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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year End Commission File Number
December 31, 1997 0-13646
DREW INDUSTRIES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3250533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Mamaroneck Avenue, White Plains, N.Y. 10601
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number including Area Code: (914) 428-9098
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check mark indicates whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock (Common Stock, $.01 par value) held by
non-affiliates of Registrant (computed by reference to the closing price as of
March 9, 1998) was $83,833,073
The number of shares outstanding of the Registrant's Common Stock, as of the
latest practicable date (March 9, 1998) was 11,363,166 shares of Common Stock.
Documents Incorporated by Reference
Annual Report to Stockholders for year ended December 31, 1997 is incorporated
by reference into Items 6, 7 and 8 of Part II.
Proxy Statement with respect to Annual Meeting of Stockholders to be held on May
21, 1998 is incorporated by reference into Part III.
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<PAGE>
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This Form 10-K contains certain statements, including the Company's plans
regarding its operating strategy, its products and performance and its views of
industry prospects, which could be construed to be forward looking statements
within the meaning of the Securities and Exchange Act of 1934. These statements
reflect the Company's current views with respect to future plans, events and
financial performance. The Company has identified certain risk factors which
could cause actual plans and results to differ substantially from those included
in the forward looking statements. These factors include pricing pressures due
to competition, raw material costs, particularly aluminum, steel and glass,
adverse weather conditions impacting retail sales, inventory adjustments by
retailers and interest rates. In addition, general economic conditions may
affect the retail sale of manufactured homes and RV's.
Item 1. BUSINESS
Introduction
Drew Industries Incorporated ("Drew" or the "Company"), through its
wholly-owned subsidiaries Kinro, Inc. ("Kinro"), Lippert Components, Inc.
("Lippert"), and Shoals Supply, Inc. ("Shoals") is a leading supplier of a
variety of products for manufactured homes and recreational vehicles. Kinro
manufactures and markets aluminum and vinyl windows for manufactured homes, and
aluminum windows and doors for recreational vehicles. Lippert manufactures and
markets chassis and chassis parts and galvanized roofing, for manufactured
homes, and manufactures and markets chassis and chassis parts for recreational
vehicles. Shoals manufactures and markets new axles, and distributes refurbished
axles and new and refurbished tires, for manufactured homes.
The Company was incorporated under the laws of Delaware on March 20, 1984,
and is the successor to Drew National Corporation, which was incorporated under
the laws of Delaware in 1962. The Company's principal executive and
administrative offices are located at 200 Mamaroneck Avenue, White Plains, New
York 10601; telephone number (914) 428-9098. The Common Stock of the Company is
traded on the American Stock Exchange (symbol: DW).
Recent Events
On October 7, 1997, the Company acquired Lippert in consideration for cash
in the amount of $27 million and 2,154,000 restricted shares of Common Stock, of
which 230,769 shares are contingent upon Lippert achieving specified earnings
from certain of its operations for the period April 1, 1998 to March 31, 1999.
For its 1997 fiscal year, Lippert had revenues of approximately $99 million on
which it achieved pro forma operating profit of approximately $8.2 million. See
"Business of the Company."
On January 28, 1998, the Company completed a private placement of $40
million 6.95%, seven-year Senior Notes with Teacher's Insurance & Annuity
Association of America and four affiliated companies of ING Investment
Management. Amortization of the seven-year Senior Notes at $8 million annually
begins at the end of the third year. Proceeds from the sale of the Senior Notes
were used to reduce borrowings under the Company's $65,000,000 credit facility
with The Chase Manhattan Bank, as agent. Simultaneously, the credit facility was
replaced with a $25 million credit facility.
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BUSINESS OF THE COMPANY
Kinro
Kinro, acquired by the Company in October 1980, initially manufactured
only aluminum primary and storm windows for the manufactured housing industry.
Since 1982, Kinro acquired additional manufacturers of aluminum windows for
manufactured homes and manufacturers of doors and windows for recreational
vehicles, and developed its own capacity to manufacture screens for its window
products, and to a lesser extent, windows for mini buses. In 1993, Kinro
commenced production of vinyl windows in addition to aluminum windows.
Each of the businesses acquired by Kinro expanded Kinro's geographic
market and product line, and, in certain instances, added manufacturing
facilities. All manufacturing, distribution and administrative functions of the
acquired businesses were integrated with those of Kinro. Although definitive
information is not readily available, the Company believes that the three
leading manufacturers of windows for manufactured homes within the United States
are Kinro, Philips Industries, and Care-Free Windows, and that there are
approximately 10 significant suppliers of windows and doors for the recreational
vehicle industry, several of which are substantially larger than Kinro.
Raw materials used by Kinro, consisting of extruded aluminum, glass, vinyl
and various adhesive and insulating components, are readily available from a
number of sources. Kinro, through the Company, maintains an aluminum hedging
program under which it purchases futures contracts on the London Metals Exchange
to hedge the prices of a portion of its anticipated aluminum requirements.
Kinro's operations consist primarily of fabricating and assembling the
components into the finished windows, doors and screens. Kinro also tempers
glass for use in its own windows and for sale to other window manufacturers.
Kinro's line of products is sold by twelve sales personnel, working exclusively
for Kinro, to major builders of manufactured housing, such as Clayton Homes,
Oakwood Homes and Champion Enterprises, and to major manufacturers of
recreational vehicles such as Fleetwood Enterprises, Thor Industries, and
Skyline. Kinro competes on the basis of price, customer service, product quality
and reliability.
Lippert
Lippert, acquired by the Company in October 1997, manufactures and markets
chassis and chassis parts and galvanized roofing for manufactured homes, and
manufactures and markets chassis and chassis parts for recreational vehicles.
Prior to the acquisition, Lippert also refurbished and distributed used axles
and tires, substantially all of which operations, excluding those in Florida,
have been assumed by Shoals.
Raw materials used by Lippert, consisting of steel (coil, sheet,
galvanized and I-beam) and fabricated parts, are available from a number of
sources. Used axles and tires, which are refurbished by Lippert, are purchased
from dealers of manufactured homes and independent agents, and their
availability is subject to competitive pricing. Lippert's products are sold by
nine sales personnel to major producers of manufactured homes in the
southeastern and southcentral United States, such as Skyline, Fleetwood
Enterprises, Oakwood Homes and Clayton Homes. Lippert's chassis and chassis
parts for recreational vehicles are sold primarily to Fleetwood Enterprises.
Lippert's operation as a supplier of chassis and chassis parts and
galvanized roofing for manufactured homes competes with several other
manufacturers of chassis and chassis parts as well as with certain producers of
manufactured homes which manufacture their own chassis and chassis parts.
Although definitive information is not readily available, the Company believes
that Lippert's share of the market for chassis and chassis parts is
approximately 15%. Lippert's operation as a supplier of chassis and chassis
parts for recreational vehicles had only a small market share in 1997, but is
currently being expanded. Most recreational vehicle manufacturers produce
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their own chassis, although Lippert has begun to capture a greater share of this
business. Lippert competes on the basis of price, customer service, product
quality, and reliability.
Shoals
Shoals, acquired by the Company in February 1996, manufactures and
distributes new axles and distributes refurbished axles and new and refurbished
tires, for manufactured homes.
Raw materials used by Shoals, consisting primarily of fabricated steel
parts for new axles are either fabricated by Shoals or purchased from suppliers.
Used axles and tires, which are refurbished by Shoals, are purchased from
dealers of manufactured homes and independent agents, and their availability is
subject to competitive pricing. Shoals products are sold by one salesperson
working exclusively for Shoals to major producers of manufactured homes in
southeastern and southcentral United States, such as Fleetwood Enterprises,
Oakwood Homes and Clayton Homes. Shoals competes on the basis of price, customer
service, product quality, and reliability.
Shoals' refurbished axle and tire operations compete with a number of
regional suppliers of refurbished axles and tires, as well as several
manufacturers of new axles, certain of which are larger than Shoals. Although
definitive information is not readily available, the Company believes that
Shoals is among the three largest suppliers of refurbished axles within the
United States.
Subsequent to the acquisition of Lippert, Shoals assumed Lippert's
refurbished axle and tire operations, except in Florida where Shoals did not
have a manufacturing facility, and Lippert assumed Shoals chassis parts
operation. Shoals may assume Lippert's Florida axle and tire operation in the
future. It is anticipated that the efficiencies achieved by the integration of
Lippert's and Shoals' operations will result in reducing freight and production
costs.
Facilities
The operations of Kinro, Lippert and Shoals are conducted at an aggregate
of 34 manufacturing and warehouse facilities throughout the United States,
strategically located in proximity to the industries and customers they serve.
See Item 2. "Properties."
