the date
hereof, whether they represent improved models of existing RVP Products or new
products that RVP has not previously offered for sale and whether or not
manufactured by RVP or by a third party for RVP.
1.2 RVP agrees that, effective as of February 1, 1996, and continuing for
the remainder of the term of this Agreement, but subject to the terms and
conditions set forth in Paragraphs (a), (b) and (c) of this Section 1.2,
Distributor shall have the exclusive right to market and sell the RVP Products
to After-Market Customers in the Territories and RVP will not (i) sell or
otherwise supply (whether by consignment, lease or otherwise) the RVP Products,
or any products that are functionally equivalent thereto or competitive
therewith, whether manufactured by or for RVP, to (A) any wholesale distributor
or other business that sells, or proposes to sell, any of the RVP Products, or
any products that are functionally equivalent to or competitive with any of the
RVP Products, in any of the Territories to After-Market Customers, or (B) to any
After-Market Customers in the Territories, or (ii) authorize or appoint any
other distributor or representative to market or sell the RVP Products in any of
the Territories, except that RVP shall continue to conduct marketing programs
for the RVP Products in the Territories to support sales thereof by Distributor
in accordance with its obligations under this Agreement. Notwithstanding
anything to the contrary contained hereinabove in this paragraph:
(a) Nothing herein shall preclude RVP from selling:
(i) To Camping World, solely for resale at Camping World
retail stores, roof-mount air conditioners or any other products that include
the Coleman(R) trademark in its brand name; provided, however, that RVP agrees
not to sell to Camping World any RVP Products, or any products that are
functionally equivalent to or competitive with any of the RVP Products,
including, but not limited to, roll-up patio awnings (but excluding awning
supports or awning cradles), that are identified as a Faulkner(R) product or are
branded with any Faulkner(R) trade name or trademark or any variant thereof;
(ii) RVP Products to OEM's, but only for incorporation of such
Products on recreational vehicles at the time of their manufacture;
(iii) RVP Products to, or for resale to, end-users that use
such Products
2
<PAGE> 3
other than in connection with the sale or lease, the use or operation or the
servicing, repair or reconditioning of recreation vehicles (which, for purposes
of this Agreement, include, without limitation, Class A and Class B motor homes,
travel trailers, fifth-wheel campers and tent campers; and
(iv) RVP Products to Jay Parr, a wholesale distributor owned
by Jay Co., provided that RVP agrees to terminate sales of RVP Products to Jay
Parr in the event Jay Co. ceases to own more than fifty percent (50%) of the
outstanding voting stock, or more than fifty percent (50%) of all of the capital
stock, voting and non-voting, of Jay Parr.
(b) Distributor shall not be entitled to purchase, for resale to
After-Market Customers in the Territories, from any manufacturer other than RVP,
any products that are functionally equivalent to or competitive with the RVP
Products listed on Exhibit D hereto (the "Primary Products") prior to the
expiration of the period beginning on February 1, 1996 and ending on the later
of (i) December 31, 1998 or (ii) twelve (12) months from the giving by
Distributor to RVP of written notice of Distributor's intention to begin making
such purchases (the "Distributor's Exclusivity Period"), except that Distributor
may make such purchases during Distributor's Exclusivity Period from other
manufacturers, and RVP shall have no right of termination hereunder as a result
thereof, if and only if such purchases are made by Distributor due to any of the
following events or circumstances: (A) RVP has terminated this Section 1.2 for
any of the reasons set forth in Subparagraphs 1.2(c) (ii) or (iii) hereof, (B)
an inability or failure by RVP, for any reason (including, but not limited to, a
Force Majeure Event as defined in Section 8), to supply Distributor, in
accordance with the provisions of this Agreement, with all of the requirements
of Distributor for the Primary Products as and when needed by Distributor, (C) a
material increase in the incidence of warranty problems, as compared to 1994,
with respect to, or a manufacturer's recall of, either of the Primary Products
or any model thereof, (D) the failure of either of the Primary Products, or any
model thereof, to meet any laws or government regulations applicable thereto or
to the sale or use thereof in any of the Territories, (E) any material breach of
this Agreement by RVP (provided that, in the case of the occurrence of any of
the events or circumstances set forth in clauses (B), (C) or (D) hereinabove
during Distributor's Exclusivity Period, Distributor shall cease purchasing
products that are functionally equivalent to or competitive with the Primary
Products ("Competing Products") when such event or circumstance has been
corrected and Distributor has been able to increase unit sales of the Primary
Products to its customers back to the unit sales volumes thereof being achieved
prior to the occurrence of such event or circumstance). RVP shall be entitled to
terminate this Agreement or may elect, instead, to terminate Section 1.2 of this
Agreement only, if, during the Distributor Exclusivity Period, Distributor
purchases Competing Products other than due to any of the events or
circumstances set forth in Clauses (A) through (E) in this Subparagraph 1.2(b),
and Distributor does not cease such purchases of Competing Products within
thirty (30) days of written notice from RVP that Distributor has violated
Subparagraph 1.2(b).
(c) RVP may terminate this Section 1.2 in its entirety, including
the restrictions agreed to by RVP in, and the exclusive rights granted by RVP to
Distributor under, this Section 1.2, but shall not be entitled to terminate this
Agreement:
(i) On, or at any time after, expiration of the Distributor
Exclusivity
3
<PAGE> 4
Period as a result of the giving by Distributor of 12 months' notice of its
intention to begin, at any time after December 31, 1998, making purchases of
Competing Products for resale to After-Market Purchasers in the Territories,
provided that no such termination of this Section 1.2 shall be effective until
the later of (A) the expiration of the Distributor Exclusivity Period or (B) two
(2) months following the delivery by RVP of written notice of such termination
of this Section 1.2 to Distributor; or
(ii) If, over the period commencing on the date hereof and
ending on December 31, 1996, the aggregate number of units of either of the
Primary Products purchased by Distributor from RVP is less than ninety percent
(90%) of the number thereof specified in Annex 1 to Exhibit D hereto, other than
due to (A) an inability or failure by RVP, for any reason (including, but not
limited to, a Force Majeure Event), to supply Distributor, in accordance with
the terms of this Agreement, with all of its requirements for either of the
Primary Products as and when needed by Distributor, (B) a material increase in
the incidence of warranty problems, as compared to 1994, with respect to, or a
manufacturer's recall of, either of the Primary Products, or any model thereof,
(C) the failure of either of the Primary Products or any model thereof, to meet
any laws or government regulations applicable thereto or to the sale or use
thereof in any of the Territories, (D) any Force Majeure Event (as defined in
Section 8 of this Agreement) or any other events outside the reasonable control
of Distributor that adversely affects Distributor's ability to sell either of
the Primary Products; (E) the failure of RVP to have introduced, by January 1,
1996, or such later date as may be agreed to by Distributor, an improved version
of the Roll-Up Patio Awning that meets the requirements set forth in Annex 1 to
Exhibit D or (F) any material breach of this Agreement by RVP.
(iii) If, in any calendar year during the Distributor
Exclusivity Period, commencing with calendar 1997, Distributor fails to purchase
either of the Primary Products in the respective quantities determined in
accordance with Annex 2 to Exhibit D, other than due to (A) an inability or
failure by RVP, for any reason (including, but not limited to, a Force Majeure
Event), to supply Distributor, in accordance with the terms of this Agreement,
with all of its requirements for either of the Primary Products as and when
needed by Distributor, (B) a material increase in the incidence of warranty
problems, as compared to 1994, with respect to, or a manufacturer's recall of,
either of the Primary Products or any model thereof, (C) the failure of the
Primary Products, or any model thereof, to meet any laws or government
regulations applicable thereto or to the sale or use thereof in any of the
Territories, (D) any Force Majeure Event (as defined in Section 8 of this
Agreement) or any other events outside the reasonable control of Distributor
that adversely affect Distributor's ability to sell either of the Primary
Products, (E) the failure of RVP to have introduced, by January 1, 1996, or such
later date as may be agreed to hereafter by Distributor, an improved version of
the Roll-Up Patio Awning that meets the requirements set forth in Annex 1 of
Exhibit D, or (F) any material breach of this Agreement by RVP.
(d) To be effective, termination of this Agreement by RVP pursuant
to Section 1.2(b) or termination of this Section 1.2 by RVP pursuant to
Subparagraph (c)(ii) or (iii) of this Section 1.2, shall require ninety (90)
days' prior written notice of such termination by RVP to Distributor that must
be given by RVP no later than thirty (30) days following the final determination
that Distributor has violated Section 1.2(b) or by March 31 of the calendar year
immediately following any calendar year in which Distributor has been determined
to have failed to
4
<PAGE> 5
meet the minimum purchase requirements of either Subparagraph 1.2(c)(ii) or
Subparagraph 1.2(c)(iii). Failure to give such written notice of termination of
this Agreement pursuant to Section 1.2(b) within such thirty (30) day period or
written notice of termination of this Section 1.2 pursuant to Subparagraph
1.2(c)(ii) or Subparagraph 1.2(c)(iii) by March 31 of the calendar year
immediately following any calendar year in which Distributor has been determined
to have failed to meet the minimum purchase requirements of either Subparagraph
1.2(c)(ii) or Subparagraph 1.2(c)(iii) shall constitute a waiver of such right
of termination as a result of the event or circumstance giving rise to such
right. If a dispute arises between the parties as to whether Distributor has
violated Section 1.2(b) or failed to meet the minimum purchase requirements of
Subparagraph 1.2(c)(ii) or Subparagraph 1.2(c)(iii), or as to whether any such
violation or failure is excused by reason of any one of the exceptions set forth
in Section 1.2(b) or by any of the causes set forth in clauses (A) through (F)
of Subparagraph 1.2(c)(ii) or Subparagraph 1.2(c)(iii), then, either party may,
after giving written notice of its intent to do so to the other party, submit
the matter in dispute to binding arbitration in accordance with Section 14
hereof and, in the event of the initiation of any such arbitration, any
termination of this Agreement pursuant to Section 1.2(b) or any termination of
this Section 1.2 (as the case may be) by RVP shall not become effective until
the earlier of the issuance of a decision in such arbitration that RVP is
entitled to terminate this Agreement due to a violation of Section 1.2(b) or to
terminate Section 1.2 pursuant to Section 1.2(c) thereof (as the case may be),
or the expiration of a period of one hundred eighty (180) days following the
initiation of such arbitration if no decision has been rendered by the end of
that 180-day period by the arbitrators. Termination of this Agreement shall be
RVP's sole right and remedy in the event of Distributor's violation of Section
1.2(b) and its failure to cease such violation within thirty (30) days after
written notice from RVP, and termination of Section 1.2 in accordance herewith
shall be RVP's sole right and remedy in the event Distributor has failed to meet
the minimum purchase requirements of either Subparagraph 1.2(c)(ii) or
Subparagraph 1.2(c)(iii).
(e) Notwithstanding anything to the contrary set forth above in this
Section 1.2, Distributor shall be entitled to purchase, market, distribute and
sell to After-Market Customers in the Territories any Competing Products from
any manufacturer other than RVP (i) in Distributor's discretion at any time on
or after the expiration of the Distributor Exclusivity Period, (ii) in
Distributor's discretion at any time on or after RVP has given Distributor
notice of RVP's intention to terminate this Section 1.2 due to any of the events
or circumstances set forth in Subparagraphs (c)(ii) or (iii) of this Section
1.2. Any termination by RVP of this Section 1.2 due to any of the events or
circumstances set forth in Subparagraphs (c)(i), (ii) or (iii) of this Section
1.2, or any election by Distributor to purchase and market, distribute or sell
any Competing Products pursuant to clauses (B), (C) (D) or (E) of Section 1.2(b)
or pursuant to clause (i) or (ii) of this Subsection 1.2 (e), shall not affect
the obligations of RVP or the rights of Distributor under Section 1.1 or any
other Sections of this Agreement, which shall continue in full force and effect,
provided that any and all restrictions on Distributor's right to purchase and
market, distribute or sell Competing Products from other manufacturers also
shall terminate in the event of a termination of this Section 1.2 by RVP or an
election by Distributor to purchase and market, distribute or sell any Competing
Products pursuant to clause (i) of this Subsection 1.2(e).
1.3 Distributor hereby agrees to authorize and permit the third-party
manufacturers of the Coast Proprietary Products ("Third-Party Manufacturers"),
who have exclusive supply arrangements with Distributor covering sales of such
Products for recreation vehicle applications,
5
<PAGE> 6
to sell such Coast Proprietary Products directly to RVP exclusively for OEM
Sales by RVP under any of the RVP Trademarks (which are listed on Exhibit H
hereto), during the term of this Agreement. The prices and delivery terms that
shall govern purchases of the Coast Proprietary Products by RVP shall be subject
to determination by agreement directly between RVP and such Third-Party
Manufacturers who, RVP hereby acknowledges, are under no obligation or duty to
sell any of the Coast Proprietary Products to RVP. RVP agrees that the failure
or refusal of any such Third-Party Manufacturers to sell the Coast Proprietary
Products to RVP shall not constitute a breach of this Agreement by Distributor,
but Distributor shall provide reasonable cooperation to RVP in its efforts to
obtain the agreements of such Third-Party Manufacturers to sell such Products to
RVP for OEM Sales. RVP further agrees that if it elects to purchase any Coast
Proprietary Products from any of the Third-Party Manufacturers, it shall notify
Distributor thereof in writing and, prior to commencing purchases thereof
(whether or not such notice has been given), RVP shall have agreed to compensate
Distributor, on an equitable basis, for research and development expenses
incurred or to be incurred by Distributor in the design of and the development
of tooling for, such Coast Proprietary Product and, upon agreement of the
parties as to the amount to be paid by RVP to Distributor, such amount shall be
set forth on Exhibit B hereto. Distributor agrees that the rights of RVP under
this Section 1.3 shall survive any termination of this Agreement, and, as
consideration for such agreement by Coast, RVP agrees that (i) it will not sell
any Coast Proprietary Products, or any products that are functionally equivalent
thereto or competitive therewith, to any After-Market Customers (including, but
not limited to, Camping World) in the Territories, other than to OEM's in OEM
Sales, either during the term of this Agreement or at any time thereafter
without the prior written consent of Distributor, which it may withhold in its
sole and absolute discretion, (ii) RVP is not acquiring hereby and agrees not to
seek to acquire from any such Third-Party Manufacturers any rights to
manufacture or make any of the Coast Proprietary Products and RVP shall not
develop tooling to manufacture or make, or have made by any other manufacturers,
any of the Coast Proprietary Products or any products functionally equivalent
thereto, either during the term of this Agreement or at any time thereafter
without the prior written consent of Distributor which it may withhold in its
sole and absolute discretion. RVP further agrees that it shall not enter into
any agreement with any of such Third-Party Manufacturers that would breach,
violate or conflict with any of the restrictions set forth hereinabove in this
Section 1.3 with respect to resales or manufacture of the Coast Proprietary
Products by RVP, which restrictions shall survive any termination of this
Agreement.
2. ORDERS AND PRICES
2.1 RVP Products shall be purchased hereunder pursuant to purchase orders
issued by Distributor to RVP specifying the RVP Products and the quantities
thereof being purchased and the delivery locations therefor; provided that, if
any provision of any such purchase order conflicts with any of the provisions of
this Agreement, the provisions of this Agreement shall control and no such
purchase order shall be effective to impose any obligation on RVP that is not
contained in this Agreement or imposed by applicable laws or regulations, or to
diminish any rights that RVP may have under this Agreement or under applicable
laws or regulations. No terms or provisions contained in any order confirmation,
invoice or shipping order issued by RVP shall be effective to alter any
provisions of this Agreement or to impose any obligation on Distributor that is
not contained in this Agreement or imposed by applicable laws or regulations, or
to diminish any rights that Distributor may have under this Agreement or under
applicable laws or regulations. RVP shall
6
<PAGE> 7
deliver, or cause to be delivered, to the locations specified by Distributor,
substantially all of the RVP Products ordered by Distributor within at least
thirty (30) days of the date the Distributor's purchase order for such RVP
Products is delivered to RVP. In each six-month period during the term of this
Agreement from and after April 1, 1996, Distributor shall endeavor to order RVP
Products from RVP in a quantity that will not vary, by more than twenty percent
(20%) from the forecast of its anticipated RVP Product orders for such periods
given to RVP by Distributor pursuant to Section 4.4 hereof.
2.2 The Distributor shall pay RVP, for the RVP Products purchased by
Distributor pursuant to this Agreement, the applicable prices for such Products
listed on Exhibit E hereto. Such prices are not subject to change until October
1, 1996. Effective as of October 1, 1996, and on each April 1 and October 1 in
each year thereafter during the term of this Agreement (hereinafter, "Adjustment
Dates"), the prices set forth in Exhibit E hereto shall be subject to adjustment
as follows:
(a) At least sixty (60) days prior to each Adjustment Date during
the term of this Agreement (the "Notice Dates"), RVP shall notify Distributor,
in writing, of the increases or decreases (as the case may be) in the direct
materials costs and the direct labor costs being incurred by RVP in the
manufacture of each RVP Product as of a date within ten (10) business days
preceding each Notice Date (hereinafter, the "Determination Date") from the
direct materials costs and direct labor costs being incurred by RVP in the
manufacture of each RVP Product as of the immediately preceding Determination
Date (which shall be the date of this Agreement in the case of the price
adjustments to be made as of October 1, 1996). Each such notice shall set forth
RVP's determination, made in accordance with the provisions hereinafter set
forth in this Subsection 2.2, of the price increases or decreases in each of the
RVP Products that will become effective as of the next succeeding Adjustment
Date, and shall be accompanied by sufficiently detailed financial information
and invoices of RVP's direct materials suppliers by which Distributor, or its
accountants, will be able to verify the amount of any such cost increases or
decreases and RVP shall provide to Distributor such additional information as it
may reasonably request for that purpose.
(b) Subject to Subsection 2.2(d), if the sum of the dollar amounts
of the direct materials costs and the direct labor costs of any RVP Product as
of the Determination Date immediately preceding a Notice Date (the "Current
Determination Date") has decreased from the sum of such costs as of the
Determination Date immediately preceding such Current Determination Date (the
"Immediately Preceding Determination Date"), the price of such RVP Product in
effect on the Current Determination Date shall be reduced, as of the next
succeeding Adjustment Date, by the dollar amount of that decrease. For example,
if as of a Current Determination Date the direct materials costs of a RVP
Product is $20.00 lower, and the direct labor costs are $10.00 higher, than at
the Immediately Preceding Determination Date, then, the price of that RVP
Product will be reduced by $10.00 per Product as of the next succeeding
Adjustment Date (i.e., $10 + (-$20) = -$10).
(c) Subject to Subsection 2.2(d), if the sum of the direct materials
costs and direct labor costs of any RVP Product as of the Current Determination
Date has increased from the sum of the direct materials costs and direct labor
costs of such Product as of the Immediately
7
<PAGE> 8
Preceding Determination Date, then, the price for that RVP Product that is in
effect on such Current Determination Date shall be increased as of the next
succeeding Adjustment Date by a dollar amount that is determined by multiplying
the price of the Product in effect on the Current Determination Date by the
percentage that results from multiplying (x) 0.87 times (y) the percentage
increase that has occurred in the sum of the direct materials and direct labor
costs of such RVP Product between such Immediately Preceding Determination Date
and the Current Determination Date. For example, if the sum of the direct
materials costs and direct labor costs of an RVP Product as of the Current
Determination Date is three percent (3%) higher than the sum of such costs of
that Product as of the Immediately Preceding Determination Date, the price of
that Product shall be increased as of the next succeeding Adjustment Date by a
dollar amount that results from multiplying the price of that Product in effect
as of the Current Determination Date by 2.61% (which is the percentage that
results from multiplying 0.87 and 3%).
(d) Notwithstanding the foregoing, any price adjustment that is to
be effective as of any Adjustment Date occurring during the period from October
1, 1996 through September 30, 1997, inclusive, shall be based only on the
increases or decreases (as the case may be) in direct materials costs that have
occurred from the Immediately Preceding Determination Date to the Current
Determination Date, so that increases or decreases in RVP's direct labor costs
occurring between the date hereof and October 1, 1997 shall be disregarded in
the determination of price adjustments, if any, that will become effective on
October 1, 1996, April 1, 1997 and October 1, 1997.
(e) On or before each Adjustment Date, Exhibit E hereto shall be
amended to set forth the prices of each of the RVP Products, as they have been
adjusted or are to be adjusted as of such Adjustment Date. In the event that,
during the term of this Agreement, any new products are added to the list of RVP
Products in Exhibit A hereto, the price thereof shall not be adjusted until the
first Adjustment Date occurring after two (2) months have elapsed following
Distributor's initial purchase of such Product from RVP and, in determining the
first price adjustment thereto, the date of such initial purchase shall be
deemed to be the immediately preceding Determination Date.
2.3 All amounts due RVP by Distributor for the purchase of any RVP
Products pursuant to this Agreement are due thirty (30) days from the date of
invoice thereof, provided that the invoice date shall be no earlier than the
date such RVP Products are shipped to Distributor. Distributor shall receive a
discount of two percent (2%) of all amounts paid within thirty (30) days from
the date of invoice thereof. Any such amounts not paid within thirty (30) days
of the invoice date shall bear interest thereafter at the lesser of fifteen
percent (15%) per annum or the maximum rate permitted by law, until such amounts
have been paid.
3. DELIVERY OF PRODUCTS
RVP Products to be delivered by RVP pursuant to any Distributor purchase
order to locations designated by Distributor within the United States shall be
shipped by truck and, in the case of shipments of roll-up patio awnings or
roof-mount air conditioners, shall be shipped in truckloads of 100 units and 224
units, respectively; unless Distributor supplies to RVP explicit instructions
for another method of shipment and Distributor agrees to pay for any additional
freight
8
<PAGE> 9
changes that result from its choice of an alternative method of delivery or the
parties agree on another method of delivery. Distributor shall take title to the
RVP Products at the time such Products are delivered to the delivery location
specified on the purchase order issued by Distributor for such Products.
Deliveries of RVP Products by RVP to Distributor shall be (a) F.O.B. the
Distributor's warehouse in the United States or Canada for which the RVP
Products have been ordered by Distributor, (b) F.O.B. at a location at the U.S.
Border designated by Distributor with respect to RVP Products for Mexico, (c)
F.O.B. at a United States port designated by Distributor with respect to air
conditioners for Australia, and (d) F.O.B. Malden, Massachusetts with respect to
Awnings for Australia.
4. OBLIGATIONS OF DISTRIBUTOR
4.1 Distributor shall, during the term of this Agreement, use its
commercially reasonable efforts to sell and promote the sale of the RVP Products
in the Territories.
4.2 Distributor shall, during the term of this Agreement, maintain (i) an
adequate sales organization reasonably capable of the active solicitation of the
sale of the RVP Products in the Territories; (ii) general liability and
contractual liability insurance, in such amounts as are set forth on Exhibit I
hereto, and with such insurance companies as is customary in accordance with
sound business practices for a business of the nature, size and scope of the
Distributor; and (iii) inventory levels of the RVP Products reasonably adequate
to meet the needs of Distributor's customers for the RVP Products.
4.3 Commencing not later than February 1, 1996, or such later date as may
be agreed by RVP, and continuing during the term of this Agreement, Distributor
shall undertake advertising and promotional activities with respect to the RVP
Products that are comparable to those activities undertaken by Distributor with
respect to functionally comparable products marketed and sold by Distributor
prior to entering into this Agreement. In connection therewith, during the term
of this Agreement, RVP shall, at the request of and at no charge to Distributor,
provide Distributor with camera-ready, full-color photographs and illustrations
of all of the RVP Products for inclusion in Distributor's catalogs and
advertising materials.
4.4 Distributor agrees to supply RVP with monthly reports prepared by
Distributor relating to each quarter's sales of the RVP Products by Distributor
in the Territories; inventories of the RVP Products on-hand at the warehouses of
the Distributor; forecasts twice each calendar year regarding anticipated sales
of the RVP Products in the Territories for the succeeding six (6) months; and
statistical and other information regarding the customers that purchase the
Products from Distributor; provided that Distributor shall not be obligated to
provide RVP with customer lists or other information identifying Distributor's
customers.
5. OBLIGATIONS OF RVP
RVP agrees, during the term of this Agreement, that:
5.1 Subject to the provisions of this Agreement, RVP shall supply all of
Distributor's requirements for the RVP Products as and when needed by
Distributor.
9
<PAGE> 10
5.2 RVP shall invoice Distributor for each Product sold no sooner than the
date of shipment thereof to the F.O.B. point and, unless otherwise instructed by
Distributor in writing, RVP shall ship the RVP Products ordered by Distributor
as soon as reasonably practicable after orders for Products are received by RVP
from Distributor; provided, however, that RVP agrees that, unless excused by
Section 8 or otherwise agreed by the parties, in no event shall RVP Products
ordered by Distributor be delivered by RVP more than thirty (30) days after
receipt by RVP of the purchase order therefor issued by Distributor.
5.3 RVP will from time to time provide Distributor with sales literature
relating to the RVP Products, at RVP's expense, in such quantities as RVP
reasonably determines.
5.4 RVP shall undertake in the Territories advertising and promotional
activities with respect to the RVP Products comparable to those activities
undertaken by RVP for the RVP Products prior to entering into this Agreement. In
addition, RVP shall participate in cooperative advertising programs with
Distributor on the terms described in Exhibit G hereto.
5.5 RVP shall use its best reasonable efforts to conduct on-going product
development and improvement activities designed to maintain and improve the
operation and competitiveness, and to prevent the obsolescence, of the RVP
Products.
5.6 Maintain, either directly, or through a third-party service provider
reasonably acceptable to Distributor, adequate service centers in the
Territories to provide warranty and post-warranty service on the RVP Products.
Notwithstanding any other provision hereof to the contrary, RVP may sell repair
parts to such service centers in the Territories.
5.7 RVP hereby grants to Distributor a fully-paid, non-exclusive right and
license, during the term of this Agreement, to (i) disclose to the public that
it is an authorized distributor of the RVP Products, (ii) to use and reproduce
the "Coleman" and "Faulkner" and other trademarks described and illustrated on
Exhibit H hereto, as well as any other trademarks that RVP may use hereafter to
identify or describe any of the RVP Products purchased by Distributor from RVP
for resale in the Territories (collectively the "RVP Trademarks") in connection
with the promotion, marketing and sale of the RVP Products, and (iii) use and
reproduce the RVP Trademarks listed on Annex 1 to Exhibit H on, and in
connection with the promotion, marketing and sale of, the Coast Proprietary
Products and those additional products manufactured by or for Distributor that,
by agreement of the parties hereafter, are listed on Annex 2 to Exhibit H hereto
(the "Coast After-Market Products"), provided that, in the case of the Coast
After-Market Products, such Products meet RVP's quality standards. RVP shall
determine whether any such Coast After-Market Products listed, as of the date
hereof, on Annex 2 to Exhibit H hereto meet RVP's quality standards within sixty
(60) days of the date hereof, and within sixty (60) days after Distributor
submits for evaluation by RVP any additional product for inclusion as a Coast
After-Market Product. If RVP concludes that any Coast After-Market Product does
not meet its quality standards, it shall provide Distributor with written notice
thereof within such applicable review period, specifying in detail the
deficiencies of such product (a "rejected product"). Distributor may re-submit
any such rejected products for re-evaluation by RVP, which shall not
unreasonably delay its evaluation thereof. The right and license granted
hereunder by RVP to Distributor shall be irrevocable during the term of this
Agreement; provided that Distributor agrees that it will not use
10
<PAGE> 11
any of the RVP Trademarks in connection with the marketing or sale of any goods
or services, other than the RVP Products, the Coast Proprietary Products, and
the Coast After-Market Products approved by RVP, and shall not publish any
advertising literature or other materials that incorporate any of the RVP
Trademarks unless such literature or other materials have been furnished to
Distributor by RVP or have been approved in advance by RVP. Distributor shall
submit all advertising copy and other materials (other than those supplied by
RVP) in which it intends to use any RVP Trademarks to RVP for its approval
thereof at least thirty (30) days prior to the anticipated publication thereof
by Distributor. RVP agrees to advise Distributor in writing within such thirty
(30) day period of RVP's approval or disapproval of such literature or other
materials and, if RVP disapproves of any literature or materials it shall
specify in the notice of disapproval the reasons therefor and any changes it
requires before it will approve the literature or other materials so submitted.
Distributor shall not make any material changes in any advertising or other
documents containing any RVP Trademarks that have previously been approved by
RVP without again obtaining RVP's approval thereof in accordance with the
provisions hereof. In the event of and notwithstanding any termination of this
Agreement, other than by reason of a material breach of this Agreement by or the
bankruptcy of Distributor, Distributor may elect, by written notice to RVP to
extend the term of the non-exclusive fully-paid trademark license granted to
Distributor by RVP hereunder for the Coast Proprietary Products and the Coast
After-Market Products for an additional five (5) years beyond the effective date
of termination of this Agreement without the payment of any royalty or license
fee to RVP.
5.8 RVP shall participate as a presenting manufacturer at each of
Distributor's annual trade shows that takes place during the term of this
Agreement, and, in connection therewith, shall:
(a) Pay to Distributor the sum of $32,000 for the floor space
occupied or used by RVP in promoting the sale of its Products at each annual
trade show; and
(b) In connection with sales of RVP Products made at each such trade
show under Distributor's "Dating Program," RVP shall provide Distributor with
credit terms comparable to those offered by Distributor to its customers under
such program; provided that the period of any such credit extension by RVP to
Distributor, as a result of the extension of credit by Distributor to any of its
customers, shall not exceed ninety (90) days and RVP shall not be obligated to
provide Distributor with any such credit extension more than once per calendar
year in respect of any extension of credit by Distributor to any customer under
Distributor's Dating Program.
5.9 RVP agrees that:
(a) During the term of this Agreement and for a period of three (3)
years following its termination, RVP shall maintain policies of insurance in the
amounts and with the insurers set forth in Exhibit I hereto, at all times naming
Distributor as an additional insured thereunder and, in addition, protecting
Distributor from any and all liabilities to customers or to other third parties
arising out of the manufacture by RVP, or the sale by Distributor or by its
customers (unless arising from the negligence or intentional wrongful acts of
Distributor or its customers), or the use by any person or entity, or the
condition of, any of the RVP Products.
11
<PAGE> 12
(b) In the event RVP is self-insured for any portion of its general
liability obligations, RVP agrees to maintain, during the period specified in
Subsection 5.9(a) above, policies of insurance naming Distributor as an
additional insured under RVP's primary and excess umbrella liability policies
and shall furnish to Distributor a certificate of an officer of RVP as to the
amount of the self-insured retention and the existence of umbrella coverage of
at least $_________.
(c) Each policy of insurance required to be maintained by RVP
hereunder shall contain provisions to the effect that the policy limits may not
be reduced, terms changed or the policy cancelled on less than thirty (30) days'
prior written notice to Distributor. The insurance required to be provided under
this Subsection 5.9 shall be primary with respect to any other insurance
available to Distributor or its subsidiaries and shall contain a waiver of
subrogation by the RVP's insurance carriers against Distributor and its
insurance carriers with respect to the liabilities and obligations required to
be covered by insurance to be obtained and maintained by RVP pursuant hereto.
(d) Within thirty (30) days of the date hereof, and at such other
times as may be requested by Distributor during the term of this Agreement and
during the three-year period referenced in Subsection 5.9(a) above, RVP shall
furnish Distributor certificates of insurance evidencing RVP's compliance with
the provisions of this Section 5.9.
6. RETURN OF PRODUCTS
RVP Products purchased by Distributor hereunder may be returned to RVP
when (i) such Products are defective or do not meet specifications; (ii) when
such Products are returned to Distributor by its customers pursuant to any RVP
Product warranty. RVP agrees to accept, without charge, the return of all RVP
Products returned for any of the reasons hereinabove set forth and all RVP
Products shipped in error by RVP to Distributor pursuant to this Agreement and
to issue to Distributor a credit in an amount equal to the prices charged by RVP
for such returned RVP Products, plus the freight charges incurred by Distributor
in returning such RVP Products. RVP further agrees, at Distributor's request, to
rework or upgrade obsolete RVP patio and window awnings in Distributor's
inventories of such RVP Products to current and saleable fabric colors or
patterns and to bear fifty percent (50%) of the costs thereof, provided that
Distributor agrees to pay the other fifty percent (50%) of such costs.
7. PATENTS AND TRADEMARKS
7.1 No rights to manufacture are granted to Distributor by this Agreement
and no licenses are granted or implied by this Agreement under any patents used,
owned or controlled by RVP or under which RVP has any rights of manufacture,
except the right to market, sell and use the RVP Products.
7.2 Except as and to the extent otherwise provided in Section 5.9,
Distributor shall not acquire any right, title or interest in or to any of the
RVP Trademarks. Distributor shall not in any way mutilate, deface, or alter
trademarks, trade names, or company names affixed to the RVP Products by RVP.
RVP agrees to add to the RVP Products or Product packaging materials,
12
<PAGE> 13
labeling, commercially acceptable to RVP, that is required by any laws or
regulations applicable to the marketing or sale of such Products.
7.3 Upon termination of this Agreement, Distributor shall return to RVP
all materials received by Distributor from RVP bearing any trademarks of RVP,
and shall not make any further use thereof, except in connection with the
marketing and sale of inventories of the RVP Products in the possession of
Distributor at the time of such termination as permitted by Section 12.1 of this
Agreement, and in connection with the marketing and sales, following such
termination, of Coast Proprietary Products and Coast After-Market Products.
7.4 RVP represents and warrants that it has the right to grant to
Distributor the licenses granted under Section 5.7 hereof, without violating the
rights of any other person or entity, and that neither the use by Distributor in
accordance with the terms of this Agreement of the RVP Trademarks licensed
hereunder to Distributor, nor any of the RVP Products supplied to Distributor
hereunder, will infringe any patent, copyright, trademark or other industrial or
intellectual property right or trade secret or other proprietary rights of any
third party in any country in the Territories.
8. FORCE MAJEURE
If any party hereto is prevented from performing its obligations hereunder
by reason of the occurrence of an event of force majeure or an act of God (a
"Force Majeure Event"), which shall include insurrections, riots, wars and
war-like operations, trade embargoes, explosions, governmental acts, epidemics,
failure of independent contractors to perform, strikes, lock-outs, fires, acts
of any public enemy, earthquakes, hurricanes and storms, inability to obtain
required materials or supplies or qualified labor or services (such as, but not
limited to, freight services), and the promulgation of any applicable law,
regulation or restriction, not in effect on the date hereof, by any foreign, or
federal, state or local governmental entity or instrumentality, such party shall
be excused from the performance of those of its obligations affected thereby for
the duration of such Force Majeure Event and for such period thereafter as may
be reasonably required to resume performance hereunder; but only if the
occurrence of the Force Majeure Event preventing performance could not have been
avoided through the exercise of reasonable diligence by the party seeking to be
excused from performance. Any party hereto whose performance is prevented by any
such Force Majeure Event shall use its commercially reasonable best efforts to
avoid, remove, or cure such circumstances and shall resume performance with
utmost dispatch when such circumstances are removed or cured. Any party claiming
such circumstances as an excuse for delay in performance shall give prompt
notice in writing thereof to the other party, together with an estimate as to
when performance shall be resumed.
13
<PAGE> 14
9. TAXES
Distributor shall, at its sole expense, pay all sales or similar taxes or
levies or import or export duties required by any state, local or municipal
government to be paid on the resale by Distributor of the RVP Products purchased
by it pursuant to this Agreement.
10. COMPLIANCE WITH LAWS
RVP agrees that the RVP Products, and all materials in which they are
packaged, shall comply with all applicable foreign, federal, state, and local
laws, including, but not limited to, those applicable to product packaging and
labeling and all environmental laws and regulations applicable to the Products
or the product packaging. Distributor shall comply with all applicable federal,
state, and local laws relating to its marketing and sales of the Products in the
Territories.
11. DURATION AND TERMINATION
11.1 Unless sooner terminated pursuant to Section 11.2 or Section 11.3
below, this Agreement shall become effective on the date hereof and shall remain
in full force and effect for a period of five (5) years from the date hereof
(the "Initial Term") and, commencing at the end of the Initial Term and each
year thereafter, this Agreement shall be automatically renewed (without the
requirement of any action on the part of either party) for an additional one (1)
year period (each, a "Renewal Period"). Notwithstanding the foregoing, either
party may terminate this Agreement, without cause, effective on two (2) years'
prior written notice of termination to the other party; provided that no
termination, other than a termination pursuant to Section 11.2 or Section 11.3,
shall be effective prior to the end of the Initial Term. For example, by way of
illustration, for a party to terminate this Agreement at the end of the Initial
Term, it must give written notice of termination to the other party by no later
than the end of the 36th month of the Initial Term; or, if a party were to give
such notice in the 37th month of the Initial Term, the effective date of such
termination (unless this Agreement is sooner terminated pursuant to Sections
11.2 or 11.3) would be the end of the 72nd month of the term of this Agreement,
because such termination notice would have been given less than two years prior
to the commencement of the first Renewal Period; or if such notice is given in
the 61st month (which would be the first month of the first Renewal Period),
this Agreement would not terminate (unless sooner terminated pursuant to
Sections 11.2 or 11.3) until the end of the third Renewal Period which would end
in the 96th month of the term of this Agreement, because such termination notice
would have been given less than two (2) years prior to the commencement of the
third Renewal Period. For purposes of this Agreement, the phrase "term of this
Agreement" shall refer to the period from the date hereof to the effective date
of any termination of this Agreement pursuant to this Section 11.1, Section 11.2
or Section 11.3 hereof, as the case may be.
11.2 In the event that either party shall have breached any of its
representations or warranties hereunder (other than a product warranty) or any
material covenant to be performed by it hereunder, including, but not limited
to, the failure of Distributor to have paid for any purchase of RVP Products
within thirty (30) days from the date of the delivery thereof to the F.O.B.
point (unless otherwise agreed to in writing by RVP), or the failure of RVP to
supply the RVP Products
14
<PAGE> 15
ordered by Distributor in accordance with the terms of this Agreement (other
than due to a Force Majeure Event, as defined in Section 8), the non-breaching
party may terminate this Agreement effective on ninety (90) days' prior written
notice (which notice shall specify the nature of such breach) to the breaching
party; provided that no such termination shall become effective if the breaching
party shall have cured such breach within ninety (90) days after its receipt of
such notice.
11.3 This Agreement shall be deemed terminated immediately and
automatically in the event that either RVP or Distributor shall be adjudged,
voluntarily, or involuntarily, bankrupt or shall have petitioned for consent to
or relief under bankruptcy, reorganization, receivership, liquidation or
arrangement.
12. TERMINATION PROCEDURES
In the event of the termination of this Agreement, whether pursuant to
Section 11.1, 11.2 or 11.3 hereof:
12.1 Distributor shall be entitled to continue selling RVP Products held
in its inventories, and to perform any other acts (not inconsistent with the
terms of this Agreement) which are necessary or appropriate to the sale thereof
and the orderly winding up of the dealings between the parties hereunder.
12.2 All of the rights of Distributor to purchase additional RVP Products
from RVP shall cease, except that Distributor shall have the right to purchase
additional quantities of the RVP Products on the terms contained in this
Agreement to meet purchase orders received prior to the effective date of
termination that cannot be filled from the existing inventories of Distributor
or to supply parts or components for roll-up awnings in connection with sales of
its existing inventories of RVP roll-up patio awnings.
12.3 Within ninety (90) days of termination, RVP shall offer to repurchase
the unused and unopened inventory of RVP Products that is held by Distributor
and is in a saleable condition and not over one (1) year old (measured from the
date of the delivery thereof to Distributor), at the purchase price charged for
such Products to Distributor, plus the costs of freight to ship those RVP
Products to locations designated by the RVP; provided, however, that there shall
be credited against such repurchase price a restocking fee equal to 15% of that
current purchase price in the event this Agreement was terminated pursuant to
Section 11.2 by RVP due to a material uncured breach by Distributor or pursuant
to Section 11.3 due to the bankruptcy of Distributor. Distributor may accept
such offer by written notice to RVP, given to RVP not more than thirty (30) days
following Distributor's receipt of such offer, which notice shall specify the
RVP Products and quantities thereof to be repurchased by RVP hereunder. Amounts
due hereunder by RVP to Distributor shall first be credited against any unpaid
amounts due by Distributor to RVP for Products purchased pursuant to this
Agreement and, if any amounts remain due by RVP to Distributor after giving
effect to such credits, such remaining amounts shall be paid to Distributor
within sixty (60) days after shipment of such Products by Distributor to RVP.
12.4 The respective rights and obligations of the parties hereto under
clause (ii) of
15
<PAGE> 16
Section 4.2, and under Section 5.7, Section 5.9, Section 6, Section 7.4, this
Section 12, Section 14, Section 17, Section 18, Section 19, Section 20 and the
provisions of Section 22, shall survive the termination of this Agreement.
13. HIRING OF FORMER EMPLOYEES
During the term of this Agreement, no party hereto shall solicit for hire
or hire any person who is employed by the other party, except with the prior
written consent of the Chief Executive Officer of such other party.
14. DISPUTES
14.1 Except as otherwise provided in Section 14.2 or in Annex 1 to Exhibit
D, any disputes, controversies or claims between the parties arising out of or
relating to this Agreement, or the performance by either party of any of its
obligations under this Agreement, that are not resolved by mutual agreement of
RVP and Distributor within thirty (30) days of receipt of written notice of such
dispute, controversy or claim, shall be submitted to binding arbitration in
accordance with the rules of the American Arbitration Association (the
"Association"). Either party may initiate such arbitration after the end of such
thirty (30) day period. RVP and Distributor agree that the Association will use
a panel of three (3) arbitrators to review the dispute, controversy or claim in
question in accordance with the Association's standard arbitration rules, and in
accordance with then existing statutes of the State of California. Each party
shall select one arbitrator from a listing of available arbitrators furnished by
the Association and those two arbitrators shall select the third; provided that
if any party fails to select an arbitrator within fifteen (15) days after the
submission of such listing of available arbitrators, the Association shall
select an arbitrator for such party. Any decision concurred in by at least two
of the three arbitrators shall be binding on the parties. This arbitration
agreement shall be specifically enforceable and judgment upon any award rendered
by arbitration may be entered in any court having jurisdiction. The first
arbitration initiated under or with respect to this Agreement shall take place
in San Jose, California, unless the parties agree on another location for such
arbitration. Thereafter, the location of subsequent arbitrations hereunder shall
alternate successively between Wichita, Kansas and San Jose, California, unless
the parties otherwise agree. Each party agrees to submit to and not to contest
the jurisdiction of the Association or the venue of any such arbitration and to
accept service of process by certified or registered mail, return receipt
requested.
14.2 Notwithstanding Section 14.1 above, either party may seek equitable
relief, such as specific performance or the issuance of a temporary restraining
order, or a preliminary or permanent injunction, with respect to a breach or
threatened breach of this Agreement in any court of competent jurisdiction.
14.3 In the event that any arbitration or other proceeding is instituted
between the parties pursuant to this Section 14, the non-prevailing party shall
pay all reasonable attorney fees and other legal costs of the other party
hereto.
16
<PAGE> 17
15. ASSIGNMENT
Each party agrees not to assign, transfer, sublicense, or convey this
Agreement without the prior written consent of the other party; except that
either party may assign this Agreement without the other party's consent in
connection with a merger of a party with, or a sale (in a single or series of
related transactions) of all or substantially all of a party's voting stock or
assets to, another person or entity; provided that at least thirty (30) days'
prior written notice of the anticipated date of such merger or sale is given to
the other party and the party to which this Agreement is assigned in any such
merger or sale confirms in writing that it will comply with the terms of this
Agreement. Any assignment, transfer, sublicense, or conveyance of this Agreement
made in violation of this Section 15 shall be void and ineffective. In the event
of an assignment made in accordance with this Section 15, all of the rights and
benefits under this Agreement to which the assigning party is entitled shall
inure to the benefit of the assignee of such party, and all obligations of the
assigning party under this Agreement shall be assumed by the assignee of such
party, provided that the assigning party shall remain liable hereunder for the
performance of any of its obligations that its assignee fails to perform.
16. INDEPENDENT CONTRACTORS
Nothing contained in this Agreement shall be deemed to create a
partnership or joint venture between the parties hereto, and neither of the
parties hereto shall in any matters connected hereto, or otherwise, hold itself
out as the partner of the other, nor shall either of the parties incur any
indebtedness or obligation in the name of, or which shall be binding on, the
other party, without the prior written consent of such other party.
17. CONFIDENTIAL INFORMATION
Each party (hereinafter, a "receiving party") shall take all reasonable
steps and do all things reasonably necessary to insure that confidential
information relating to any aspect of the business of the other party (the
"disclosing party"), disclosed to the receiving party under or in connection
with this Agreement, including, without limitation, any customer lists and sales
information furnished by Distributor to RVP, shall not be disclosed or made use
of by the receiving party except in connection with the performance by the
receiving party of its obligations under this Agreement, provided, however, that
the foregoing shall not apply to information which:
(a) The receiving party demonstrates was known to it prior to the
disclosure by the disclosing party;
(b) Is or becomes public knowledge through no fault or action of the
receiving party;
(c) Is lawfully disclosed to the receiving party by a third party
that is not subject to a confidentiality obligation to the disclosing party and
acquired such information with the consent of the disclosing party; or
17
<PAGE> 18
(d) Is compelled by judicial process or subpoena to be disclosed,
provided that in such event the receiving party shall promptly notify the other
party thereof and shall cooperate with such other party to quash such subpoena
or obtain an appropriate protective order limiting the disclosure thereof.
The parties' obligations hereunder shall survive the termination of this
Agreement.
18. PRODUCT WARRANTIES; LIMITATION OF LIABILITY
18.1 RVP warrants each RVP Product as set forth in the warranty attached
hereto in Exhibit F that is applicable to such Product, as such warranties may
be amended from time to time by mutual agreement of the parties. IT IS
UNDERSTOOD AND AGREED THAT EXCEPT FOR THE WARRANTIES OF RVP IN SECTION 7.4 OF
THIS AGREEMENT, RVP'S PRODUCT WARRANTIES TO DISTRIBUTOR SET FORTH IN EXHIBIT F
ARE IN LIEU OF ALL OTHER PRODUCT WARRANTIES TO DISTRIBUTOR, EXPRESSED OR
IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. Distributor shall not have any authority to
make any representations or warranties concerning the RVP Products other than
those set forth in Exhibit F or in written materials provided to Distributor or
approved by RVP pursuant to this Agreement.
18.2 EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 18.2 AND IN SECTION 19.1
OF THIS AGREEMENT, THE LIABILITY OF RVP TO DISTRIBUTOR FOR OR IN CONNECTION WITH
ANY DEFECT IN OR NEGLIGENT MANUFACTURE OF ANY OF THE RVP PRODUCTS SOLD TO
DISTRIBUTOR HEREUNDER (WHETHER BASED ON PRINCIPLES OF STRICT PRODUCT LIABILITY
OR NEGLIGENCE OR BREACH OF WARRANTY OR ANY OTHER PRINCIPLES OF LAW) SHALL NOT
EXCEED THE PURCHASE PRICE PAID BY DISTRIBUTOR FOR THE DEFECTIVE OR NEGLIGENTLY
MANUFACTURED PRODUCTS AND THE DIRECT COSTS INCURRED BY DISTRIBUTOR IN CONNECTION
WITH THE REPLACEMENT, REPAIR OR RECALL THEREOF, AND THE LIABILITY OF DISTRIBUTOR
FOR NEGLIGENCE IN CONNECTION WITH THE DISTRIBUTION OR SALE OF ANY OF THE RVP
PRODUCTS SHALL NOT EXCEED THE PRICE PAID BY DISTRIBUTOR FOR THE RVP PRODUCTS
THAT WERE SOLD OR DISTRIBUTED IN A NEGLIGENT MANNER BY DISTRIBUTOR AND NO PARTY
HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS
OF BUSINESS OPPORTUNITIES, OR LOSS OF BUSINESS INVESTMENT ARISING OUT OF ANY
DEFECT IN, OR NEGLIGENCE IN THE MANUFACTURE OR DISTRIBUTION OR SALE OF, ANY OF
THE RVP PRODUCTS; PROVIDED THAT ANY LOSSES, DAMAGES, LIABILITIES, COSTS OR
EXPENSES (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS FEES) INCURRED BY DISTRIBUTOR
IN CONNECTION WITH ANY CLAIM, ACTION OR SUIT BY ANY PURCHASER OR USER OF THE RVP
PRODUCTS ARISING OUT OF THE SALE, OPERATION, CONDITION OR USE OF ANY RVP
PRODUCT, OTHER THAN DUE TO NEGLIGENT ACTS OF DISTRIBUTOR, SHALL BE DEEMED TO
CONSTITUTE DIRECT DAMAGES, AND NOT INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL
18
<PAGE> 19
DAMAGES, INCURRED BY DISTRIBUTOR AND SHALL NOT BE SUBJECT TO ANY OF THE
LIMITATIONS ON LIABILITY SET FORTH HEREINABOVE.
19
<PAGE> 20
19. INDEMNIFICATION
19.1 RVP shall indemnify, defend, and hold harmless Distributor and its
directors, officers, employees, representatives and their successors in interest
and permitted assigns (the "Distributor Indemnified Parties") from and against
any and all demands, claims, actions, suits and other proceedings, and any and
all losses, damages or liabilities, costs and expenses (including, but not
limited to, reasonable attorneys' fees), whether or not incurred in connection
with any demand, claim, action, suit or other proceeding, that arise out of or
are based on (i) any claim or determination that any of the RVP Products are or
were defective or were negligently manufactured, whether based on principles of
strict manufacturer's product liability, negligence or breach of warranty, or
otherwise, (ii) any claim or determination that the manufacture, marketing,
distribution, sale, lease or use of the Products, or the reproduction or use of
any of the trademarks of RVP which Distributor is granted the right to use
hereunder, infringes any patent rights, trademarks, copyrights or other
intellectual or industrial property, trade secret or other proprietary rights of
any third party, or (iii) any negligent act or negligent omission to act of RVP,
other than any act or omission for which the Distributor Indemnified Parties are
entitled to indemnification pursuant to clause (i) or clause (ii) of this
Section 19.1. The limitation on liabilities set forth in Section 18.2 of this
Agreement shall not apply to the obligations of RVP with respect to, or losses,
damages, liabilities or costs or expenses (including, but not limited to,
attorneys fees) arising out of, any of the claims or any of the determinations
referenced in clause (i) or clause (ii) of this Section 19.1. Without limiting
the indemnification rights of the Distributor Indemnified Parties hereunder, RVP
agrees that if any RVP Product is held by any court of competent jurisdiction in
any of the Territories to infringe any patent or other intellectual or
industrial property or trade secret or other proprietary right of any other
person or entity (an "Infringing Product"), or if RVP believes that such a claim
is reasonably likely to occur, RVP shall promptly notify Distributor thereof in
writing and RVP shall, at its sole expense and at no expense to Distributor,
take one or more of the following actions: (x) modify such Infringing Products
so that they are no longer infringing, or (y) procure the rights needed to
permit RVP to continue manufacturing and selling the Infringing Products to
Distributor and to permit Distributor to continue marketing, distributing and
selling such Products in the Territories on the terms and conditions of and with
the licenses and rights provided to Distributor under this Agreement and without
any additional obligations being imposed as a result thereof on Distributor, or
(z) repurchase all of the Infringing Products in the possession of Distributor
for resale, or returned by any of its customers, in any of the Territories in
which the manufacture, marketing or sale of such RVP Product was held, or RVP
believes is reasonably likely to be held, to be infringing, at the price paid by
Distributor for such Infringing Products. The determination of which of the
three foregoing actions that shall be taken by RVP with respect to any
Infringing Products shall be made by RVP. In addition, in the event RVP
repurchases any Infringing Products, RVP also shall reimburse Distributor for
all packaging and shipping costs incurred in connection with the shipment
thereof to RVP or to any person designated by RVP to receive such items. Amounts
due Distributor in respect of the repurchase, packaging and shipment of
Infringing Products shall first be credited against unpaid amounts due hereunder
by Distributor to RVP and any amounts remaining due by RVP to Distributor, after
giving effect to such credits, shall be paid to Distributor within thirty (30)
days after shipment of such Products by Distributor to RVP or to a person
designated by RVP in the United States.
20
<PAGE> 21
19.2 Distributor shall indemnify, defend, and hold harmless RVP and its
directors, officers, employees, representatives and their successors in interest
and permitted assigns (the "RVP Indemnified Parties") from and against any and
all demands, claims, actions, suits and other proceedings, and any and all
losses, damages or liabilities, costs and expenses (including, but not limited
to, reasonable attorneys' fees), whether or not incurred in connection with any
demand, claim, action, suit or other proceeding, that arise out of or are based
on any negligent act or negligent omission to act of Distributor.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings (written or oral) of the parties in connection therewith.
21. AMENDMENTS AND WAIVERS
Any modifications to or amendments or waivers of any provision of this
Agreement must be in writing and bear the signatures of an authorized officer of
both RVP and Distributor. The failure of either party to require the performance
of any term of this Agreement, or the waiver by either party of any breach of
this Agreement, shall not prevent a subsequent enforcement of such term nor be
deemed a waiver of any subsequent breach.
22. MISCELLANEOUS
22.1 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
22.2 If any term of provision of this Agreement or any application thereof
shall be invalid or unenforceable, the remainder of this Agreement and any other
application of such provision shall not be affected thereby. The section
headings in this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of any of the provisions of this
Agreement. This Agreement is the result of arms'-length negotiations between the
parties and no provision of this Agreement shall be construed against any party
because its attorneys were the draftsmen or principal draftsmen of such
provision.
22.3 Any notice hereunder given in writing shall be deemed sufficiently
given by one party to another (i) on the date of delivery or tender, if
delivered or tendered in person, or (ii) three (3) days after its deposit in the
United States Mail, if mailed in a sealed envelope, registered or certified,
with postage and postal charges prepaid, and addressed, if to Distributor, to
the attention of Distributor's Chief Executive Officer, at:
THE COAST DISTRIBUTION SYSTEM
1982 Zanker Road
San Jose, California 95112
21
<PAGE> 22
and, if to RVP, to the attention of its Chief Executive Officer, at:
RECREATION VEHICLE PRODUCTS, INC.
3050 St. Francis
Wichita, Kansas 67204
Any party may change its address at which any notices are to be delivered or to
which they are to be mailed by giving the other party at least ten (10) days'
prior written notice of such change in the manner specified in this Subsection
22.3.
22.4 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of this date first above written.
THE COAST DISTRIBUTION SYSTEM
By: /s/ Thomas R. McGuire
-----------------------------
Date: October 11, 1995
RECREATION VEHICLE PRODUCTS, INC.
By: /s/ Melvin C. Adams
-----------------------------
Date: October 11, 1995
22
<PAGE> 1
EXHIBIT 10.12
A G R E E M E N T
THIS AGREEMENT is entered into on the 6th day of October, 1997, between
CRISPAIRE CORPORATION (PRIMARY CONTRACTOR)
3285 Saturn Court NW
Norcross, GA 30092
(770) 734-9696
Fax (770) 453-9323
hereinafter called the Contractor, and
LOS ANGELES UNIFIED SCHOOL DISTRICT
hereinafter called the District.
The parties hereby agree as follows:
SCOPE OF WORK
The Contractor shall furnish to the District in accordance with its Bid Request
C-250, Specifications dated October, 1997, the Rate Schedule set out herein and
in strict conformity with all Contract documents:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR
DESIGN AND INSPECTION BRANCH
SCOPE OF CONTRACT
The scope of the Contract is to provide various types of air conditioning
systems including miscellaneous accessories and spare parts to various District
locations. Contractor will have to provide service to any of the District's
locations, (see map included) on an "as required" (scheduled delivery) basis, in
accordance with all the terms, and conditions and Specifications indicated
herein. (See Specifications section, Pages l through 19 for specific details).
This Contract is for furnishing equipment/material only, and does not cover
installation. Installation shall be provided by the District and/or by outside
Contractor under separate agreement. Contract shall allow the District to issue
individual orders throughout the Contract period for a various number of units.
TERM OF CONTRACT
The term of the Contract is October 1, 1997 to September 30, 2000 (36 months),
inclusive. Upon written mutual consent of the District and the Contractor, this
Contract is subject to two (2) additional twelve (12) month extensions for a
maximum of five (5) years with no change in terms and/or conditions. After each
annual period (12 months), rates are subject to modification for each remaining
twelve (12) month period evaluated upon increases or decreases in the Consumer
Price Index. Additionally, each extended Contract period would also be subject
to the same provisions. (See "Contract Extensions" and "Adjustment To Rate
Schedule" (clauses).
CANCELLATION CLAUSE
All terms, conditions, and prices (including percentage discount), are firm for
the first one (1) year of the Contract period. After one (1) year from the
beginning date of the Contract, this agreement may be cancelled by either party
without cause upon sixty (60) days written notification of intention to cancel
the agreement.
Upon notification, the District has the right to order at the price, terms, and
conditions in effect at any time prior to the effective date of the cancellation
of the agreement and require delivery of the items so ordered. Purchase orders
issued
CONTRACT NO. 985072 Page 1 of 13 BID NO. C-617
<PAGE> 2
against the Contract prior to cancellation may specify delivery dates
beyond the effective date of the cancellation of this agreement, not exceeding
forty five (45) days.
The District reserves the right to cancel this agreement if delivery or
performance proves unsatisfactory and may procure the articles from other
sources and may deduct from unpaid balance due the Contractor and/or may collect
against the surety for excess costs so paid. The prices paid by the District
shall be considered the "prevailing market price" at the time such purchase is
made. The District shall be sole judge to satisfactory performance based upon
delivery requirements indicated in the Specifications section.
TAXES
The unit costs shall exclude all applicable taxes.
The District shall pay only the California Sales and Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice
The Federal Excise Tax is not applicable, as school districts are exempt
therefrom. The District, upon request, shall furnish the Contractor a Federal
Exemption Certificate.
Any new of additional tax not in effect at the time of the bid but which becomes
effective during the Contract period shall be paid by the District providing
that the services/materials being provided under this Contract are applicable to
such tax.
INVOICES AND PAYMENTS
Itemized invoices on a form acceptable to the District with Contract and
Purchase Order Number clearly indicated, should be submitted to the District
immediately in triplicate. Issued and mail to:
Los Angeles Unified School District
Accounting & Disbursements Division
Accounts Payable Section, 9th Floor
P.O. Box 54306
Los Angeles, California 90054
Invoices submitted shall include the original (signed) copy of the delivery slip
and listing of unit serial numbers delivered. See Specifications section,
"Serial Numbering".
For each purchase order issued: Payment shall be made for only the actual number
of units delivered, either all or in-part.
For payment information call Accounts Payable Section: (213) 633-3441, Attn:
Contracts/"M" Order Payer.
CONTRACT NO. 985072 Page 2 of 13 BID NO. C-617
<PAGE> 3
RATE SCHEDULE
The following rate schedule shall be firm* during the period, October 1, 1997
through September 30, 2000 (36 months) inclusive.
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (110 Ea.) (104 Ea.) (214 Ea.)
- ------------------ ---------
2 ton 460V/3 phase
(0310532043) $4,070.00 $4,192.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
2 ton 208V/230V/1 phase
(0310532021) $3,844.00 $3,959.00
2 ton 208V/230V/3 phase
(0310532023) $3,920.00 $4,038.00 40 Ea. 40 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 3 of 13 BID NO. C-617
<PAGE> 4
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (200 Ea.) (200 Ea.) (200 Ea.)
- ------------------ ---------
2.5 ton 460V/3 phase
(0310532543) $4,161.00 $4,286.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
2.5 ton 208V/230V/1 phase
(0310532521) $3,930.00 $4,048.00
2.5 ton 208V/230V/3 phase
(0310532523) $4,007.00 $4,127.00 40 Ea. 40 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 4 of 13 BID NO. C-617
<PAGE> 5
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (616 Ea.) (570 Ea.) (2419 Ea.)
- ------------------ ---------
3 ton 460V/3 phase Unit Cost
(0310533043) $4,223.00 $4,350.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3 ton 208V/230V/1 phase
(0310533021) $3,988.00 $4,108.00
3 ton 208V/230V/3 phase
(0310533023) $4,067.00 $4,189.00 40 Ea. 40 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 5 of 13 BID NO. C-617
<PAGE> 6
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (145 Ea.) (142 Ea.) (200 Ea.)
- ------------------ ---------
3.5 ton 460V/3 phase
(0310533543) $4,586.00 $4,724.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3.5 ton 208V/230V/1 phase
(0310533521) $4,329.00 $4,459.00
3.5 ton 208V/230V/3 phase
(0310533523) $4,415.00 $4,548.00 40 Ea. 40 Ea.
-------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 6 of 13 BID NO. C-617
<PAGE> 7
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (248 Ea.) (235 Ea.) (200 Ea.)
- ------------------ ---------
4 ton 460V/3 phase
(0310534043) $5,796.00 $5,970.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
4 ton 208V/230V/1 phase
(0310534021) $5,467.00 $5,631.00
4 ton 208V/230V/3 phase
(0310534023) $5,577.00 $5,744.00 30 Ea. 30 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 7 of 13 BID NO. C-617
<PAGE> 8
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (13 Ea.) (13 Ea.) (26 Ea.)
- ------------------ ---------
5 ton 460V/3 phase
(0310535043) $6,336.00 $6,526.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
5 ton 208V/230V/1 phase
(0310535021) $5,974.00 $6,153.00
5 ton 208V/230V/3 phase
(0310535023) $6,095.00 $6,278.00 30 Ea. 30 Ea.
------- ------
Category Totals: 1,331 1,252
===== =====
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985072 Page 8 of 13 BID NO. C-617
<PAGE> 9
RATE SCHEDULE (cont.)
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type. Shall provide 450
CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.*
SPARE AND
REPLACEMENT PARTS
- -Percentage discount off manufacturer's published price list: 40%
- -Date of price list used: 4/97 Column or category used: Trade Price
*See Specification section for complete technical equipment specification.
**See Specification section for specific details.
UNIT COSTS IF PURCHASED:
<TABLE>
<CAPTION>
Over Two (2) Years
-------------------------------
System Options 1st Year 2nd Year
--------------- ---------------
<C> <S> <C> <C> <C>
4A. Control cabinets and/or breaker panels to be Upgrade Unit Cost: $7.00 $7.50
provided with door locks: flush type latched (Each)
Corbin no. 15751, 5/8 inch for metal door, Keyed
to Corbin cat. No. 60 key.
5A. Auto changeover Thermostat and Sub-base for AC-2 Upgrade Unit Cost: $41.00 $43.00
(Each)
</TABLE>
* See Specification section for complete technical equipment specification.
CONTRACT NO. 985072 Page 9 of 13 BID NO. C-617
<PAGE> 10
CATEGORY - TRAINING
Training of District's Maintenance and Operations Personnel
Cost to provide technical training to the Maintenance and Operations Personnel
of the District who are responsible for the maintenance and repair of air
conditioning units covered under this Contract. This training is to be conducted
at each of the seven (7) M&O locations for each of the different types of air
conditioning units listed in this request. The cost shall be based on forty (40)
hours of training per year, which should allow sufficient time to train all
personnel at the different locations. However, if this is not sufficient time in
the Contractor's opinion, an alternate time period may be submitted in addition
to the original requested time.
Cost per hour to provide "on-site" training: $ 250.00 per hour.
Suggested number of hours for training: 8 hours/per session.
AUTHORIZED DISTRICT REPRESENTATIVE
The Contract shall be under the direction and subject to the approval of the
Branch Director of Design and Inspection Branch, Julie Crum, or her designated
representative. The authorized District representative for this Contract will
be:
Bronco Popovich, HVAC Testing and Inspection Supervisor.
Los Angeles Unified School District
Design and Inspection Branch, Inspection Section
c/o Central Shops
1500 East 14th Street
Los Angeles, California 90021
(213) 743-3586
Fax (213) 746-7679
ESTIMATED DISTRICT REQUIREMENTS
The District's estimated requirement indicated in the Rate Schedule Section is
what will need to be provided to facilitate the District's current Contract
needs. This is an estimated requirement for information only and is in no way
intended to indicate expressly or by implication the actual quantity that may be
required. The District may require substantially more or less than this amount.
Although a guarantee cannot be made as to the number of systems which will be
provided under the Contract, for purposes of bidding, Bidder should base cost on
the estimates indicated in the "Rate Schedule". Ordering will be based upon one
(1) of the three (3) options shown.
The Contractor will be afforded the option by giving written notice to the
District, of refusing to deliver in excess of 25% over the quantity for each
item indicated in the "Rate Schedule." Refusal to deliver shall serve to
terminate that item from the Contract and the District reserves the right to
terminate the entire Contract when 50% of the Contract line items have been
terminated.
The equipment listed in the Contract and required during the Contract period
shall be ordered exclusively from the Contractor during such period except as
noted in the General Bid and Contract Conditions, #32 "Special Purchases" and
#34 "District Purchasing Rights".
CASH DISCOUNT
Cash Discount of Net % 30 days, is being offered.
CONTRACT NO. 985072 Page 10 of 13 BID NO. C-617
<PAGE> 11
NOTICES, DEMANDS AND COMMUNICATIONS
Formal notices, demands, and communications to be given hereunder by either
party shall be made in writing and may be effected by U.S. mail, personal
delivery, registered/certified mail or return receipt requested and shall be
deemed effective as of the date of receipt.
PERFORMANCE GUARANTEE
A performance guarantee is required on Contracts with estimated values which are
expected to be $100,000.00 or more during any annual period. ( i.e.) for
multi-year Contracts, the estimated value will be based on the annual (12 month)
amount only.
The Contractor shall be required to provide a performance guarantee at the time
of execution of the Contract. Guarantee shall be in the form of a cashier's or
certified check, a certificate of deposit or a performance bond. Period of
coverage shall be during the first Contract period, twelve (12) months, plus 120
days to cover service/deliveries ordered before but performed after the Contract
expiration date. The amount shall be equal to twenty-five (25) percent of the
total cost for the annual period. The guarantee shall be effective for the first
Contract period and shall be renewed for each subsequent twelve (12) month
period(s).
Failure to promptly submit a performance guarantee may result in a default
action. (See General Bid and Contract Condition #30).
USE OF IRREVOCABLE LETTERS OF CREDIT
Contractors that are unable to obtain or find difficulty in obtaining
performance bonds and that do not desire to tie up their funds by assignment of
a Certificate of Deposit occasionally request the District to accept an
Irrevocable Letter of Credit as a substitute security. For the information of
Contractors desiring to submit letters of credit, the following is furnished:
The procedure and criteria for acceptance by the District of Irrevocable Letters
of Credit generally are as follows:
1. The Letter should be issued by a bank haying one or more branches in Los
Angeles County or in a county contiguous to Los Angeles County.
2. The Letter should be effective for the period of the Contract and for 120
days thereafter. If the Contract conditions provide for renewal or
extension of the Contract, the Letter must include the bank's guarantee
that it will extend the Letter for any period for which the Contract is
extended, plus 120 days thereafter.
3. The Letter should provide that the District has the right unilaterally to
make draft(s) against the Letter in whole or in part, at any time,
provided that the Board of Education of the City of Los Angeles has
declared the contractor in default or has approved a claim and/or any
encumbrance against the Contract.
4. Prior to the bank's issuing the Letter of Credit, the Contractor should
obtain from the bank and submit to the District for review a completed
draft of the Letter as the bank proposes to issue it. The Contractor
should anticipate that review of the draft by the District and the
District's counsel will take approximately two weeks, plus additional time
if it is found necessary to arrange with the Contractor and/or the bank to
make changes in the Letter and, found if applicable, to review such
changes.
5. The Letter issued and submitted to the District should be fully executed
and accompanied by a properly executed acknowledgment.
NOTE: Any questions or concerns regarding either Insurance or Bonding
Requirements may be referred to the Contract and Insurance Services Branch
at (213) 633-7380.
CONTRACT NO. 985072 Page 11 of 13 BID NO. C-617
<PAGE> 12
PIGGYBACK CLAUSE
For the term of the Contract and any mutually agreed extension(s), pursuant to
request for bid and at the option of the Contractor, other school districts,
community college districts, public corporation or agency, including any county,
city, town or public corporation or agency within the State of California, may
purchase, services/item(s) at the same price and upon the same terms and
conditions pursuant to Section 20652 and/or 20118 of the Public Contract Code.
Sales tax and delivery charges are applicable to the Contract for Los Angeles
Unified School District area only. Different sales tax and delivery charges
outside the area of this Contract are subject to change based upon area of
service.
District waives its right to require such other districts and agencies to draw
their warrants in the favor of the District as provided in said code sections.
ADJUSTMENT TO THE RATE SCHEDULE (PRICES)
All rates (prices) are firm for the first Contract period of thirty-six (36)
months. For each of the two (2) additional annual extended Contract periods, the
rates(s) are "subject to modification" according to the following criteria.
The adjustment to the Contract rate(s) (prices), if any, would be effective
October 1st, for each remaining Contract period(s). Increases considered shall
be evaluated by using the percentage of change between the previous year and the
current year's Consumer Price Index, published by the U.S. Department of Labor's
Bureau of Labor Statistics as a guide. The specific index to be used is the
C.P.I. for Los Angeles-Anaheim-Riverside, CA for April of each year using the
"Special Index Category" of "All Items Less Shelter" under the "All Urban
Consumers" column.
All requests for rate adjustments must be requested by the Contractor in writing
no later than sixty (60) days prior to the end of each annual Contract period.
An explanation citing the rationale for price increase should be included in
such correspondence.
Note: It is expressly understood that Contract rate increases are not automatic
nor guaranteed. Contractor's request to increase the current rate schedule
will be evaluated and considered when such adjustments are requested. The
District reserves the right to reject any such request and re-bid and/or
cancel said Contract within the provisions of the existing agreement. The
District may offer a lower, higher or no increase in percentage. All
increases are subject to negotiation between the Contractor and the
District. For information on the Consumer Price Index, contact the Bureau
of Labor Statistics at (415) 975-4350.
Further explanation or clarification of provisions pertaining to "Adjustment To
The Rate Schedule (Prices)" may be obtained by contacting the Purchasing
Services Manager.
CONTRACT EXTENSION
After the initial Contract period of thirty-six (36) months, the Contract is
subject to two (2) additional twelve (12) month extensions, for a maximum of
five (5) years total. Extensions are contingent upon written mutual consent of
the District and the Contractor. Any request for extension must be requested by
the Contractor in writing no later than sixty (60) days prior to the expiration
date of the existing agreement. Extended Contract period granted by the District
would be subject to the same terms and conditions. Provisions for price
adjustments would be subject to the "Adjustment To The Rate Schedule (Prices)"
provision.
ASSIGNMENT
The Contractor shall not assign or transfer by operation of law or otherwise any
or all of its rights, including the right to receive payment, burdens, duties or
obligations without the prior written consent of the District and the surety on
the Contract bonds. The District's standard assignment form shall be used for
any assignment requested by the Contractor.
The District will not sign any documents in connection with assignments or
financing other than the District's standard form for "assignment of Contract
money" or "assignment of rights and delegation of duties on Contract" which is
available from the District's Contract and Insurance Services Branch, 355 South
Grand Avenue, 19th Floor, Los Angles, CA 90071, Telephone (213) 633-7380.
CONTRACT NO. 985072 Page 12 of 13 BID NO. C-617
<PAGE> 13
CONTRACT DOCUMENTS
The complete Contract includes the following documents: the Advertisement for
Bids, the Bid and General Contract Conditions, the Specifications, the Bid of
the Contractor and its acceptance by the District, the Contract, the Performance
Guarantee, and all amendments thereto. Any of these documents shall be
interpreted to include all provisions of the other documents as though fully set
out therein.