Regulatory Matters
Windows produced by Kinro for manufactured homes must comply with
performance and construction regulations promulgated by the United States
Housing and Urban Development Authority ("HUD") and by the American
Architectural Manufacturers Association relating to air and water infiltration,
thermal performance, emergency exit conformance, and hurricane resistance.
Windows and doors produced by Kinro for the recreational vehicle industry are
regulated by The United States Department of Transportation Federal Highway
Administration ("DOT"), National Fire and Protection Agency, and the National
Electric Code governing safety glass performance, egressability, door hinge and
lock systems, egress window retention hardware, and baggage door ventilation.
Manufactured homes are built on steel chassis which are fitted with axles
and tires sufficient in number to support the weight of the home and are
transported by producers to dealers via roadway. When the home is installed at
the site, the axles and tires are repurchased from the homeowner and removed by
the dealer or installer. Regulations promulgated by HUD require the axles to be
inspected after each use and refurbished or, if necessary,
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replaced. Shoals and Lippert purchase from dealers and independent agents, and
repair and refurbish, used axles and tires, and market the reconditioned axles
and tires to producers of manufactured homes.
In accordance with regulations promulgated by HUD, refurbished axle
assemblies distributed by Lippert and Shoals are reconditioned in accordance
with a detailed Quality Control Program formulated by an independent inspection
agency. Compliance with the Quality Control Program is monitored by the
inspection agency on a monthly basis. All expenses of formulating the program,
inspection, and monitoring are paid for by Lippert and Shoals. In addition, new
and refurbished tires distributed by Lippert and Shoals are subject to
regulations promulgated by DOT and by HUD relating to weight tolerance, maximum
speed, size, and components.
Kinro's, Lippert's and Shoals' operations are also subject to certain
federal, state and local regulatory requirements relating to the use, storage,
discharge and disposal of hazardous chemicals used during their manufacturing
processes.
The Company believes that Kinro, Lippert and Shoals are currently
operating in compliance with applicable laws and regulations, and does not
believe that the expense of compliance with these laws and regulations, as
currently in effect, will have a material effect on Kinro's, Lippert's or
Shoals' capital expenditures, earnings or competitive position.
Employees
The approximate number of persons employed full-time by the Company at
December 31, 1997 was as follows:
Drew.......................... 6
Kinro......................... 1,289
Lippert....................... 637
Shoals........................ 326
-----
Total...................... 2,258
=====
Seven of Kinro's employees are represented by a union. The Company and its
subsidiaries believe that relations with its employees are good.
In connection with the spin-off of Leslie Building Products, Inc. ("Leslie
Building Products"), and its wholly-owned subsidiary, Leslie-Locke, Inc.
("Leslie-Locke"), by the Company, which was effective on July 29, 1994, the
Company and Leslie Building Products entered into a Shared Services Agreement.
Pursuant to the Shared Services Agreement, the Company and Leslie Building
Products agreed to share certain administrative functions and employee services,
such as management overview and planning, tax preparation, financial reporting,
coordination of independent audit, stockholder relations, and regulatory
matters. The Company is reimbursed by Leslie Building Products for the fair
market value of such services. The Shared Services Agreement, which expired on
December 31, 1997, was extended to December 31, 1998.
Item 2. PROPERTIES
Drew leases its principal executive offices in White Plains, New York,
consisting of approximately 2,800 square feet of office space.
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Kinro owns six and leases six manufacturing and warehouse facilities
consisting of an aggregate of approximately 870,000 square feet, in Mansfield,
Texas; Double Springs, Alabama; Liberty, North Carolina; Thomasville, Georgia;
Morraine, Ohio; Goshen (three facilities) and Elkhart, Indiana; Fontana,
California; and Dayton, Tennessee; and Nampa, Idaho; and leases its corporate
offices in Arlington, Texas consisting of approximately 8,500 square feet of
office space.
Lippert owns 13 and leases three manufacturing and warehouse facilities,
consisting of an aggregate of approximately 620,000 sq. ft. in Phil Campbell,
Alabama; Ocala, Florida; Wakarusa and Goshen, Indiana; Lancaster, Wisconsin;
Harrisburg, North Carolina; McAdoo, Pennsylvania; Arkansas City, Kansas;
Whitehall, New York; Sugarcreek, Ohio; Bossier City, Louisiana; Alvarado and
Longview, Texas; and Fitzgerald and Americus, Georgia (two facilities). Lippert
also owns its corporate offices in Alma, Michigan consisting of approximately
10,800 square feet. An additional 36,000 square foot facility is under
construction in Berkely Springs, West Virginia.
Shoals owns two and leases four manufacturing and warehouse facilities
consisting of an aggregate of approximately 250,000 square feet in Bear Creek
and Phil Campbell, Alabama; Rockwell, North Carolina; Elm Mott, Texas;
Maynardsville, Tennessee; and Bristol, Indiana.
See Note 9 of Notes to Consolidated Financial Statements with respect to
the Company's lease obligations as of December 31, 1997.
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings which, in the opinion
of Management, could have a material adverse effect on the Company or its
consolidated financial position.
See Note 9 of Notes to Consolidated Financial Statements with respect to
certain product liability claims pending against White Metal Rolling and
Stamping Corp. ("White Metal"), a subsidiary of Leslie-Locke, arising in
connection with the ladder manufacturing business formerly conducted by White
Metal. Although the Company was named as a defendant in certain actions
commenced in connection with these claims, the Company has not been held
responsible, and the Company disclaims any liability for the obligations of
White Metal.
See Note 9 of Notes to Consolidated Financial Statements with respect to
the filing by White Metal, on September 30, 1994, of a voluntary petition
seeking liquidation under the provisions of chapter 7 of the United States
Bankruptcy Code. On May 7, 1996, the Company and its subsidiary, Kinro, Inc.,
and Leslie Building Products and its subsidiary, Leslie-Locke, were served with
a summons and complaint in an adversary proceeding commenced by the chapter 7
trustee of White Metal. The complaint, which appears to allege several duplicate
claims, seeks damages in the aggregate amount of $10.6 million plus attorneys
fees, of which up to approximately $7.5 million is sought, jointly and
severally, from the Company, Kinro, Leslie Building Products and Leslie-Locke.
The proceeding is based principally upon the trustee's allegations that the
Company and its affiliated companies obtained tax benefits attributable to the
use of White Metal's net operating losses. The trustee seeks to recover the
purported value of the tax savings achieved. Management believes that the
trustee's allegations are without merit and have no basis in fact. In addition,
the trustee alleges that White Metal made certain payments to the Company which
were preferential and are recoverable by White Metal, in the approximate amount
of $900,000. The Company denies liability for any such amount and is vigorously
defending against the allegations. However, an estimate of potential loss, if
any, cannot be made at this time. The Company believes that it has sufficient
accruals for the defense of this proceeding and that such defense will not have
a material adverse impact on the Company's financial condition or results of
operations.
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following tables set forth certain information with respect to the
Directors and Executive Officers of the Company as of December 31, 1997.
Name Position
- ---- --------
Leigh J. Abrams President, Chief Executive Officer and Director of the
(Age 55) Company since March 1984.
Edward W. Rose, III Chairman of the Board of Directors of the Company since
(Age 56) March 1984.
David L. Webster Director of the Company since March 1984.
(Age 62)
L. Douglas Lippert Director of the Company since November 1997.
(Age 50)
James F. Gero Director of the Company since May 1992.
(Age 52)
Gene H. Bishop Director of the Company since June 1995.
(Age 68)
Fredric M. Zinn Chief Financial Officer of the Company since January 1986.
(Age 46)
Harvey J. Kaplan Secretary and Treasurer of the Company since March 1984.
(Age 63)
LEIGH J. ABRAMS has also been President, Chief Executive Officer and a
Director of Leslie Building Products since July 1994.
EDWARD W. ROSE, III, for more than the past five years, has been President
and principal stockholder of Cardinal Investment Company, Inc., an investment
firm. Mr. Rose also serves as the Co-Managing General Partner of the Texas
Rangers Baseball Team, and as a director of the following public companies:
Osprey Holding, Inc., previously engaged in selling computer software for
hospitals; and ACE Cash Express, Inc. engaged in check cashing services. Since
July 1994, Mr. Rose has been Chairman of the Board of Leslie Building Products.
DAVID L. WEBSTER, since November 1980, has been President and Chief
Executive Officer of Kinro, Inc., a subsidiary of the Company, and Chairman of
Kinro, Inc. since November 1984. Mr. Webster has also been President and Chief
Executive Officer of Shoals Supply, Inc., a subsidiary of the Company, since its
acquisition in February 1996.