-CONTRACTOR- -DISTRICT-
CRISPAIRE CORPORATION LOS ANGELES UNIFIED SCHOOL DISTRICT
BY /s/ DAVID L. SHUFORD BY LOS ANGELES UNIFIED SCHOOL
------------------------------ DISTRICT BOARD OF EDUCATION
VP Sales & Marketing
BY /s/ CHARLOTTE BARNEY
--------------------------------
CHARLOTTE BARNEY
Contract Assistant
CONTRACT NO. 985072 Page 13 of 13 BID NO. C-617
<PAGE> 14
BOND OF FAITHFUL PERFORMANCE
WHEREAS, LOS ANGELES UNIFIED SCHOOL DISTRICT OF LOS ANGELES COUNTY
hereinafter called the District, and CRISPAIRE CORPORATION
hereinafter called the Contractor, have entered into a contract
dated ..................October 6, 1997
for ....................AIR CONDITIONING SYSTEMS (VARIOUS TYPES) FOR VARIOUS
LOCATIONS WITHIN THE LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR DESIGN AND INSPECTION BRANCH C-617 10/1/97 THROUGH
9/30/2000
Amount of Bond .........FIFTY EIGHT THOUSAND FIVE HUNDRED TWENTY FIVE AND NO/100
DOLLARS ($58,525.00)
NOW, THEREFORE, the Contractor, as Principal, and the following named Surety,
________________________________________________________________________________
are held and firmly bound to the District jointly and severally in the penal sum
of this Bond set forth above as Amount of Bond for which payment, well and truly
to be made, the Principal and Surety bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these
presents.
The conditions of this obligation is that if the Contractor shall promptly and
faithfully perform all the conditions of the Contract in strict conformity with
all terms and conditions set forth in the Contract, then this obligation shall
be null and void, otherwise it shall remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees that
notwithstanding California Civil Code Sections 2819 and 2849, no change,
alteration or extension of time in the terms of the contract or in the goods,
supplies or service to be furnished thereunder shall in any wise affect its
obligations on this bond; and it does hereby waive notice of any such change.
Signed, sealed, and dated, _______________________19___.
-Contractor/Principal- -Surety-
CRISPAIRE CORPORATION Agency (if any) ____________________
NAME ____________________________________ By _________________________________
TITLE ___________________________________ Address ____________________________
Phone (For inquiries) ______________
Bond No. ___________________________
- --------------------------------------------------------------------------------
CERTIFICATION BY LOS ANGELES COUNTY CLERK'S OFFICE
I hereby certify:
1. That the Surety named above has been certified by the State Insurance
Commissioner as an admitted Surety Insurer and that such authority is in
full force and effect.
2. That the person executing this bond on behalf of the Surety is authorized
to do so under a power of attorney on file in this office.
3. That there is on file in this office the financial statement of the Surety
for the period ending ____________ showing capital and surplus not less
than ten times the amount of this bond.
CONNY B. McCORMACK, County Clerk
Date _____________________________________ By _________________________________
985060
Form 82.4
Rev. 11/97
(Signatures for Surety must be acknowledged by jurat before a Notary Public)
<PAGE> 15
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
SPECIFICATIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES WILL AUTHORIZE THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANGES TO
THIS CONTRACT.
SCOPE OF CONTRACT
The scope of the Contract is to provide various types of air conditioning
systems. Contractor will have to provide service to any of the District's
locations, on an "As Required" (scheduled delivery) basis.
Contracted services shall be in accordance with all the Terms and Conditions set
forth herein; including adherence to the following Specifications. The "Unit
Costs" bid in the "Rate Schedule" should take into account and shall include the
following requirements.
NOTE: It is the responsibility of the Contractor to carefully read and fully
understand these specifications. If exceptions are taken thereto they must
have been noted on the signed bid. After the contract is issued, no
modifications or changes to the specifications will be authorized without
Written consent from the District.
I. TECHNICAL SPECIFICATIONS
EQUIPMENT
A. Equipment Specifications as written below may be revised to reflect latest
product developments. Such revisions are subject to approval by the
District.
B. Heat Pump Units, packaged type, floor mounted or wall hung, serving single
classroom without distribution duct:
1. Shall be tested, certified, and warranted by their manufacturers to
operate without undue noise of more than 50 dB on "A" scale measured
10 feet directly in front or 45-degree angle of the unit, at a
height 5 feet above finish floor. Supplier and Contractor shall, at
their expense, make changes or adjustments or replace loud units, to
produce a condition of quietness not to exceed 50 dB. Changes shall
not reduce air flow quantities nor cooling capacity called for in
the Contract Documents.
2. Shall have their compressors mounted on vibration isolation springs
within the cabinets.
3. Shall have height of distribution air plenum fabricated to meet
individual classroom requirement. Air outlet shall have 120 degrees
direction, adjustable 10 degree downward or upward. Air outlet to
utilize the whole width of the unit. Floor mounted units only.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 1 OF 7 C-617
<PAGE> 16
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
EQUIPMENT - continued
4. Shall have outside air make-up for ventilation mixed with return
air, filtered through same filter, prior to passing through
evaporator coil. O.S.A. shall not by-pass evaporator coils.
5. Shall have all component parts, wiring, including filters,
accessible for inspection and service from the inside (Classroom).
Floor mounted units only.
6. Shall have controls to automatically operate the mechanical
equipment through the heating or cooling and ventilating cycles as
required.
AIR CONDITIONING UNITS
Item No.
8. HP-5: Heat Pump, Single Packaged, Air Cooled, Floor Mounted (up to 5
ton capacity) of various voltages: 460V/ 3 Phase, 208/230V/ 1 Phase,
208/230V/ 3 Phase.
Unit shall be factory assembled, testsed, and fully charged with R-22 and
shall include a compressor, indoor and outdoor coils, fans and motors,
regrigerant piping, wiring, and HACR breaker Disconnect mounted in
cabinet. Provide Thermal Expansion Valve on indoor coils, and fixed
metering on the outdoor coils. Units shall be UL listed., certified under
ARI Standard 210/240 and shall have a minimum SEER/COP rating as
established by California Energy Conservation latest Standards, CCR, Title
24. Unit shall have 5 years all parts warranty from dte of acceptance of
the project. Unit cabinet shall be 29" maximum depth; furnished complete
with disconnect switch and base stand.
1. Cabinet: No. 16 gage minimum double side wall zinc coated galvanized
steel with one coat of satin acrylic paint. Cabinet insulated with
12" double density fiberglass. Disconnect access door panel shall be
lockable for vandal protection.
2. Compressor: Hermetic sealed scroll compressor with internal
vibration isolators. Refrigerator circuit shall include,
filter-dryer, high pressure and low of charge controls, and access
valves.
3. Filters: Filters shall be replaceable media in a 2" filter rack,
installed in filter section as part of unit.
4. Capacity: Heating and cooling capacity, minimum SEER/COP rating, and
indoor fan CFM shall be in compliance with California Energy
Conservatin Latest Standards, CCR, Title 24.
5. Coils: Coils shall be of non-ferrous construction with aluminum
plate fins mechanically bonded to copper tubes, factory tested.
Drain pan sloped for positive drainage.
6. Outdoor Blower: Blower shall be belt driven low speed centrifugal
type forward curved. Motor shall be equipped with internal thermal
protection.
7. Indoor Fan: Indoor fan shall be dual direct drive centrifugal type,
forward urved. Motor equipped with thermal protection.
8. Control and By-Pass: Thermostatic room temperature controls and six
(6) hour by-pass timer shall be as specified by the manufacturer and
approved by the District.
9. Controls: The internal circuit shall consist of a current limiting
type transformer to generate 24VAC, switching devices to operate the
compressor and indoor fan motor. The control circuit shall
incorporate a manual reset safety circuit to render the regfrigerant
system (compressor and outdoor blower motor) inoperative should
there
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 2 OF 7 C-617
<PAGE> 17
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
be a loss of air flow or refrigerant. The safety circuit shall be
resettable. The defrost circuit shall consist of a single device and
shall be time and temperature inititated. A 90 minute timer, readily
adjustable to 30 to 45 minutes, shall initiate a defrost cycle on if
the outdoor coil temperature has been elevated to a satisfactory
level that assures all ice has been removed or at the end of 10
minutes of defrosts operation. To prevent rapid compressor
short-cycling and to delay start-up of compressor, an automatic
resetting anti-short cycle circuit shall be factory installed.
II. GENERAL CONDITIONS AND REQUIREMENTS
1. INSURANCE
The Contractor shall secure and maintain, as a minimum, insurance as set
forth below with insurance companies acceptable to the District to protect
the Contractor from claims which may arise from operations under the
contract, whether such operations be by the Contractor or anyone directly
or indirectly employed by them. The Contractor further shall furnish upon
request of the District's Contract and Insurance Services Branch,
certificates of such insurance, signed by an authorized representative of
the insurance carrier, which shall include a minimum thirty-one (31) day
cancellation clause. Failure to maintain the insurance and furnish the
required certificates may be considered a breach of the contract by the
Contractor and the District may terminate the contract and the Contractor
shall he put in default pursuant to General Contract Condition #30,
"Default by Contractor."
a. Workers' Compensation Insurance in accordance with provisions of the
California Labor Code, adequate to protect the Contractor from
claims under Workers' Compensation Acts which may arise from
operations under the contract, whether such operations be by the
Contractor or anyone directly or indirectly employed by them.
The Contractor in signing this contract hereby certifies, pursuant to Sec. 1861
of the California Labor Code, as follows:
I am aware of the provisions of Section 3700 of the
Labor Code which require every employer to be insured
against liability for workers' compensation or to
undertake self-insurance in accordance with the
provisions of that code, and I will comply with such
provisions before commencing the performance of the work
of this contract.
b. Comprehensive Bodily Injury and Property Damage Liability Insurance
for Combined Single Limit Bodily Injury and/or Property Damage
Liability of not less than $1,000,000.00 each occurrence. The policy
so secured and maintained shall include coverage for Contractual or
Assumed Liability, Contractors Protective (Contingency) Liability,
Products Liability or Completed Operations, and Owned, Hired, and
Nonowned Automobiles Insurance; and shall be endorsed to name the
Los Angeles Unified School District and Board of Education of the
City of Los Angeles as additional insureds and to provide
specifically that any insurance carried by the District which may be
applicable to any claim or loss shall be deemed excess and the
Contractor's insurance primary despite any conflicting provisions in
the Contractor's policy to the contrary.
The Contractor shall be responsible and liable for all damage to the
property of the District which is caused by the Contractor,
Sub-Contractors, or employees thereof, during the execution of this
Contract and shall, at his own expense, repair and/or replace all damage
property to its original condition.
2. PERMITS AND LICENSES
All work shall comply with the needs of the District. The Contractor and
all their employees shall secure and maintain in force such permits,
licenses, certificates, and other documents as are required by State,
County, City, or other governmental or regulatory bodies to legally engage
in and perform the services to be provided under the Agreement.
Specifically, the Contractor shall observe and comply with the Department
of Health Services,
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 3 OF 7 C-617
<PAGE> 18
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
CAL/OSHA, South Coast Air Quality Management District, State and Federal
Environmental Regulations, Fire codes and all other applicable laws,
ordinances and regulations in their operations.
3. PACKAGING
All deliveries shall be made in cartons properly marked and fully labeled,
showing Contractor's name, contents, quantity, sizes and purchase order
number. Deliveries may be rejected if not properly identified.
4. DELIVERY REQUIREMENTS AND LOCATIONS
The Contractor will be provided a map showing the District's schools and
locations for reference. Not all schools and locations will require
service under this Contract. The Contractor is to refer to the map for
verification of District boundaries/locations that may require delivery.
Costs indicated in the Rate Schedule shall reflect delivery to any
location within those boundaries. (1) Unless otherwise specified, the
Contractor shall be responsible for delivery and shall pay all costs,
including drayage, freight, insurance and special equipment at the rates
established in the Rate Schedule. (2) Contractor shall set the equipment
"on-site" as directed by the District. It shall be the Contractor's
responsibility to coordinate the deliveries and inspection (time, place,
equipment, etc.). It shall be the Contractor's/Trucking Line's
responsibility to have the necessary manpower/equipment to unload the
trucks. (3) Contractor/Trucking Line shall contact the District a minimum
of two (2) days prior to delivery to arrange for personnel to be available
to receive the units.
5. PREFERENTIAL PRICING
The Los Angeles Unified School District shall be given the benefit of any
lower prices which may for comparable quantity and delivery be given by
the Contractor to any other school district, state, county, municipal or
local government agency for the product listed herein.
6. MANUFACTURERS CATALOG
Contractor shall provide (at no charge to the District) ten (10) copies of
manufacturer's current catalogs/published price lists indicating available
items and price listing upon award of contract and with any subsequent
price change. Contractor is responsible for contacting the manufacturers
to assure availability of price lists. Items to be invoiced are to be
based on catalog prices effective on ordering (Purchase Order) date, not
shipping or receiving date. Any change in prices and/or price lists shall
not be effective until ten (l0) days after the revised price lists are
received by the Purchasing Branch, who are so authorized to order under
contract. Revised prices/catalogs should be sent to and include:
COVER LETTER: To indicate Contractor's name contact person, phone
number.
EACH PRICE LIST: Label or stamp Contractor's name, address and phone
number. Send price lists to:
Los Angeles Unified School District
1 each: Purchasing Branch -19th Floor
355 South Grand Avenue, Suite 1951
Los Angeles, CA 90051
Attn: Marc Monforte, Purchasing Services Manager
Los Angeles Unified School District
9 each: Design and Inspection Branch 6th Floor
355 South Grand Avenue
Los Angeles, CA 90051
Attn: Victor Euben, Supervising Mechanical Engineer.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 4 OF 7 C-617
<PAGE> 19
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
It is specifically understood that the District's Bid Conditions shall supersede
any general terms and/or conditions contained in manufacturer's price list,
submitted as a part of this Bid/Contract by the Contractor/Vendor.
7. MANUFACTURER CHANGES
During the course of the contract, if there are manufacturer's changes in
the basic units and/or model number changes, the District must be
immediately notified. The Manufacturer or their representative must
provide the District with the new specification data sheet(s) within a
week, and must have the District approval prior to shipment. If the new
model(s) is acceptable, all other terms, conditions and prices shall
remain in effect. If the new model is unacceptable to the District,
Contractor will be notified not to provide/ship.
8. SPARE PARTS: The manufacturer or his assigned agent shall maintain within
the Los Angeles metropolitan area an adequate stock of replacement parts
which shall be available for immediate delivery for a minimum period of
five (5) years.
9. OPERATING AND MAINTENANCE INSTRUCTIONS
The Contractor shall provide seven (7) sets of operating and maintenance
instructions for each type of unit purchased. Also to be included are
copies of the certified test results and certified drawings of the units
in accordance with the serial numbers of each. These documents shall be
sent separately from the units, in book format (one binder per type of
unit), to the District's Supervising Mechanical Engineer. Each set of
documents shall have the name and address identifying the point of
delivery of the units. A specific address for books will be provided to
the Contractor.
10. FAILURE OF CONTRACTOR TO PROVIDE AS AGREED
If in the opinion of the District, the Contractor at any time during the
period of the contract fails to perform satisfactorily the service called
for herein, or otherwise fails to perform satisfactorily the service
called for herein, or otherwise fails or neglects to comply with the terms
of the Contract, the District may, without notice or demand, make
arrangements elsewhere for the service or any part thereof and hold the
Contractor responsible for damages which may be sustained by the District.
Any additional costs incurred by such default may be collected by the
District from the Contractor and/or Contractor's Performance Guarantee
Surety and/or deducted from any payment(s) due or to become due. It is
specifically provided and agreed that time shall be of the essence in
regard to the Contract performance requirement.
A. Liquidated Damages
It is agreed by the Contractor and the District that because it
would be impracticable and extremely difficult to fix the actual
damage to the District (in accordance with government Code Section
53069.85) should the work not be completed within the prescribed
time period, (plus any extension of time authorized by change orders
under the Contract), it is agreed that there shall be assessed as
liquidated damages, but not as a penalty, the following amount for
each calendar day's delay after the expiration of such time period
until the date of physical delivery of the equipment as accepted by
the District.
1. If Contractor does not deliver the equipment on or before the
scheduled delivery date(s), Contractor shall pay to the
District as fixed and agreed liquidated damages which shall be
in lieu of all other damages for such non-delivery, the amount
(as indicated below) per day, per unit, for each calendar day
between the scheduled delivery date and the date of actual
delivery, but in no event more than five (5) calendar days.
Assessment shall not exceed contracted cost of unit being
purchased.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 5 OF 7 C-617
<PAGE> 20
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
CATEGORY: AC-1 $250.00 HP-2 $250.00 MZ-1 $250.00
AC-2 $250.00 HP-3 $250.00 MZ-2 $250.00
AC-3 $250.00 HP-4 $250.00 SPECIAL $250.00
HP-1 $250.00 HP-5 $250.00 HP(EXTRA) $250.00
2. If the delay in delivery of the equipment continues for more than
five (5) days, then during the thirty (30) day period immediately
thereafter, upon written notice, the District may terminate the
entire agreement and/or outstanding purchase order and proceed to
invoke the provision of the clause entitled "Default by Contractor,"
(See General Bid and Contract Conditions, Page G, Paragraph 30).
These assessments may be levied whenever the delivery time
requirements of this contract have not been met. Circumstances
beyond the control of the Contractor will be given consideration.
The District shall be the sole judge in determining to invoke this
provision.
Additionally, in lieu of assessment indicated in number one (1)
above, should the Contractor fail to provide service, the District
reserves the right to have the services performed by another vendor.
The difference between the contracted and actual cost to the
District (fair market value) will be considered restitution in lieu
of any default action being taken by the District, if such action is
needed.
Assessment of such reductions by the District shall in no way
relieve the Contractor of their obligation to provide continued
contracted service/performance.
NOTE: Repeated offenses may result in a default action against the Contractor.
(See: General Contract Conditions, Page F and G, #30).
11. SERIAL NUMBERING
Each air conditioner unit is to be marked with the serial number clearly
legible on the outside of the unit by means of a permanently affixed stamp
or metal tag. This serial number must also be shown on the invoice when
submitted for payment.
12. RISK OR LOSS OR DAMAGE
A. It is the full intent of the District that the Contractor retain
responsibility for the unit(s) unit delivered to the construction
site for installation specified in the DAR, (deliver as requested)
document, at which time the Construction Contractor and District
will assume responsibility of the unit(s).
B. Should the unit(s) be found to have been damaged in shipping, the
Contractor will be notified and it will be the Contractor's
responsibility to provide repair or replacement within two (2) weeks
of the notification. Final determination of whether to repair or
replace the unit(s) shall be by the District. It is the intent of
this action to prevent the interruption of the Construction
Contractor's schedule, which is critical to this project. Damaged
units not repaired/replaced within the two (2) week period would be
subject to assessment or liquidated damages. (See: page 18,
paragraph no. l0).
13. ORDERING PROCEDURES
A. The units will be purchased by the District with individual purchase
orders for various quantities throughout the life of the agreement.
However, the purchase order will include a "Deliver As Requested"
(DAR) section to allow the scheduling of arrival of units to match
installation.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 6 OF 7 C-617
<PAGE> 21
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
B. The intent is to place a purchase order for several units from the
selected supplier(s) then allow the Construction Program Management
to place a release of the units under the DAR. All shipments will be
delivered to locations in Southern California within District's area
of responsibility/geographic boundaries.
C. It is also anticipated that an order will be requested initially to
provide a small backlog for the Installation Contractor.
D. It is the intent of the District to obtain the lowest cost for
shipment of the air conditioner units by working with the Contractor
to allow full truckload shipments if possible.
E. It is the intent of the District to provide the Contractor with a
preliminary listing of the type and size of the air conditioner
units to be supplied. As design is complete, the list will be
updated reflecting the actual type and size units required on a
bi-weekly/monthly basis. This listing is to be used ONLY to provide
the Contractor information on approximately the number, type, and
size of air conditioner units to be purchased. This should assist
the supplier(s) in planning production and shipping schedules to
meet the requirements of the District.
F. No minimum dollar value or minimum size of order shall be designated
for any order.
14. WARRANTY
Manufacturers or their assigned agent shall guarantee equipment against
imperfections of materials and/or workmanship for a period of one (1) year
from date units are put into service. Compressor shall have a five (5)
year "unconditional guarantee."
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 7 OF 7 C-617
<PAGE> 22
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
APPENDIX
MANUFACTURER'S MAKE AND MODEL NUMBER
Bidder shall provide the manufacturer's make and model number for each
individual unit they are bidding on. The system description below matches those
in the "Rate Schedule" Section (see pages no. 6 through 73). Make sure items are
properly matched. Systems bid which do not have a make and model indicated may
not be considered for an award.
CATEGORY HP-5
Heat pump, single packaged, air-cooled, floor mounted type.
Shall provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.
System Description Manufacturer's Make and Model Number
- ----------------------- --------------------------------------------------------
2 ton 460V/3 phase Make: Marvair Model No: VAI24HPD-OON
(0310532043)
2 ton 208V/230V/1 phase Make: Marvair Model No: VAI24HPA-OON
(0310532021)
2 ton 208V/230V/3 phase Make: Marvair Model No: VAI24HPC-OON
(0310532023)
2.5 ton 460V/3 phase Make: Marvair Model No: VAI30HPD-OON
(0310532543)
2.5 ton 208V/230V/1 phase Make: Marvair Model No: VAI30HPA-OON
(0310532521)
2.5 ton 208V/230V/3 phase Make: Marvair Model No: VAI30HPC-OON
(0310532523)
3 ton 460V/3 phase Make: Marvair Model No: VAI36HPD-OON
(0310533043)
3 ton 208V/230V/1 phase Make: Marvair Model No: VAI36HPA-OON
(0310533021)
3 ton 208V/230V/3 phase Make: Marvair Model No: VAI36HPC-OON
(0310533023)
3.5 ton 460V/3 phase Make: Marvair Model No: VAI42HPD-OON
(0310533543)
APPENDIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 1 OF 2 C-617
<PAGE> 23
System Description Manufacturer's Make and Model Number
- ----------------------- --------------------------------------------------------
3.5 ton 208V/230V/1 phase Make: Marvair Model No: VAI42HPA-OON
(0310533521)
3.5 ton 208V/230V/3 phase Make: Marvair Model No: VAI42HPC-OON
(0310533523)
4 ton 460V/3 phase Make: Marvair Model No: VAI48HPD-OON
(0310534043)
4 ton 208V/230V/1 phase Make: Marvair Model No: VAI48HPA-OON
(0310534021)
4 ton 208V/230V/3 phase Make: Marvair Model No: VAI48HPC-OON
(0310534023)
5 ton 460V/3 phase Make: Marvair Model No: VAI60HPD-OON
(0310535043)
5 ton 208V/230V/1 phase Make: Marvair Model No: VAI60HPA-OON
(0310535021)
5 ton 208V/230V/3 phase Make: Marvair Model No: VAI60HPC-OON
(0310535023)
APPENDIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 2 OF 2 C-617
<PAGE> 24
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES HAS AUTHORIZED THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANCES TO
THIS CONTRACT.
1. SMALL MINORITY, FEMALE-OWNED AND DISABLED VETERAN VENDORS PREFERENCE
PROGRAM - Small minority, female-owned and disabled veteran vendors
located within the boundaries of Los Angeles, Orange, San Bernardino, and
Ventura Counties applying for the preference program must have on file a
certification application which becomes effective 30 days after approval
by the District. For further information, please contact Equal Opportunity
Section, (213) 633-7735.
2. NAME AND NATURE OF CONTRACTOR'S LEGAL ENTITY - The Bidder shall specify in
the Bid and in the performance guarantee, if any, the full name and nature
of its legal entity and any fictitious name under which it does business.
The Bill shall be signed under the full legal name by a person authorized
to sign on behalf of the legal entity.
After award of a bid, should a change be contemplated in the name or
nature of the legal entity, the Contractor shall first notify the Contract
and insurance Services Branch of the District in order that proper steps
may be taken to have the change reflected on the Contract.
3. EXAMINATION OF CONTRACT DOCUMENTS AND ACTUAL CONDITIONS - Before
submitting a Bid, the Bidder shall thoroughly familiarize themselves with
all Contract documents and any addenda issued before the Bid opening. Such
addenda shall form a part of the Bid and shall be made a part of the
Contract documents. It shall be the Bidder's responsibility to ascertain
that their Bid includes all addenda issued prior to the Bid opening.
The Bidder must satisfy themselves by personal examination and by such
other means as they may prefer as to the actual conditions and
requirements under which the Contract must be performed. If upon
inspection and examination by else Bidder, there are any existing
conditions or requirements which are not completely understood by the
Bidder, they shall contact the Purchasing Branch for such information.
The Bidder, when visiting a District location, shall make themselves and
their business known to the Administrator so that their presence on the
premises is authorized.
4. SPECIFICATIONS - The detailed specification(s) and/or brand name or number
given is descriptive and indicates quality and style of the
supply/equipment item required. Offers to supply an item substantially the
same as the item described herein will be considered regardless of minor
variations from the listed specifications. If such offers are made, the
equipment offered must be equal in quality, durability and fitness for the
purpose intended.
5. PRICING - Prices should be typed for each item separately for the units
specified in the Bid form. California Sales and Use Tax shall not be
included. School Districts are exempt from Federal Excise tax. Errors in
price may be crossed off and corrections made prior to bid opening and
should be initialed in ink by the person signing the Bid or Bidder's
authorized representative.
During the Contract period, should there be any decrease in prices of the
items listed therein, a corresponding decrease in prices on the balance of
the Contract period shall be given to the District for as long as the
lower prices are in effect, but at no time shall the prices charged the
District exceed the prices therein
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -A-
<PAGE> 25
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
The District shall be given the benefit of any lower rates which may (for
comparable quality and delivery) be given by the Contractor to any other
School District or any other State, County, municipal or local government
agency in Los Angeles County in similar quantities, terms and conditions
for the equipment listed herein.
6. INSPECTION OF BIDDER'S FACILITIES - The District reserves the right to
inspect the facilities of the Bidder prior to award of the Contract and if
representatives of the District determine after such inspection that the
Bidder is not capable of performance satisfactory to the District, their
bid shall be ruled "non-responsive."
7. WARRANTY - Bidder shall attach a copy of their standard warranty to their
bid when applicable. In ease of award, the resulting Contract supersedes
all clauses, terms and conditions of the Bidders warranty which in any way
limit this Contract, or are in conflict with, or inconsistent with it, but
incorporates by reference any terms and conditions which extend or
increase the warranty specified by the District.
In addition to the foregoing, if the Branch Director of Purchasing or his
or her designee, upon reviewing the Bidder's warranty, determines that any
terms and conditions of the Bidder's warranty are not acceptable for any
reason, the Branch Director/designee will notify the Bidder thereof in
writing prior to award, and in that event, the terms and conditions so
specified will be inapplicable. (This provision is intended to apply to
situations where a Bidder's warranty is technically not limiting, or in
conflict with, or inconsistent with the District's warranty, but contains
additional terms and conditions which are unacceptable to the District.
The decisions of the Branch Director of Purchasing shall be final.)
8. ACCEPTABLE OR REJECTION OF BID - Bid shall remain open and valid for sixty
(60) days after the Bid opening date unless otherwise stipulated and may
be accepted without further written notice by the Board of Education at a
public meeting; upon mutual agreement by the District and the Bidder, the
sixty (60) day period may be extended. The Bidder may withdraw their Bid
at any time before the Bid closing date/time.
9. SAMPLES - The District may reject the Bid of Bidder failing to submit
samples as requested. Samples shall be furnished free of cost and shall be
submitted when requested in the Bid to the Purchasing Branch location as
indicated. Samples should be plainly marked with name of Bidder, Bid
Number and date of Bid Closing. Samples of successful Bidder may be
retained for comparison with deliveries. Bidder may pick up samples (if
not destroyed by test) on notice from the Purchasing Branch. Within thirty
(30) calendar days after date of such notice, samples not picked up will
be disposed of by the District. Suppliers (or its agent) assumes all risks
of loss or damage to sample.
10. AWARDS OF CONTRACT - If an award is made on a Bid, the Contract will be
awarded according to the authority granted the Board of Education of the
Los Angeles Unified School District under California Law (e.g., the Public
Contract Code, Education Code, Government Code). Ordinarily, Contracts are
awarded to the lowest responsible bidder. However, certain statutes,
(e.g., Education Code Sections 39645 and 39802) authorize award for
certain Contracts to other than the lowest responsible Bidder, at the
discretion of the Board of Education. The Board of Education reserves the
right to award in accordance with flee fullest authority granted it under
State Law.
Moreover, certain Contracts are designed to be awarded to the lowest or
best bidder on specific items or parts. In such situations, this intention
is delineated in the Bid documents. Bidder is cautioned and urged to pay
specific attention to all the terms and conditions in the Bid documents
pertaining to such award (and all other matters).
11. FORCE MAJEURE CLAUSE - The parties to the Contract shall be excused from
performance during the time and to the extent that they are prevented from
obtaining, delivering or performing by act of God, fire, strike, loss or
shortage of transportation facilities, lockout, or commandeering of
materials, products, plants or facilities by the government, when
satisfactory evidence thereof is presented to the other party, provided
that it is satisfactorily established that the non-performance is not due
to the fault or neglect of the party not performing.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -B-
<PAGE> 26
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
Upon issuance of an award, the Contractor shall as part of subject
Contract, establish lines of communication which shall require the
Contractor and/or principal subcontractor to issue notices of strikes or
other work stoppages within 24 hours of the occurrence of such events.
Failure of the Contractor to notify the District of the occurrence of such
situations within 24 hours of notification by the principal
subcontractor(s) shall entitle the District to pursue such remedies as are
available under the provisions of the Contract.
12. SAFETY AND SECURITY - It shall be the responsibility of the Contractor to
ascertain the District Branch or Office, under whose direction the service
shall be performed. The rules and regulations pertaining to safe driving
on school grounds, particularly when students and children are present
must be adhered to. The Contractor's drivers shall exercise extreme
caution at all times.
Drivers entering school premises when school is not in session shall lock
any gate or door to which they have access, both when entering and/or
leaving the grounds. Gate keys, as may he required, will he furnished by
the District Branch or Office supervising the service. Any unusual
condition noted by drivers, such as gates or doors found unlocked or open
or evidence of vandalism, should he reported to the School Police
Department of the Los Angeles Unified School District, Tel: (213) 625-6631
(24 -hour telephone number)
13. HOLD HARMLESS CLAUSES - The Contractor shall hold harmless and indemnify
the District and the Board of Education of the City of Los Angeles, its
officers and employees from every claim or demand which may be made by
reason of:
(a) Any injury to person or property sustained by the Contractor or by
any person, firm, or corporation, employed directly or indirectly by
them upon or in connection with his performance under the Contract,
however caused, unless such injury is caused by the negligence or
willful misconduct of the District.
(b) Any injury to person or property sustained by any person, firm or
corporation, caused by any act, neglect, default, or omission of the
Contractor or of any person, firm, or corporation, indirectly
employed by them upon or in connection with his performance under
the Contract.
(c) Any liability that may arise from the furnishing or use of any
copyrighted composition, or patented invention, under this Contract.
It is the intent of the District to adhere to the provisions of the
copyright laws; this hold harmless shall not apply to any claim by
Contractor that District has infringed a patent or copyright of
Contractor.
The Contractor at their own expense and risk shall defend any legal
proceeding that may be brought against the District or the Board on any
such claim or demand, and satisfy any judgment that may be rendered
against the District or the Board therein. With respect to claims of
patent or copyright infringement, the District agrees to give Contractor
notice of any such claim and to fully cooperate with Contractor in the
defense and all related settlement negotiations.
14. INSURANCE - The Contractor shall maintain adequate insurance for Worker's
Compensation claims for personal injury claims including death and for
property damage claims which may arise from operations under the Contract.
On leased or rented machines, the Contractor shall also maintain insurance
adequate to cover any losses due to vandalism, theft, fire or water
damage.
The contractor shall be required to file with the District certifications
of such insurance. Failure to furnish such evidence, may be considered
default by the Contractor.
15. PERMIT AND LICENSES - The Contractor and all their employees or agents
shall secure and maintain in force such licenses and permits as are
required by law in connection with the furnishing of materials, articles
or services required for performance hereunder. All operations and
materials shall be governed by the laws of the State of California.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -C-
<PAGE> 27
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
16. CONTRACTOR, NOT OFFICER, EMPLOYEE OR AGENT OF THE DISTRICT - While engaged
in carrying out and complying with the terms and conditions of the
Contract, the Contractor is an independent Contractor and not an officer,
employee or agent of the District.
17. TOLL CHARGES - - If it is necessary that the District place toll or long
distance telephone calls in connection therewith (for complaints,
adjustments, shortages, failure to deliver, etc.), the Contractor shall
accept all charges for such calls on a reverse charge basis.
18. INVOICES AND PAYMENTS - Unless otherwise specified the Contractor shall
submit invoices in duplicate on a form acceptable to the District, to the
Financial Services Division, Accounts Payable Section, P.O. Box 54306, Los
Angeles, California 90054. All invoices shall reference the District
purchase order/Contract number.
The District shall pay only the California Sales, Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice. School Districts are
exempt from the Federal Excise Tax. The District, upon request, shall
furnish the Contractor a Federal Tax Exemption Certificate. Any new or
additional tax not in effect at the time of the Bid but in effect during
the Contract period shall be paid by the District.
The supplier shall list separately any taxes payable by the District and
shall certify on the invoices that the Federal Excise Tax is not included.
The District shall make payment for materials, supplies, or services
furnished under the Contract within a reasonable and proper time after
acceptance thereof and approval of the invoices by the authorized District
Representative. Late payment by the District shall not constitute a
material breach of any Contract resulting from the Bid.
All Cash Discounts shall be taken and computed from the date of delivery
of acceptable material or the date of receipt of the invoice, whichever is
the later.
In any Contract or purchase order resulting from the Bid, the District
will reserve the right to withhold payment as a set off against amounts
due or to become due to the District resulting from any other Contracts or
purchase orders entered into with the same Contractor.
19. TAXABLE INTEREST - In accordance with Section 107.6, California Revenue
and Taxation Code, the Contractor is hereby notified that a possessory
interest subject to property taxation may be created by this Contract;
that such property interest may be subject to property taxation if created
and that the party in whom the possessory interest is vested may be
subject to the payment of property taxes levied on such interest.
20. TITLE - At the option of the vendor, title may pass to the District on
acceptance by the District or may pass to the District for each item of
equipment on the date of shipment form the Contractor or on the date
Contractor receives the District's order for its purchase, whichever is
later. During the period the equipment is in transit, the Contractor and
its insurers, if any, relieves the District of responsibility for all
risks of loss or damage.
21. SECURITY INTEREST - To the extent permitted by law, the Contractor may
reserve a purchase money security interest in each item of equipment. This
interest will be satisfied by payment in full hereunder and, in addition,
when applicable, by the return to Contractor by the District of parts in
respect to additions or conversions that involve the removal of parts
which become the property of the Contractor. The District agrees to sign
appropriate documents to permit the Contractor to perfect any security
interest it might be entitled to by law.
22. GENERAL - The complete Contract includes the following documents: The
advertisement for Bids, the Bid and General Contract Conditions, the
Specifications, the Bid of the Contractor and its acceptance by the
District, the Contract, and the Performance Guarantee (if applicable), and
all amendments thereto. Any of these documents shall be interpreted to
include all provisions of the other documents as though fully set out
therein.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -D-
<PAGE> 28
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
This Contract and any amendments, addenda or purchase orders issued
hereunder by the District shall be the complete and exclusive Contract
between District and vendor.
The District hereby certifies and represents that as of the date of award
of a Contract pursuant to these specifications, the equipment to be
purchased hereunder is intended for the use of District's officers and
employees for school purposes and is not purchased with the intention to
resell the equipment.
If any provision or provisions of this Contract shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
effected or impaired thereby.
23. FAIR EMPLOYMENT PRACTICES ADDENDUM - In the performance of this Contract,
the Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, ancestry, sex, age, handicap
or national origin. The Contractor will take affirmative action to ensure
that applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, ancestry, sex,
age, handicap or national origin. Such action shall include, but not be
limited to, the following: employment, promotion, demotion or transfer;
recruitment or recruitment advertising, layoff or termination; rates of
pay or other forms of compensation; and selection for training, including
apprenticeship. The Contractor shall post in conspicuous places, available
to employees and applicants for employment, notices setting forth the
provisions of this Fair Employment Practices Section.
The Contractor will permit access to their records of employment,
employment advertisements, application forms, and other pertinent
information and records by the Affirmative Action/Title IX Programs
Section for the purposes of investigation to ascertain compliance with the
Fair Employment Practices Section of this Contract.