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L. DOUGLAS LIPPERT, since October 1997, has been President and Chief
Executive Officer of Lippert Components, Inc., a subsidiary of the Company, and
President of the predecessor of Lippert Components, Inc. since 1978. The Board
of Directors appointed Mr. Lippert as a Director, in connection with the
acquisition of Lippert Components, Inc. in October 1997.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies. From July 1987 to October 1989, Mr. Gero was Chairman and Chief
Executive Officer of Varo, Inc., a manufacturer of defense electronics, and from
1985 to 1987, Mr. Gero was President and Chief Executive Officer of Varo, Inc.
Mr. Gero also serves as a director of the following public companies:
Recognition Equipment, Inc., engaged in providing hardware, software and
services to automate work processing systems; American Medical Electronics,
Inc., engaged in manufacturing and distributing orthopedic and neurosurgical
medical devices; and Spar Aerospace Ltd., engaged in space robotics,
communications equipment and aerospace products and services. Since July 1994,
Mr. Gero has been a Director of Leslie Building Products.
GENE H. BISHOP, from March 1975 until July 1990, was Chief Executive
Officer of MCorp, a bank holding company, and from October 1990 to November
1991, was Vice Chairman and Chief Financial Officer of Lomas Financial
Corporation, a financial services company. From November 1991 until his
retirement in October 1994, Mr. Bishop served as Chairman and Chief Executive
Officer of Life Partners Group, Inc., a life insurance holding company, of which
he continues to serve as a director. Mr. Bishop also serves as a director of the
following publicly-owned companies: First USA, Inc., engaged in the credit card
business; Liberte-Investors, engaged in real estate loans and investments;
Southwest Airlines Co., a regional airline; and Southwestern Public Service
Company, a public utility.
FREDRIC M. ZINN has also been Chief Financial Officer of Leslie Building
Products since July 1994. Mr. Zinn is a Certified Public Accountant.
HARVEY J. KAPLAN has also been Secretary and Treasurer of Leslie Building
Products since July 1994. Mr. Kaplan is a Certified Public Accountant.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the
Company believes that during 1997 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
during 1997 other than Edward W. Rose, III and L. Douglas Lippert, directors of
the Company) were complied with, except that Gene H. Bishop, a director of the
Company, inadvertently filed one day late with respect to an aggregate of 600
shares of the Common Stock of the Company purchased for his children.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Per Share Market Price Information
The Common Stock of the Company is traded on the American Stock Exchange
(symbol: DW). On March 9, 1998, there were 2,369 holders of record of the Common
Stock. The Company estimates that 2,000 to 4,000 additional stockholders own
shares of its Common Stock held in the name of Cede & Co. and other broker and
nominee names.
The table below sets forth, for the periods indicated, the range of high
and low closing prices per share for the Common Stock as reported by the
American Stock Exchange.
All of the following prices have been retroactively adjusted to reflect
the two-for-one split effective March 21, 1997.
High Low
---- ---
Calendar 1996
Quarter ended March 31 ....... $ 8.00 $ 6.75
Quarter ended June 30......... $ 9.25 $ 7.32
Quarter ended September 30.... $12.32 $ 8.38
Quarter ended December 31..... $13.62 $10.62
Calendar 1997
Quarter ended March 31........ $13.81 $10.75
Quarter ended June 30......... $13.00 $10.63
Quarter ended September 30.... $14.38 $11.75
Quarter ended December 31..... $14.13 $11.06
The closing price per share for the Common Stock on March 9, 1998 was
$12.75.
Dividend Information
The Company has not paid any cash dividends on its Common Stock. Future
dividend policy with respect to the Common Stock will be determined by the Board
of Directors of the Company in light of prevailing financial needs and earnings
of the Company and other relevant factors.
On February 13, 1997, the Company declared a two-for-one stock split by
means of a 100% stock dividend, payable on March 21, 1997 to stockholders of
record on March 4, 1997.
Item 6. SELECTED FINANCIAL DATA, Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, and Item 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA, are incorporated by reference to the Company's Annual
Report to Stockholders for the year ended December 31, 1997.
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Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Part III of Form 10-K is incorporated by reference to the Company's
Proxy Statement with respect to its Annual Meeting of Stockholders to be held on
May 21, 1998.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES and REPORTS ON FORM 8-K
(a) Documents Filed
(1) Financial Statements. The Consolidated Financial
Statements of the Company and its subsidiaries are
incorporated by reference to the Consolidated Financial
Statements and Notes to Consolidated Financial
Statements in the Company's Annual Report to
Stockholders for the year ended December 31, 1997.
(2) Schedules. Schedule II - Valuation and Qualifying
Accounts.
(3) Exhibits. See "List of Exhibits" at the end of this
report incorporated herein by reference.
(b) Reports on Form 8-K
On October 16, 1997, the Company filed a Current Report on Form 8-K
reporting the acquisition of Lippert Components, Inc. On December 22, 1997, the
Company filed an Amendment on Form 8-K/A1 to the Current Report amending Items
7(a), 7(b) and 7(c) thereof by filing the following Financial Statements of
Business Acquired and Pro Forma Financial Information:
Item 7(a) - Financial Statements of Business Acquired:
A) Independent Auditors' Report;
B) Balance Sheets as of September 30, 1997 and 1996;
C) Statements of Income for the years ended September 30,
1997, 1996 and 1995;
D) Statements of Stockholders' Equity for the years ended
September 30, 1997, 1996 and 1995;
E) Statements of Cash Flows for the years ended September
30, 1997, 1996 and 1995; and
F) Notes to Financial Statements.
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Item 7(b) - Pro Forma Financial Information:
A) Unaudited Pro Forma Combined Statements of Income for
the year ended December 31, 1996 and the nine months
ended September 30, 1997;
B) Unaudited Pro Forma Combined Balance Sheet as of
September 30, 1997; and
C) Pro Forma Adjustments.
Item 7(c) - Exhibits
Consent of Independent Auditors
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DREW INDUSTRIES INCORPORATED
Date: March 23, 1998
By: /s/ Leigh J. Abrams
-----------------------------
Leigh J. Abrams, President
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and dates indicated.
Each person whose signature appears below hereby authorizes Leigh J.
Abrams and Harvey J. Kaplan, or either of them, to file one or more amendments
to the Annual Report on Form 10-K which amendments may make such changes in such
Report as either of them deems appropriate, and each such person hereby appoints
Leigh J. Abrams and Harvey J. Kaplan, or either of them, as attorneys-in-fact to
execute in the name and on behalf of each such person individually, and in each
capacity stated below, such amendments to such Report.
Date Signature Title
- ---- --------- -----
March 23, 1998 By: /s/ Leigh J. Abrams Director, President and Chief
-------------------------- Executive Officer
(Leigh J. Abrams)
March 23, 1998 By: /s/ Harvey J. Kaplan Secretary and Treasurer
--------------------------
(Harvey J. Kaplan)
March 23, 1998 By: /s/ Fredric M. Zinn Chief Financial Officer
--------------------------
(Fredric M. Zinn)
March 23, 1998 By: /s/ John F. Cupak Controller
--------------------------
(John F. Cupak)
March 23, 1998 By: /s/ Edward W. Rose III Director
--------------------------
(Edward W. Rose, III)
March 23, 1998 By: /s/ David L. Webster Director
--------------------------
(David L. Webster)
March 23, 1998 By: /s/ L. Douglas Lippert Director
--------------------------
(L. Douglas Lippert)
March 23, 1998 By: /s/ James F. Gero Director
--------------------------
(James F. Gero)
March 23, 1998 By: /s/ Gene H. Bishop Director
--------------------------
(Gene H. Bishop)
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Report of Independent Auditors
The Board of Directors
Drew Industries Incorporated:
Under date of February 11, 1998, we reported on the consolidated balance sheets
of Drew Industries Incorporated and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1997, as contained on pages 12 through 23 in the 1997 annual report to
stockholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 1997.
In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule as
listed on Item 14. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Stamford, Connecticut
February 11, 1998
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DREW INDUSTRIES INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- ------------------------- -------- --------
Additions
-------------------------
Balance At Charged To Charged To Balance At
Beginning Costs and Other End
Of Period Expenses Accounts Deductions Of Period
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997:
Allowance for doubtful accounts
receivable, trade $ 308 $ (10) $ 231(a) $ 1(b) $ 528
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 361 (301) 60
Reserve for notes receivable 498 (86) (24)(c) 436
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts
receivable, trade $ 266 $ 23 $ 30(a) $ 11(b) $ 308
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 334 27 361
Reserve for notes receivable 692 (321) (127)(c) 498
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts
receivable, trade $ 197 $ 74 $ (5)(b) $ 266
Reserve for liquidation losses -
disposal of businesses 9 9
Reserve for revaluation of loans 319 15 334
Reserve for notes receivable 533 46 (113)(c) 692
</TABLE>
(a) Represents balance at date of acquisition of Shoals Supply, Inc.