Willful violation
The District may determine a willful violation of the Fair Employment
Practices Provision to have occurred upon receipt of a final judgment
having that effect from a court in an action to which Contractor was a
party, or upon receipt of a written notice from the Department of Fair
Employment and Housing that it has investigated and determined that the
Contractor has violated the Fair Employment Practices Act and has issued
an order, under Labor Code Section 1426, which has become final, or
obtained an injunction under Labor Code Section 1426.
For willful violation of this Fair Employment Practices Provision, the
District shall have the right to terminate this Contract either in whole
or in part, and any loss or damage sustained by the District in securing
the goods or services hereunder the Performance Guarantee, if any, and the
District may deduct from any monies due or that thereafter may become due
to the Contractor, the difference between else price named in the Contract
and the actual cost (fair market value) thereof to the District.
24. CALIFORNIA LAW - This agreement is to be construed and interpreted in
accordance with California Law. With respect to statutory references that
may be set forth in the Contract documents, the District has attempted to
the best of its ability to have such references accurate and current.
Because of the possibility of legislative changes, not reflected herein,
however, Bidder is hereby expressly informed that all statutory references
may be subject to change or renumbering and that the Contract will be
deemed to incorporate and follow the specific statutes referred to herein,
as amended, revised, or renumbered.
25. EXECUTION OF CONTRACT - The Contractor shall return the Contract,
completely executed to the District's Contract and Insurance Services
Branch, P.O. Box 512298, Los Angeles, California 90051, within fifteen
(15) days of receipt of the Contract documents.
26. PERFORMANCE GUARANTEE - The Contractor shall be required to provide a
performance guarantee at the time of execution of the Contract, (if
applicable) in the form of a cashier's or certified check, a certificate
of deposit or a performance bond for awards during the first Contract
period (12 months) plus 120 days to cover service/
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -E-
<PAGE> 29
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
deliveries ordered before but performed after the Contract expiration
date, in an amount equal to 25% of the total cost for the annual period.
The guarantee shall be effective for the first Contract period and shall
be renewed for each subsequent 12 months period.
Failure to promptly submit the required performance guarantee within ten
(10) calendar days of notification may result in the initiation of a
default action against the successful Bidder.
27. ASSIGNMENT OF CONTRACT - The Contractor shall not assign or transfer by
operation of law or otherwise any or all of its rights, burdens, duties or
obligations without the prior written consent of the Board of Education of
the Los Angeles Unified School District, and of the surety on Contract
bond, if any. Should the Contractor be allowed to assign any Contract
awarded, any such assignment shall not operate to increase the cost nor to
reduce the obligations owed to the District. The District will not enter
into a separate agreement with the assignee.
28. EQUIPMENT AND LABOR - The Contractor shall furnish all tools, equipment,
apparatus, facilities, transportation, labor and material necessary to
furnish the service herein described, the service to be performed at such
times and places as directed by and subject to the approval of the
authorized District representative indicated in the specifications.
29. SUB-CONTRACTORS - Sub-contractors, if any, engaged by the Contractor for
the Contractor shall be subject to the approval of the District. The
Contractor shall be held responsible for all operations of subcontractors
and shall require them to maintain adequate Worker's Compensation and
Public Liability Insurance.
30. DEFAULT BY CONTRACTOR - The District shall hold the Contractor liable and
responsible for all damages which may be sustained because of the failure
or neglect of the Contractor to comply with any term or condition listed
herein, it being specifically provided and agreed that time is of the
essence in the Contract performance.
If the Contractor fails or neglects to furnish any of the supplies or
services listed herein at the prices named and at the time and places
herein stated or otherwise fails or neglects to comply with the terms of
the Contract the District may upon written notice to the Contractor cancel
the Contract in its entirety or cancel or rescind any or all items
affected by such default, and may, whether or not the Contract is canceled
in whole or in part, procure supplies or services elsewhere without notice
to the Contractor. The prices paid by the District at the time such
supplies or services are procured shall be considered the prevailing
market prices. Any extra cost incurred by such default shall be collected
by the District from the Contractor and the performance guarantee, if any.
31. CONTRACT EXTENSION - Unless otherwise stated any Contract resulting from
this Bid may be extended in accordance with applicable legal provisions at
the same terms and conditions upon mutual agreement of the parties.
32. SPECIAL PURCHASES - The District reserves the right to acquire from other
sources during the life of the Contract such items as may be required for
testing, evaluation, experimental purposes, emergency needs, or small
purchases made by individual schools.
33. DISTRICT NAME MAY NOT BE USED - The name and/ or logo of the District or
any school of the District may not be used in any advertisements or other
communications which may convey the impression that the District
authorizes the solicitation and/or that there may be some connection
between the District and the contractor.
34. DISTRICT PURCHASING RIGHT - Individual schools and offices reserve the
right to purchase similar or the same items from other sources through the
Imprest Fund and/or School Purchase Orders.
35. CHILD AND/OR ANTI-SLAVE LABOR RIGHTS/LAWS - It is the District s policy to
only purchase products that have been manufactured without the illegal use
of child and/or forced convict or indentured labor. All goods provided to
the District shall be manufactured in strict compliance with all
applicable child and anti-slave labor laws of this or other countries of
origin.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -F-
<PAGE> 30
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
WILLFUL VIOLATION - Should the District determine that willful violation
of child and/or anti-slave labor rights/laws have occurred the District
shall have the right to terminate this contract either in whole or in part
and obtain the goods elsewhere. Any loss or damage sustained by the
District in securing the goods hereunder may be deducted from any moneys
due or that thereafter become due to the Contractor. Such deduction shall
be the difference between the price named in the contract and the actual
cost thereof to the District. Additional sanctions prescribed by law or
board policy may similarly be applied.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -G-
<PAGE> 1
EXHIBIT 10.13
A G R E E M E N T
THIS AGREEMENT is entered into on the 6th day of October, 1997, between
CRISPAIRE CORPORATION (PRIMARY CONTRACTOR)
3285 Saturn Court NW
Norcross, GA 30092
(770) 734-9696
Fax (770) 453-9323
hereinafter called the Contractor, and
LOS ANGELES UNIFIED SCHOOL DISTRICT
hereinafter called the District.
The parties hereby agree as follows:
SCOPE OF WORK
The Contractor shall furnish to the District in accordance with its Bid Request
C-250, Specifications dated October, 1997, the Rate Schedule set out herein and
in strict conformity with all Contract documents:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR
DESIGN AND INSPECTION BRANCH
SCOPE OF CONTRACT
The scope of the Contract is to provide various types of air conditioning
systems including miscellaneous accessories and spare parts to various District
locations. Contractor will have to provide service to any of the District's
locations, (see map included) on an "as required" (scheduled delivery) basis, in
accordance with all the terms, and conditions and Specifications indicated
herein. (See Specifications section, Pages l through 19 for specific details).
This Contract is for furnishing equipment/material only, and does not cover
installation. Installation shall be provided by the District and/or by outside
Contractor under separate agreement. Contract shall allow the District to issue
individual orders throughout the Contract period for a various number of units.
TERM OF CONTRACT
The term of the Contract is October 1, 1997 to September 30, 2000 (36 months),
inclusive. Upon written mutual consent of the District and the Contractor, this
Contract is subject to two (2) additional twelve (12) month extensions for a
maximum of five (5) years with no change in terms and/or conditions. After each
annual period (12 months), rates are subject to modification for each remaining
twelve (12) month period evaluated upon increases or decreases in the Consumer
Price Index. Additionally, each extended Contract period would also be subject
to the same provisions. (See "Contract Extensions" and "Adjustment To Rate
Schedule" (clauses).
CANCELLATION CLAUSE
All terms, conditions, and prices (including percentage discount), are firm for
the first one (1) year of the Contract period. After one (1) year from the
beginning date of the Contract, this agreement may be cancelled by either party
without cause upon sixty (60) days written notification of intention to cancel
the agreement.
Upon notification, the District has the right to order at the price, terms, and
conditions in effect at any time prior to the effective date of the cancellation
of the agreement and require delivery of the items so ordered. Purchase orders
issued
CONTRACT NO. 985060 PAGE 1 OF 13 BID NO. C-617
<PAGE> 2
against the Contract prior to cancellation may specify delivery dates beyond the
effective date of the cancellation of this agreement, not exceeding forty five
(45) days.
The District reserves the right to cancel this agreement if delivery or
performance proves unsatisfactory and may procure the articles from other
sources and may deduct from unpaid balance due the Contractor and/or may collect
against the surety for excess costs so paid. The prices paid by the District
shall be considered the "prevailing market price" at the time such purchase is
made. The District shall be sole judge to satisfactory performance based upon
delivery requirements indicated in the Specifications section.
TAXES
The unit costs shall exclude all applicable taxes.
The District shall pay only the California Sales and Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice
The Federal Excise Tax is not applicable, as school districts are exempt
therefrom. The District, upon request, shall furnish the Contractor a Federal
Exemption Certificate.
Any new of additional tax not in effect at the time of the bid but which becomes
effective during the Contract period shall be paid by the District providing
that the services/materials being provided under this Contract are applicable to
such tax.
INVOICES AND PAYMENTS
Itemized invoices on a form acceptable to the District with Contract and
Purchase Order Number clearly indicated, should be submitted to the District
immediately in triplicate. Issued and mail to:
Los Angeles Unified School District
Accounting & Disbursements Division
Accounts Payable Section, 9th Floor
P.O. Box 54306
Los Angeles, California 90054
Invoices submitted shall include the original (signed) copy of the delivery slip
and listing of unit serial numbers delivered. See Specifications section,
"Serial Numbering".
For each purchase order issued: Payment shall be made for only the actual number
of units delivered, either all or in-part.
For payment information call Accounts Payable Section: (213) 633-3441, Attn:
Contracts/"M" Order Payer.
CONTRACT NO. 985060 PAGE 2 OF 13 BID NO. C-617
<PAGE> 3
RATE SCHEDULE
The following rate schedule shall be firm* during the period, October 1, 1997
through September 30, 2000 (36 months) inclusive.
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (9 Ea.) (9 Ea.) (250 Ea.)
- ------------------ ---------
2 ton 460V/3 phase
(0310562043) $1,133.00 $1,167.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
2 ton 208V/230V/1 phase
(0310562021) $926.00 $954.00
2 ton 208V/230V/3 phase
(0310562023) $996.00 $1,026.00 10 Ea. 60 Ea.
-------- --------
4 ton 208V/230V/3 phase
(0310564023) $2,163.00 $2,237.00 5 Ea. 45 Ea.
-------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 3 OF 13 BID NO. C-617
<PAGE> 4
RATE SCHEDULE (cont.)
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (7 Ea.) (8 Ea.) (15 Ea.)
- ------------------ ---------
2.5 ton 460V/3 phase $1,177.00 $1,212.00 $25.00 $75.00
(0310562543)
Bi-monthly Minimum
Unit Cost Each: Amount: Load of:
2.5 ton 208V/230V/1 phase $951.00 $980.00
(0310562521)
2.5 ton 208V/230V/3 phase $1,040.00 $1,071.00 10 Ea. 50 Ea.
(0310562523) -------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 4 OF 13 BID NO. C-617
<PAGE> 5
RATE SCHEDULE (cont.)
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (68 Ea.) (64 Ea.) (132 Ea.)
- ------------------ ---------
3 ton 460V/3 phase $1,224.00 $1,261.00 $25.00 $75.00
(0310563043)
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3 ton 208V/230V/1 phase $1,018.00 $1,049.00
(0310563021)
3 ton 208V/230V/3 phase $1,087.00 $1,120.00 50 Ea. 50 Ea.
(0310563023) -------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 5 OF 13 BID NO. C-617
<PAGE> 6
RATE SCHEDULE (cont.)
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (3 Ea.) (4 Ea.) (7 Ea.)
- ------------------ ---------
3.5 ton 460V/3 phase $1,495.00 $1,540.00
(0310563543) $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3.5 ton 208V/230V/1 phase $1,278.00 $1,316.00
(0310563521)
3.5 ton 208V/230V/3 phase $1,345.00 $1,385.00 10 Ea. 40 Ea.
(0310563523) --------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 6 OF 13 BID NO. C-617
<PAGE> 7
RATE SCHEDULE (cont.)
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (1 Ea.) (2 Ea.) (15 Ea.)
- ------------------ ---------
4 ton 460V/3 phase $1,620.00 $1,689.00
(0310564043) $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
4 ton 208V/230V/1 phase $1,331.00 $1,371.00
(0310564021)
4 ton 208V/230V/3 phase $1,394.00 $1,436.00 10 Ea. 40 Ea.
(0310564023) -------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 7 OF 13 BID NO. C-617
<PAGE> 8
RATE SCHEDULE (cont.)
CATEGORY AC-2
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (7 Ea.) (8 Ea.) (15 Ea.)
- ------------------ ---------
5 ton 460V/3 phase $1,897.00 $1,954.00
(0310565043) $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
5 ton 208V/230V/1 phase $1,527.00 $1,573.00
(0310565021)
5 ton 208V/230V/3 phase $1,586.00 $1,634.00
(0310565023) 10 Ea. 40 Ea.
-------- --------
Category totals: 89 89
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985060 PAGE 8 OF 13 BID NO. C-617
<PAGE> 9
RATE SCHEDULE (cont.)
CATEGORY AC-2-continued
Packaged vertical wall mounted, air cooled, straight cooling only.
Must be able to supply 450 CFM without economizer. (Use only when there is
existing heating system to remain)*
SPARE AND
REPLACEMENT PARTS
- -Percentage discount off manufacturer's published price list: 40%
- -Date of price list used: 4/97 Column or category used: Trade Price
*See Specification section for complete technical equipment specification.
**See Specification section for specific details.
UNIT COSTS IF PURCHASED:
<TABLE>
<CAPTION>
Over Two (2) Years
--------------------
System Options 1st Year 2nd Year
-------- --------
<S> <C> <C> <C> <C>
1A. Replace condenser guard with one-half (1/2) inch, Upgrade Unit Cost: $29.00 $31.00
sixteen (16) gauge flat expanded metal, hot dipped (Each)
galvanized
2A. Replace standard supply and return air grilles Upgrade Unit Cost: $63.00 $66.00
with heavy duty type, double deflection horizontal (Each)
adjustable rear bars, vertical adjustable face
bars: Air Mate E-240V supply, E-280 return or
approved equal.
3A. Supply and return air sleeves to interconnect Upgrade Unit Cost: $15.14 $15.90
registers to unit through the wall. (Each)
4A. Control cabinets and/or breaker panels to be Upgrade Unit Cost: $10.00 $11.00
provided with door locks: flush type latched (Each)
Corbin no. 15751, 5/8 inch for metal door, Keyed
to Corbin cat. No. 60 key.
5A. Auto changeover Thermostat and Sub-base for AC-2 Upgrade Unit Cost: $35.00 $37.00
(Each)
</TABLE>
* See Specification section for complete technical equipment specifications.
CONTRACT NO. 985060 PAGE 9 OF 13 BID NO. C-617
<PAGE> 10
CATEGORY - TRAINING
Training of District's Maintenance and Operations Personnel
Cost to provide technical training to the Maintenance and Operations Personnel
of the District who are responsible for the maintenance and repair of air
conditioning units covered under this Contract. This training is to be conducted
at each of the seven (7) M&O locations for each of the different types of air
conditioning units listed in this request. The cost shall be based on forty (40)
hours of training per year, which should allow sufficient time to train all
personnel at the different locations. However, if this is not sufficient time in
the Contractor's opinion, an alternate time period may be submitted in addition
to the original requested time.
Cost per hour to provide "on-site" training: $ 250.00 per hour.
Suggested number of hours for training: 8 hours/per session.
AUTHORIZED DISTRICT REPRESENTATIVE
The Contract shall be under the direction and subject to the approval of the
Branch Director of Design and Inspection Branch, Julie Crum, or her designated
representative. The authorized District representative for this Contract will
be:
Bronco Popovich, HVAC Testing and Inspection Supervisor.
Los Angeles Unified School District
Design and Inspection Branch, Inspection Section
c/o Central Shops
1500 East 14th Street
Los Angeles, California 90021
(213) 743-3586
Fax (213) 746-7679
ESTIMATED DISTRICT REQUIREMENTS
The District's estimated requirement indicated in the Rate Schedule Section is
what will need to be provided to facilitate the District's current Contract
needs. This is an estimated requirement for information only and is in no way
intended to indicate expressly or by implication the actual quantity that may be
required. The District may require substantially more or less than this amount.
Although a guarantee cannot be made as to the number of systems which will be
provided under the Contract, for purposes of bidding, Bidder should base cost on
the estimates indicated in the "Rate Schedule". Ordering will be based upon one
(1) of the three (3) options shown.
The Contractor will be afforded the option by giving written notice to the
District, of refusing to deliver in excess of 25% over the quantity for each
item indicated in the "Rate Schedule." Refusal to deliver shall serve to
terminate that item from the Contract and the District reserves the right to
terminate the entire Contract when 50% of the Contract line items have been
terminated.
The equipment listed in the Contract and required during the Contract period
shall be ordered exclusively from the Contractor during such period except as
noted in the General Bid and Contract Conditions, #32 "Special Purchases" and
#34 "District Purchasing Rights".
CASH DISCOUNT
Cash Discount of NET 30 days, is being offered.
CONTRACT NO. 985060 PAGE 10 OF 13 BID NO. C-617
<PAGE> 11
NOTICES, DEMANDS AND COMMUNICATIONS
Formal notices, demands, and communications to be given hereunder by either
party shall be made in writing and may be effected by U.S. mail, personal
delivery, registered/certified mail or return receipt requested and shall be
deemed effective as of the date of receipt.
PERFORMANCE GUARANTEE
A performance guarantee is required on Contracts with estimated values which are
expected to be $100,000.00 or more during any annual period. ( i.e.) for
multi-year Contracts, the estimated value will be based on the annual (12 month)
amount only.
The Contractor shall be required to provide a performance guarantee at the time
of execution of the Contract. Guarantee shall be in the form of a cashier's or
certified check, a certificate of deposit or a performance bond. Period of
coverage shall be during the first Contract period, twelve (12) months, plus 120
days to cover service/deliveries ordered before but performed after the Contract
expiration date. The amount shall be equal to twenty-five (25) percent of the
total cost for the annual period. The guarantee shall be effective for the first
Contract period and shall be renewed for each subsequent twelve (12) month
period(s).
Failure to promptly submit a performance guarantee may result in a default
action. (See General Bid and Contract Condition #30).
USE OF IRREVOCABLE LETTERS OF CREDIT
Contractors that are unable to obtain or find difficulty in obtaining
performance bonds and that do not desire to tie up their funds by assignment of
a Certificate of Deposit occasionally request the District to accept an
Irrevocable Letter of Credit as a substitute security. For the information of
Contractors desiring to submit letters of credit, the following is furnished:
The procedure and criteria for acceptance by the District of Irrevocable Letters
of Credit generally are as follows:
1. The Letter should be issued by a bank haying one or more branches in Los
Angeles County or in a county contiguous to Los Angeles County.
2. The Letter should be effective for the period of the Contract and for 120
days thereafter. If the Contract conditions provide for renewal or
extension of the Contract, the Letter must include the bank's guarantee
that it will extend the Letter for any period for which the Contract is
extended, plus 120 days thereafter.
3. The Letter should provide that the District has the right unilaterally to
make draft(s) against the Letter in whole or in part, at any time,
provided that the Board of Education of the City of Los Angeles has
declared the contractor in default or has approved a claim and/or any
encumbrance against the Contract.
4. Prior to the bank's issuing the Letter of Credit, the Contractor should
obtain from the bank and submit to the District for review a completed
draft of the Letter as the bank proposes to issue it. The Contractor
should anticipate that review of the draft by the District and the
District's counsel will take approximately two weeks, plus additional time
if it is found necessary to arrange with the Contractor and/or the bank to
make changes in the Letter and, found if applicable, to review such
changes.
5. The Letter issued and submitted to the District should be fully executed
and accompanied by a properly executed acknowledgment.
NOTE: Any questions or concerns regarding either Insurance or Bonding
Requirements may be referred to the Contract and Insurance Services Branch
at (213) 633-7380.
CONTRACT NO. 985060 PAGE 11 OF 13 BID NO. C-617
<PAGE> 12
PIGGYBACK CLAUSE
For the term of the Contract and any mutually agreed extension(s), pursuant to
request for bid and at the option of the Contractor, other school districts,
community college districts, public corporation or agency, including any county,
city, town or public corporation or agency within the State of California, may
purchase, services/item(s) at the same price and upon the same terms and
conditions pursuant to Section 20652 and/or 20118 of the Public Contract Code.
Sales tax and delivery charges are applicable to the Contract for Los Angeles
Unified School District area only. Different sales tax and delivery charges
outside the area of this Contract are subject to change based upon area of
service.
District waives its right to require such other districts and agencies to draw
their warrants in the favor of the District as provided in said code sections.
ADJUSTMENT TO THE RATE SCHEDULE (PRICES)
All rates (prices) are firm for the first Contract period of thirty-six (36)
months. For each of the two (2) additional annual extended Contract periods, the
rates(s) are "subject to modification" according to the following criteria.
The adjustment to the Contract rate(s) (prices), if any, would be effective
October 1st, for each remaining Contract period(s). Increases considered shall
be evaluated by using the percentage of change between the previous year and the
current year's Consumer Price Index, published by the U.S. Department of Labor's
Bureau of Labor Statistics as a guide. The specific index to be used is the
C.P.I. for Los Angeles-Anaheim-Riverside, CA for April of each year using the
"Special Index Category" of "All Items Less Shelter" under the "All Urban
Consumers" column.
All requests for rate adjustments must be requested by the Contractor in writing
no later than sixty (60) days prior to the end of each annual Contract period.
An explanation citing the rationale for price increase should be included in
such correspondence.
Note: It is expressly understood that Contract rate increases are not automatic
nor guaranteed. Contractor's request to increase the current rate schedule
will be evaluated and considered when such adjustments are requested. The
District reserves the right to reject any such request and re-bid and/or
cancel said Contract within the provisions of the existing agreement. The
District may offer a lower, higher or no increase in percentage. All
increases are subject to negotiation between the Contractor and the
District. For information on the Consumer Price Index, contact the Bureau
of Labor Statistics at (415) 975-4350.
Further explanation or clarification of provisions pertaining to "Adjustment To
The Rate Schedule (Prices)" may be obtained by contacting the Purchasing
Services Manager.
CONTRACT EXTENSION
After the initial Contract period of thirty-six (36) months, the Contract is
subject to two (2) additional twelve (12) month extensions, for a maximum of
five (5) years total. Extensions are contingent upon written mutual consent of
the District and the Contractor. Any request for extension must be requested by
the Contractor in writing no later than sixty (60) days prior to the expiration
date of the existing agreement. Extended Contract period granted by the District
would be subject to the same terms and conditions. Provisions for price
adjustments would be subject to the "Adjustment To The Rate Schedule (Prices)"
provision.
ASSIGNMENT
The Contractor shall not assign or transfer by operation of law or otherwise any
or all of its rights, including the right to receive payment, burdens, duties or
obligations without the prior written consent of the District and the surety on
the Contract bonds. The District's standard assignment form shall be used for
any assignment requested by the Contractor.
The District will not sign any documents in connection with assignments or
financing other than the District's standard form for "assignment of Contract
money" or "assignment of rights and delegation of duties on Contract" which is
available from the District's Contract and Insurance Services Branch, 355 South
Grand Avenue, 19th Floor, Los Angles, CA 90071, Telephone (213) 633-7380.
CONTRACT NO. 985060 PAGE 12 OF 13 BID NO. C-617
<PAGE> 13
CONTRACT DOCUMENTS
The complete Contract includes the following documents: the Advertisement for
Bids, the Bid and General Contract Conditions, the Specifications, the Bid of
the Contractor and its acceptance by the District, the Contract, the Performance
Guarantee, and all amendments thereto. Any of these documents shall be
interpreted to include all provisions of the other documents as though fully set
out therein.
-CONTRACTOR- -DISTRICT-
CRISPAIRE CORPORATION LOS ANGELES UNIFIED SCHOOL DISTRICT
BY /s/ DAVID L. SHUFORD BY LOS ANGELES UNIFIED SCHOOL
------------------------------ DISTRICT BOARD OF EDUCATION
VP Sales & Marketing
BY /s/ CHARLOTTE BARNEY
--------------------------------
CHARLOTTE BARNEY
Contract Assistant
CONTRACT NO. 985060 PAGE 13 OF 13 BID NO. C-617
<PAGE> 14
BOND OF FAITHFUL PERFORMANCE
WHEREAS, LOS ANGELES UNIFIED SCHOOL DISTRICT OF LOS ANGELES COUNTY
hereinafter called the District, and CRISPAIRE CORPORATION
hereinafter called the Contractor, have entered into a contract
dated ..................October 6, 1997
for ....................AIR CONDITIONING SYSTEMS (VARIOUS TYPES) FOR VARIOUS
LOCATIONS WITHIN THE LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR DESIGN AND INSPECTION BRANCH C-617 10/1/97 THROUGH
9/30/2000
Amount of Bond .........FIFTY EIGHT THOUSAND FIVE HUNDRED TWENTY FIVE AND NO/100
DOLLARS ($58,525.00)
NOW, THEREFORE, the Contractor, as Principal, and the following named Surety,
- --------------------------------------------------------------------------------
are held and firmly bound to the District jointly and severally in the penal sum
of this Bond set forth above as Amount of Bond for which payment, well and truly
to be made, the Principal and Surety bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these
presents.
The conditions of this obligation is that if the Contractor shall promptly and
faithfully perform all the conditions of the Contract in strict conformity with
all terms and conditions set forth in the Contract, then this obligation shall
be null and void, otherwise it shall remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees that
notwithstanding California Civil Code Sections 2819 and 2849, no change,
alteration or extension of time in the terms of the contract or in the goods,
supplies or service to be furnished thereunder shall in any wise affect its
obligations on this bond; and it does hereby waive notice of any such change.
Signed, sealed, and dated, _______________________19___.
-Contractor/Principal- -Surety-
CRISPAIRE CORPORATION Agency (if any) ____________________
NAME ____________________________________ By _________________________________
TITLE ___________________________________ Address ____________________________
Phone (For inquiries) ______________
Bond No. ___________________________
- --------------------------------------------------------------------------------
CERTIFICATION BY LOS ANGELES COUNTY CLERK'S OFFICE
I hereby certify:
1. That the Surety named above has been certified by the State Insurance
Commissioner as an admitted Surety Insurer and that such authority is in
full force and effect.
2. That the person executing this bond on behalf of the Surety is authorized
to do so under a power of attorney on file in this office.
3. That there is on file in this office the financial statement of the Surety
for the period ending ____________ showing capital and surplus not less
than ten times the amount of this bond.
CONNY B. Mc CORMACK, County Clerk
Date _____________________________________ By _________________________________
985060
Form 82.4
Rev. 11/97
(Signatures for Surety must be acknowledged by jurat before a Notary Public)
<PAGE> 15
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
SPECIFICATIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES WILL AUTHORIZE THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANGES TO
THIS CONTRACT.
SCOPE OF CONTRACT
The scope of the Contract is to provide various types of air conditioning
systems. Contractor will have to provide service to any of the District's
locations, on an "As Required" (scheduled delivery) basis.
Contracted services shall be in accordance with all the Terms and Conditions set
forth herein; including adherence to the following Specifications. The "Unit
Costs" bid in the "Rate Schedule" should take into account and shall include the
following requirements.
NOTE: It is the responsibility of the Contractor to carefully read and fully
understand these specifications. If exceptions are taken thereto they must
have been noted on the signed bid. After the contract is issued, no
modifications or changes to the specifications will be authorized without
Written consent from the District.
I. TECHNICAL SPECIFICATIONS
EQUIPMENT
A. Equipment Specifications as written below may be revised to reflect latest
product developments. Such revisions are subject to approval by the
District.
B. Heat Pump Units, packaged type, floor mounted or wall hung, serving single
classroom without distribution duct:
1. Shall be tested, certified, and warranted by their manufacturers to
operate without undue noise of more than 50 dB on "A" scale measured
10 feet directly in front or 45-degree angle of the unit, at a
height 5 feet above finish floor. Supplier and Contractor shall, at
their expense, make changes or adjustments or replace loud units, to
produce a condition of quietness not to exceed 50 dB. Changes shall
not reduce air flow quantities nor cooling capacity called for in
the Contract Documents.
2. Shall have their compressors mounted on vibration isolation springs
within the cabinets.
3. Shall have height of distribution air plenum fabricated to meet
individual classroom requirement. Air outlet shall have 120 degrees
direction, adjustable 10 degree downward or upward. Air outlet to
utilize the whole width of the unit. Floor mounted units only.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 1 OF 7 C-617
<PAGE> 16
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
EQUIPMENT - continued
4. Shall have outside air make-up for ventilation mixed with return
air, filtered through same filter, prior to passing through
evaporator coil. O.S.A. shall not by-pass evaporator coils.
5. Shall have all component parts, wiring, including filters,
accessible for inspection and service from the inside (Classroom).
Floor mounted units only.
6. Shall have controls to automatically operate the mechanical
equipment through the heating or cooling and ventilating cycles as
required.
AIR CONDITIONING UNITS
Item No.
2. AC-2:Packaged, vertical wall mounted, air cooled, of various
voltages: 460V/ 3 Phase, 208/230V/ 1 Phase, 208/230V/ 3 Phase.
Unit shall be wall-mounted type, electric, cooling only, factory
assembled, piped, internally wired and fully charged with R-22. Units
shall be UL listed. Cooling capacity rated in accordance with ARI Standard
210. Unit shall have SEER in compliance with California Energy
Conservation latest Standards, CCR, Title 24, with a minimum SEER of 10.0.
Units shall be furnished complete with disconnect switch, filter-driers,
fixed expansion valves, services gage connections on suction, and
discharge.
1. Cabinet and Frame: Frame shall be of welded construction. Cabinet
shall be #20 gage zinc coated or galvannealed steel with one coat of
satin acrylic paint, and complete with integral mounting brackets,
sloped top, weather stripping and fresh air damper capable of
providing 450 CFM of outside air. Panels shall be insulated with 2
pounds per cubic foot, l/2" thick fiberglass.
2. Compressor: Unit shall have hermetically sealed scroll compressor(s)
with internal vibration isolators. Compressor shall carry
unconditional 5 year warranty and be complete with access valves,
depress Schraeder type. Compressor motor assembly shall be protected
by thermal and electrical overloads.
3. Coils: Coils shall be of non-ferrous construction with aluminum fins
mechanically bonded to copper tubes, factory tested. Drain pan
sloped for positive drainage.
4. Fans and Motors: Evaporator fan shall be forward curved centrifugal
type, tested and rated in accordance with AMCA requirements. Fans
shall be direct driven with at least two speed taps. Evaporator
blower and motor shall have permanently lubricated bearings.
Condenser fan may be propeller type, direct-driven by a permanently
lubricated motor. Condenser air shall be discharged horizontally.
5. Controls: Compressor shall have a time delay installed for
compressor short cycle protection with a minimum of three (3) to
five (5) minutes (to be determined by the manufacturer). A manual
reset high pressure control and a refrigerant loss pressure switch
with manual reset (set to open at 10 psi ) shall be included. The
internal control circuit shall consist of a current limiting type
transformer to generate 24VAC, switching devices to operate the
compressor, indoor fan, and electric heaters.
6. Control and Timer: Thermostatic room temperature controls and six
(6) hour By-Pass timer shall be as specified by air conditioner
manufacturer and approved by the District.
7. Filters: Filters shall be 2" replaceable media type Farr D/C or
approved equal, in a 2" filter rack, installed in filter section as
part of unit.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 2 OF 7 C-617
<PAGE> 17
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
II. GENERAL CONDITIONS AND REQUIREMENTS
1. INSURANCE
The Contractor shall secure and maintain, as a minimum, insurance as set
forth below with insurance companies acceptable to the District to protect
the Contractor from claims which may arise from operations under the
contract, whether such operations be by the Contractor or anyone directly
or indirectly employed by them. The Contractor further shall furnish upon
request of the District's Contract and Insurance Services Branch,
certificates of such insurance, signed by an authorized representative of
the insurance carrier, which shall include a minimum thirty-one (31) day
cancellation clause. Failure to maintain the insurance and furnish the
required certificates may be considered a breach of the contract by the
Contractor and the District may terminate the contract and the Contractor
shall he put in default pursuant to General Contract Condition #30,
"Default by Contractor."
a. Workers' Compensation Insurance in accordance with provisions of the
California Labor Code, adequate to protect the Contractor from
claims under Workers' Compensation Acts which may arise from
operations under the contract, whether such operations be by the
Contractor or anyone directly or indirectly employed by them.
The Contractor in signing this contract hereby certifies, pursuant to Sec. 1861
of the California Labor Code, as follows:
I am aware of the provisions of Section 3700 of the Labor Code
which require every employer to be insured against liability
for workers' compensation or to undertake self-insurance in
accordance with the provisions of that code, and I will comply
with such provisions before commencing the performance of the
work of this contract.
b. Comprehensive Bodily Injury and Property Damage Liability Insurance
for Combined Single Limit Bodily Injury and/or Property Damage
Liability of not less than $1,000,000.00 each occurrence. The policy
so secured and maintained shall include coverage for Contractual or
Assumed Liability, Contractors Protective (Contingency) Liability,
Products Liability or Completed Operations, and Owned, Hired, and
Nonowned Automobiles Insurance; and shall be endorsed to name the
Los Angeles Unified School District and Board of Education of the
City of Los Angeles as additional insureds and to provide
specifically that any insurance carried by the District which may be
applicable to any claim or loss shall be deemed excess and the
Contractor's insurance primary despite any conflicting provisions in
the Contractor's policy to the contrary.
The Contractor shall be responsible and liable for all damage to the
property of the District which is caused by the Contractor,
Sub-Contractors, or employees thereof, during the execution of this
Contract and shall, at his own expense, repair and/or replace all damage
property to its original condition.
2. PERMITS AND LICENSES
All work shall comply with the needs of the District. The Contractor and
all their employees shall secure and maintain in force such permits,
licenses, certificates, and other documents as are required by State,
County, City, or other governmental or regulatory bodies to legally engage
in and perform the services to be provided under the Agreement.
Specifically, the Contractor shall observe and comply with the Department
of Health Services, CAL/OSHA, South Coast Air Quality Management District,
State and Federal Environmental Regulations, Fire codes and all other
applicable laws, ordinances and regulations in their operations.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 3 OF 7 C-617
<PAGE> 18
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
3. PACKAGING
All deliveries shall be made in cartons properly marked and fully labeled,
showing Contractor's name, contents, quantity, sizes and purchase order
number. Deliveries may be rejected if not properly identified.
4. DELIVERY REQUIREMENTS AND LOCATIONS
The Contractor will be provided a map showing the District's schools and
locations for reference. Not all schools and locations will require
service under this Contract. The Contractor is to refer to the map for
verification of District boundaries/locations that may require delivery.
Costs indicated in the Rate Schedule shall reflect delivery to any
location within those boundaries. (1) Unless otherwise specified, the
Contractor shall be responsible for delivery and shall pay all costs,
including drayage, freight, insurance and special equipment at the rates
established in the Rate Schedule. (2) Contractor shall set the equipment
"on-site" as directed by the District. It shall be the Contractor's
responsibility to coordinate the deliveries and inspection (time, place,
equipment, etc.). It shall be the Contractor's/Trucking Line's
responsibility to have the necessary manpower/equipment to unload the
trucks. (3) Contractor/Trucking Line shall contact the District a minimum
of two (2) days prior to delivery to arrange for personnel to be available
to receive the units.
5. PREFERENTIAL PRICING
The Los Angeles Unified School District shall be given the benefit of any
lower prices which may for comparable quantity and delivery be given by
the Contractor to any other school district, state, county, municipal or
local government agency for the product listed herein.
6. MANUFACTURERS CATALOG
Contractor shall provide (at no charge to the District) ten (10) copies of
manufacturer's current catalogs/published price lists indicating available
items and price listing upon award of contract and with any subsequent
price change. Contractor is responsible for contacting the manufacturers
to assure availability of price lists. Items to be invoiced are to be
based on catalog prices effective on ordering (Purchase Order) date, not
shipping or receiving date. Any change in prices and/or price lists shall
not be effective until ten (l0) days after the revised price lists are
received by the Purchasing Branch, who are so authorized to order under
contract. Revised prices/catalogs should be sent to and include:
COVER LETTER: To indicate Contractor's name contact person, phone
number.