(b) Represents accounts written-off net of recoveries.
(c) Represents write-off of uncollectible portion of notes, net of recoveries.
Page - 14 -
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
3. Articles of Incorporation and By-laws.
3.1 Drew Industries Incorporated Restated
Certificate of Incorporation.
3.2 Drew Industries Incorporated By-laws, as amended.
Exhibit 3.1 is incorporated by reference to Exhibit III to the Proxy
Statement-Prospectus constituting Part I of the Drew National Corporation and
Drew Industries Incorporated Registration Statement on Form S-14 (Registration
No. 2-94693).
Exhibit 3.2 is incorporated by reference to the Exhibit bearing the same
number included in the Annual Report of Drew Industries Incorporated on Form
10-K for the fiscal year ended August 31, 1985.
10 Material Contracts.
10.27 Lease between Kinro, Inc. and Robert A. White and Larry B. White, dated
June 1, 1979, as amended.
10.39 Leases between Robert A. White, Larry B. White and Kinro, Inc. dated
July 25, 1983, as amended.
10.47 Registration Agreement among Drew Industries Incorporated and the
Leslie-Locke Shareholders dated August 28, 1985.
10.49 Loan and Pledge Agreements between Drew Industries Incorporated and
Robert S. Sandlin, Ralph C. Pepper and James S. Roach, respectively,
dated August 28, 1985.
10.66 Employment Agreement by and between Kinro, Inc. and David L. Webster,
dated March 31, 1996.
10.100 Drew Industries Incorporated Stock Option Plan.
10.134 Letter, dated April 28, 1988, from Drew Industries Incorporated to
Leigh J. Abrams confirming compensation arrangement.
10.135 Description of split-dollar life insurance plan for certain executive
officers.
10.146 Form of Plan and Agreement of Distribution between Leslie Building
Products, Inc. and Drew Industries Incorporated dated July 29, 1994.
10.147 Form of Shared Services Agreement between Leslie Building Products,
Inc. and Drew Industries Incorporated dated July 29, 1994.
Page - 15 -
<PAGE>
10.148 Form of Tax Matters Agreement between Leslie Building Products, Inc.
and Drew Industries Incorporated dated July 29, 1994.
10.151 Asset Purchase Agreement, dated February 15, 1996, by and among Shoals
Supply, Inc., Lecil V. Thomas, and Drew Industries Incorporated.
10.152 Non-Negotiable Promissory Note, dated February 15, 1996, of Shoals
Acquisition Corp., to the order of Shoals Supply, Inc. in the principal
amount of $760,000, guaranteed by Drew Industries Incorporated.
10.153 Bill of Sale, dated February 15, 1996 by and between Shoals Supply,
Inc. and Drew Industries Incorporated.
10.154 Registration Rights Agreement, dated February 15, 1996, by and among
Drew Industries Incorporated, Shoals Supply, Inc., and Lecil V. Thomas.
10.155 Consulting and Non-Competition Agreement, dated February 15, 1996, by
and between Drew Industries Incorporated and Lecil V. Thomas.
10.156 Leases, dated February 15, 1996, between Thomas Family Partnership,
Ltd. and Shoals Acquisition Corp.
10.157 Employment Bonus Agreements, dated February 15, 1996, by and between
Shoals Supply, Inc. and the employees named therein.
10.158 Assignment, dated February 15, 1996, by and among Shoals Supply, Inc.,
Lecil V. Thomas and Drew Industries Incorporated.
10.159 Stock Purchase and Pledge Agreement and Non-Negotiable Promissory Note,
dated March 7, 1997 by and between Drew Industries Incorporated and
Edward W. Rose, III.
10.160 Agreement and Plan of Merger, dated October 7, 1997, by and among Drew
Industries Incorporated, Lippert Acquisition Corp., Lippert Components,
Inc. and the shareholders of Lippert Components, Inc. named therein.
10.161 Registration Rights Agreement, dated October 7, 1997, by and among Drew
Industries Incorporated, Lippert Acquisition Corp., and certain
shareholders of Lippert Components, Inc. named therein.
10.162 Contingency Escrow Agreement, dated October 7, 1997 by and among Drew
Industries Incorporated, Lippert Acquisition Corp., The Chase Manhattan
Bank, and certain shareholders of Lippert Components, Inc. named
therein.
10.163 Indemnity Escrow Agreement, dated October 7, 1997, by and among Drew
Industries Incorporated, Lippert Acquisition Corp., The Chase Manhattan
Bank, and The L. Douglas Lippert Living Trust dated June 6, 1989.
10.164 Executive Employment and Non-Competition Agreement, dated October 7,
1997, by and between Lippert Components, Inc. and L. Douglas Lippert.
Page - 16 -
<PAGE>
10.165 Note Purchase Agreement, dated January 28, 1998, by and among Kinro,
Inc, Lippert Components, Inc. and Shoals Supply, Inc. (collectively,
the "Note Co-Issuers") and Teachers Insurance and Annuity Association
of America, ING Investment Management, Inc. as agent for Midwestern
Life Insurance Company, Security Life of Denver Insurance Company,
Equitable Life Insurance Company of Iowa and USG Annuity & Life
Insurance Company (collectively, the "Note Purchasers").
10.166 6.95% Senior Notes due January 28, 2005 in the aggregate principal
amount of $40,000,000 issued by the Note Co-Issuers to the Note
Purchasers.
10.167 Pledge Agreements, dated January 28, 1998, by and between The Chase
Manhattan Bank, as trustee for the benefit of the Note Purchasers and,
separately, Registrant, Kinro, Inc., Shoals Supply, Inc., Kinro
Manufacturing.
10.168 Guarantee Agreement, dated January 28, 1998, by and among Registrant
and the Note Purchasers.
10.169 Subsidiary Guaranty, dated January 28 1998, by Kinro Holding Inc.,
Kinro Manufacturing, Inc., Shoals Holding, Inc., Kinro Texas Limited
Partnership, Kinro Tennessee Limited Partnership, Shoals Supply Texas
Limited Partnership and Shoals Supply Tennessee Limited Partnership
(collectively, the "Subsidiaries") in favor of the Note Purchasers.
10.170 Collateralized Trust Agreement, dated January 28, 1998, by and among
the Note Co-Issuers and the Note Purchasers.
10.171 Subordination Agreement, dated January 28, 1998, by and among
Registrant, the Note Co-Issuers, Lippert Components, Inc., the
Subsidiaries, and the Note Purchasers.
10.172 $25,000,000 Revolving Credit Facility - Credit Agreement, dated January
28 1998, by and among Kinro, Inc., Shoals Supply, Inc. and Lippert
Components, Inc. (The "Borrowers") and The Chase Manhattan Bank
("Chase") and KeyBank National Association ("KeyBank") (together, the
"Lenders").
10.173 $15,000,000 Revolving Credit Note, dated January 28, 1998, made by the
Borrowers to Chase.
10.174 $10,000,000 Revolving Credit Note, dated January 28, 1998, made by the
Borrowers to KeyBank.
10.175 Company Guarantee Agreement, dated January 28, 1998, made by Registrant
to Chase, as agent for the Lenders.
10.176 Subsidiary Guarantee Agreement, dated January 28, 1998, made by each
direct and indirect subsidiary of Registrant (other than the Borrowers)
in favor of Chase, as agent for the Lenders.
10.177 Subordination Agreement, dated January 29, 1998, made by each direct
and indirect subsidiary of Registrant and Chase, as agent for the
Lenders
10.178 Pledge and Security Agreement, dated January 28, 1998, made by
Registrant, the Borrowers, and certain indirect subsidiaries of
Registrant in favor of Chase, as collateral agent.
Exhibit 10.27 is incorporated by reference to the Exhibits bearing the
same number indicated on the Registration Statement of Drew National Corporation
on Form S-1 (Registration No. 2-72492).
Page - 17 -
<PAGE>
Exhibit 10.39 is incorporated by reference to the Exhibit included in
the Annual Report of Drew National Corporation on Form 10-K for the fiscal year
ended August 31, 1983.
Exhibits 10.47 and 10.49 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated September 6, 1985.
Exhibit 10.66 is incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
Exhibit 10.100 is incorporated by reference to Exhibit A to the Proxy
Statement of the Company dated May 10, 1995.
Exhibits 10.123-10.130 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated December 23, 1991.
Exhibits 10.131 and 10.132 are incorporated by reference to the
Exhibits included in Amendment No. 5 on Form 8, dated October 20, 1992, to the
Company's Current Report on Form 8-K dated January 9, 1987.