EACH PRICE LIST: Label or stamp Contractor's name, address and phone
number. Send price lists to:
Los Angeles Unified School District
1 each: Purchasing Branch -19th Floor
355 South Grand Avenue, Suite 1951
Los Angeles, CA 90051
Attn: Marc Monforte, Purchasing Services Manager
Los Angeles Unified School District
9 each: Design and Inspection Branch 6th Floor
355 South Grand Avenue
Los Angeles, CA 90051
Attn: Victor Euben, Supervising Mechanical Engineer.
It is specifically understood that the District's Bid Conditions shall supersede
any general terms and/or conditions contained in manufacturer's price list,
submitted as a part of this Bid/Contract by the Contractor/Vendor.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 4 OF 7 C-617
<PAGE> 19
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
7. MANUFACTURER CHANGES
During the course of the contract, if there are manufacturer's changes in
the basic units and/or model number changes, the District must be
immediately notified. The Manufacturer or their representative must
provide the District with the new specification data sheet(s) within a
week, and must have the District approval prior to shipment. If the new
model(s) is acceptable, all other terms, conditions and prices shall
remain in effect. If the new model is unacceptable to the District,
Contractor will be notified not to provide/ship.
8. SPARE PARTS: The manufacturer or his assigned agent shall maintain within
the Los Angeles metropolitan area an adequate stock of replacement parts
which shall be available for immediate delivery for a minimum period of
five (5) years.
9. OPERATING AND MAINTENANCE INSTRUCTIONS
The Contractor shall provide seven (7) sets of operating and maintenance
instructions for each type of unit purchased. Also to be included are
copies of the certified test results and certified drawings of the units
in accordance with the serial numbers of each. These documents shall be
sent separately from the units, in book format (one binder per type of
unit), to the District's Supervising Mechanical Engineer. Each set of
documents shall have the name and address identifying the point of
delivery of the units. A specific address for books will be provided to
the Contractor.
10. FAILURE OF CONTRACTOR TO PROVIDE AS AGREED
If in the opinion of the District, the Contractor at any time during the
period of the contract fails to perform satisfactorily the service called
for herein, or otherwise fails to perform satisfactorily the service
called for herein, or otherwise fails or neglects to comply with the terms
of the Contract, the District may, without notice or demand, make
arrangements elsewhere for the service or any part thereof and hold the
Contractor responsible for damages which may be sustained by the District.
Any additional costs incurred by such default may be collected by the
District from the Contractor and/or Contractor's Performance Guarantee
Surety and/or deducted from any payment(s) due or to become due. It is
specifically provided and agreed that time shall be of the essence in
regard to the Contract performance requirement.
A. Liquidated Damages
It is agreed by the Contractor and the District that because it
would be impracticable and extremely difficult to fix the actual
damage to the District (in accordance with government Code Section
53069.85) should the work not be completed within the prescribed
time period, (plus any extension of time authorized by change orders
under the Contract), it is agreed that there shall be assessed as
liquidated damages, but not as a penalty, the following amount for
each calendar day's delay after the expiration of such time period
until the date of physical delivery of the equipment as accepted by
the District.
1. If Contractor does not deliver the equipment on or before the
scheduled delivery date(s), Contractor shall pay to the
District as fixed and agreed liquidated damages which shall be
in lieu of all other damages for such non-delivery, the amount
(as indicated below) per day, per unit, for each calendar day
between the scheduled delivery date and the date of actual
delivery, but in no event more than five (5) calendar days.
Assessment shall not exceed contracted cost of unit being
purchased.
CATEGORY: AC-1 $250.00 HP-2 $250.00 MZ-1 $250.00
AC-2 $250.00 HP-3 $250.00 MZ-2 $250.00
AC-3 $250.00 HP-4 $250.00 SPECIAL $250.00
HP-1 $250.00 HP-5 $250.00 HP(EXTRA) $250.00
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 5 OF 7 C-617
<PAGE> 20
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
2. If the delay in delivery of the equipment continues for more
than five (5) days, then during the thirty (30) day period
immediately thereafter, upon written notice, the District may
terminate the entire agreement and/or outstanding purchase
order and proceed to invoke the provision of the clause
entitled "Default by Contractor," (See General Bid and
Contract Conditions, Page G, Paragraph 30).
These assessments may be levied whenever the delivery time
requirements of this contract have not been met. Circumstances
beyond the control of the Contractor will be given
consideration. The District shall be the sole judge in
determining to invoke this provision.
Additionally, in lieu of assessment indicated in number one
(1) above, should the Contractor fail to provide service, the
District reserves the right to have the services performed by
another vendor. The difference between the contracted and
actual cost to the District (fair market value) will be
considered restitution in lieu of any default action being
taken by the District, if such action is needed.
Assessment of such reductions by the District shall in no way
relieve the Contractor of their obligation to provide
continued contracted service/performance.
NOTE: Repeated offenses may result in a default action against the Contractor.
(See: General Contract Conditions, Page F and G, #30).
11. SERIAL NUMBERING
Each air conditioner unit is to be marked with the serial number clearly
legible on the outside of the unit by means of a permanently affixed stamp
or metal tag. This serial number must also be shown on the invoice when
submitted for payment.
12. RISK OR LOSS OR DAMAGE
A. It is the full intent of the District that the Contractor retain
responsibility for the unit(s) unit delivered to the construction
site for installation specified in the DAR, (deliver as requested)
document, at which time the Construction Contractor and District
will assume responsibility of the unit(s).
B. Should the unit(s) be found to have been damaged in shipping, the
Contractor will be notified and it will be the Contractor's
responsibility to provide repair or replacement within two (2) weeks
of the notification. Final determination of whether to repair or
replace the unit(s) shall be by the District. It is the intent of
this action to prevent the interruption of the Construction
Contractor's schedule, which is critical to this project. Damaged
units not repaired/replaced within the two (2) week period would be
subject to assessment or liquidated damages. (See: page 18,
paragraph no. l0).
13. ORDERING PROCEDURES
A. The units will be purchased by the District with individual purchase
orders for various quantities throughout the life of the agreement.
However, the purchase order will include a "Deliver As Requested"
(DAR) section to allow the scheduling of arrival of units to match
installation.
B. The intent is to place a purchase order for several units from the
selected supplier(s) then allow the Construction Program Management
to place a release of the units under the DAR. All shipments will be
delivered to locations in Southern California within District's area
of responsibility/geographic boundaries.
C. It is also anticipated that an order will be requested initially to
provide a small backlog for the Installation Contractor.
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 6 OF 7 C-617
<PAGE> 21
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
D. It is the intent of the District to obtain the lowest cost for
shipment of the air conditioner units by working with the Contractor
to allow full truckload shipments if possible.
E. It is the intent of the District to provide the Contractor with a
preliminary listing of the type and size of the air conditioner
units to be supplied. As design is complete, the list will be
updated reflecting the actual type and size units required on a
bi-weekly/monthly basis. This listing is to be used ONLY to provide
the Contractor information on approximately the number, type, and
size of air conditioner units to be purchased. This should assist
the supplier(s) in planning production and shipping schedules to
meet the requirements of the District.
F. No minimum dollar value or minimum size of order shall be designated
for any order.
14. WARRANTY
Manufacturers or their assigned agent shall guarantee equipment against
imperfections of materials and/or workmanship for a period of one (1) year
from date units are put into service. Compressor shall have a five (5)
year "unconditional guarantee."
SPECIFICATIONS
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 7 OF 7 C-617
<PAGE> 22
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
APPENDIX
MANUFACTURER'S MAKE AND MODEL NUMBER
Bidder shall provide the manufacturer's make and model number for each
individual unit they are bidding on. The system description below matches those
in the "Rate Schedule" Section (see pages no. 6 through 73). Make sure items are
properly matched. Systems bid which do not have a make and model indicated may
not be considered for an award.
System Description Manufacturer's Make and Model Number
- -------------------------- -------------------------------------------
2 ton 460V/3 phase Make: Marvair Model No: AVP24ACD-OOY
(0310562043)
2 ton 208V/230V/1 phase Make: Marvair Model No: AVP24ACA-OOY
(0310562021)
2 ton 208V/230V/3 phase Make: Marvair Model No: AVP24ACC-OOY
(0310562023)
2.5 ton 460V/3 phase Make: Marvair Model No: AVP30ACD-OOY
(0310562543)
2.5 ton 208V/230V/1 phase Make: Marvair Model No: AVP30ACA-OOY
(0310562521)
2.5 ton 208V/230V/3 phase Make: Marvair Model No: AVP30ACC-OOY
(0310562523)
3 ton 460V/3 phase Make: Marvair Model No: AVP36ACD-OOY
(0310563043)
3 ton 208V/230V/1 phase Make: Marvair Model No: AVP36ACA-OOY
(0310563021)
3 ton 208V/230V/3 phase Make: Marvair Model No: AVP36ACC-OOY
(0310563023)
3.5 ton 460V/3 phase Make: Marvair Model No: AVP42ACD-OOY
(0310563543)
3.5 ton 208V/230V/1 phase Make: Marvair Model No: AVP42ACA-OOY
(0310563521)
3.5 ton 208V/230V/3 phase Make: Marvair Model No: AVP42ACC-OOY
(0310563523)
APPENDIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 1 OF 2 C-617
<PAGE> 23
LOS ANGELES UNIFIED SCHOOL DISTRICT
APPENDIX - continued
System Description Manufacturer's Make and Model Number
- -------------------------- -------------------------------------------
4 ton 460V/3 phase Make: Marvair Model No: AVP48ACD-OOY
(0310564043)
4 ton 208V/230V/1 phase Make: Marvair Model No: AVP48ACA-OOY
(0310564021)
4 ton 208V/230V/3 phase Make: Marvair Model No: AVP48ACC-OOY
(0310564023)
5 ton 460V/3 phase Make: Marvair Model No: AVP60ACD-OOY
(0310565043)
5 ton 208V/230V/1 phase Make: Marvair Model No: AVP60ACA-OOY
(0310565021)
5 ton 208V/230V/3 phase Make: Marvair Model No: AVP60ACC-OOY
(0310565023)
APPENDIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) PAGE 2 OF 2 C-617
<PAGE> 24
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES HAS AUTHORIZED THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANCES TO
THIS CONTRACT.
1. SMALL MINORITY, FEMALE-OWNED AND DISABLED VETERAN VENDORS PREFERENCE
PROGRAM Small minority, female-owned and disabled veteran vendors located
within the boundaries of Los Angeles, Orange, San Bernardino, and Ventura
Counties applying for the preference program must have on file a
certification application which becomes effective 30 days after approval
by the District. For further information, please contact Equal Opportunity
Section, (213) 633-7735.
2. NAME AND NATURE OF CONTRACTOR'S LEGAL ENTITY - The Bidder shall specify in
the Bid and in the performance guarantee, if any, the full name and nature
of its legal entity and any fictitious name under which it does business.
The Bill shall be signed under the full legal name by a person authorized
to sign on behalf of the legal entity.
After award of a bid, should a change be contemplated in the name or
nature of the legal entity, the Contractor shall first notify the Contract
and insurance Services Branch of the District in order that proper steps
may be taken to have the change reflected on the Contract.
3. EXAMINATION OF CONTRACT DOCUMENTS AND ACTUAL CONDITIONS - Before
submitting a Bid, the Bidder shall thoroughly familiarize themselves with
all Contract documents and any addenda issued before the Bid opening. Such
addenda shall form a part of the Bid and shall be made a part of the
Contract documents. It shall be the Bidder's responsibility to ascertain
that their Bid includes all addenda issued prior to the Bid opening.
The Bidder must satisfy themselves by personal examination and by such
other means as they may prefer as to the actual conditions and
requirements under which the Contract must be performed. If upon
inspection and examination by else Bidder, there are any existing
conditions or requirements which are not completely understood by the
Bidder, they shall contact the Purchasing Branch for such information.
The Bidder, when visiting a District location, shall make themselves and
their business known to the Administrator so that their presence on the
premises is authorized.
4. SPECIFICATIONS - The detailed specification(s) and/or brand name or number
given is descriptive and indicates quality and style of the
supply/equipment item required. Offers to supply an item substantially the
same as the item described herein will be considered regardless of minor
variations from the listed specifications. If such offers are made, the
equipment offered must be equal in quality, durability and fitness for the
purpose intended.
5. PRICING - Prices should be typed for each item separately for the units
specified in the Bid form. California Sales and Use Tax shall not be
included. School Districts are exempt from Federal Excise tax. Errors in
price may be crossed off and corrections made prior to bid opening and
should be initialed in ink by the person signing the Bid or Bidder's
authorized representative.
During the Contract period, should there be any decrease in prices of the
items listed therein, a corresponding decrease in prices on the balance of
the Contract period shall be given to the District for as long as the
lower prices are in effect, but at no time shall the prices charged the
District exceed the prices therein
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -A-
<PAGE> 25
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
The District shall be given the benefit of any lower rates which may (for
comparable quality and delivery) be given by the Contractor to any other
School District or any other State, County, municipal or local government
agency in Los Angeles County in similar quantities, terms and conditions
for the equipment listed herein.
6. INSPECTION OF BIDDER'S FACILITIES - The District reserves the right to
inspect the facilities of the Bidder prior to award of the Contract and if
representatives of the District determine after such inspection that the
Bidder is not capable of performance satisfactory to the District, their
bid shall be ruled "non-responsive."
7. WARRANTY - Bidder shall attach a copy of their standard warranty to their
bid when applicable. In ease of award, the resulting Contract supersedes
all clauses, terms and conditions of the Bidders warranty which in any way
limit this Contract, or are in conflict with, or inconsistent with it, but
incorporates by reference any terms and conditions which extend or
increase the warranty specified by the District.
In addition to the foregoing, if the Branch Director of Purchasing or his
or her designee, upon reviewing the Bidder's warranty, determines that any
terms and conditions of the Bidder's warranty are not acceptable for any
reason, the Branch Director/designee will notify the Bidder thereof in
writing prior to award, and in that event, the terms and conditions so
specified will be inapplicable. (This provision is intended to apply to
situations where a Bidder's warranty is technically not limiting, or in
conflict with, or inconsistent with the District's warranty, but contains
additional terms and conditions which are unacceptable to the District.
The decisions of the Branch Director of Purchasing shall be final.)
8. ACCEPTABLE OR REJECTION OF BID - Bid shall remain open and valid for sixty
(60) days after the Bid opening date unless otherwise stipulated and may
be accepted without further written notice by the Board of Education at a
public meeting; upon mutual agreement by the District and the Bidder, the
sixty (60) day period may be extended. The Bidder may withdraw their Bid
at any time before the Bid closing date/time.
9. SAMPLES - The District may reject the Bid of Bidder failing to submit
samples as requested. Samples shall be furnished free of cost and shall be
submitted when requested in the Bid to the Purchasing Branch location as
indicated. Samples should be plainly marked with name of Bidder, Bid
Number and date of Bid Closing. Samples of successful Bidder may be
retained for comparison with deliveries. Bidder may pick up samples (if
not destroyed by test) on notice from the Purchasing Branch. Within thirty
(30) calendar days after date of such notice, samples not picked up will
be disposed of by the District. Suppliers (or its agent) assumes all risks
of loss or damage to sample.
10. AWARDS OF CONTRACT - If an award is made on a Bid, the Contract will be
awarded according to the authority granted the Board of Education of the
Los Angeles Unified School District under California Law (e.g., the Public
Contract Code, Education Code, Government Code). Ordinarily, Contracts are
awarded to the lowest responsible bidder. However, certain statutes,
(e.g., Education Code Sections 39645 and 39802) authorize award for
certain Contracts to other than the lowest responsible Bidder, at the
discretion of the Board of Education. The Board of Education reserves the
right to award in accordance with flee fullest authority granted it under
State Law.
Moreover, certain Contracts are designed to be awarded to the lowest or
best bidder on specific items or parts. In such situations, this intention
is delineated in the Bid documents. Bidder is cautioned and urged to pay
specific attention to all the terms and conditions in the Bid documents
pertaining to such award (and all other matters).
11. FORCE MAJEURE CLAUSE - The parties to the Contract shall be excused from
performance during the time and to the extent that they are prevented from
obtaining, delivering or performing by act of God, fire, strike, loss or
shortage of transportation facilities, lockout, or commandeering of
materials, products, plants or facilities by the government, when
satisfactory evidence thereof is presented to the other party, provided
that it is satisfactorily established that the non-performance is not due
to the fault or neglect of the party not performing.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -B-
<PAGE> 26
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
Upon issuance of an award, the Contractor shall as part of subject
Contract, establish lines of communication which shall require the
Contractor and/or principal subcontractor to issue notices of strikes or
other work stoppages within 24 hours of the occurrence of such events.
Failure of the Contractor to notify the District of the occurrence of such
situations within 24 hours of notification by the principal
subcontractor(s) shall entitle the District to pursue such remedies as are
available under the provisions of the Contract.
12. SAFETY AND SECURITY - It shall be the responsibility of the Contractor to
ascertain the District Branch or Office, under whose direction the service
shall be performed. The rules and regulations pertaining to safe driving
on school grounds, particularly when students and children are present
must be adhered to. The Contractor's drivers shall exercise extreme
caution at all times.
Drivers entering school premises when school is not in session shall lock
any gate or door to which they have access, both when entering and/or
leaving the grounds. Gate keys, as may he required, will he furnished by
the District Branch or Office supervising the service. Any unusual
condition noted by drivers, such as gates or doors found unlocked or open
or evidence of vandalism, should he reported to the School Police
Department of the Los Angeles Unified School District, Tel: (213) 625-6631
(24 -hour telephone number)
13. HOLD HARMLESS CLAUSES - The Contractor shall hold harmless and indemnify
the District and the Board of Education of the City of Los Angeles, its
officers and employees from every claim or demand which may be made by
reason of:
(a) Any injury to person or property sustained by the Contractor or by
any person, firm, or corporation, employed directly or indirectly by
them upon or in connection with his performance under the Contract,
however caused, unless such injury is caused by the negligence or
willful misconduct of the District.
(b) Any injury to person or property sustained by any person, firm or
corporation, caused by any act, neglect, default, or omission of the
Contractor or of any person, firm, or corporation, indirectly
employed by them upon or in connection with his performance under
the Contract.
(c) Any liability that may arise from the furnishing or use of any
copyrighted composition, or patented invention, under this Contract.
It is the intent of the District to adhere to the provisions of the
copyright laws; this hold harmless shall not apply to any claim by
Contractor that District has infringed a patent or copyright of
Contractor.
The Contractor at their own expense and risk shall defend any legal
proceeding that may be brought against the District or the Board on any
such claim or demand, and satisfy any judgment that may be rendered
against the District or the Board therein. With respect to claims of
patent or copyright infringement, the District agrees to give Contractor
notice of any such claim and to fully cooperate with Contractor in the
defense and all related settlement negotiations.
14. INSURANCE - The Contractor shall maintain adequate insurance for Worker's
Compensation claims for personal injury claims including death and for
property damage claims which may arise from operations under the Contract.
On leased or rented machines, the Contractor shall also maintain insurance
adequate to cover any losses due to vandalism, theft, fire or water
damage.
The contractor shall be required to file with the District certifications
of such insurance. Failure to furnish such evidence, may be considered
default by the Contractor.
15. PERMIT AND LICENSES - The Contractor and all their employees or agents
shall secure and maintain in force such licenses and permits as are
required by law in connection with the furnishing of materials, articles
or services required for performance hereunder. All operations and
materials shall be governed by the laws of the State of California.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -C-
<PAGE> 27
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
16. CONTRACTOR, NOT OFFICER, EMPLOYEE OR AGENT OF THE DISTRICT - While engaged
in carrying out and complying with the terms and conditions of the
Contract, the Contractor is an independent Contractor and not an officer,
employee or agent of the District.
17. TOLL CHARGES - - If it is necessary that the District place toll or long
distance telephone calls in connection therewith (for complaints,
adjustments, shortages, failure to deliver, etc.), the Contractor shall
accept all charges for such calls on a reverse charge basis.
18. INVOICES AND PAYMENTS - Unless otherwise specified the Contractor shall
submit invoices in duplicate on a form acceptable to the District, to the
Financial Services Division, Accounts Payable Section, P.O. Box 54306, Los
Angeles, California 90054. All invoices shall reference the District
purchase order/Contract number.
The District shall pay only the California Sales, Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice. School Districts are
exempt from the Federal Excise Tax. The District, upon request, shall
furnish the Contractor a Federal Tax Exemption Certificate. Any new or
additional tax not in effect at the time of the Bid but in effect during
the Contract period shall be paid by the District.
The supplier shall list separately any taxes payable by the District and
shall certify on the invoices that the Federal Excise Tax is not included.
The District shall make payment for materials, supplies, or services
furnished under the Contract within a reasonable and proper time after
acceptance thereof and approval of the invoices by the authorized District
Representative. Late payment by the District shall not constitute a
material breach of any Contract resulting from the Bid.
All Cash Discounts shall be taken and computed from the date of delivery
of acceptable material or the date of receipt of the invoice, whichever is
the later.
In any Contract or purchase order resulting from the Bid, the District
will reserve the right to withhold payment as a set off against amounts
due or to become due to the District resulting from any other Contracts or
purchase orders entered into with the same Contractor.
19. TAXABLE INTEREST - In accordance with Section 107.6, California Revenue
and Taxation Code, the Contractor is hereby notified that a possessory
interest subject to property taxation may be created by this Contract;
that such property interest may be subject to property taxation if created
and that the party in whom the possessory interest is vested may be
subject to the payment of property taxes levied on such interest.
20. TITLE - At the option of the vendor, title may pass to the District on
acceptance by the District or may pass to the District for each item of
equipment on the date of shipment form the Contractor or on the date
Contractor receives the District's order for its purchase, whichever is
later. During the period the equipment is in transit, the Contractor and
its insurers, if any, relieves the District of responsibility for all
risks of loss or damage.
21. SECURITY INTEREST - To the extent permitted by law, the Contractor may
reserve a purchase money security interest in each item of equipment. This
interest will be satisfied by payment in full hereunder and, in addition,
when applicable, by the return to Contractor by the District of parts in
respect to additions or conversions that involve the removal of parts
which become the property of the Contractor. The District agrees to sign
appropriate documents to permit the Contractor to perfect any security
interest it might be entitled to by law.
22. GENERAL - The complete Contract includes the following documents: The
advertisement for Bids, the Bid and General Contract Conditions, the
Specifications, the Bid of the Contractor and its acceptance by the
District, the Contract, and the Performance Guarantee (if applicable), and
all amendments thereto. Any of these documents shall be interpreted to
include all provisions of the other documents as though fully set out
therein.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -D-
<PAGE> 28
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
This Contract and any amendments, addenda or purchase orders issued
hereunder by the District shall be the complete and exclusive Contract
between District and vendor.
The District hereby certifies and represents that as of the date of award
of a Contract pursuant to these specifications, the equipment to be
purchased hereunder is intended for the use of District's officers and
employees for school purposes and is not purchased with the intention to
resell the equipment.
If any provision or provisions of this Contract shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
effected or impaired thereby.
23. FAIR EMPLOYMENT PRACTICES ADDENDUM - In the performance of this Contract,
the Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, ancestry, sex, age, handicap
or national origin. The Contractor will take affirmative action to ensure
that applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, ancestry, sex,
age, handicap or national origin. Such action shall include, but not be
limited to, the following: employment, promotion, demotion or transfer;
recruitment or recruitment advertising, layoff or termination; rates of
pay or other forms of compensation; and selection for training, including
apprenticeship. The Contractor shall post in conspicuous places, available
to employees and applicants for employment, notices setting forth the
provisions of this Fair Employment Practices Section.
The Contractor will permit access to their records of employment,
employment advertisements, application forms, and other pertinent
information and records by the Affirmative Action/Title IX Programs
Section for the purposes of investigation to ascertain compliance with the
Fair Employment Practices Section of this Contract.
Willful violation
The District may determine a willful violation of the Fair Employment
Practices Provision to have occurred upon receipt of a final judgment
having that effect from a court in an action to which Contractor was a
party, or upon receipt of a written notice from the Department of Fair
Employment and Housing that it has investigated and determined that the
Contractor has violated the Fair Employment Practices Act and has issued
an order, under Labor Code Section 1426, which has become final, or
obtained an injunction under Labor Code Section 1426.
For willful violation of this Fair Employment Practices Provision, the
District shall have the right to terminate this Contract either in whole
or in part, and any loss or damage sustained by the District in securing
the goods or services hereunder the Performance Guarantee, if any, and the
District may deduct from any monies due or that thereafter may become due
to the Contractor, the difference between else price named in the Contract
and the actual cost (fair market value) thereof to the District.
24. CALIFORNIA LAW - This agreement is to be construed and interpreted in
accordance with California Law. With respect to statutory references that
may be set forth in the Contract documents, the District has attempted to
the best of its ability to have such references accurate and current.
Because of the possibility of legislative changes, not reflected herein,
however, Bidder is hereby expressly informed that all statutory references
may be subject to change or renumbering and that the Contract will be
deemed to incorporate and follow the specific statutes referred to herein,
as amended, revised, or renumbered.
25. EXECUTION OF CONTRACT - The Contractor shall return the Contract,
completely executed to the District's Contract and Insurance Services
Branch, P.O. Box 512298, Los Angeles, California 90051, within fifteen
(15) days of receipt of the Contract documents.
26. PERFORMANCE GUARANTEE - The Contractor shall be required to provide a
performance guarantee at the time of execution of the Contract, (if
applicable) in the form of a cashier's or certified check, a certificate
of deposit or a performance bond for awards during the first Contract
period (12 months) plus 120 days to cover service/
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -E-
<PAGE> 29
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
deliveries ordered before but performed after the Contract expiration
date, in an amount equal to 25% of the total cost for the annual period.
The guarantee shall be effective for the first Contract period and shall
be renewed for each subsequent 12 months period.
Failure to promptly submit the required performance guarantee within ten
(10) calendar days of notification may result in the initiation of a
default action against the successful Bidder.
27. ASSIGNMENT OF CONTRACT - The Contractor shall not assign or transfer by
operation of law or otherwise any or all of its rights, burdens, duties or
obligations without the prior written consent of the Board of Education of
the Los Angeles Unified School District, and of the surety on Contract
bond, if any. Should the Contractor be allowed to assign any Contract
awarded, any such assignment shall not operate to increase the cost nor to
reduce the obligations owed to the District. The District will not enter
into a separate agreement with the assignee.
28. EQUIPMENT AND LABOR - The Contractor shall furnish all tools, equipment,
apparatus, facilities, transportation, labor and material necessary to
furnish the service herein described, the service to be performed at such
times and places as directed by and subject to the approval of the
authorized District representative indicated in the specifications.
29. SUB-CONTRACTORS - Sub-contractors, if any, engaged by the Contractor for
the Contractor shall be subject to the approval of the District. The
Contractor shall be held responsible for all operations of subcontractors
and shall require them to maintain adequate Worker's Compensation and
Public Liability Insurance.
30. DEFAULT BY CONTRACTOR - The District shall hold the Contractor liable and
responsible for all damages which may be sustained because of the failure
or neglect of the Contractor to comply with any term or condition listed
herein, it being specifically provided and agreed that time is of the
essence in the Contract performance.
If the Contractor fails or neglects to furnish any of the supplies or
services listed herein at the prices named and at the time and places
herein stated or otherwise fails or neglects to comply with the terms of
the Contract the District may upon written notice to the Contractor cancel
the Contract in its entirety or cancel or rescind any or all items
affected by such default, and may, whether or not the Contract is canceled
in whole or in part, procure supplies or services elsewhere without notice
to the Contractor. The prices paid by the District at the time such
supplies or services are procured shall be considered the prevailing
market prices. Any extra cost incurred by such default shall be collected
by the District from the Contractor and the performance guarantee, if any.
31. CONTRACT EXTENSION - Unless otherwise stated any Contract resulting from
this Bid may be extended in accordance with applicable legal provisions at
the same terms and conditions upon mutual agreement of the parties.
32. SPECIAL PURCHASES - The District reserves the right to acquire from other
sources during the life of the Contract such items as may be required for
testing, evaluation, experimental purposes, emergency needs, or small
purchases made by individual schools.
33. DISTRICT NAME MAY NOT BE USED - The name and/ or logo of the District or
any school of the District may not be used in any advertisements or other
communications which may convey the impression that the District
authorizes the solicitation and/or that there may be some connection
between the District and the contractor.
34. DISTRICT PURCHASING RIGHT - Individual schools and offices reserve the
right to purchase similar or the same items from other sources through the
Imprest Fund and/or School Purchase Orders.
35. CHILD AND/OR ANTI-SLAVE LABOR RIGHTS/LAWS - It is the District s policy to
only purchase products that have been manufactured without the illegal use
of child and/or forced convict or indentured labor. All goods provided to
the District shall be manufactured in strict compliance with all
applicable child and anti-slave labor laws of this or other countries of
origin.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -F-
<PAGE> 30
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
36. WILLFUL VIOLATION - Should the District determine that willful violation
of child and/or anti-slave labor rights/laws have occurred the District
shall have the right to terminate this contract either in whole or in part
and obtain the goods elsewhere. Any loss or damage sustained by the
District in securing the goods hereunder may be deducted from any moneys
due or that thereafter become due to the Contractor. Such deduction shall
be the difference between the price named in the contract and the actual
cost thereof to the District. Additional sanctions prescribed by law or
board policy may similarly be applied.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -G-
<PAGE> 1
EXHIBIT 10.14
A G R E E M E N T
THIS AGREEMENT is entered into on the 6th day of October, 1997, between
CRISPAIRE CORPORATION (PRIMARY CONTRACTOR)
3285 Saturn Court NW
Norcross, GA 30092
(770) 734-9696
Fax (770) 453-9323
hereinafter called the Contractor, and
LOS ANGELES UNIFIED SCHOOL DISTRICT
hereinafter called the District.
The parties hereby agree as follows:
SCOPE OF WORK
The Contractor shall furnish to the District in accordance with its Bid Request
C-250, Specifications dated October, 1997, the Rate Schedule set out herein and
in strict conformity with all Contract documents:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR
DESIGN AND INSPECTION BRANCH
SCOPE OF CONTRACT
The scope of the Contract is to provide various types of air conditioning
systems including miscellaneous accessories and spare parts to various District
locations. Contractor will have to provide service to any of the District's
locations, (see map included) on an "as required" (scheduled delivery) basis, in
accordance with all the terms, and conditions and Specifications indicated
herein. (See Specifications section, Pages l through 19 for specific details).
This Contract is for furnishing equipment/material only, and does not cover
installation. Installation shall be provided by the District and/or by outside
Contractor under separate agreement. Contract shall allow the District to issue
individual orders throughout the Contract period for a various number of units.
TERM OF CONTRACT
The term of the Contract is October 1, 1997 to September 30, 2000 (36 months),
inclusive. Upon written mutual consent of the District and the Contractor, this
Contract is subject to two (2) additional twelve (12) month extensions for a
maximum of five (5) years with no change in terms and/or conditions. After each
annual period (12 months), rates are subject to modification for each remaining
twelve (12) month period evaluated upon increases or decreases in the Consumer
Price Index. Additionally, each extended Contract period would also be subject
to the same provisions. (See "Contract Extensions" and "Adjustment To Rate
Schedule" (clauses).
CANCELLATION CLAUSE
All terms, conditions, and prices (including percentage discount), are firm for
the first one (1) year of the Contract period. After one (1) year from the
beginning date of the Contract, this agreement may be cancelled by either party
without cause upon sixty (60) days written notification of intention to cancel
the agreement.
Upon notification, the District has the right to order at the price, terms, and
conditions in effect at any time prior to the effective date of the cancellation
of the agreement and require delivery of the items so ordered. Purchase orders
issued
CONTRACT NO. 985067 Page 1 of 13 BID NO. C-617
<PAGE> 2
against the Contract prior to cancellation may specify delivery dates beyond the
effective date of the cancellation of this agreement, not exceeding forty five
(45) days.
The District reserves the right to cancel this agreement if delivery or
performance proves unsatisfactory and may procure the articles from other
sources and may deduct from unpaid balance due the Contractor and/or may collect
against the surety for excess costs so paid. The prices paid by the District
shall be considered the "prevailing market price" at the time such purchase is
made. The District shall be sole judge to satisfactory performance based upon
delivery requirements indicated in the Specifications section.
TAXES
The unit costs shall exclude all applicable taxes.
The District shall pay only the California Sales and Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice
The Federal Excise Tax is not applicable, as school districts are exempt
therefrom. The District, upon request, shall furnish the Contractor a Federal
Exemption Certificate.
Any new of additional tax not in effect at the time of the bid but which becomes
effective during the Contract period shall be paid by the District providing
that the services/materials being provided under this Contract are applicable to
such tax.
INVOICES AND PAYMENTS
Itemized invoices on a form acceptable to the District with Contract and
Purchase Order Number clearly indicated, should be submitted to the District
immediately in triplicate. Issued and mail to:
Los Angeles Unified School District
Accounting & Disbursements Division
Accounts Payable Section, 9th Floor
P.O. Box 54306
Los Angeles, California 90054
Invoices submitted shall include the original (signed) copy of the delivery slip
and listing of unit serial numbers delivered. See Specifications section,
"Serial Numbering".
For each purchase order issued: Payment shall be made for only the actual number
of units delivered, either all or in-part.
For payment information call Accounts Payable Section: (213) 633-3441, Attn:
Contracts/"M" Order Payer.
CONTRACT NO. 985067 Page 2 of 13 BID NO. C-617
<PAGE> 3
RATE SCHEDULE
The following rate schedule shall be firm* during the period, October 1, 1997
through September 30, 2000 (36 months) inclusive.
CATEGORY HP-3
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed away from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (140 Ea.) (134 Ea.) (250 Ea.)
- ------------------ ---------
2 ton 460V/3 phase
(0310512043) $1,346.00 $1,386.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
2 ton 208V/230V/1 phase
(0310512021) $1,117.00 $1,151.00
2 ton 208V/230V/3 phase
(0310512023) $1,222.00 $1,259.00 60 Ea. 60 Ea.
-------- --------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 3 of 13 BID NO. C-617
<PAGE> 4
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (127 Ea.) (121 Ea.) (248 Ea.)
- ------------------ ---------
2.5 ton 460V/3 phase
(0310512543) $1,399.00 $1,441.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
2.5 ton 208V/230V/1 phase
(0310512521) $1,136.00 $1,170.00
2.5 ton 208V/230V/3 phase
(0310512523) $1,242.00 $1,279.00 50 Ea. 50 Ea.
------ ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 4 of 13 BID NO. C-617
<PAGE> 5
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (1154 Ea.) (1265 Ea.) (2419 Ea.)
- ------------------ ---------
3 ton 460V/3 phase
(0310513043) $1,379.00 $1,420.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3 ton 208V/230V/1 phase
(0310513021) $1,150.00 $1,185.00
3 ton 208V/230V/3 phase
(0310513023) $1,256.00 $1,294.00 50 Ea. 50 Ea.
------- -------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 5 of 13 BID NO. C-617
<PAGE> 6
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (258 Ea.) (334 Ea.) (300 Ea.)
- ------------------ ---------
3.5 ton 460V/3 phase $1,693.00 $1,744.00 $25.00 $75.00
(0310513543)
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
3.5 ton 208V/230V/1 phase $1,498.00 $1,543.00
(0310513521)
3.5 ton 208V/230V/3 phase
(0310513523) $1,572.00 $1,619.00 40 Ea. 40 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 6 of 13 BID NO. C-617
<PAGE> 7
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (258 Ea.) (264 Ea.) (300 Ea.)
- ------------------ ---------
4 ton 460V/3 phase
(0310514043) $1,880.00 $1,936.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
4 ton 208V/230V/1 phase
(0310514021) $1,614.00 $1,662.00
4 ton 208V/230V/3 phase
(0310514023) $1,739.00 $1,791.00 40 Ea. 40 Ea.
------- ------
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 7 of 13 BID NO. C-617
<PAGE> 8
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit. Must
be able to supply 450 CFM without economizer. (Use only when there is existing
heating system to remain)*
<TABLE>
<CAPTION>
UNIT COSTS IF PURCHASED: Freight Cost: **
----------------
Over Two (2) Years Maximum
---------------------- Number of
Units Full Truck Less Than
Capable of Load Truck Load
1st Year 2nd Year Providing Quantity: Quantity:
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
District's
Estimated
System Description Quantity (12 Ea.) (12 Ea.) (235 Ea.)
- ------------------ ---------
5 ton 460V/3 phase
(0310515043) $1,991.00 $2,051.00 $25.00 $75.00
Unit Cost Each: Bi-monthly Minimum
Amount: Load of:
5 ton 208V/230V/1 phase
(0310515021) $1,675.00 $1,725.00
5 ton 208V/230V/3 phase
(0310515023) $1,756.00 $1,809.00 40 Ea. 40 Ea.
------- ------
Category Totals: 1949 2129
---- ----
</TABLE>
* See Specification section for complete technical equipment specifications.
** See Specification section for specific details
CONTRACT NO. 985067 Page 8 of 13 BID NO. C-617
<PAGE> 9
RATE SCHEDULE (cont.)
CATEGORY HP-3 - continued
Heat pump, single packaged, air, vertical, wall mounted. Must provide 450 CFM
O.S.A. Noise criteria maximum 50 dba on "A" scale 10 feed awayf from unit.
SPARE AND
REPLACEMENT PARTS
- -Percentage discount off manufacturer's published price list: 40%
- -Date of price list used: 4/97 Column or category used: Trade Price
*See Specification section for complete technical equipment specification.
**See Specification section for specific details.
UNIT COSTS IF PURCHASED:
<TABLE>
<CAPTION>
Over Two (2) Years
------------------------
System Options 1st Year 2nd Year
-------- --------
<C> <S> <C> <C> <C>
1A. Replace condenser guard with one-half (1/2) inch, Upgrade Unit Cost: $29.00 $31.00
sixteen (16) gauge flat expanded metal, hot dipped (Each)
galvanized
2A. Replace standard supply and return air grilles Upgrade Unit Cost: $63.00 $66.00
with heavy duty type, double deflection horizontal (Each)
adjustable rear bars, vertical adjustable face
bars: Air Mate E-240V supply, E-280 return or
approved equal.
3A. Supply and return air sleeves to interconnect Upgrade Unit Cost: $15.14 $15.90
registers to unit through the wall. (Each)
4A. Control cabinets and/or breaker panels to be Upgrade Unit Cost: $10.00 $11.00
provided with door locks: flush type latched (Each)
Corbin no. 15751, 5/8 inch for metal door, Keyed
to Corbin cat. No. 60 key.
5A. Auto changeover Thermostat and Sub-base for AC-2 Upgrade Unit Cost: $41.00 $43.00
(Each)
</TABLE>
* See Specification section for complete technical equipment specifications.
CONTRACT NO. 985067 Page 9 of 13 BID NO. C-617
<PAGE> 10
CATEGORY - TRAINING
Training of District's Maintenance and Operations Personnel
Cost to provide technical training to the Maintenance and Operations Personnel
of the District who are responsible for the maintenance and repair of air
conditioning units covered under this Contract. This training is to be conducted
at each of the seven (7) M&O locations for each of the different types of air
conditioning units listed in this request. The cost shall be based on forty (40)
hours of training per year, which should allow sufficient time to train all
personnel at the different locations. However, if this is not sufficient time in
the Contractor's opinion, an alternate time period may be submitted in addition
to the original requested time.
Cost per hour to provide "on-site" training: $ 250.00 per hour.
Suggested number of hours for training: 8 hours/per session.
AUTHORIZED DISTRICT REPRESENTATIVE
The Contract shall be under the direction and subject to the approval of the
Branch Director of Design and Inspection Branch, Julie Crum, or her designated
representative. The authorized District representative for this Contract will
be:
Bronco Popovich, HVAC Testing and Inspection Supervisor.
Los Angeles Unified School District
Design and Inspection Branch, Inspection Section
c/o Central Shops
1500 East 14th Street
Los Angeles, California 90021
(213) 743-3586
Fax (213) 746-7679
ESTIMATED DISTRICT REQUIREMENTS
The District's estimated requirement indicated in the Rate Schedule Section is
what will need to be provided to facilitate the District's current Contract
needs. This is an estimated requirement for information only and is in no way
intended to indicate expressly or by implication the actual quantity that may be
required. The District may require substantially more or less than this amount.
Although a guarantee cannot be made as to the number of systems which will be
provided under the Contract, for purposes of bidding, Bidder should base cost on
the estimates indicated in the "Rate Schedule". Ordering will be based upon one
(1) of the three (3) options shown.
The Contractor will be afforded the option by giving written notice to the
District, of refusing to deliver in excess of 25% over the quantity for each
item indicated in the "Rate Schedule." Refusal to deliver shall serve to
terminate that item from the Contract and the District reserves the right to
terminate the entire Contract when 50% of the Contract line items have been
terminated.
The equipment listed in the Contract and required during the Contract period
shall be ordered exclusively from the Contractor during such period except as
noted in the General Bid and Contract Conditions, #32 "Special Purchases" and
#34 "District Purchasing Rights".
CASH DISCOUNT
Cash Discount of Net % 30 days, is being offered.
CONTRACT NO. 985067 Page 10 of 13 BID NO. C-617
<PAGE> 11
NOTICES, DEMANDS AND COMMUNICATIONS
Formal notices, demands, and communications to be given hereunder by either
party shall be made in writing and may be effected by U.S. mail, personal
delivery, registered/certified mail or return receipt requested and shall be
deemed effective as of the date of receipt.
PERFORMANCE GUARANTEE
A performance guarantee is required on Contracts with estimated values which are
expected to be $100,000.00 or more during any annual period. ( i.e.) for
multi-year Contracts, the estimated value will be based on the annual (12 month)
amount only.
The Contractor shall be required to provide a performance guarantee at the time
of execution of the Contract. Guarantee shall be in the form of a cashier's or
certified check, a certificate of deposit or a performance bond. Period of
coverage shall be during the first Contract period, twelve (12) months, plus 120
days to cover service/deliveries ordered before but performed after the Contract
expiration date. The amount shall be equal to twenty-five (25) percent of the
total cost for the annual period. The guarantee shall be effective for the first
Contract period and shall be renewed for each subsequent twelve (12) month
period(s).
Failure to promptly submit a performance guarantee may result in a default
action. (See General Bid and Contract Condition #30).
USE OF IRREVOCABLE LETTERS OF CREDIT
Contractors that are unable to obtain or find difficulty in obtaining
performance bonds and that do not desire to tie up their funds by assignment of
a Certificate of Deposit occasionally request the District to accept an
Irrevocable Letter of Credit as a substitute security. For the information of
Contractors desiring to submit letters of credit, the following is furnished:
The procedure and criteria for acceptance by the District of Irrevocable Letters
of Credit generally are as follows:
1. The Letter should be issued by a bank haying one or more branches in Los
Angeles County or in a county contiguous to Los Angeles County.
2. The Letter should be effective for the period of the Contract and for 120
days thereafter. If the Contract conditions provide for renewal or
extension of the Contract, the Letter must include the bank's guarantee
that it will extend the Letter for any period for which the Contract is
extended, plus 120 days thereafter.
3. The Letter should provide that the District has the right unilaterally to
make draft(s) against the Letter in whole or in part, at any time,
provided that the Board of Education of the City of Los Angeles has
declared the contractor in default or has approved a claim and/or any
encumbrance against the Contract.
4. Prior to the bank's issuing the Letter of Credit, the Contractor should
obtain from the bank and submit to the District for review a completed
draft of the Letter as the bank proposes to issue it. The Contractor
should anticipate that review of the draft by the District and the
District's counsel will take approximately two weeks, plus additional time
if it is found necessary to arrange with the Contractor and/or the bank to
make changes in the Letter and, found if applicable, to review such
changes.
5. The Letter issued and submitted to the District should be fully executed
and accompanied by a properly executed acknowledgment.
NOTE: Any questions or concerns regarding either Insurance or Bonding
Requirements may be referred to the Contract and Insurance Services Branch
at (213) 633-7380.
CONTRACT NO. 985067 Page 11 of 13 BID NO. C-617
<PAGE> 12
PIGGYBACK CLAUSE
For the term of the Contract and any mutually agreed extension(s), pursuant to
request for bid and at the option of the Contractor, other school districts,
community college districts, public corporation or agency, including any county,
city, town or public corporation or agency within the State of California, may
purchase, services/item(s) at the same price and upon the same terms and
conditions pursuant to Section 20652 and/or 20118 of the Public Contract Code.
Sales tax and delivery charges are applicable to the Contract for Los Angeles
Unified School District area only. Different sales tax and delivery charges
outside the area of this Contract are subject to change based upon area of
service.
District waives its right to require such other districts and agencies to draw
their warrants in the favor of the District as provided in said code sections.
ADJUSTMENT TO THE RATE SCHEDULE (PRICES)
All rates (prices) are firm for the first Contract period of thirty-six (36)
months. For each of the two (2) additional annual extended Contract periods, the
rates(s) are "subject to modification" according to the following criteria.
The adjustment to the Contract rate(s) (prices), if any, would be effective
October 1st, for each remaining Contract period(s). Increases considered shall
be evaluated by using the percentage of change between the previous year and the
current year's Consumer Price Index, published by the U.S. Department of Labor's
Bureau of Labor Statistics as a guide. The specific index to be used is the
C.P.I. for Los Angeles-Anaheim-Riverside, CA for April of each year using the
"Special Index Category" of "All Items Less Shelter" under the "All Urban
Consumers" column.
All requests for rate adjustments must be requested by the Contractor in writing
no later than sixty (60) days prior to the end of each annual Contract period.
An explanation citing the rationale for price increase should be included in
such correspondence.
Note: It is expressly understood that Contract rate increases are not automatic
nor guaranteed. Contractor's request to increase the current rate schedule
will be evaluated and considered when such adjustments are requested. The
District reserves the right to reject any such request and re-bid and/or
cancel said Contract within the provisions of the existing agreement. The
District may offer a lower, higher or no increase in percentage. All
increases are subject to negotiation between the Contractor and the
District. For information on the Consumer Price Index, contact the Bureau
of Labor Statistics at (415) 975-4350.
Further explanation or clarification of provisions pertaining to "Adjustment To
The Rate Schedule (Prices)" may be obtained by contacting the Purchasing
Services Manager.
CONTRACT EXTENSION
After the initial Contract period of thirty-six (36) months, the Contract is
subject to two (2) additional twelve (12) month extensions, for a maximum of
five (5) years total. Extensions are contingent upon written mutual consent of
the District and the Contractor. Any request for extension must be requested by
the Contractor in writing no later than sixty (60) days prior to the expiration
date of the existing agreement. Extended Contract period granted by the District
would be subject to the same terms and conditions. Provisions for price
adjustments would be subject to the "Adjustment To The Rate Schedule (Prices)"
provision.
ASSIGNMENT
The Contractor shall not assign or transfer by operation of law or otherwise any
or all of its rights, including the right to receive payment, burdens, duties or
obligations without the prior written consent of the District and the surety on
the Contract bonds. The District's standard assignment form shall be used for
any assignment requested by the Contractor.
The District will not sign any documents in connection with assignments or
financing other than the District's standard form for "assignment of Contract
money" or "assignment of rights and delegation of duties on Contract" which is
available from the District's Contract and Insurance Services Branch, 355 South
Grand Avenue, 19th Floor, Los Angles, CA 90071, Telephone (213) 633-7380.
CONTRACT NO. 985067 Page 12 of 13 BID NO. C-617
<PAGE> 13
CONTRACT DOCUMENTS
The complete Contract includes the following documents: the Advertisement for
Bids, the Bid and General Contract Conditions, the Specifications, the Bid of
the Contractor and its acceptance by the District, the Contract, the Performance
Guarantee, and all amendments thereto. Any of these documents shall be
interpreted to include all provisions of the other documents as though fully set
out therein.
-CONTRACTOR- -DISTRICT-
CRISPAIRE CORPORATION LOS ANGELES UNIFIED SCHOOL DISTRICT
BY /s/ DAVID L. SHUFORD BY LOS ANGELES UNIFIED SCHOOL
------------------------- DISTRICT BOARD OF EDUCATION
VP Sales & Marketing
BY /s/ CHARLOTTE BARNEY
---------------------------
CHARLOTTE BARNEY
Contract Assistant
CONTRACT NO. 985067 Page 13 of 13 BID NO. C-617
<PAGE> 14
BOND OF FAITHFUL PERFORMANCE
WHEREAS, LOS ANGELES UNIFIED SCHOOL DISTRICT OF LOS ANGELES COUNTY
hereinafter called the District, and CRISPAIRE CORPORATION
hereinafter called the Contractor, have entered into a contract
dated ................ October 6, 1997
for .................. AIR CONDITIONING SYSTEMS (VARIOUS TYPES) FOR VARIOUS
LOCATIONS WITHIN THE LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR DESIGN AND INSPECTION BRANCH C-617 10/1/97 THROUGH
9/30/2000
Amount of Bond ....... FIFTY EIGHT THOUSAND FIVE HUNDRED TWENTY FIVE AND NO/100
DOLLARS ($58,525.00)
NOW, THEREFORE, the Contractor, as Principal, and the following named Surety,
________________________________________________________________________________
are held and firmly bound to the District jointly and severally in the penal sum
of this Bond set forth above as Amount of Bond for which payment, well and truly
to be made, the Principal and Surety bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these
presents.
The conditions of this obligation is that if the Contractor shall promptly and
faithfully perform all the conditions of the Contract in strict conformity with
all terms and conditions set forth in the Contract, then this obligation shall
be null and void, otherwise it shall remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees that
notwithstanding California Civil Code Sections 2819 and 2849, no change,
alteration or extension of time in the terms of the contract or in the goods,
supplies or service to be furnished thereunder shall in any wise affect its
obligations on this bond; and it does hereby waive notice of any such change.
Signed, sealed, and dated, _______________________19___.
-Contractor/Principal- -Surety-
CRISPAIRE CORPORATION Agency (if any) ____________________
NAME ____________________________________ By _________________________________
TITLE ___________________________________ Address ____________________________
Phone (For inquiries) ______________
Bond No. ___________________________
- --------------------------------------------------------------------------------
CERTIFICATION BY LOS ANGELES COUNTY CLERK'S OFFICE
I hereby certify:
1. That the Surety named above has been certified by the State Insurance
Commissioner as an admitted Surety Insurer and that such authority is in
full force and effect.
2. That the person executing this bond on behalf of the Surety is authorized
to do so under a power of attorney on file in this office.
3. That there is on file in this office the financial statement of the Surety
for the period ending ____________ showing capital and surplus not less
than ten times the amount of this bond.
CONNY B. McCORMACK, County Clerk
Date _____________________________________ By _________________________________
985060
Form 82.4
Rev. 11/97
(Signatures for Surety must be acknowledged by jurat before a Notary Public)
<PAGE> 15
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
SPECIFICATIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES WILL AUTHORIZE THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANGES TO
THIS CONTRACT.
SCOPE OF CONTRACT
T he scope of the Contract is to provide various types of air conditioning
systems. Contractor will have to provide service to any of the District's
locations, on an "As Required" (scheduled delivery) basis.
Contracted services shall be in accordance with all the Terms and Conditions set
forth herein; including adherence to the following Specifications. The "Unit
Costs" bid in the "Rate Schedule" should take into account and shall include the
following requirements.
NOTE: It is the responsibility of the Contractor to carefully read and fully
understand these specifications. If exceptions are taken thereto they must
have been noted on the signed bid. After the contract is issued, no
modifications or changes to the specifications will be authorized without
Written consent from the District.
I. TECHNICAL SPECIFICATIONS
EQUIPMENT
A. Equipment Specifications as written below may be revised to reflect latest
product developments. Such revisions are subject to approval by the
District.
B. Heat Pump Units, packaged type, floor mounted or wall hung, serving single
classroom without distribution duct:
1. Shall be tested, certified, and warranted by their manufacturers to
operate without undue noise of more than 50 dB on "A" scale measured
10 feet directly in front or 45-degree angle of the unit, at a
height 5 feet above finish floor. Supplier and Contractor shall, at
their expense, make changes or adjustments or replace loud units, to
produce a condition of quietness not to exceed 50 dB. Changes shall
not reduce air flow quantities nor cooling capacity called for in
the Contract Documents.
2. Shall have their compressors mounted on vibration isolation springs
within the cabinets.
3. Shall have height of distribution air plenum fabricated to meet
individual classroom requirement. Air outlet shall have 120 degrees
direction, adjustable 10 degree downward or upward. Air outlet to
utilize the whole width of the unit. Floor mounted units only.
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 1 of 7 C-617
<PAGE> 16
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
EQUIPMENT - continued
4. Shall have outside air make-up for ventilation mixed with return
air, filtered through same filter, prior to passing through
evaporator coil. O.S.A. shall not by-pass evaporator coils.
5. Shall have all component parts, wiring, including filters,
accessible for inspection and service from the inside (Classroom).
Floor mounted units only.
6. Shall have controls to automatically operate the mechanical
equipment through the heating or cooling and ventilating cycles as
required.
AIR CONDITIONING UNITS
Item No.
6. HP-e: Heat pump, single packaged, air to air, vertical wall mount
unit, of various voltages: 460V/ 3 Phase, 208/230V/ 1 Phase,
208/230V/ 3 Phase.
Unit shall be factory assembled, piped, internally wired and fully charged
with R-22. Units shall be UL listed. Cooling capacity rated in accordance
with ARI Standard 240-89. Unit shall have SEER/COP in compliance with
California Energy Conservation latest Standards, CCR, Title 24, with a
minimum SEER of 10.0. Units shall be furnished complete with HACR Breaker
disconnect, filter driers, thermal expansion valves on indoor coil,
service gage connections or suction and discharge lines and heavy expanded
metal protective guard for coil. Provide fixed metering on the outdoor
coil.
1. Cabinet and Frame: Frame shall be welded construction. Cabinet shall
be constructed of not less than #20 gage zinc coated galvanized with
one coat of satin acrylic paint and be complete with integral
mounting brackets, sloped top, weather stripping and fresh air
damper capable of providing 450 CFM of outside air. Panels shall be
insulated with 2 pounds per cubic foot, l/2" thick fiberglass.
2. Compressor: Hermetically sealed scroll compressor with internal
vibration isolators. Compressor shall carry unconditional 5 year
warranty and be complete with access valves, depress Schraeder type.
Compressor motor assembly shall be protected by thermal and
electrical overload, and high pressure switch.
3. Coils: Coils shall be of non-ferrous construction with aluminum
plate fins mechanically bonded to copper tubes, factory tested.
Drain pan sloped for positive drainage.
4. Fans and Motors: Evaporator fan shall be forward curved centrifugal
type, tested and rated in accordance with AMCA requirements. Fans
shall be direct driven with at least two speed taps. Evaporator
blower and motor shall have permanently lubricated bearings.
Condenser fan may be propeller type, direct-driven by a permanently
lubricated motor. Condenser air shall be discharged horizontally.
5. Controls: The internal control circuit shall consist of current
limiting type transformer to generate 24 VAC, switching devices to
operate the compressor, indoor fan motor. The control circuit shall
incorprate a manual reset safety circuit to render the refrigerant
system (compressor and outdoor air motor) inoperative should there
be a loss of air flow or refrigerant. The safety circuit shall be
resettable at the wall thermostat. A "fault" light located on the
wall thermostat shall indicate a safety lock-out. The defrost
circuit shall consist of a single device and shall be time and
temperature initiated. A 90 minute timer, readily adjustable to 30
or 45 minutes, shall initiate a defrost cycle only if the outdoor
coil temperature indicates the possibility of an iced condition. The
device shall terminate the defrost cycle when the coil temperature
has been elevated to a satisfactory level that assures all ice has
been removed, or at the end of ten minutes of defrost operation.
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 2 of 7 C-617
<PAGE> 17
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
6. Control and Timer: Thermostatic room temperature controls and six
(6) hour by-pass timer shall be as recommended by the manufacturer
and approved by the District.
7. Filters: Filters shall be 2" replaceable media type Farr D/C or
approved equal, installed in filter section as part of unit.
II. GENERAL CONDITIONS AND REQUIREMENTS
1. INSURANCE
The Contractor shall secure and maintain, as a minimum, insurance as set
forth below with insurance companies acceptable to the District to protect
the Contractor from claims which may arise from operations under the
contract, whether such operations be by the Contractor or anyone directly
or indirectly employed by them. The Contractor further shall furnish upon
request of the District's Contract and Insurance Services Branch,
certificates of such insurance, signed by an authorized representative of
the insurance carrier, which shall include a minimum thirty-one (31) day
cancellation clause. Failure to maintain the insurance and furnish the
required certificates may be considered a breach of the contract by the
Contractor and the District may terminate the contract and the Contractor
shall he put in default pursuant to General Contract Condition #30,
"Default by Contractor."
a. Workers' Compensation Insurance in accordance with provisions of the
California Labor Code, adequate to protect the Contractor from
claims under Workers' Compensation Acts which may arise from
operations under the contract, whether such operations be by the
Contractor or anyone directly or indirectly employed by them.
The Contractor in signing this contract hereby certifies, pursuant to Sec. 1861
of the California Labor Code, as follows:
I am aware of the provisions of Section 3700 of the
Labor Code which require every employer to be insured
against liability for workers' compensation or to
undertake self-insurance in accordance with the
provisions of that code, and I will comply with such
provisions before commencing the performance of the work
of this contract.
b. Comprehensive Bodily Injury and Property Damage Liability Insurance
for Combined Single Limit Bodily Injury and/or Property Damage
Liability of not less than $1,000,000.00 each occurrence. The policy
so secured and maintained shall include coverage for Contractual or
Assumed Liability, Contractors Protective (Contingency) Liability,
Products Liability or Completed Operations, and Owned, Hired, and
Nonowned Automobiles Insurance; and shall be endorsed to name the
Los Angeles Unified School District and Board of Education of the
City of Los Angeles as additional insureds and to provide
specifically that any insurance carried by the District which may be
applicable to any claim or loss shall be deemed excess and the
Contractor's insurance primary despite any conflicting provisions in
the Contractor's policy to the contrary.
The Contractor shall be responsible and liable for all damage to the
property of the District which is caused by the Contractor,
Sub-Contractors, or employees thereof, during the execution of this
Contract and shall, at his own expense, repair and/or replace all damage
property to its original condition.
2. PERMITS AND LICENSES
All work shall comply with the needs of the District. The Contractor and
all their employees shall secure and maintain in force such permits,
licenses, certificates, and other documents as are required by State,
County, City, or other governmental or regulatory bodies to legally engage
in and perform the services to be provided under the Agreement.
Specifically, the Contractor shall observe and comply with the Department
of Health Services,
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 3 of 7 C-617
<PAGE> 18
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
CAL/OSHA, South Coast Air Quality Management District, State and Federal
Environmental Regulations, Fire codes and all other applicable laws,
ordinances and regulations in their operations.
3. PACKAGING
All deliveries shall be made in cartons properly marked and fully labeled,
showing Contractor's name, contents, quantity, sizes and purchase order
number. Deliveries may be rejected if not properly identified.
4. DELIVERY REQUIREMENTS AND LOCATIONS
The Contractor will be provided a map showing the District's schools and
locations for reference. Not all schools and locations will require
service under this Contract. The Contractor is to refer to the map for
verification of District boundaries/locations that may require delivery.
Costs indicated in the Rate Schedule shall reflect delivery to any
location within those boundaries. (1) Unless otherwise specified, the
Contractor shall be responsible for delivery and shall pay all costs,
including drayage, freight, insurance and special equipment at the rates
established in the Rate Schedule. (2) Contractor shall set the equipment
"on-site" as directed by the District. It shall be the Contractor's
responsibility to coordinate the deliveries and inspection (time, place,
equipment, etc.). It shall be the Contractor's/Trucking Line's
responsibility to have the necessary manpower/equipment to unload the
trucks. (3) Contractor/Trucking Line shall contact the District a minimum
of two (2) days prior to delivery to arrange for personnel to be available
to receive the units.
5. PREFERENTIAL PRICING
The Los Angeles Unified School District shall be given the benefit of any
lower prices which may for comparable quantity and delivery be given by
the Contractor to any other school district, state, county, municipal or
local government agency for the product listed herein.
6. MANUFACTURERS CATALOG
Contractor shall provide (at no charge to the District) ten (10) copies of
manufacturer's current catalogs/published price lists indicating available
items and price listing upon award of contract and with any subsequent
price change. Contractor is responsible for contacting the manufacturers
to assure availability of price lists. Items to be invoiced are to be
based on catalog prices effective on ordering (Purchase Order) date, not
shipping or receiving date. Any change in prices and/or price lists shall
not be effective until ten (l0) days after the revised price lists are
received by the Purchasing Branch, who are so authorized to order under
contract. Revised prices/catalogs should be sent to and include:
COVER LETTER: To indicate Contractor's name contact person, phone
number.
EACH PRICE LIST: Label or stamp Contractor's name, address and phone
number. Send price lists to:
Los Angeles Unified School District
1 each: Purchasing Branch -19th Floor
355 South Grand Avenue, Suite 1951
Los Angeles, CA 90051
Attn: Marc Monforte, Purchasing Services Manager
Los Angeles Unified School District
9 each: Design and Inspection Branch 6th Floor
355 South Grand Avenue
Los Angeles, CA 90051
Attn: Victor Euben, Supervising Mechanical Engineer.
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 4 of 7 C-617
<PAGE> 19
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
It is specifically understood that the District's Bid Conditions shall supersede
any general terms and/or conditions contained in manufacturer's price list,
submitted as a part of this Bid/Contract by the Contractor/Vendor.
7. MANUFACTURER CHANGES
During the course of the contract, if there are manufacturer's changes in
the basic units and/or model number changes, the District must be
immediately notified. The Manufacturer or their representative must
provide the District with the new specification data sheet(s) within a
week, and must have the District approval prior to shipment. If the new
model(s) is acceptable, all other terms, conditions and prices shall
remain in effect. If the new model is unacceptable to the District,
Contractor will be notified not to provide/ship.
8. SPARE PARTS: The manufacturer or his assigned agent shall maintain within
the Los Angeles metropolitan area an adequate stock of replacement parts
which shall be available for immediate delivery for a minimum period of
five (5) years.
9. OPERATING AND MAINTENANCE INSTRUCTIONS
The Contractor shall provide seven (7) sets of operating and maintenance
instructions for each type of unit purchased. Also to be included are
copies of the certified test results and certified drawings of the units
in accordance with the serial numbers of each. These documents shall be
sent separately from the units, in book format (one binder per type of
unit), to the District's Supervising Mechanical Engineer. Each set of
documents shall have the name and address identifying the point of
delivery of the units. A specific address for books will be provided to
the Contractor.
10. FAILURE OF CONTRACTOR TO PROVIDE AS AGREED
If in the opinion of the District, the Contractor at any time during the
period of the contract fails to perform satisfactorily the service called
for herein, or otherwise fails to perform satisfactorily the service
called for herein, or otherwise fails or neglects to comply with the terms
of the Contract, the District may, without notice or demand, make
arrangements elsewhere for the service or any part thereof and hold the
Contractor responsible for damages which may be sustained by the District.
Any additional costs incurred by such default may be collected by the
District from the Contractor and/or Contractor's Performance Guarantee
Surety and/or deducted from any payment(s) due or to become due. It is
specifically provided and agreed that time shall be of the essence in
regard to the Contract performance requirement.
A. Liquidated Damages
It is agreed by the Contractor and the District that because it
would be impracticable and extremely difficult to fix the actual
damage to the District (in accordance with government Code Section
53069.85) should the work not be completed within the prescribed
time period, (plus any extension of time authorized by change orders
under the Contract), it is agreed that there shall be assessed as
liquidated damages, but not as a penalty, the following amount for
each calendar day's delay after the expiration of such time period
until the date of physical delivery of the equipment as accepted by
the District.
1. If Contractor does not deliver the equipment on or before the
scheduled delivery date(s), Contractor shall pay to the
District as fixed and agreed liquidated damages which shall be
in lieu of all other damages for such non-delivery, the amount
(as indicated below) per day, per unit, for each calendar day
between the scheduled delivery date and the date of actual
delivery, but in no event more than five (5) calendar days.
Assessment shall not exceed contracted cost of unit being
purchased.
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 5 of 7 C-617
<PAGE> 20
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
CATEGORY: AC-1 $250.00 HP-2 $250.00 MZ-1 $250.00
AC-2 $250.00 HP-3 $250.00 MZ-2 $250.00
AC-3 $250.00 HP-4 $250.00 SPECIAL $250.00
HP-1 $250.00 HP-5 $250.00 HP(EXTRA) $250.00
2. If the delay in delivery of the equipment continues for more than
five (5) days, then during the thirty (30) day period immediately
thereafter, upon written notice, the District may terminate the
entire agreement and/or outstanding purchase order and proceed to
invoke the provision of the clause entitled "Default by Contractor,"
(See General Bid and Contract Conditions, Page G, Paragraph 30).
These assessments may be levied whenever the delivery time
requirements of this contract have not been met. Circumstances
beyond the control of the Contractor will be given consideration.
The District shall be the sole judge in determining to invoke this
provision.
Additionally, in lieu of assessment indicated in number one (1)
above, should the Contractor fail to provide service, the District
reserves the right to have the services performed by another vendor.
The difference between the contracted and actual cost to the
District (fair market value) will be considered restitution in lieu
of any default action being taken by the District, if such action is
needed.
Assessment of such reductions by the District shall in no way
relieve the Contractor of their obligation to provide continued
contracted service/performance.
NOTE: Repeated offenses may result in a default action against the Contractor.
(See: General Contract Conditions, Page F and G, #30).
11. SERIAL NUMBERING
Each air conditioner unit is to be marked with the serial number clearly
legible on the outside of the unit by means of a permanently affixed stamp
or metal tag. This serial number must also be shown on the invoice when
submitted for payment.
12. RISK OR LOSS OR DAMAGE
A. It is the full intent of the District that the Contractor retain
responsibility for the unit(s) unit delivered to the construction
site for installation specified in the DAR, (deliver as requested)
document, at which time the Construction Contractor and District
will assume responsibility of the unit(s).
B. Should the unit(s) be found to have been damaged in shipping, the
Contractor will be notified and it will be the Contractor's
responsibility to provide repair or replacement within two (2) weeks
of the notification. Final determination of whether to repair or
replace the unit(s) shall be by the District. It is the intent of
this action to prevent the interruption of the Construction
Contractor's schedule, which is critical to this project. Damaged
units not repaired/replaced within the two (2) week period would be
subject to assessment or liquidated damages. (See: page 18,
paragraph no. l0).
13. ORDERING PROCEDURES
A. The units will be purchased by the District with individual purchase
orders for various quantities throughout the life of the agreement.
However, the purchase order will include a "Deliver As Requested"
(DAR) section to allow the scheduling of arrival of units to match
installation.
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 6 of 7 C-617
<PAGE> 21
LOS ANGELES UNIFIED SCHOOL DISTRICT
SPECIFICATIONS - continued
B. The intent is to place a purchase order for several units from the
selected supplier(s) then allow the Construction Program Management
to place a release of the units under the DAR. All shipments will be
delivered to locations in Southern California within District's area
of responsibility/geographic boundaries.
C. It is also anticipated that an order will be requested initially to
provide a small backlog for the Installation Contractor.
D. It is the intent of the District to obtain the lowest cost for
shipment of the air conditioner units by working with the Contractor
to allow full truckload shipments if possible.
E. It is the intent of the District to provide the Contractor with a
preliminary listing of the type and size of the air conditioner
units to be supplied. As design is complete, the list will be
updated reflecting the actual type and size units required on a
bi-weekly/monthly basis. This listing is to be used ONLY to provide
the Contractor information on approximately the number, type, and
size of air conditioner units to be purchased. This should assist
the supplier(s) in planning production and shipping schedules to
meet the requirements of the District.
F. No minimum dollar value or minimum size of order shall be designated
for any order.
14. WARRANTY
Manufacturers or their assigned agent shall guarantee equipment against
imperfections of materials and/or workmanship for a period of one (1) year
from date units are put into service. Compressor shall have a five (5)
year "unconditional guarantee."
SPECIFICATIONS
AIR CONDITIONING
SYSTEMS (VARIOUS TYPES) Page 7 of 7 C-617
<PAGE> 22
Business Services Center, Purchasing Branch
355 South Grand Avenue 19th Floor, Suite 1951
Los Angeles, CA. 90071
CONTRACT FOR FURNISHING:
AIR CONDITIONING SYSTEMS
(VARIOUS TYPES)
FOR VARIOUS LOCATIONS WITHIN THE
LOS ANGELES UNIFIED SCHOOL DISTRICT
FOR: DESIGN AND INSPECTION BRANCH
APPENDIX
MANUFACTURER'S MAKE AND MODEL NUMBER
Bidder shall provide the manufacturer's make and model number for each
individual unit they are bidding on. The system description below matches those
in the "Rate Schedule" Section (see pages no. 6 through 73). Make sure items are
properly matched. Systems bid which do not have a make and model indicated may
not be considered for an award.
CATEGORY HP-3
Heat pump, single packaged, air to air, vertical, wall mounted.
Must provide 450 CFM O.S.A.
Noise criteria maximum 50 dba on "A" scale 10 feet away from unit.
System Description Manufacturer's Make and Model Number
- --------------------------------------------------------------------------------
2 ton 460V/3 phase Make: Marvair Model No: AVP24HPD-OOY
(0310512043)
2 ton 208V/230V/1 phase Make: Marvair Model No: AVP24HPA-OOY
(0310512021)
2 ton 208V/230V/3 phase Make: Marvair Model No: AVP24HPC-OOY
(0310512023)
2.5 ton 460V/3 phase Make: Marvair Model No: AVP30HPD-OOY
(0310512543)
2.5 ton 208V/230V/1 phase Make: Marvair Model No: AVP30HPA-OOY
(0310512521)
2.5 ton 208V/230V/3 phase Make: Marvair Model No: AVP30HPC-OOY
(0310512523)
3 ton 460V/3 phase Make: Marvair Model No: AVP36HPD-OOY
(0310513043)
3 ton 208V/230V/1 phase Make: Marvair Model No: AVP36HPA-OOY
(0310513021)
3 ton 208V/230V/3 phase Make: Marvair Model No: AVP36HPC-OOY
(0310513023)
APPENIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) Page 1 of 2 C-617
<PAGE> 23
LOS ANGELES UNIFIED SCHOOL DISTRICT
APPENIX - continued
System Description Manufacturer's Make and Model Number
- --------------------------------------------------------------------------------
3.5 ton 460V/3 phase Make: Marvair Model No: AVP42HPD-OOY
(0310513543)
3.5 ton 208V/230V/1 phase Make: Marvair Model No: AVP42HPA-OOY
(0310513521)
3.5 ton 208V/230V/3 phase Make: Marvair Model No: AVP42HPC-OOY
(0310513523)
4 ton 460V/3 phase Make: Marvair Model No: AVP48HPD-OOY
(0310514043)
4 ton 208V/230V/1 phase Make: Marvair Model No: AVP48HPA-OOY
(0310514021)
4 ton 208V/230V/3 phase Make: Marvair Model No: AVP48HPC-OOY
(0310514023)
5 ton 460V/3 phase Make: Marvair Model No: AVP60HPD-OOY
(0310515043)
5 ton 208V/230V/1 phase Make: Marvair Model No: AVP60HPA-OOY
(0310515021)
5 ton 208V/230V/3 phase Make: Marvair Model No: AVP60HPC-OOY
(0310515023)
APPENIX
AIR CONDITIONING OCTOBER 1997
SYSTEMS (VARIOUS TYPES) Page 2 of 2 C-617
<PAGE> 24
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS
THE BOARD OF EDUCATION OF THE CITY OF LOS ANGELES HAS AUTHORIZED THIS CONTRACT
AND ONLY THE BOARD OF EDUCATION CAN AUTHORIZE CHANGES IN THE RATES, TERMS AND
CONDITIONS IN THE CONTRACT. THE BRANCH DIRECTOR OF PURCHASING OR THE BRANCH
DIRECTOR OF CONTRACT AND INSURANCE SERVICES SHALL NOTIFY THE CONTRACTOR IN
WRITING OF ANY CHANGES SO AUTHORIZED. NO OTHER PERSONS MAY AUTHORIZE CHANCES TO
THIS CONTRACT.