Exhibit 10.134 is incorporated by reference to the Exhibit bearing the
same number included in the Company's Transition Report on Form 10-K for the
period September 1, 1992 to December 31, 1993.
Exhibit 10.135 is incorporated by reference to the Exhibit bearing the
same number included in the Company's Transition Report on Form 10-K for the
period September 1, 1992 to December 31, 1993.
Exhibits 10.146-10.148 are incorporated by reference to the Exhibits
bearing numbers 10.1, 10.3 and 10.4, respectively, included in Post-Effective
amendment No. 1 on Form 10/A, dated August 30, 1994, to the Registration
Statement of Leslie Building Products, Inc. on Form 10 (Registration No.
0-24094).
Exhibits 10.151 - 10.158 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated February 29, 1996.
Exhibits 10.160 - 10.164 are incorporated by reference to the Exhibits
included in the Company's Current Report on Form 8-K dated October 16, 1997.
Exhibits 10.165 - 10.178 are filed herewith.
13. 1997 Annual Report to Stockholders.
Exhibit 13 is filed herewith ____________ .
21. Subsidiaries
Exhibit 21 is filed herewith ____________ .
23. Consent of Independent Auditors.
Exhibit 23 is filed herewith ____________ .
24. Powers of Attorney.
Powers of Attorney of persons signing this Report are included as part
of this Report.
Page - 18 -
EXECUTION COPY
================================================================================
Exhibit 10.165 - Note Purchase Agreement
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
$40,000,000
IN AGGREGATE PRINCIPAL AMOUNT
6.95% Senior Notes Due January 28, 2005
--------
NOTE PURCHASE AGREEMENT
--------
Dated as of January 28, 1998
================================================================================
<PAGE>
6.95% Senior Notes due January 28, 2005
Dated as of January 28, 1998
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Kinro, Inc. ("Kinro"), an Ohio corporation, Lippert Components, Inc.
("Lippert"), a Delaware corporation and Shoals Supply, Inc. ("Shoals"), a
Delaware corporation (each a "Co-Issuer" and collectively the "Co-Issuers" and
each a Subsidiary of Drew Industries Incorporated, a Delaware corporation (the
"Company")), each agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Co-Issuers have authorized the issuance and sale of $40,000,000
aggregate principal amount of 6.95% Senior Notes due January 28, 2005 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 15 of this Agreement or the Other Agreements (as hereinafter
defined)). Each of the Notes shall bear interest from the date thereof until
such Note shall become due and payable in accordance with the terms thereof and
hereof (whether at maturity, by acceleration or otherwise) at the rate of 6.95%
per annum. Interest on each Note shall be computed on the basis of a three
hundred sixty (360) day year of twelve (12) thirty (30) day months.
Notwithstanding the foregoing, the Co-Issuers shall pay interest on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount at the Default Rate in
accordance with the Notes. The Notes shall be substantially in the form set out
in Exhibit 1, with such changes therefrom, if any, as may be approved by you and
the Co-Issuers. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Co-Issuers will issue and sell to you and you will purchase from the Co-Issuers,
at the Closing provided for in Section 4, Notes in the principal amount
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Co-Issuers are entering into separate Note Purchase Agreements (the "Other
Agreements") identical with this Agreement with each of the other purchasers
named in Schedule A (the "Other Purchasers"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amount
specified opposite its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other Agreement
<PAGE>
and no liability to any Person for the performance or non-performance by any
Other Purchaser thereunder.
3. TRANSACTION DOCUMENTS.
(a) The Notes shall be secured pursuant to certain Pledge Agreements
delivered by the Company, Kinro, Shoals, Lippert, Kinro Holding, Inc., Kinro
Manufacturing, Inc. and Shoals Holding, Inc. and direct Subsidiaries thereof,
each such Pledge Agreement to be dated as of the date hereof, substantially in
the form of Exhibit 2 hereto, and between the pledgor thereunder and The Chase
Manhattan Bank, N.A., as trustee, for the benefit of the holders of the Notes
(as amended, modified and supplemented from time to time, each is a "Pledge
Agreement" and collectively the "Pledge Agreements") granting to the Pledgee for
the benefit of the holders of the Notes a pledge of the stock of its
Subsidiaries and certain partnership interests in its Subsidiaries.
(b) The security interests created pursuant to the Pledge Agreements shall
be subject to an Intercreditor Agreement, dated as of the date hereof, among the
holders of the Notes and The Chase Manhattan Bank, N.A., as Administrative
Agent, as Collateral Agent for the benefit of the Secured Parties (as such terms
are defined in the Revolving Credit Agreement) and as trustee for the benefit of
the holders (which, together with all supplements thereto and amendments thereof
and any replacement intercreditor agreement entered into, is referred to herein
as the "Intercreditor Agreement"), substantially in the form of Exhibit 3
hereto.
(c) The Notes will be unconditionally guaranteed by (i) the Company
pursuant to the Guarantee Agreement dated as of the date hereof between the
Company and the holders substantially in the form of Exhibit 4(a) hereto (as
amended, modified and supplemented from time to time the "Parent Guaranty") and
(ii) the other Guarantors pursuant to a Subsidiary Guaranty dated as of the date
hereof, between the Guarantors (other than the Company) substantially in the
form of Exhibit 4(b) hereto (as amended, modified, and supplemented from time to
time the "Subsidiary Guaranty"); the Parent Guaranty and Subsidiary Guarantee
are collectively referred to as the "Guarantee Agreements."
(d) The collateral secured by the Pledge Agreements shall be held by The
Chase Manhattan Bank, N.A., as trustee for the benefit of the holders of the
Notes, pursuant to a Trust Agreement dated as of the date hereof between the
Co-Issuers, The Chase Manhattan Bank, N.A., as trustee and the holders of the
Notes substantially in the form of Exhibit 5 hereto (as amended, modified and
supplemented from time to time, the "Trust Agreement").
(e) Each of the Credit Parties and the holders of the Notes, shall
simultaneously herewith, enter into a Subordination Agreement substantially in
the form of Exhibit 6 hereto (as amended, modified and supplemented from time to
time, the "Subordination Agreement").
(f) The Pledge Agreements, the Guarantee Agreements, the Intercreditor
Agreement, the Trust Agreement and the Subordination Agreement are referred to
herein collectively as the "Transaction Documents".
2
<PAGE>
4. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Orrick, Herrington & Sutcliffe
LLP, 666 Fifth Avenue, 18th Floor, New York, New York 10103, at 10:00 a.m., New
York time, at a closing (the "Closing") on January 28, 1998 or on such other
Business Day thereafter on or prior to January 30, 1998 as may be agreed upon by
the Co-Issuers and you and the Other Purchasers. At the Closing the Co-Issuers
will deliver to you the Notes to be purchased by you in the form of a single
Note (or such greater number of Notes in integral multiples of $100,000 and in
an amount not less than the lesser of (x) $1,000,000 or (y) the aggregate amount
outstanding under the Note as you may request) dated the date of the Closing and
registered in your name (or in the name of your nominee), against delivery by
you to the Co-Issuers or their order of immediately available funds in the
amount of the purchase price therefor by wire transfer of immediately available
funds for the account of the Co-Issuers to account number 000323511759 at The
Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004, ABA No.
021000021 for wire transfers, and any other relevant wire transfer information].
If at the Closing the Co-Issuers shall fail to tender such Notes to you as
provided above in this Section 4, or any of the conditions specified in Section
5 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
5. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
5.1 Representations and Warranties.
The representations and warranties of each of the Credit Parties in
each Transaction Document, this Agreement and the Other Agreements shall be
correct when made and at the time of the Closing.
5.2 Performance; No Default.
Each Credit Party shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing, and after giving effect to
the issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 6.14) no Default or Event of Default shall have
occurred and be continuing. Neither any Credit Party nor any of its Subsidiaries
shall have entered into any transaction since the date of the Memorandum that
would have been prohibited by Sections 12.1, 12.2, 12.3, 12.4 or 12.5 hereof had
such Sections applied since such date.
5.3 Compliance Certificates.
(a) Officer's Certificate. The Company and each Co-Issuer shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 5.1, 5.2 and 5.9 (as
applicable) have been fulfilled.
3
<PAGE>
(b) Secretary's Certificate. Each Credit Party shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement and the Transaction Documents and the Other Agreements
and as to the incumbency and the authority of the officers executing such
agreements.