1. SMALL MINORITY, FEMALE-OWNED AND DISABLED VETERAN VENDORS PREFERENCE
PROGRAM - Small minority, female-owned and disabled veteran vendors
located within the boundaries of Los Angeles, Orange, San Bernardino, and
Ventura Counties applying for the preference program must have on file a
certification application which becomes effective 30 days after approval
by the District. For further information, please contact Equal Opportunity
Section, (213) 633-7735.
2. NAME AND NATURE OF CONTRACTOR'S LEGAL ENTITY - The Bidder shall specify in
the Bid and in the performance guarantee, if any, the full name and nature
of its legal entity and any fictitious name under which it does business.
The Bill shall be signed under the full legal name by a person authorized
to sign on behalf of the legal entity.
After award of a bid, should a change be contemplated in the name or
nature of the legal entity, the Contractor shall first notify the Contract
and insurance Services Branch of the District in order that proper steps
may be taken to have the change reflected on the Contract.
3. EXAMINATION OF CONTRACT DOCUMENTS AND ACTUAL CONDITIONS - Before
submitting a Bid, the Bidder shall thoroughly familiarize themselves with
all Contract documents and any addenda issued before the Bid opening. Such
addenda shall form a part of the Bid and shall be made a part of the
Contract documents. It shall be the Bidder's responsibility to ascertain
that their Bid includes all addenda issued prior to the Bid opening.
The Bidder must satisfy themselves by personal examination and by such
other means as they may prefer as to the actual conditions and
requirements under which the Contract must be performed. If upon
inspection and examination by else Bidder, there are any existing
conditions or requirements which are not completely understood by the
Bidder, they shall contact the Purchasing Branch for such information.
The Bidder, when visiting a District location, shall make themselves and
their business known to the Administrator so that their presence on the
premises is authorized.
4. SPECIFICATIONS - The detailed specification(s) and/or brand name or number
given is descriptive and indicates quality and style of the
supply/equipment item required. Offers to supply an item substantially the
same as the item described herein will be considered regardless of minor
variations from the listed specifications. If such offers are made, the
equipment offered must be equal in quality, durability and fitness for the
purpose intended.
5. PRICING - Prices should be typed for each item separately for the units
specified in the Bid form. California Sales and Use Tax shall not be
included. School Districts are exempt from Federal Excise tax. Errors in
price may be crossed off and corrections made prior to bid opening and
should be initialed in ink by the person signing the Bid or Bidder's
authorized representative.
During the Contract period, should there be any decrease in prices of the
items listed therein, a corresponding decrease in prices on the balance of
the Contract period shall be given to the District for as long as the
lower prices are in effect, but at no time shall the prices charged the
District exceed the prices therein
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -A-
<PAGE> 25
The District shall be given the benefit of any lower rates which may (for
comparable quality and delivery) be given by the Contractor to any other
School District or any other State, County, municipal or local government
agency in Los Angeles County in similar quantities, terms and conditions
for the equipment listed herein.
6. INSPECTION OF BIDDER'S FACILITIES - The District reserves the right to
inspect the facilities of the Bidder prior to award of the Contract and if
representatives of the District determine after such inspection that the
Bidder is not capable of performance satisfactory to the District, their
bid shall be ruled "non-responsive."
7. WARRANTY - Bidder shall attach a copy of their standard warranty to their
bid when applicable. In ease of award, the resulting Contract supersedes
all clauses, terms and conditions of the Bidders warranty which in any way
limit this Contract, or are in conflict with, or inconsistent with it, but
incorporates by reference any terms and conditions which extend or
increase the warranty specified by the District.
In addition to the foregoing, if the Branch Director of Purchasing or his
or her designee, upon reviewing the Bidder's warranty, determines that any
terms and conditions of the Bidder's warranty are not acceptable for any
reason, the Branch Director/designee will notify the Bidder thereof in
writing prior to award, and in that event, the terms and conditions so
specified will be inapplicable. (This provision is intended to apply to
situations where a Bidder's warranty is technically not limiting, or in
conflict with, or inconsistent with the District's warranty, but contains
additional terms and conditions which are unacceptable to the District.
The decisions of the Branch Director of Purchasing shall be final.)
8. ACCEPTABLE OR REJECTION OF BID - Bid shall remain open and valid for sixty
(60) days after the Bid opening date unless otherwise stipulated and may
be accepted without further written notice by the Board of Education at a
public meeting; upon mutual agreement by the District and the Bidder, the
sixty (60) day period may be extended. The Bidder may withdraw their Bid
at any time before the Bid closing date/time.
9. SAMPLES - The District may reject the Bid of Bidder failing to submit
samples as requested. Samples shall be furnished free of cost and shall be
submitted when requested in the Bid to the Purchasing Branch location as
indicated. Samples should be plainly marked with name of Bidder, Bid
Number and date of Bid Closing. Samples of successful Bidder may be
retained for comparison with deliveries. Bidder may pick up samples (if
not destroyed by test) on notice from the Purchasing Branch. Within thirty
(30) calendar days after date of such notice, samples not picked up will
be disposed of by the District. Suppliers (or its agent) assumes all risks
of loss or damage to sample.
10. AWARDS OF CONTRACT - If an award is made on a Bid, the Contract will be
awarded according to the authority granted the Board of Education of the
Los Angeles Unified School District under California Law (e.g., the Public
Contract Code, Education Code, Government Code). Ordinarily, Contracts are
awarded to the lowest responsible bidder. However, certain statutes,
(e.g., Education Code Sections 39645 and 39802) authorize award for
certain Contracts to other than the lowest responsible Bidder, at the
discretion of the Board of Education. The Board of Education reserves the
right to award in accordance with flee fullest authority granted it under
State Law.
Moreover, certain Contracts are designed to be awarded to the lowest or
best bidder on specific items or parts. In such situations, this intention
is delineated in the Bid documents. Bidder is cautioned and urged to pay
specific attention to all the terms and conditions in the Bid documents
pertaining to such award (and all other matters).
11. FORCE MAJEURE CLAUSE - The parties to the Contract shall be excused from
performance during the time and to the extent that they are prevented from
obtaining, delivering or performing by act of God, fire, strike, loss or
shortage of transportation facilities, lockout, or commandeering of
materials, products, plants or facilities by the government, when
satisfactory evidence thereof is presented to the other party, provided
that it is satisfactorily established that the non-performance is not due
to the fault or neglect of the party not performing.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -B-
<PAGE> 26
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
Upon issuance of an award, the Contractor shall as part of subject
Contract, establish lines of communication which shall require the
Contractor and/or principal subcontractor to issue notices of strikes or
other work stoppages within 24 hours of the occurrence of such events.
Failure of the Contractor to notify the District of the occurrence of such
situations within 24 hours of notification by the principal
subcontractor(s) shall entitle the District to pursue such remedies as are
available under the provisions of the Contract.
12. SAFETY AND SECURITY - It shall be the responsibility of the Contractor to
ascertain the District Branch or Office, under whose direction the service
shall be performed. The rules and regulations pertaining to safe driving
on school grounds, particularly when students and children are present
must be adhered to. The Contractor's drivers shall exercise extreme
caution at all times.
Drivers entering school premises when school is not in session shall lock
any gate or door to which they have access, both when entering and/or
leaving the grounds. Gate keys, as may he required, will he furnished by
the District Branch or Office supervising the service. Any unusual
condition noted by drivers, such as gates or doors found unlocked or open
or evidence of vandalism, should he reported to the School Police
Department of the Los Angeles Unified School District, Tel: (213) 625-6631
(24 -hour telephone number)
13. HOLD HARMLESS CLAUSES - The Contractor shall hold harmless and indemnify
the District and the Board of Education of the City of Los Angeles, its
officers and employees from every claim or demand which may be made by
reason of:
(a) Any injury to person or property sustained by the Contractor or by
any person, firm, or corporation, employed directly or indirectly by
them upon or in connection with his performance under the Contract,
however caused, unless such injury is caused by the negligence or
willful misconduct of the District.
(b) Any injury to person or property sustained by any person, firm or
corporation, caused by any act, neglect, default, or omission of the
Contractor or of any person, firm, or corporation, indirectly
employed by them upon or in connection with his performance under
the Contract.
(c) Any liability that may arise from the furnishing or use of any
copyrighted composition, or patented invention, under this Contract.
It is the intent of the District to adhere to the provisions of the
copyright laws; this hold harmless shall not apply to any claim by
Contractor that District has infringed a patent or copyright of
Contractor.
The Contractor at their own expense and risk shall defend any legal
proceeding that may be brought against the District or the Board on any
such claim or demand, and satisfy any judgment that may be rendered
against the District or the Board therein. With respect to claims of
patent or copyright infringement, the District agrees to give Contractor
notice of any such claim and to fully cooperate with Contractor in the
defense and all related settlement negotiations.
14. INSURANCE - The Contractor shall maintain adequate insurance for Worker's
Compensation claims for personal injury claims including death and for
property damage claims which may arise from operations under the Contract.
On leased or rented machines, the Contractor shall also maintain insurance
adequate to cover any losses due to vandalism, theft, fire or water
damage.
The contractor shall be required to file with the District certifications
of such insurance. Failure to furnish such evidence, may be considered
default by the Contractor.
15. PERMIT AND LICENSES - The Contractor and all their employees or agents
shall secure and maintain in force such licenses and permits as are
required by law in connection with the furnishing of materials, articles
or services required for performance hereunder. All operations and
materials shall be governed by the laws of the State of California.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -C-
<PAGE> 27
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
16. CONTRACTOR, NOT OFFICER, EMPLOYEE OR AGENT OF THE DISTRICT - While engaged
in carrying out and complying with the terms and conditions of the
Contract, the Contractor is an independent Contractor and not an officer,
employee or agent of the District.
17. TOLL CHARGES - - If it is necessary that the District place toll or long
distance telephone calls in connection therewith (for complaints,
adjustments, shortages, failure to deliver, etc.), the Contractor shall
accept all charges for such calls on a reverse charge basis.
18. INVOICES AND PAYMENTS - Unless otherwise specified the Contractor shall
submit invoices in duplicate on a form acceptable to the District, to the
Financial Services Division, Accounts Payable Section, P.O. Box 54306, Los
Angeles, California 90054. All invoices shall reference the District
purchase order/Contract number.
The District shall pay only the California Sales, Use Tax, and/or the Los
Angeles County Uniform Local Sales and Use Tax on the prices (rates), when
applicable and listed separately on the invoice. School Districts are
exempt from the Federal Excise Tax. The District, upon request, shall
furnish the Contractor a Federal Tax Exemption Certificate. Any new or
additional tax not in effect at the time of the Bid but in effect during
the Contract period shall be paid by the District.
The supplier shall list separately any taxes payable by the District and
shall certify on the invoices that the Federal Excise Tax is not included.
The District shall make payment for materials, supplies, or services
furnished under the Contract within a reasonable and proper time after
acceptance thereof and approval of the invoices by the authorized District
Representative. Late payment by the District shall not constitute a
material breach of any Contract resulting from the Bid.
All Cash Discounts shall be taken and computed from the date of delivery
of acceptable material or the date of receipt of the invoice, whichever is
the later.
In any Contract or purchase order resulting from the Bid, the District
will reserve the right to withhold payment as a set off against amounts
due or to become due to the District resulting from any other Contracts or
purchase orders entered into with the same Contractor.
19. TAXABLE INTEREST - In accordance with Section 107.6, California Revenue
and Taxation Code, the Contractor is hereby notified that a possessory
interest subject to property taxation may be created by this Contract;
that such property interest may be subject to property taxation if created
and that the party in whom the possessory interest is vested may be
subject to the payment of property taxes levied on such interest.
20. TITLE - At the option of the vendor, title may pass to the District on
acceptance by the District or may pass to the District for each item of
equipment on the date of shipment form the Contractor or on the date
Contractor receives the District's order for its purchase, whichever is
later. During the period the equipment is in transit, the Contractor and
its insurers, if any, relieves the District of responsibility for all
risks of loss or damage.
21. SECURITY INTEREST - To the extent permitted by law, the Contractor may
reserve a purchase money security interest in each item of equipment. This
interest will be satisfied by payment in full hereunder and, in addition,
when applicable, by the return to Contractor by the District of parts in
respect to additions or conversions that involve the removal of parts
which become the property of the Contractor. The District agrees to sign
appropriate documents to permit the Contractor to perfect any security
interest it might be entitled to by law.
22. GENERAL - The complete Contract includes the following documents: The
advertisement for Bids, the Bid and General Contract Conditions, the
Specifications, the Bid of the Contractor and its acceptance by the
District, the Contract, and the Performance Guarantee (if applicable), and
all amendments thereto. Any of these documents shall be interpreted to
include all provisions of the other documents as though fully set out
therein.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -D-
<PAGE> 28
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
This Contract and any amendments, addenda or purchase orders issued
hereunder by the District shall be the complete and exclusive Contract
between District and vendor.
The District hereby certifies and represents that as of the date of award
of a Contract pursuant to these specifications, the equipment to be
purchased hereunder is intended for the use of District's officers and
employees for school purposes and is not purchased with the intention to
resell the equipment.
If any provision or provisions of this Contract shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
effected or impaired thereby.
23. FAIR EMPLOYMENT PRACTICES ADDENDUM - In the performance of this Contract,
the Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, ancestry, sex, age, handicap
or national origin. The Contractor will take affirmative action to ensure
that applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, ancestry, sex,
age, handicap or national origin. Such action shall include, but not be
limited to, the following: employment, promotion, demotion or transfer;
recruitment or recruitment advertising, layoff or termination; rates of
pay or other forms of compensation; and selection for training, including
apprenticeship. The Contractor shall post in conspicuous places, available
to employees and applicants for employment, notices setting forth the
provisions of this Fair Employment Practices Section.
The Contractor will permit access to their records of employment,
employment advertisements, application forms, and other pertinent
information and records by the Affirmative Action/Title IX Programs
Section for the purposes of investigation to ascertain compliance with the
Fair Employment Practices Section of this Contract.
Willful violation
The District may determine a willful violation of the Fair Employment
Practices Provision to have occurred upon receipt of a final judgment
having that effect from a court in an action to which Contractor was a
party, or upon receipt of a written notice from the Department of Fair
Employment and Housing that it has investigated and determined that the
Contractor has violated the Fair Employment Practices Act and has issued
an order, under Labor Code Section 1426, which has become final, or
obtained an injunction under Labor Code Section 1426.
For willful violation of this Fair Employment Practices Provision, the
District shall have the right to terminate this Contract either in whole
or in part, and any loss or damage sustained by the District in securing
the goods or services hereunder the Performance Guarantee, if any, and the
District may deduct from any monies due or that thereafter may become due
to the Contractor, the difference between else price named in the Contract
and the actual cost (fair market value) thereof to the District.
24. CALIFORNIA LAW - This agreement is to be construed and interpreted in
accordance with California Law. With respect to statutory references that
may be set forth in the Contract documents, the District has attempted to
the best of its ability to have such references accurate and current.
Because of the possibility of legislative changes, not reflected herein,
however, Bidder is hereby expressly informed that all statutory references
may be subject to change or renumbering and that the Contract will be
deemed to incorporate and follow the specific statutes referred to herein,
as amended, revised, or renumbered.
25. EXECUTION OF CONTRACT - The Contractor shall return the Contract,
completely executed to the District's Contract and Insurance Services
Branch, P.O. Box 512298, Los Angeles, California 90051, within fifteen
(15) days of receipt of the Contract documents.
26. PERFORMANCE GUARANTEE - The Contractor shall be required to provide a
performance guarantee at the time of execution of the Contract, (if
applicable) in the form of a cashier's or certified check, a certificate
of deposit or a performance bond for awards during the first Contract
period (12 months) plus 120 days to cover service/
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -E-
<PAGE> 29
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
deliveries ordered before but performed after the Contract expiration
date, in an amount equal to 25% of the total cost for the annual period.
The guarantee shall be effective for the first Contract period and shall
be renewed for each subsequent 12 months period.
Failure to promptly submit the required performance guarantee within ten
(10) calendar days of notification may result in the initiation of a
default action against the successful Bidder.
27. ASSIGNMENT OF CONTRACT - The Contractor shall not assign or transfer by
operation of law or otherwise any or all of its rights, burdens, duties or
obligations without the prior written consent of the Board of Education of
the Los Angeles Unified School District, and of the surety on Contract
bond, if any. Should the Contractor be allowed to assign any Contract
awarded, any such assignment shall not operate to increase the cost nor to
reduce the obligations owed to the District. The District will not enter
into a separate agreement with the assignee.
28. EQUIPMENT AND LABOR - The Contractor shall furnish all tools, equipment,
apparatus, facilities, transportation, labor and material necessary to
furnish the service herein described, the service to be performed at such
times and places as directed by and subject to the approval of the
authorized District representative indicated in the specifications.
29. SUB-CONTRACTORS - Sub-contractors, if any, engaged by the Contractor for
the Contractor shall be subject to the approval of the District. The
Contractor shall be held responsible for all operations of subcontractors
and shall require them to maintain adequate Worker's Compensation and
Public Liability Insurance.
30. DEFAULT BY CONTRACTOR - The District shall hold the Contractor liable and
responsible for all damages which may be sustained because of the failure
or neglect of the Contractor to comply with any term or condition listed
herein, it being specifically provided and agreed that time is of the
essence in the Contract performance.
If the Contractor fails or neglects to furnish any of the supplies or
services listed herein at the prices named and at the time and places
herein stated or otherwise fails or neglects to comply with the terms of
the Contract the District may upon written notice to the Contractor cancel
the Contract in its entirety or cancel or rescind any or all items
affected by such default, and may, whether or not the Contract is canceled
in whole or in part, procure supplies or services elsewhere without notice
to the Contractor. The prices paid by the District at the time such
supplies or services are procured shall be considered the prevailing
market prices. Any extra cost incurred by such default shall be collected
by the District from the Contractor and the performance guarantee, if any.
31. CONTRACT EXTENSION - Unless otherwise stated any Contract resulting from
this Bid may be extended in accordance with applicable legal provisions at
the same terms and conditions upon mutual agreement of the parties.
32. SPECIAL PURCHASES - The District reserves the right to acquire from other
sources during the life of the Contract such items as may be required for
testing, evaluation, experimental purposes, emergency needs, or small
purchases made by individual schools.
33. DISTRICT NAME MAY NOT BE USED - The name and/ or logo of the District or
any school of the District may not be used in any advertisements or other
communications which may convey the impression that the District
authorizes the solicitation and/or that there may be some connection
between the District and the contractor.
34. DISTRICT PURCHASING RIGHT - Individual schools and offices reserve the
right to purchase similar or the same items from other sources through the
Imprest Fund and/or School Purchase Orders.
35. CHILD AND/OR ANTI-SLAVE LABOR RIGHTS/LAWS - It is the District s policy to
only purchase products that have been manufactured without the illegal use
of child and/or forced convict or indentured labor. All goods provided to
the District shall be manufactured in strict compliance with all
applicable child and anti-slave labor laws of this or other countries of
origin.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -F-
<PAGE> 30
LOS ANGELES UNIFIED SCHOOL DISTRICT
GENERAL BID AND CONTRACT CONDITIONS - continued
WILLFUL VIOLATION - Should the District determine that willful violation
of child and/or anti-slave labor rights/laws have occurred the District
shall have the right to terminate this contract either in whole or in part
and obtain the goods elsewhere. Any loss or damage sustained by the
District in securing the goods hereunder may be deducted from any moneys
due or that thereafter become due to the Contractor. Such deduction shall
be the difference between the price named in the contract and the actual
cost thereof to the District. Additional sanctions prescribed by law or
board policy may similarly be applied.
GENERAL CONTRACT CONDITIONS
Revised (03/27/97) -G-
<PAGE> 1
EXHIBIT 10.15
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made November 10, 1997, by and among AIRXCEL,
INC., a Delaware corporation (the "Company") and T. K. Sellers, Jr. (the
"Executive").
WHEREAS, the Company, its parent corporation and CA Holding Company
(formerly Crispaire Corporation and referred to herein as "Crispaire") are
parties to an Asset Purchase Agreement effective October 17, 1997 (the
"Agreement"), and
WHEREAS, it is a condition precedent to the Company's obligations
under the Agreement that the Executive shall have entered into this Agreement
with the Company,
NOW, THEREFORE, in consideration of the employment and in further
consideration of these mutual covenants and agreements, the parties hereto, each
intending to be bound, covenant and agree as follows.
1. Definitions. In this Agreement:
"Board" means the board of directors of Holdco.
"Cause" means (i) a material breach of the Executive's covenants
under this Agreement or of any statutory or common law duty of loyalty to the
Company which, if capable of cure, is not cured within 15 days of the Executive
receiving written notice thereof; (ii) the commission by the Executive of a
felony, or any crime involving theft, dishonesty or moral turpitude or other act
causing material harm to the standing or reputation of the Company; (iii) the
commission by the Executive of act(s) or omission(s) which have or are likely to
have a material adverse effect on the business, operations, financial condition
or reputation of the Company; or (iv) any material misrepresentation or material
non-disclosure by the Executive to the Board. For purposes hereof, the Board
shall determine in its reasonable discretion and consistent with the foregoing,
which acts or omissions constitute "Cause."
"Disability" means the inability, due to illness, accident, injury,
physical or mental incapacity or other disability, of the Executive to carry out
effectively his duties and obligations to the Company or to participate
effectively and actively in the management of the Company or a Subsidiary of the
Company for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any
twelve-month period, as determined in the reasonable judgment of the President.
"Holdco" means Airxcel Holdings, Inc., a Delaware corporation and
the parent corporation of the Company.
"Person" means any individual, corporation, partnership, firm,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government body or other entity.
<PAGE> 2
"President" means the president of Holdco.
"Stock Plan"means the RVP Products Holding Corp. 1997 Stock Option
Plan of Holdco, as amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation of
which in excess of 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether any other class or classes of capital stock of such
corporation may have such voting power by reason of the happening of any
contingency) is directly or indirectly owned by such Person and/or one or more
Subsidiaries of such Person.
2. Employment.
(a) Agreement. The Company agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this agreement for the period beginning on the date
hereof and ending as provided in Section 4(a) (the "Employment Period"). The
Executive represents and warrants to the Company that there are no agreements or
arrangements, whether written or oral, in effect which would prevent him from
rendering services to the Company or which would be violated as a result of his
performance hereunder in accordance with the terms hereof.
(b) Position and Duties. During the Employment Period, the Executive
shall serve as Vice-President, Administration of the "Crispaire" division of the
Company under the supervision and direction of George Wyers , or his successor
as head of the "Crispaire" division. The Executive shall serve as an officer of
the Company in the Company's Crispaire division, and shall exercise such
authority and perform such duties as are commensurate with the authority
generally exercised and duties generally performed by the Executive for
Crispaire immediately prior to November 5, 1997. A general description of the
Executive's authority and duties is included in Exhibit A attached hereto and
incorporated herein by this reference. The Executive shall be required to
perform duties and services only at the location where the Executive was
employed immediately prior to November 5, 1997 or at such other mutually
acceptable location. The Executive shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company including, but not limited to, its day to day operations. The
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner. Nothing
herein shall prevent the Executive from attending to the winding-up of the
business and affairs of Crispaire.
3. Base Salary and Benefits.
(a) Base Salary. During the Employment Period, the Executive's base
salary shall be Sellers $60,840 per annum, subject to annual increases as George
Wyers, or his successor as head of the "Crispaire" division of the Company may
in his discretion determine in December of each year, beginning December 1997
(the "Base Salary"), which salary shall be payable in regular
2
<PAGE> 3
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding.
(b) Bonus. During the Employment Period, the Executive will be
eligible for an annual performance bonus ("Bonus") for each fiscal year ending
on or after December 31, 1997 payable within seventy-five (75) days following
the close of such fiscal year computed as provided in Exhibit B attached hereto
and incorporated herein by reference.
(c) Other Benefits. During the Employment Period, the Executive
shall also be covered by the Company's standard benefits package available to
all similarly situated employees as now existing or as may be hereafter revised.
(d) Stock Plan. The Executive shall be entitled to participate in
the Stock Plan.
4. Term and Severance.
(a) Term. The Employment Period shall end on the earlier of (i)
October 31, 2000, (ii) the Executive's death or, at the Company's option and
upon notice to the Executive, the Executive's Disability, (iii) the actual
termination date following the voluntary termination by the Executive pursuant
to Section 4(e) below or (iv) the actual termination date following a resolution
of the Board terminating the Executive with or without Cause.
(b) Termination for Cause. Subject to Section 7(d), if the
Employment Period is terminated by the Company for Cause, the Executive shall be
entitled to receive a pro-rated portion of the Bonus for that year based on the
number of days actually employed during the fiscal year (payable as and when
such Bonus would have been determined but for the termination) and shall receive
as severance compensation his Base Salary and other benefits (excluding any
Bonus) during the 3 months following the date of such termination.
(c) Termination Without Cause. If the Employment Period is
terminated by the Company without Cause, the Executive shall be entitled to a
prorated portion of his bonus based on the number of days actually employed
during the fiscal year (payable as and when such Bonus would have been
determined but for the termination) and shall receive as severance compensation
his Base Salary and other benefits (including any Bonus) during the period
through October 31, 2000.
(d) Death or Disability. If the Executive's employment is terminated
as a result of his death or Disability, the Company shall pay to the Executive
or his estate, as applicable, (i) all previously earned and accrued Base Salary,
(ii) a pro-rated portion of the Bonus based upon the number of days actually
employed during the fiscal year in which such termination occurred (payable as
and when such Bonus would have been determined but for the termination), and
(iii) his Base Salary and other benefits (excluding any Bonus) during the 3
months following the date of such termination.
3
<PAGE> 4
(e) Resignation. The Executive agrees that no severance compensation
shall be payable in the event of termination by resignation; provided that the
Executive shall be entitled to Base Salary and other benefits (including a
pro-rated portion of the Bonus based upon the number of days actually employed
during the fiscal year in which such termination occurred payable as and when
such Bonus would have been determined but for the termination) through the
actual termination date following the resignation. The Executive may terminate
his employment with the Company at any time during the Employment Period upon
two weeks' prior written notice to the Board. During the two week period after
such notice, the Executive shall continue his employment in accordance herewith
until an actual termination date as notified to the Executive by the Board,
which date shall be no later than the last day of such two-week period. The
Executive shall obtain the agreement of any Person offering to employ him any
time during the period prior to his termination under this Section 4(e), that,
and the Executive agrees that, during such period, that Person shall not
disclose to third parties, including any of its employees who do not then have
an immediate need to know, that it has agreed to employ the Executive.
(f) No Further Obligations. The Executive acknowledges that the
payments referred to in this Section 4 constitute the only payments which the
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment and that except for such payments the
Company shall not have any further liability or obligation to him (or his legal
representative, as the case may be) hereunder or otherwise in respect of his
employment. Nothing herein shall affect any requirement or benefit under COBRA,
HIPA, ERISA or any retirement or other benefit plan available to the Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him in the course of his
employment by the Company concerning the business or affairs of the Company or
any of its Subsidiaries ("Confidential Information") are the property of the
Company or such Subsidiary. The Executive agrees that he will not disclose to
any unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of the Executive's acts or omissions to act.
The Executive shall deliver to the Company at the termination of such
Executive's employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) and the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. The Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by the Executive in the course of his employment by the
Company or any of its Subsidiaries ("Work Product") belong to the Company or
such Subsidiary. The Executive will promptly disclose such Work Product to Wyers
or his successor as head of the "Crispaire" division of the Company or the Board
and, at no expense to the Executive perform all
4
<PAGE> 5
actions reasonably requested by Wyers or his successor as head of the
"Crispaire" division or the Board (whether during or after the Executive's
employment period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
7. Nonsolicitation.
(a) During the period of six months after any termination of the
Executive's employment (the "Nonsoliciation Period"), the Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person (other
than persons employed in a clerical or non-professional position) who was an
employee of the Company or any Subsidiary within the six month period preceding
the date of such hiring, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary.
(b) If, at the time of enforcement of this Section 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(c) In the event of a breach or a threatened breach by Executive of
any of the provisions of this Section 7, the Company, in addition and
supplementary to any other rights and remedies existing in its favor, may apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof. Without limiting the Company's other remedies, in the
event of the Executive's breach of any of the covenants in this Section 7, as
determined by a court of competent jurisdiction, the Company will have no
further obligation to pay any of the amounts payable by it pursuant to Sections
3 or 4.
(d) In the event of a breach of any of the Company's monetary
obligations under this Agreement, as determined by a court of competent
jurisdiction, the Executive shall not be bound by this Section 7.
8. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient. Such notices, demands and other communications will be sent to
the address indicated below:
5
<PAGE> 6
To the Company:
Airxcel, Inc.
3050 North Frances Street
Wichita, Kansas 67204
Attention: Mel Adams
Fax: (316)832-3482
With a copy to (which shall not constitute notice):
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke, Esq.
Fax: (212) 446-4900
To the Executive:
T.K. Sellers, Jr.
1833 Lullwater Road
Albany, GA 31707
With a copy to (which shall not constitute notice):
Bovis, Kyle & Burch, L.L.C.
53 Perimeter Center East
Third Floor
Atlanta, GA 30346-2298
Attention: Greg Gale, Esq.
Fax: (770) 668-0878
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
9. Miscellaneous.
(a) Survival. The representations and warranties made herein survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other
6
<PAGE> 7
provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. As of the Effective Date, this Agreement
embodies the complete agreement and understanding among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
counterparts which taken together constitute one agreement.
(e) Governing Law. The construction, validity and interpretation of
this Agreement will be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(f) Remedies. Each of the parties hereto is entitled to enforce its
rights hereunder specifically, to recover damages and costs (including
reasonable attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor hereunder or at
law. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any breach hereof.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
AIRXCEL, INC.
By:
---------------------------------------
Its:
------------------------------------------
T.K. SELLERS, JR.
7
<PAGE> 1
EXHIBIT 10.16
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made November 10, 1997, by and among AIRXCEL,
INC., a Delaware corporation (the "Company") and George D. Wyers (the
"Executive").
WHEREAS, the Company, its parent corporation and CA Holding Company
(formerly Crispaire Corporation and referred to herein as "Crispaire") are
parties to an Asset Purchase Agreement effective October 17, 1997 (the
"Agreement"), and
WHEREAS, it is a condition precedent to the Company's obligations
under the Agreement that the Executive shall have entered into this Agreement
with the Company,
NOW, THEREFORE, in consideration of the employment and in further
consideration of these mutual covenants and agreements, the parties hereto, each
intending to be bound, covenant and agree as follows.
1. Definitions. In this Agreement:
"Board" means the board of directors of Holdco.
"Cause" means (i) a material breach of the Executive's covenants
under this Agreement or of any statutory or common law duty of loyalty to the
Company which, if capable of cure, is not cured within 15 days of the Executive
receiving written notice thereof; (ii) the commission by the Executive of a
felony, or any crime involving theft, dishonesty or moral turpitude or other act
causing material harm to the standing or reputation of the Company; (iii) the
commission by the Executive of act(s) or omission(s) which have or are likely to
have a material adverse effect on the business, operations, financial condition
or reputation of the Company; or (iv) any material misrepresentation or material
non-disclosure by the Executive to the Board. For purposes hereof, the Board
shall determine in its reasonable discretion and consistent with the foregoing,
which acts or omissions constitute "Cause."
"Disability" means the inability, due to illness, accident, injury,
physical or mental incapacity or other disability, of the Executive to carry out
effectively his duties and obligations to the Company or to participate
effectively and actively in the management of the Company or a Subsidiary of the
Company for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any
twelve-month period, as determined in the reasonable judgment of the President.
"Holdco" means Airxcel Holdings, Inc., a Delaware corporation and
the parent corporation of the Company.
"Person" means any individual, corporation, partnership, firm,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government body or other entity.
<PAGE> 2
"President" means the president of Holdco.
"Stock Plan" means the RVP Products Holding Corp. 1997 Stock Option
Plan of Holdco, as amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation of
which in excess of 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether any other class or classes of capital stock of such
corporation may have such voting power by reason of the happening of any
contingency) is directly or indirectly owned by such Person and/or one or more
Subsidiaries of such Person.
2. Employment.
(a) Agreement. The Company agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this agreement for the period beginning on the date
hereof and ending as provided in Section 4(a) (the "Employment Period"). The
Executive represents and warrants to the Company that there are no agreements or
arrangements, whether written or oral, in effect which would prevent him from
rendering services to the Company or which would be violated as a result of his
performance hereunder in accordance with the terms hereof.
(b) Position and Duties. During the Employment Period, the Executive
shall serve as President of the "Crispaire" division of the Company under the
supervision and direction of the President of the Company and the Board. The
Executive shall serve as an officer of the Company in the Company's Crispaire
division, and shall exercise such authority and perform such duties as are
commensurate with the authority generally exercised and duties generally
performed by the Executive for Crispaire immediately prior to November 5, 1997.
A general description of the Executive's authority and duties is included in
Exhibit A attached hereto and incorporated herein by this reference. The
Executive shall be required to perform duties and services only at the location
where the Executive was employed immediately prior to November 5, 1997 or at
such other mutually acceptable location. The Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company including, but not limited to, its day to day
operations. The Executive shall perform his duties and responsibilities to the
best of his abilities in a diligent, trustworthy, businesslike and efficient
manner. Nothing herein shall prevent the Executive from attending to the
winding-up of the business and affairs of Crispaire.
3. Base Salary and Benefits.
(a) Base Salary. During the Employment Period, the Executive's base
salary shall be Wyers $200,000 per annum, subject to annual increases as the
Board may in its discretion determine in December of each year, beginning
December 1997 (the "Base Salary"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding.
2
<PAGE> 3
(b) Bonus. During the Employment Period, the Executive will be
eligible for an annual performance bonus ("Bonus") for each fiscal year ending
on or after December 31, 1997 payable within seventy-five (75) days following
the close of such fiscal year computed as provided in Exhibit B attached hereto
and incorporated herein by reference.
(c) Other Benefits. During the Employment Period, the Executive
shall also be covered by the Company's standard benefits package available to
all similarly situated employees as now existing or as may be hereafter revised.
(d) Stock Plan. The Executive shall be entitled to participate in
the Stock Plan.
4. Term and Severance.
(a) Term. The Employment Period shall end on the earlier of (i)
October 31, 2000, (ii) the Executive's death or, at the Company's option and
upon notice to the Executive, the Executive's Disability, (iii) the actual
termination date following the voluntary termination by the Executive pursuant
to Section 4(e) below or (iv) the actual termination date following a resolution
of the Board terminating the Executive with or without Cause.
(b) Termination for Cause. Subject to Section 7(d), if the
Employment Period is terminated by the Company for Cause, the Executive shall be
entitled to receive a pro-rated portion of the Bonus for that year based on the
number of days actually employed during the fiscal year (payable as and when
such Bonus would have been determined but for the termination) and shall receive
as severance compensation his Base Salary and other benefits (excluding any
Bonus) during the 3 months following the date of such termination.
(c) Termination Without Cause. If the Employment Period is
terminated by the Company without Cause, the Executive shall be entitled to a
prorated portion of his bonus based on the number of days actually employed
during the fiscal year (payable as and when such Bonus would have been
determined but for the termination) and shall receive as severance compensation
his Base Salary and other benefits (including any Bonus) during the period
through October 31, 2000.
(d) Death or Disability. If the Executive's employment is terminated
as a result of his death or Disability, the Company shall pay to the Executive
or his estate, as applicable, (i) all previously earned and accrued Base Salary,
(ii) a pro-rated portion of the Bonus based upon the number of days actually
employed during the fiscal year in which such termination occurred (payable as
and when such Bonus would have been determined but for the termination), and
(iii) his Base Salary and other benefits (excluding any Bonus) during the 3
months following the date of such termination.
(e) Resignation. The Executive agrees that no severance compensation
shall be payable in the event of termination by resignation; provided that the
Executive shall be entitled to Base Salary and other benefits (including a
pro-rated portion of the Bonus based upon the number
3
<PAGE> 4
of days actually employed during the fiscal year in which such termination
occurred payable as and when such Bonus would have been determined but for the
termination) through the actual termination date following the resignation. The
Executive may terminate his employment with the Company at any time during the
Employment Period upon six months' prior written notice to the Board. During the
six month period after such notice, the Executive shall continue his employment
in accordance herewith until an actual termination date as notified to the
Executive by the Board, which date shall be no later than the last day of such
six-month period. The Executive shall obtain the agreement of any Person
offering to employ him any time during the period prior to his termination under
this Section 4(e), that, and the Executive agrees that, during such period, that
Person shall not disclose to third parties, including any of its employees who
do not then have an immediate need to know, that it has agreed to employ the
Executive.