5.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing, (a) from Gilbert, Segall and Young LLP,
counsel for the Co-Issuers, the Guarantors and the Pledgors covering the matters
set forth in Exhibit 5.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you),
(b) from Orrick, Herrington & Sutcliffe LLP, your special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 5.4(b)
and covering such other matters incident to such transactions as you may
reasonably request, and (c) from Pryor Cashman Sherman & Flynn, counsel to the
Trustee, substantially in the form of Exhibit 5.4(c) and covering such other
matters incident to such transactions as you may reasonably request.
5.5 Purchase Permitted By Applicable Law, Etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
5.6 Sale of Other Notes.
Contemporaneously with the Closing the Co-Issuers shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.
5.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 17.1, the Co-Issuers
shall have paid on or before the Closing the fees, charges and disbursements of
your special counsel referred to in Section 5.4 to the extent reflected in a
statement of such counsel rendered to the Co-Issuers at least one Business Day
prior to the Closing.
4
<PAGE>
5.8 Private Placement Number.
A private placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
5.9 Changes in Corporate Structure.
Except as specified in Schedule 5.9, each Credit Party and each of
its Subsidiaries shall not have changed its respective jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 6.5.
5.10 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement, the Transaction Documents, the
Other Agreements and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.
5.11 Transaction Documents.
Each of the Transaction Documents, this Agreement, the Notes and the
Other Agreements shall have been duly authorized by all necessary corporate
action. Each Credit Party that is a party thereto shall have executed and
delivered the Transaction Documents, this Agreement, the Notes and the Other
Agreements, and each of the Transaction Documents, this Agreement, the Notes and
the Other Agreements shall be in full force and effect. The collateral secured
by the Pledge Agreements shall have been transferred to the trustee in
accordance with the Pledge Agreements, subject to the simultaneous delivery of
such collateral to the Collateral Agent.
5.12 Taxes.
Any taxes, fees and other charges due in connection with the
issuance and sale of the Notes shall have been paid in full by the Co-Issuers.
5.13 Legality.
The Notes shall qualify as a legal investment for you under all
applicable laws of any jurisdiction to which you are subject (without reference
to any so-called "basket clause" of any such law or any clause that imposes
limitations on particular investments, whether in the aggregate or
individually), and the Co-Issuers shall have delivered to you any evidence
thereof which you or your special counsel may reasonably request.
5
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF THE CO-ISSUERS.
Each of the Co-Issuers represents and warrants to you that:
6.1 Organization; Power and Authority.
Each Credit Party is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified as a foreign corporation
or other legal organization and is in good standing in each jurisdiction in
which such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Credit Party has all requisite corporate or partnership
power to own or hold under lease the properties it purports to own or hold under
lease, to transact the business it transacts and proposes to transact, to
execute and deliver this Agreement, the Transaction Documents, the Other
Agreements and the Notes and to perform the provisions hereof and thereof.
6.2 Authorization, Etc.
This Agreement, the Other Agreements, the Transaction Documents and
the Notes have been duly authorized by all necessary corporate or partnership
action on the part of each Credit Party that is a party thereto, and this
Agreement, the Other Agreements and the Transaction Documents each constitutes,
and upon execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of each Credit Party that is a party thereto,
enforceable against such Credit Party in accordance with its terms, except as
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6.3 Disclosure.
The Co-Issuers, through their agent, Chase Securities Inc., have
delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum of Drew Industries Incorporated, dated November 1997 (the
"Memorandum"), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of each Credit Party and its Subsidiaries. Except as
disclosed in Schedule 6.3, this Agreement, the Notes, the Other Agreements, the
Memorandum, the Transaction Documents, the documents, certificates or other
writings delivered to you by or on behalf of any Credit Party or its
Subsidiaries in connection with the transactions contemplated hereby and the
financial statements listed in Schedule 6.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 6.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 6.5, since December 31, 1996, there has been no
change in the financial condition, operations, business, properties or prospects
of any Credit
6
<PAGE>
Party or any of its Subsidiaries, except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to any Credit Party that could reasonably be expected to
have a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of any Credit Party or any of its Subsidiaries
specifically for use in connection with the transactions contemplated hereby.
6.4 Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 6.4 contains (except as noted therein) complete and correct
lists (i) of the Subsidiaries of each Co-Issuer, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Co-Issuer and each of its other Subsidiaries,
(ii) of the Co-Issuer's Affiliates, other than Subsidiaries, (iii) of the
Company's and the Co-Issuer's respective directors and senior officers, and (iv)
those Subsidiaries of the Co-Issuers that are Inactive Subsidiaries. The
Co-Issuers are the only Wholly-Owned Subsidiaries of the Company.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 6.4 as being owned by a Co-Issuer
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by a Co-Issuer or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 6.4) and other than those Liens in
existence on the date hereof granted in favor of the Collateral Agent pursuant
to the Pledge Agreement (as defined in the Revolving Credit Agreement).
(c) Each Subsidiary identified in Schedule 6.4 (other than the Inactive
Subsidiaries) is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
(d) No Subsidiary of any Co-Issuer is a party to, or otherwise subject to
any legal restriction or any agreement (other than this Agreement, the Other
Agreements, the Revolving Credit Documents, the agreements listed on Schedule
6.4 and customary limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to any Co-Issuer or to any of its Subsidiaries
that owns outstanding shares of capital stock or similar equity interests of
such Subsidiary.
6.5 Financial Statements.
The Company has delivered to each Purchaser copies of the
consolidated financial statements of the Company and its Subsidiaries listed on
Schedule 6.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material
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respects the consolidated financial position of the Company and its Subsidiaries
as of the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments). In addition, the Company has delivered to each purchaser the Form
8-K/A1, amendment to the Current Report on Form 8-K dated October 7, 1997, as
filed with the Securities and Exchange Commission. This filing contains the
audited financial statements of Lippert Components, Inc. ("Lippert") as of and
for the periods ended September 30, 1997, as well as pro forma combined
financial statements of the Company and Lippert.
6.6 Compliance with Laws, Other Instruments, Etc.
The execution, delivery and performance by each Credit Party of this
Agreement, the Other Agreements, the Notes or the Transaction Documents will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of any Credit
Party or any of its Subsidiaries under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which any Credit Party or any of its
Subsidiaries is bound or by which any Credit Party or any of its Subsidiaries or
any of their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to any Credit Party or any of its Subsidiaries or (iii)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to any Credit Party or any of its
Subsidiaries.
6.7 Governmental Authorizations, Etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by any Credit Party of this Agreement, the
Other Agreements, the Notes or the Transaction Documents.
6.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 6.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Co-Issuers, threatened against
or affecting any Credit Party or any of its Subsidiaries or any property of any
Credit Party or any of its Subsidiaries in any court or before any arbitrator of
any kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(b) No Credit Party nor any of its Subsidiaries is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
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6.9 Taxes.
Each Credit Party and its Subsidiaries has filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which such Credit Party or such
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. Each Co-Issuer knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of each Credit Party and its Subsidiaries in
respect of Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of each Credit Party and its Subsidiaries
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1992.
6.10 Title to Property; Leases.
Each Credit Party and its Subsidiaries has good and marketable title
to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 6.5 or purported to have been acquired by
any Credit Party or any of its Subsidiaries after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
6.11 Licenses, Permits, Etc.
Except as disclosed in Schedule 6.11, each Credit Party and its
Subsidiaries owns or possesses all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others;
(a) to the best knowledge of each of the Co-Issuers, no product of any
Credit Party or any of its Subsidiaries infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, service mark,
trademark, trade name or other right owned by any other Person; and
(b) to the best knowledge of each of the Co-Issuers, there is no Material
violation by any Person of any right of any Credit Party or any of its
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right owned or used by any Credit Party or any of its
Subsidiaries.
6.12 Compliance with ERISA.
(a) Each Credit Party and each ERISA Affiliate has operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not
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resulted in and could not reasonably be expected to result in a Material Adverse
Effect. Neither any Credit Party nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in Section
3 of ERISA), and no event, transaction or condition has occurred or exists that
could reasonably be expected to result in the incurrence of any such liability
by any Credit Party or any ERISA Affiliate, or in the imposition of any Lien on
any of the rights, properties or assets of any Credit Party or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $50,000 in the case of any
single Plan and by more than $150,000 in the aggregate for all Plans. The term
"benefit liabilities" has the meaning specified in Section 4001 of ERISA and the
terms "current value" and "present value" have the meaning specified in Section
3 of ERISA.
(c) Each Credit Party and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of each Credit Party's most recently ended fiscal year, respectively,
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
Section 4980B of the Code) of each Credit Party and its Subsidiaries is not
Material.
(e) The execution and delivery of this Agreement, the issuance and sale of
the Notes hereunder, and the Transaction Documents will not constitute or result
in any non-exempt prohibited transaction under Section 406 of ERISA or any
transaction in connection with which a tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code. The representation by each Credit Party in the
first sentence of this Section 6.12(e) is made in reliance upon and subject to
the accuracy of your representation in Section 7.2 as to the sources of the
funds used to pay the purchase price of the Notes to be purchased by you.
6.13 Private Offering by the Company and the Co-Issuers.
Neither the Company nor any Co-Issuer nor anyone acting on the behalf of
the Company or any Co-Issuer has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you, the
Other Purchasers and not more than five (5) other Institutional Investors, each
of which has been offered the Notes at a private sale for investment. Neither
the Company nor any Co-Issuer nor anyone acting on the behalf of the Company or
any Co-Issuer has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act.
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6.14 Use of Proceeds; Margin Regulations.
The Co-Issuers will apply the proceeds of the sale of the Notes as set
forth in Schedule 6.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve any Co-Issuer in a violation of Regulation X of said Board (12 CFR 224)
or to involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Co-Issuers and the Co-Issuers do not have any present
intention that margin stock will constitute more than 5% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation G.
6.15 Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 6.15 sets forth a complete and
correct list of all outstanding Indebtedness of each Credit Party and its
Subsidiaries as of January 20, 1998, since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Indebtedness of any Credit Party or any of its Subsidiaries.
Neither any Credit Party nor any of its Subsidiaries is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Indebtedness for borrowed money of such Credit Party or such Subsidiary
and no event or condition exists with respect to any such Indebtedness of any
Credit Party or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 6.15, neither any Credit Party nor any
of its Subsidiaries has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 12.3.
6.16 Foreign Assets Control Regulations, Etc.
Neither the sale of the Notes by the Co-Issuers hereunder nor their use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
6.17 Status under Certain Statutes.
Neither any Credit Party nor any of its Subsidiaries is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
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6.18 Environmental Matters.
Except as set forth on Schedule 6.18, neither any Credit Party nor any of
its Subsidiaries has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against any
Credit Party or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as could not reasonably be expected to result
in a Material Adverse Effect. Except as otherwise disclosed to you in writing,
(a) neither any Credit Party nor any of its Subsidiaries has knowledge of
any facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither any Credit Party nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated by
any Credit Party or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
6.19 Solvency.
Each Credit Party is Solvent and, immediately after giving effect to the
issue and sale of the Note and the consummation of the other transactions
contemplated by this Agreement, each Credit Party will be Solvent.
For purposes of this Section 6.19, the term "Solvent" shall mean, with
respect to any Person, that:
(a) the assets of such Person (including rights of contribution), at a
fair valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person;
(b) based on current projections, which are based on underlying
assumptions which provide a reasonable basis for the projections and which
reflect such Person's judgment based on present circumstances of the most likely
set of conditions and such Person's most likely course of action for the period
projected, such Person believes it has sufficient cash flow to enable it to pay
its debts as they mature; and
(c) such Person does not have an unreasonably small capital with which to
engage in its anticipated business.
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For purposes of this Section 6.19, the "fair valuation" of the assets of
any Person shall be determined on the basis of the amount which may be realized
within a reasonable time, either through collection or sale of such assets at
the regular market value, conceiving the latter as the amount which could be
obtained for the property in question within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase under
ordinary selling conditions.
6.20 Pledge Agreements
The Pledge Agreements, upon execution and delivery by the parties thereto,
will create in favor of the Trustee, for the ratable benefit of the holders of
the Notes, a legal, valid and enforceable security interest in the Collateral
(as such term is defined in the Pledge Agreements) and, when (i) such Collateral
consisting of corporate stock is delivered to the Trustee together with duly
executed, undated instruments of transfer, and (ii) financing statements in
appropriate form in respect of limited partnership interests constituting
Collateral thereunder are filed in the offices specified therein, the Pledge
Agreements and the Liens created thereunder will constitute fully perfected
first priority Liens on, and security interest in such Collateral, in each case
prior and superior in right to any other Person other than the Liens in favor of
the Collateral Agent in existence on the date hereof which shall rank pari
passu.
7. REPRESENTATIONS OF THE PURCHASER.
7.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Co-Issuers
are not required to register the Notes.
7.2 Source of Funds.
You represent that at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" as defined in
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60 (60 FR
35925, July 12, 1995) and in respect thereof you represent that there is no
"employee benefit plan" (as defined in Section 3(3) of ERISA and Section
4975(e)(1) of the Code, treating as a single plan all plans maintained by the
same employer or employee organization or affiliate thereof) with respect to
which the amount of the general account reserves and liabilities of all
contracts held by or on behalf of such plan exceed ten percent (10%) of the
total reserves and liabilities of such general account (exclusive of separate
account liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile; or
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(b) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTCE 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTCE 91-38 (issued July
12, 1991) and, except as you have disclosed to the Co-Issuers in writing
pursuant to this paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Section I(c) and (g) of the QPAM
Exemption are satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company or any of the Co-Issuers
and (i) the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed to
the Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Co-Issuers in writing pursuant to this
paragraph (e); or
(f) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA. As used in this Section 7.2, the
terms "employee benefit plan", "governmental plan", "party in interest" and
"separate account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
8. INFORMATION AS TO COMPANY
8.1 Financial and Business Information
The Company and the Co-Issuers shall deliver to each holder of Notes that
is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and
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(ii) consolidated statements of income, changes in stockholders'
equity and cash flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, provided
that delivery within the time period specified above of copies of the
Company's Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
8.1(a);
(b) Annual Statements -- within 105 days after the end of each fiscal year
of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported
upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default
unless such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of the
Company's Annual
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Report on Form 10-K for such fiscal year (together with the Company's
annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission, together
with the accountant's certificate described in clause (B) above, shall be
deemed to satisfy the requirements of this Section 8.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement sent by
the Company or any Subsidiary to public securities holders generally, and (ii)
each regular or periodic report, each registration statement (without exhibits
except as expressly requested by such holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the Securities
and Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning
developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 13(f), a written notice specifying the nature and
period of existence thereof and what action the Co-Issuers are taking or propose
to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that any Credit Party
or any ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by any Credit Party or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by any Credit Party or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans, or in the imposition of
any Lien on any of the rights, properties or assets of the any Credit
Party or any ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;
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(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to any Credit Party or
any of its Subsidiaries from any Federal or state Governmental Authority
relating to any order, ruling, statute or other law or regulation that could
reasonably be expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries, or
relating to the ability of the Co-Issuers to perform their obligations hereunder
and under the Notes or the ability of any Credit Party to perform its
obligations under any Transaction Document to which it is a party in each case
as from time to time may be reasonably requested by any such holder of Notes.
8.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes pursuant
to Section 8.1(a) or Section 8.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer of the Company setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish compliance with the requirements of
Section 10.1 through Section 10.3 hereof, inclusive, and Sections 12.3, 12.4,
12.6, 12.7, 12.8 and 12.9 hereof during the quarterly or annual period covered
by the statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of each Credit Party
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Co-Issuers shall have taken or propose to take with respect
thereto.
8.3 Inspection.
The Company and each Co-Issuer shall permit the representatives of each
holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of any Credit Party, to discuss the affairs,
finances and accounts of such Credit Party and its Subsidiaries with such Credit
Party's officers, and (with the consent of such Credit Party, which consent will
not be unreasonably withheld and in such Credit Party's presence) its
independent public accountants, and (with the consent of such Credit Party,
which consent will not be
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unreasonably withheld) to visit the other offices and properties of such Credit
Party and any of its Subsidiaries, all at such reasonable times and as often as
may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Co-Issuers, to visit and inspect any of the offices or properties
of any Credit Party or any of its Subsidiaries, to examine all of their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision the Co-Issuers authorize (and shall cause each Credit Party to
authorize) said accountants to discuss the affairs, finances and accounts of
such Credit Party and its Subsidiaries), all at such times and as often as may
be requested.
9. PREPAYMENT OF THE NOTES.
9.1 Required Prepayments.
On January 28, 2001 and on each January 28,thereafter to and including
January 28, 2005 the Co-Issuers will prepay $8,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any
partial prepayment of the Notes pursuant to Section 9.2 or purchase of the Notes
permitted by Section 9.5 the principal amount of each required prepayment of the
Notes becoming due under this Section 9.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment
or purchase.
9.2 Optional Prepayments with Make-Whole Amount.
The Co-Issuers may, at their option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 10% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment provided that such amounts shall only be in
increments of $100,000, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Co-Issuers will give each holder of Notes written notice
of each optional prepayment under this Section 9.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 9.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Co-Issuers shall deliver to each holder of Notes a certificate
of a Senior Financial Officer specifying the calculation of such Make-Whole
Amount as of the specified prepayment date.