(f) No Further Obligations. The Executive acknowledges that the
payments referred to in this Section 4 constitute the only payments which the
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment and that except for such payments the
Company shall not have any further liability or obligation to him (or his legal
representative, as the case may be) hereunder or otherwise in respect of his
employment. Nothing herein shall affect any requirement or benefit under COBRA,
HIPA, ERISA or any retirement or other benefit plan available to the Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him in the course of his
employment by the Company concerning the business or affairs of the Company or
any of its Subsidiaries ("Confidential Information") are the property of the
Company or such Subsidiary. The Executive agrees that he will not disclose to
any unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of the Executive's acts or omissions to act.
The Executive shall deliver to the Company at the termination of such
Executive's employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) and the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. The Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by the Executive in the course of his employment by the
Company or any of its Subsidiaries ("Work Product") belong to the Company or
such Subsidiary. The Executive will promptly disclose such Work Product to the
Board and, at no expense to the Executive perform all actions reasonably
requested by the Board (whether during or after the Executive's employment
period) to establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
4
<PAGE> 5
7. Noncompete, Nonsolicitation.
(a) The Executive acknowledges that in the course of his employment
with the Company and its Subsidiaries he has become familiar, and he will become
familiar, with the Company's and its Subsidiaries' trade secrets and with other
Confidential Information and that his services have been and will be of special,
unique and extraordinary value to the Company and its Subsidiaries. Therefore,
the Executive agrees that, during the time he is employed by the Company and its
Subsidiaries and for 2 years after any voluntary termination, termination
without Cause, or termination for Cause of the Executive's employment (the
"Noncompete Period"), he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business (including by himself or through any other entity) competing with
the businesses of the Company or its Subsidiaries as such businesses exist or
are in process on the date of the termination of the Executive's employment,
within any geographical area in which the Company or its Subsidiaries engage or
plan to engage in such businesses.
(b) During the Noncompete Period, the Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of the Company or any Subsidiary to leave the employ of the Company or
such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person (other
than persons employed in a clerical or non-professional position) who was an
employee of the Company or any Subsidiary within the six month period preceding
the date of such hiring, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary.
(c) If, at the time of enforcement of this Section 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(d) In the event of a breach or a threatened breach by Executive of
any of the provisions of this Section 7, the Company, in addition and
supplementary to any other rights and remedies existing in its favor, may apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof. Without limiting the Company's other remedies, in the
event of the Executive's breach of any of the covenants in this Section 7, as
determined by a court of competent jurisdiction, the Company will have no
further obligation to pay any of the amounts payable by it pursuant to Sections
3 or 4.
(e) In the event of a breach of any of the Company's monetary
obligations under this Agreement, as determined by a court of competent
jurisdiction, the Executive shall not be bound by this Section 7.
5
<PAGE> 6
8. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient. Such notices, demands and other communications will be sent to
the address indicated below:
To the Company:
Airxcel, Inc.
3050 North Frances Street
Wichita, Kansas 67204
Attention: Mel Adams
Fax: (316)832-3482
With a copy to (which shall not constitute notice):
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke, Esq.
Fax: (212) 446-4900
To the Executive:
George D. Wyers
5105 Lakeside Drive
Atlanta, GA 30360
With a copy to (which shall not constitute notice):
Bovis, Kyle & Burch, L.L.C.
53 Perimeter Center East
Third Floor
Atlanta, GA 30346-2298
Attention: Greg Gale, Esq.
Fax: (770) 668-0878
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
9. Miscellaneous.
6
<PAGE> 7
(a) Survival. The representations and warranties made herein survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. As of the Effective Date, this Agreement
embodies the complete agreement and understanding among the parties and
supersedes any prior under standings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
counterparts which taken together constitute one agreement.
(e) Governing Law. The construction, validity and interpretation of
this Agreement will be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(f) Remedies. Each of the parties hereto is entitled to enforce its
rights hereunder specifically, to recover damages and costs (including
reasonable attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor hereunder or at
law. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any breach hereof.
* * * * *
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
AIRXCEL, INC.
By:
---------------------------------------
Its:
------------------------------------------
GEORGE D. WYERS
<PAGE> 1
EXHIBIT 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made November 10, 1997, by and among AIRXCEL,
INC., a Delaware corporation (the "Company") and David Shuford (the
"Executive").
WHEREAS, the Company, its parent corporation and CA Holding Company
(formerly Crispaire Corporation and referred to herein as "Crispaire") are
parties to an Asset Purchase Agreement effective October 17, 1997 (the
"Agreement"), and
WHEREAS, it is a condition precedent to the Company's obligations
under the Agreement that the Executive shall have entered into this Agreement
with the Company,
NOW, THEREFORE, in consideration of the employment and in further
consideration of these mutual covenants and agreements, the parties hereto, each
intending to be bound, covenant and agree as follows.
1. Definitions. In this Agreement:
"Board" means the board of directors of Holdco.
"Cause" means (i) a material breach of the Executive's covenants
under this Agreement or of any statutory or common law duty of loyalty to the
Company which, if capable of cure, is not cured within 15 days of the Executive
receiving written notice thereof; (ii) the commission by the Executive of a
felony, or any crime involving theft, dishonesty or moral turpitude or other act
causing material harm to the standing or reputation of the Company; (iii) the
commission by the Executive of act(s) or omission(s) which have or are likely to
have a material adverse effect on the business, operations, financial condition
or reputation of the Company; or (iv) any material misrepresentation or material
non-disclosure by the Executive to the Board. For purposes hereof, the Board
shall determine in its reasonable discretion and consistent with the foregoing,
which acts or omissions constitute "Cause."
"Disability" means the inability, due to illness, accident, injury,
physical or mental incapacity or other disability, of the Executive to carry out
effectively his duties and obligations to the Company or to participate
effectively and actively in the management of the Company or a Subsidiary of the
Company for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any
twelve-month period, as determined in the reasonable judgment of the President.
"Holdco" means Airxcel Holdings, Inc., a Delaware corporation and
the parent corporation of the Company.
"Person" means any individual, corporation, partnership, firm,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government body or other entity.
<PAGE> 2
"President" means the president of Holdco.
"Stock Plan"means the RVP Products Holding Corp. 1997 Stock Option
Plan of Holdco, as amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation of
which in excess of 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether any other class or classes of capital stock of such
corporation may have such voting power by reason of the happening of any
contingency) is directly or indirectly owned by such Person and/or one or more
Subsidiaries of such Person.
2. Employment.
(a) Agreement. The Company agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this agreement for the period beginning on the date
hereof and ending as provided in Section 4(a) (the "Employment Period"). The
Executive represents and warrants to the Company that there are no agreements or
arrangements, whether written or oral, in effect which would prevent him from
rendering services to the Company or which would be violated as a result of his
performance hereunder in accordance with the terms hereof.
(b) Position and Duties. During the Employment Period, the Executive
shall serve as Vice-President, Sales and Marketing of the "Crispaire" division
of the Company under the supervision and direction of George Wyers, or his
successor as the head of the "Crispaire" division. The Executive shall serve as
an officer of the Company in the Company's Crispaire division, and shall
exercise such authority and perform such duties as are commensurate with the
authority generally exercised and duties generally performed by the Executive
for Crispaire immediately prior to November 5, 1997. A general description of
the Executive's authority and duties is included in Exhibit A attached hereto
and incorporated herein by this reference. The Executive shall be required to
perform duties and services only at the location where the Executive was
employed immediately prior to November 5, 1997 or at such other mutually
acceptable location. The Executive shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company including, but not limited to, its day to day operations. The
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner. Nothing
herein shall prevent the Executive from attending to the winding-up of the
business and affairs of Crispaire.
3. Base Salary and Benefits.
(a) Base Salary. During the Employment Period, the Executive's base
salary shall be $93,095.20 per annum, subject to annual increases as George
Wyers, or his successor as the head of the "Crispaire" division may in his
discretion determine in December of each year, beginning December 1997 (the
"Base Salary"), which salary shall be payable in regular installments in
2
<PAGE> 3
accordance with the Company's general payroll practices and shall be subject to
customary withholding.
(b) Bonus. During the Employment Period, the Executive will be
eligible for an annual performance bonus ("Bonus") for each fiscal year ending
on or after December 31, 1997 payable within seventy-five (75) days following
the close of such fiscal year computed as provided in Exhibit B attached hereto
and incorporated herein by reference.
(c) Other Benefits. During the Employment Period, the Executive
shall also be covered by the Company's standard benefits package available to
all similarly situated employees as now existing or as may be hereafter revised.
(d) Stock Plan. The Executive shall be entitled to participate in
the Stock Plan.
4. Term and Severance.
(a) Term. The Employment Period shall end on the earlier of (i)
October 31, 2000, (ii) the Executive's death or, at the Company's option and
upon notice to the Executive, the Executive's Disability, (iii) the actual
termination date following the voluntary termination by the Executive pursuant
to Section 4(e) below or (iv) the actual termination date following a resolution
of the Board terminating the Executive with or without Cause.
(b) Termination for Cause. Subject to Section 7(d), if the
Employment Period is terminated by the Company for Cause, the Executive shall be
entitled to receive a pro-rated portion of the Bonus for that year based on the
number of days actually employed during the fiscal year (payable as and when
such Bonus would have been determined but for the termination) and shall receive
as severance compensation his Base Salary and other benefits (excluding any
Bonus) during the 3 months following the date of such termination.
(c) Termination Without Cause. If the Employment Period is
terminated by the Company without Cause, the Executive shall be entitled to a
prorated portion of his bonus based on the number of days actually employed
during the fiscal year (payable as and when such Bonus would have been
determined but for the termination) and shall receive as severance compensation
his Base Salary and other benefits (including any Bonus) during the period
through October 31, 2000.
(d) Death or Disability. If the Executive's employment is terminated
as a result of his death or Disability, the Company shall pay to the Executive
or his estate, as applicable, (i) all previously earned and accrued Base Salary,
(ii) a pro-rated portion of the Bonus based upon the number of days actually
employed during the fiscal year in which such termination occurred (payable as
and when such Bonus would have been determined but for the termination), and
(iii) his Base Salary and other benefits (excluding any Bonus) during the 3
months following the date of such termination.
3
<PAGE> 4
(e) Resignation. The Executive agrees that no severance compensation
shall be payable in the event of termination by resignation; provided that the
Executive shall be entitled to Base Salary and other benefits (including a
pro-rated portion of the Bonus based upon the number of days actually employed
during the fiscal year in which such termination occurred payable as and when
such Bonus would have been determined but for the termination) through the
actual termination date following the resignation. The Executive may terminate
his employment with the Company at any time during the Employment Period upon
three months' prior written notice to the Board. During the three month period
after such notice, the Executive shall continue his employment in accordance
herewith until an actual termination date as notified to the Executive by the
Board, which date shall be no later than the last day of such three month
period. The Executive shall obtain the agreement of any Person offering to
employ him any time during the period prior to his termination under this
Section 4(e), that, and the Executive agrees that, during such period, that
Person shall not disclose to third parties, including any of its employees who
do not then have an immediate need to know, that it has agreed to employ the
Executive.
(f) No Further Obligations. The Executive acknowledges that the
payments referred to in this Section 4 constitute the only payments which the
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment and that except for such payments the
Company shall not have any further liability or obligation to him (or his legal
representative, as the case may be) hereunder or otherwise in respect of his
employment. Nothing herein shall affect any requirement or benefit under COBRA,
HIPA, ERISA or any retirement or other benefit plan available to the Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him in the course of his
employment by the Company concerning the business or affairs of the Company or
any of its Subsidiaries ("Confidential Information") are the property of the
Company or such Subsidiary. The Executive agrees that he will not disclose to
any unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of the Executive's acts or omissions to act.
The Executive shall deliver to the Company at the termination of such
Executive's employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) and the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. The Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by the Executive in the course of his employment by the
Company or any of its Subsidiaries ("Work Product") belong to the Company or
such Subsidiary. The Executive will promptly disclose such Work Product to
George Wyers or his successor as head of the "Crispaire" division of the Company
or the Board and, at no expense to the Executive perform
4
<PAGE> 5
all actions reasonably requested by George Wyers or his successor as head of the
"Crispaire" division or the Board (whether during or after the Executive's
employment period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
7. Nonsolicitation.
(a) The Executive acknowledges that in the course of his employment
with the Company and its Subsidiaries he has become familiar, and he will become
familiar, with the Company's and its Subsidiaries' trade secrets and with other
Confidential Information and that his services have been and will be of special,
unique and extraordinary value to the Company and its Subsidiaries. Therefore,
the Executive agrees that, during the time he is employed by the Company and its
Subsidiaries and for 2 years after any voluntary termination, termination
without Cause, or termination for Cause of the Executive's employment (the
"Nonsolicitation Period"), the Executive shall not solicit or attempt to divert
or appropriate on behalf of any third party or on the Executive's own behalf,
any business from any customer of the Company with which the Executive had
contact in the course of his employment with Crispaire during the two-year
period prior to the date of termination, for purposes competitive with any
business in which the Company or its Subsidiaries engage or plan to engage.
(b) During the Nonsolicitation Period, the Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person (other
than persons employed in a clerical or non-professional position) who was an
employee of the Company or any Subsidiary within the six month period preceding
the date of such hiring, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company or any Subsidiary
with which the Executive had contact in the course of his employment with
Crispaire during the two year period prior to the date of termination, to cease
doing business with the Company or such Subsidiary, or in any way interfere with
the relationship between any such customer, supplier, licensee or business
relation and the Company or any Subsidiary.
(c) If, at the time of enforcement of this Section 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(d) In the event of a breach or a threatened breach by Executive of
any of the provisions of this Section 7, the Company, in addition and
supplementary to any other rights and remedies existing in its favor, may apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof. Without limiting the Company's other remedies, in the
event of the
5
<PAGE> 6
Executive's breach of any of the covenants in this Section 7, as determined by a
court of competent jurisdiction, the Company will have no further obligation to
pay any of the amounts payable by it pursuant to Sections 3 or 4.
(e) In the event of a breach of any of the Company's monetary
obligations under this Agreement, as determined by a court of competent
jurisdiction, the Executive shall not be bound by this Section 7.
8. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient. Such notices, demands and other communications will be sent to
the address indicated below:
To the Company:
Airxcel, Inc.
3050 North Frances Street
Wichita, Kansas 67204
Attention: Mel Adams
Fax: (316)832-3482
With a copy to (which shall not constitute notice):
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Attention: Kirk A. Radke, Esq.
Fax: (212) 446-4900
To the Executive:
David Shuford
1044 Mt. Paran Road, N.W.
Atlanta, GA 30327
With a copy to (which shall not constitute notice):
Bovis, Kyle & Burch, L.L.C.
53 Perimeter Center East
Third Floor
Atlanta, GA 30346-2298
Attention: Greg Gale, Esq.
6
<PAGE> 7
Fax: (770) 668-0878
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
9. Miscellaneous.
(a) Survival. The representations and warranties made herein survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. As of the Effective Date, this Agreement
embodies the complete agreement and understanding among the parties and
supersedes any prior under standings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
counterparts which taken together constitute one agreement.
(e) Governing Law. The construction, validity and interpretation of
this Agreement will be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(f) Remedies. Each of the parties hereto is entitled to enforce its
rights hereunder specifically, to recover damages and costs (including
reasonable attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor hereunder or at
law. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any breach hereof.
* * * * *
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
AIRXCEL, INC.
By:
---------------------------------------
Its:
------------------------------------------
DAVID SHUFORD
<PAGE> 1
<TABLE>
EXHIBIT 12.1
CRISPAIRE CORPORATION
COMPUTATION OF EARNINGS TO FIXED CHARGES
(Amounts in Thousands, except ratios)
<CAPTION> Seven Months Ended
Year ended October 31, July 31,
---------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes ....... $761 $649 $1,829 $2,287 $3,292 $2,644 $3,853
Fixed Charges .................... 207 199 327 176 198 160 139
---- ---- ------ ------ ------ ------ ------
Earnings ......................... $968 $848 $2,156 $2,463 $3,490 $2,804 $3,992
==== ==== ====== ====== ====== ====== ======
Interest Expense ................. 203 194 160 94 146 127 106
Interest portion
of rent expense ................ 4 5 167 82 52 33 33
---- ---- ------ ------ ------ ------ ------
Fixed Charges .................... $207 $199 $ 327 $ 176 $ 198 $ 160 $ 139
==== ==== ====== ====== ====== ====== ======
Ratio of earnings
to fixed charges ............... 4.7 4.3 6.6 14.0 17.7 17.5 28.7
==== ==== ===== ====== ====== ===== ======
</TABLE>
<TABLE>
AIRXCEL, INC.
COMPUTATION OF EARNINGS TO FIXED CHARGES
(Amounts in Thousands, except ratios)
<CAPTION> Nine Months Ended
Year ended December 31, September 30,
1992 1993 1994 1995 1996 1996 1997 1996 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before income taxes ........... $1,674 $ 138 $5,352 $1,383 $5,968 $5,671 $4,909 $ 735 $1,229 $2,235
Fixed Charges ................... 2,322 2,374 1,369 1,184 2,385 1,241 2,522 10,466 7,725 7,725
------ ------ ------ ------ ------ ------ ------ ------- ------ ------
Earnings ........................ $3,996 $2,512 $6,721 $2,567 $8,353 $6,912 $7,431 $11,201 $8,954 $9,960
====== ====== ====== ====== ====== ====== ====== ======= ====== ======
Interest Expense(1) ............. 2,234 2,273 1,282 1,097 2,273 1,161 2,436 10,300 7,725 7,725
Interest portion of rent expense 88 101 87 87 112 80 86 166 0 0
------ ------ ------ ------ ------ ------ ------ ------- ------ ------
Fixed Charges ................... $2,322 $2,374 $1,369 $1,184 $2,385 $1,241 $2,522 $10,466 $7,725 $7,725
====== ====== ====== ====== ====== ====== ====== ======= ====== ======
Ratio of earnings
to fixed charges............... 1.7 1.1 4.9 2.2 3.5 5.6 2.9 1.1 1.2 1.3
====== ====== ====== ===== ====== ===== ====== ======= ====== ======
(1) Interest expense includes amortization of deferred financing
costs and excludes interest expense related to discontinued
Faulkner manufacturing division.
</TABLE>
<PAGE> 1
Exhibit 21.1
RVP International Sales Corporation
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (File No.
333- ) of our report dated October 17, 1997, except for the information
presented in Note 14 as to which the date is December 24, 1997, on our audits of
the financial statements of Airxcel, Inc. We also consent to the references to
our firm under the caption "Experts", "Summary Historical Financial and Other
Data" and "Selected Financial and Other Data."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
December 24, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 (No.
333- ) of our report, dated December 4, 1996 and October 18, 1997, relating to
the financial statements of Crispaire Corporation. We also consent to the
reference to our Firm under the captions "Independent Accountants", "Summary
Historical Financial and Other Data" and "Selected Financial and Other Data" in
the Prospectus and Prospectus Statement.
/s/ Mauldin & Jenkins, LLC
Albany, Georgia
December 23, 1997
<PAGE> 1
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation or (I. R. S. Employer
organization if not a U. S. national bank) Identification Number)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
AIRXCEL, INC.
(Exact name of OBLIGOR as specified in its charter)
Delaware 48-1071795
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
3050 North Saint Frances Street 67219
Wichita, KS (Zip code)
(Address of principal executive offices)
--------------------------
11% Senior Subordinated Note due 2007, Series B
(Title of the indenture securities)
<PAGE> 2
-2-
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York,
New York (Board of Governors of the Federal Reserve
System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
The obligor is currently not in default under any of its outstanding
securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 3
- 3 -
16. List of Exhibits (continued)
T-1.4 -- The By-laws of the United States Trust Company of
New York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of December 24, 1997, the trustee had 2,999,020 shares of Common
Stock outstanding, all of which are owned by its parent company, U. S.
Trust Corporation. The term "trustee" in Item 2, refers to each of
United States Trust Company of New York and its parent company, U. S.
Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
---------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 24th day of December, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Patricia Stermer
------------------------
Patricia Stermer
Assistant Vice President
<PAGE> 4
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /S/ Gerard F. Ganey
-------------------------------
Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1997
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 116,582
Short-Term Investments 183,652
Securities, Available for Sale 691,965
Loans 1,669,611
Less: Allowance for Credit Losses 16,067
----------
Net Loans 1,653,544
Premises and Equipment 61,796
Other Assets 125,121
----------
TOTAL ASSETS $2,832,660
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 541,619
Interest Bearing 1,617,028
----------
Total Deposits 2,158,647
Short-Term Credit Facilities 365,235
Accounts Payable and Accrued Liabilities 141,793
----------
TOTAL LIABILITIES $2,665,675
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,542
Retained Earnings 99,601
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes 2,847
----------
TOTAL STOCKHOLDER'S EQUITY 166,985
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,832,660
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
November 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1997 SEP-30-1997
<CASH> 226,431 69,747
<SECURITIES> 0 0
<RECEIVABLES> 3,713,910 4,216,182
<ALLOWANCES> 20,000 95,094
<INVENTORY> 6,421,396 4,903,410
<CURRENT-ASSETS> 18,489,700 13,636,336
<PP&E> 6,260,584 7,145,533
<DEPRECIATION> 3,202,357 3,542,785
<TOTAL-ASSETS> 24,748,129 19,908,951
<CURRENT-LIABILITIES> 12,857,330 9,995,548
<BONDS> 48,279,941 42,538,669
0 0
0 0
<COMMON> 1,000 1,000
<OTHER-SE> 14,222,563 15,172,564
<TOTAL-LIABILITY-AND-EQUITY> 24,748,129 19,908,951
<SALES> 58,168,823 43,906,856
<TOTAL-REVENUES> 58,168,823 43,906,856
<CGS> 43,802,980 33,488,707
<TOTAL-COSTS> 43,802,980 33,488,707
<OTHER-EXPENSES> 6,124,621 3,074,360
<LOSS-PROVISION> 0 101,387
<INTEREST-EXPENSE> 2,273,318 2,434,860
<INCOME-PRETAX> 5,967,904 4,908,929
<INCOME-TAX> 2,411,275 1,865,000
<INCOME-CONTINUING> 3,556,629 3,043,929
<DISCONTINUED> 2,299,189 3,874,968
<EXTRAORDINARY> 183,821 0
<CHANGES> 0 0
<NET-INCOME> 1,073,619 (831,089)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
11% SENIOR SUBORDINATED NOTES DUE 2007
OF
AIRXCEL, INC.
Pursuant to the Prospectus Dated ____________, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _______________, 1998 UNLESS EXTENDED (THE "EXPIRATION DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed, and submitted to the Exchange Agent:
<TABLE>
<CAPTION>
By Overnight Courier: By Hand: By Registered or Certified Mail:
- --------------------- -------- --------------------------------
<S> <C> <C>
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway P.O. Box 844
New York, New York 10003 Lower Level New York, New York 10276-0844
Attn: Corporate Trust Services New York, New York 10006 Attn: Corporate Trust Services
Attn: Corporate Trust Services Cooper Station
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT
800-548-6565, OR BY FACSIMILE AT 212-420-6152.
The undersigned hereby acknowledges receipt of the Prospectus dated
___________, 1998 (the "Prospectus") of Airxcel, Inc., a Delaware corporation
(the "Issuer"), and this Letter of Transmittal (the "Letter of Transmittal"),
that together constitute the Issuer's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its 11 % Senior Subordinated Notes due 2007 (the
"Exchange Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement, for
each $1,000 in principal amount of its outstanding 11% Senior Subordinated Notes
due 2007 (the "Notes"), of which $90,000,000 aggregate principal amount is
outstanding. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
<PAGE> 2
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns, and transfers to, or
upon the order of, the Issuer, all right, title, and interest in, to, and under
the Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below (Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as appropriate)
to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Issuer or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Issuer, on the books of
the registrar for the Notes and deliver all accompanying evidences of transfer
and authenticity to, or upon the order of, the Issuer upon receipt by the
Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon acceptance by the Issuer of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Issuer upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer-Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owners hereunder shall be
binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Issuer will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges, encumbrances, and adverse claims
when the Tendered Notes are acquired by the Issuer as contemplated herein. The
undersigned and each Beneficial Owner will, upon request, execute and deliver
any additional documents reasonably requested by the Issuer or the Exchange
Agent as necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Issuer, and
(iv) the undersigned and each Beneficial Owner acknowledge and agree that any
person participating in the Exchange Offer with the intention or for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), in connection with a secondary resale of the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the Securities and
Exchange Commission (the "Commission") set forth in the no-action letters that
are discussed in the section of the Prospectus entitled "The Exchange Offer." In
addition, by accepting the Exchange Offer, the undersigned hereby (i) represents
and warrants that, if the undersigned or any Beneficial Owner of the Notes is a
Participating Broker-Dealer, such Participating Broker-Dealer acquired the Notes
for
2
<PAGE> 3
its own account as a result of market-making activities or other trading
activities and has not entered into any arrangement or understanding with the
Company or any affiliate of the Company (within the meaning of Rule 405 under
the Securities Act) to distribute the New Notes to be received in the Exchange
Offer, and (ii) acknowledges that, by receiving New Notes for its own account in
exchange for Notes, where such Notes were acquired as a result of market-making
activities or other trading activities, such Participating Broker-Dealer will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes.
[] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "Use of Guaranteed Delivery" BELOW (Box 4).
[] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "Use of Book-Entry Transfer" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
DESCRIPTION OF NOTES TENDERED
(Attach additional signed pages, if necessary)
<TABLE>
<CAPTION>
Aggregate
Name(s) and Address(es) of Registered Note Holder(s), Certificate Principal Amount Aggregate
exactly a name(s) appear(s) on Note Certificate(s) Number(s) of Represented by Principal Amount
(Please fill in, if blank) Notes* Certificate(s) Tendered**
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All
other tenders must be in integral multiples of $1,000 of principal amount.
Unless otherwise indicated in this column, the principal amount of all
Note Certificates identified in this Box 1 or delivered to the Exchange
Agent herewith shall be deemed tendered. See Instruction 4.
3
<PAGE> 4
BOX 2
BENEFICIAL OWNER(S)
<TABLE>
<CAPTION>
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- --------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
- --------------------------------------------------------------------------------
(please print)
Address:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
- --------------------------------------------------------------------------------
4
<PAGE> 5
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
________________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________________
Name of Institution which Guaranteed Delivery:__________________________________
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution:__________________________________________________
Account Number:_________________________________________________________________
Transaction Code Number:________________________________________________________
5
<PAGE> 6
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
X______________________________________
X______________________________________
(Signature of Registered Holder(s) or
Authorized Signatory)
Note: The above lines must be signed by the registered holder(s) of Notes as
their name(s) appear(s) on the Notes or by persons(s) authorized to become
registered holder(s) (evidence of which authorization must be transmitted with
this Letter of Transmittal). If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer, or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below. See Instruction 5.
Name(s): _______________________________________________________________________
_______________________________________________________________________
Capacity:_______________________________________________________________________
_______________________________________________________________________
Street Address: ________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(include Zip Code)
Area Code and Telephone Number:
___________________________________________________________
Tax Identification or Social Security Number:
___________________________________________________________
Signature-Guarantee
(If required by Instruction 5)
Authorized-Signature
X ______________________________________________________________________________
Name:___________________________________________________________________________
(please print)
Title:__________________________________________________________________________
Name of Firm:___________________________________________________________________
(Must be an Eligible Institution as
defined in Instruction 2)
Address:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
(include Zip Code)
Area-Code-and-Telephone-Number:
________________________________________________________________________
Dated: ________________________________________________________________________
BOX 7
BROKER-DEALER STATUS
- --------------------------------------------------------------------------------
[] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities.
- --------------------------------------------------------------------------------
6
<PAGE> 7
- --------------------------------------------------------------------------------
PAYOR'S NAME: AIRXCEL, INC.
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity
whose number you enter in Part 1 below. See instructions if your name has
changed.)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City, State and ZIP Code
- --------------------------------------------------------------------------------
List account number(s) here (optional)
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION
NUMBER ("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW
- --------------------------------------------------------------------------------
Social Security
Number or TIN
- --------------------------------------------------------------------------------
PART 2--Check the box if you are NOT subject to backup withholding under the
provisions of section 3406(a)(1)(C) of the Internal Revenue Code because (1) you
have not been notified that you are subject to backup withholding as a result of
failure to report all interest or dividends or (2) the
Internal Revenue Service has notified you that you are no longer subject to
backup withholding. [ ]
- --------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE _________________ DATE ____________________
- --------------------------------------------------------------------------------
PART 3--
Awaiting TIN [ ]
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
<PAGE> 8
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. A properly completed
and duly executed copy of this Letter of Transmittal, including Substitute Form
W-9, and any other documents required by this Letter of Transmittal must be
received by the Exchange Agent at its address set forth herein, and either
certificates for Tendered Notes must be received by the Exchange Agent at its
address set forth herein or such Tendered Notes must be transferred pursuant to
the procedures for book-entry transfer described in the Prospectus under the
caption "The Exchange Offer--Procedures for Tendering" (and a confirmation of
such transfer received by the Exchange Agent), in each case prior to 5:00 p.m.,
New York City time, on the Expiration Date. The method of delivery of
certificates for Tendered Notes, this Letter of Transmittal and all other
required documents to the Exchange Agent is at the election and risk of the
tendering holder and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. Instead of delivery
by mail, it is recommended that the Holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Notes should be sent to the Company.
Neither the Issuer nor the registrar is under any obligation to notify any
tendering holder of the Issuer's acceptance of Tendered Notes prior to the
closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available, and who cannot deliver their
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date must tender their Notes according to
the guaranteed delivery procedures set forth below, including completion of Box
4. Pursuant to such procedures: (i) such tender must be made by or through a
firm which is a member of a recognized Medallion Program approved by the
Securities Transfer Association Inc. (an "Eligible Institution") and the Notice
of Guaranteed Delivery must be signed by the holder; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the holder and the
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by mail or hand delivery) setting forth the name and address of the
holder, the certificate number(s) of the Tendered Notes and the principal amount
of Tendered Notes, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, this Letter of Transmittal together with the certificate(s)
representing the Notes and any other required documents will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) such properly completed
and executed Letter of Transmittal, as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all Tendered
Notes in proper form for transfer, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date. Any holder
who wishes to tender Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery relating to such Notes prior to 5:00 p.m., New York City
time, on the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
an Eligible Holder who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner form accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder
8
<PAGE> 9
should fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of the box entitled "Description of Notes Tendered"
(Box 1) above. The entire principal amount of Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated. If the
entire principal amount of all Notes held by the holder is not tendered, then
Notes for the principal amount of Notes not tendered and Exchange Notes issued
in exchange for any Notes tendered and accepted will be sent to the Holder at
his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, as soon as practicable following
the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed separate bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Issuer, evidence satisfactory to the Issuer of their authority to so act must be
submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Notes are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in
the applicable box (Box 3), the name and address to which the Exchange Notes
and/or substitute Notes for principal amounts not tendered or not accepted for
exchange are to be sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
9
<PAGE> 10
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Issuer (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If the Issuer is not provided with the correct TIN, the Holder
may be subject to backup withholding and a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an over-payment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) the Internal Revenue Service
has notified the holder that such holder is no longer subject to backup
withholding. If the Tendered Notes are registered in more than one name or are
not in the name of the actual owner, consult the "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for information on
which TIN to report.
The Issuer reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Issuer's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Tendered
Notes will be determined by the Issuer in its sole discretion, which
determination will be final and binding. The Issuer reserves the right to reject
any and all Notes not validly tendered or any Notes the Issuer's acceptance of
which would, in the opinion of the Issuer or their counsel, be unlawful. The
Issuer also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Notes as to any ineligibility of any
holder who seeks to tender Notes in the Exchange Offer. The interpretation of
the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Issuer shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Issuer
shall determine. Neither the Issuer, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Notes, nor shall any of them incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify any of the conditions in the Exchange Offer in the case
of any Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder whose
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at
10
<PAGE> 11
the address indicated herein. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF NOTES; RETURN OF NOTES.
Subject to the terms and conditions of the Exchange Offer, the Issuer will
accept for exchange all validly tendered Notes as soon as practicable after the
Expiration Date and will issue Exchange Notes therefor as soon as practicable
thereafter. For purposes of the Exchange Offer, the Issuer shall be deemed to
have accepted tendered Notes when, as and if the Issuer has given written or
oral notice (immediately followed in writing) thereof to the Exchange Agent. If
any Tendered Notes are not exchanged pursuant to the Exchange Offer for any
reason, such unexchanged Notes will be returned, without expense, to the
undersigned at the address shown in Box 1 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer."
11
<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
11% SENIOR SUBORDINATED NOTES DUE 2007
OF
AIRXCEL, INC.
Pursuant to the Prospectus Dated _______________, 1998
This form must be used by a holder of 11% Senior Subordinated Notes due
2007 (the "Notes") of Glenoit Corporation, a Delaware corporation (the
"Company"), who wishes to tender Notes to the Exchange Agent pursuant to the
guaranteed delivery procedures described in "The Exchange Offer - Guaranteed
Delivery Procedures" of the Company's Prospectus, dated ____________, 1998 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ________________, 1998 UNLESS EXTENDED (THE "EXPIRATION DATE").
United States Trust Company of New York
(the "Exchange Agent")
<TABLE>
<CAPTION>
By Overnight Courier: By Hand: By Registered or Certified Mail:
- --------------------- -------- --------------------------------
<S> <C> <C>
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway P.O. Box 844
New York, New York 10003 Lower Level Attn: Corporate Trust Services
Attn: Corporate Trust Services Attn: Corporate Trust Services Cooper Station
New York, New York 10006 New York, New York 10276-0844
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or
Authorized Signatory:______________________ Date: ___________________, 1998
___________________________________________ Address:_________________________________
___________________________________________ _________________________________________
Name(s) of Registered Holder(s):___________ Area Code and Telephone No.______________
___________________________________________
___________________________________________
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): _______________________________________________________________________
________________________________________________________________________________
Capacity: ______________________________________________________________________
Address(es):____________________________________________________________________
________________________________________________________________________________
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility described in the
prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the fifth New York Stock Exchange
trading day following the Expiration Date.
<TABLE>
<S> <C>
Name of firm_____________________________ _________________________________________
(Authorized Signature)
Address__________________________________ Name_____________________________________
(Please Print)
________________________________________ Title____________________________________
(Include Zip Code)
Area Code and Tel. No. ___________________ Dated______________________________, 1996
</TABLE>
DO NOT SEND SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF SECURITIES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF
TRANSMITTAL.
4
<PAGE> 5
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face of
the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of the Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
5
<PAGE> 1
Exhibit 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
AIRXCEL, INC.
11% SENIOR SUBORDINATED NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
_____________, 1998 (the "Prospectus") of Airxcel, Inc., a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 11% Senior Subordinated Notes due 2007 (the "Notes")
held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT):
$ of the 11% Senior Subordinated Notes due 2007
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY): $
[] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (FILL IN STATE) , (ii) the
undersigned is acquiring the Exchange Notes in the ordinary course of business
of the undersigned, (iii) the undersigned is not participating, does not
participate, and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Act"), in connection with a secondary resale transaction of the Exchange Notes
acquired by such person and cannot rely on the position of the Staff of the
Securities and Exchange Commission set forth in no-action letters that are
discussed in the section of the Prospectus entitled "The Exchange Offer--Resales
of the Exchange Notes," and (v) the undersigned is not an "affiliate," as
defined in Rule 405 under the Act, of the Company; (b) to agree, on behalf of
the undersigned, as set forth in the Letter of Transmittal; and (c) to take such
other action as necessary under the Prospectus or the Letter of Transmittal to
effect the valid tender of such Notes.
SIGN HERE
Name of beneficial owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name (please print):____________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Telephone number:_______________________________________________________________
Taxpayer Identification or Social Security Number_______________________________
Date:___________________________________________________________________________