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9.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
9.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 9, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Co-Issuers shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Co-Issuers and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid principal amount of any Note.
9.5 Purchase of Notes.
Each Co-Issuer will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. Each Co-Issuer will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
9.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 9.2 or has become or
is declared to be immediately due and payable pursuant to Section 14.1,
as the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, .50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M.
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(New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the government PX6 Screen
of Bloomberg Financial Markets for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (ii) if such yields are
not reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the
second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) on the run U.S.
Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) on the run U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that
will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior
to its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to Section 9.2
or 14.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant
to Section 9.2 or has become or is declared to be immediately due and
payable pursuant to Section 14.1, as the context requires.
9.7 Mandatory Offer to Prepay in Event of Change in Control.
(a) In the event of the occurrence of a Change in Control (as defined in
Section 9.7(d) hereof), the Co-Issuers shall (i) deliver to each holder of Notes
a Section 9.7 Notice and Offer to Prepay pursuant to Section 9.7(b) hereof and
(ii) unless such holder declines prepayment as to all of the Notes it holds by
delivering a Section 9.7(c) Response pursuant to Section 9.7(c) hereof, prepay
all, but not less than all, of the Notes held by such holder, as hereinafter
provided. Any prepayment of Notes pursuant to this Section 9.7 shall be made at
a prepayment price equal to
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the principal amount of Notes to be prepaid, together with interest accrued
thereon to the date of prepayment.
(b) Not later than thirty (30) days and not more than sixty (60) days
prior to a Change in Control (or in the case of the Company no later than 3
Business Days after actual knowledge of a Change of Control) the Co-Issuers
shall give written notice to each holder of Notes that the Co-Issuers anticipate
a Change in Control and of such holder's right to elect to be prepaid hereunder
arising as a result thereof (a "Section 9.7 Notice and Offer to Prepay"). Such
Section 9.7 Notice and Offer to Prepay shall state: (i) that such notice is
delivered pursuant to this Section 9.7(b); (ii) the proposed date of and a
description of the circumstances surrounding such Change in Control; (iii) the
date by which a holder must deliver a Section 9.7 Response pursuant to Section
9.7(c) hereof in order to decline prepayment; and (v) the date on which the
Co-Issuers will prepay the Notes held by such holder if the holder does not
deliver a Section 9.7 Response pursuant to Section 9.7(c) hereof, which
prepayment date shall be the date of the occurrence of a Change in Control (the
"Section 9.7 Special Prepayment Date"). No failure by the Co-Issuers to deliver
a Section 9.7 Notice and Offer to Prepay to any holder shall limit such holder's
right to exercise such election.
(c) To decline prepayment pursuant to this Section 9.7 of the Notes held
by it, a holder of Notes shall deliver to any of the Co-Issuers such holder's
notice that it declines prepayment pursuant to this Section 9.7 with respect to
the Notes held by it and designated therein (a "Section 9.7(c) Response"). Such
Section 9.7(c) Response shall be delivered to such Co-Issuers (i) on or before
the fifteenth (15th) Business Day prior to the Section 9.7 Special Prepayment
Date, if the Co-Issuers deliver a Section 9.7 Notice and Offer to Prepay
pursuant to Section 9.7(b) hereof, or (ii) at any time on or prior to the
Section 9.7 Special Prepayment Date if the Co-Issuers fail to deliver a Section
9.7 Notice and Offer to Prepay. The Section 9.7(c) Response shall set forth the
name of such holder and the statement that it declines prepayment pursuant to
this Section 9.7 with respect to the Notes designated therein. Promptly and in
any event within two (2) Business Days after receipt of a holder's Section
9.7(c) Response, the Company shall, by written notice to such holder of a Note,
acknowledge receipt thereof. If the Co-Issuers have delivered a Section 9.7
Notice and Offer to Prepay to each holder and on or prior to the fifth (5th) day
prior to the Section 9.7 Special Prepayment Date, the Co-Issuers shall not have
received a Section 9.7(c) Response from a holder (or shall have received a
Section 9.7(c) Response with respect to some but not all the Notes held by such
holder), (i) the Co-Issuers shall promptly, but in any case within one (1)
Business Day after the expiration of such 5-day period, deliver written notice
to such holder that all of the Notes held by such holder (or all of the Notes
held by such holder with respect to which such holder shall not have declined
prepayment in such holder's Section 9.7(c) Response) will be prepaid pursuant to
this Section 9.7 on the Section 9.7 Special Prepayment Date; provided, however,
in respect of a Change of Control of the Company, if the Co-Issuers are unable
to prepay the Notes on the Special Prepayment Date, such Notes may be prepaid no
later than 30 days after receipt by the holders of a Section 9.7 Notice and
Offer to Prepay and (ii) the full unpaid principal amount of the Notes
outstanding, together with interest accrued thereon to the Section 9.7 Special
Prepayment Date, shall become due and payable on the Section 9.7 Special
Prepayment Date.
(d) For the purposes of this Section 9.7, a "Change of Control" shall be
deemed to have occurred in the event that: (a) in respect of the Co-Issuers (i)
the Principal Shareholders shall
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cease to own, directly or indirectly, at least fifty percent (50%) of the Voting
Stock of any of the Co-Issuers, free and clear of Liens; or (ii) the Principal
Shareholders shall cease to be entitled, directly or indirectly through
ownership of Voting Stock of the Co-Issuers, by contract or otherwise, to direct
or cause the direction of the Management and policies of any Co-Issuer; or (iii)
the failure of the Principal Shareholders to be entitled, directly or
indirectly, whether through ownership of stock, contract, or otherwise, to elect
a majority of the Board of the Co-Issuers, or (b) in respect of the Company, (i)
a person or group of persons shall acquire, directly of indirectly at least
fifty percent (50%) of the Voting Stock of the Company; or (ii) the Company
shall cease to be publicly owned.
10. FINANCIAL COVENANTS.
10.1 Net Worth.
The Company and its Subsidiaries, on a consolidated basis, shall have, at
the end of each fiscal quarter, a minimum Consolidated Net Worth of not less
than thirty-nine Million ($39,000,000) Dollars plus fifty (50%) percent of
Consolidated Net Income (but only if a positive number) since September 30,
1997.
10.2 Interest Coverage Ratio.
The Company and its Subsidiaries, on a consolidated basis, shall have, at
the conclusion of each twelve month period ending on the last day of each fiscal
quarter following the date hereof and at all times during such period, an
Interest Coverage Ratio of not less than 3.00:1.00.
10.3 Modified Fixed Charge Coverage Ratio.
The Company and its Subsidiaries, on a consolidated basis, shall have, at
the conclusion of each twelve month period ending on the last day of each fiscal
quarter following the date hereof and at all times during such period, a
Modified Fixed Charge Coverage Ratio of not less than 2.00:1.00.
11. AFFIRMATIVE COVENANTS.
Each Co-Issuer covenants and agrees that so long as any of the Notes are
outstanding:
11.1 Maintenance of Office.
Each Co-Issuer will maintain at the address for notices to such Co-Issuer
provided in Section 20 hereof an office where notices, presentations and demands
in respect of this Agreement and the Notes may be given to and made upon it;
provided, however, that any Co-Issuer may, upon fifteen (15) Business Days'
prior written notice to the holders of the Notes, move its respective office to
any other location within the continental boundaries of the United States. Each
Co-Issuer agrees that it will pay, and will save any holder of Notes harmless
against liability for, any stamp or other tax or governmental charge imposed in
respect of any transfer of a Note resulting from such change in office; and said
obligation of such Co-Issuer shall survive the payment or prepayment of the
Notes and the termination of this Agreement.
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11.2 Compliance with Law.
Each Co-Issuer will, and will cause each Credit Party and its Subsidiaries
to, comply with all laws, ordinances or governmental rules or regulations to
which each of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
11.3 Notice of Certain Events and Conditions.
(a) Each Co-Issuer will give prompt written notice to each holder of Notes
of any event of default (including, without limitation, any Event of Default) or
any event which with notice or lapse of time or both would constitute an event
of default (including, without limitation, any Default) under any evidence or
evidences of Indebtedness (including the Notes) in an aggregate amount of
$1,000,000 or more of any Credit Party or any of its Subsidiaries or under any
indenture, mortgage or other agreement or instrument relating to any such
evidence of Indebtedness (including this Agreement and the Other Agreements) or
under any other agreement or instrument relating to preferred stock (or
comparable equity interest) of any Credit Party or any of its Subsidiaries or
under any material lease for or in respect of which any Credit Party and any of
its Subsidiaries may be liable.
(b) Each Co-Issuer will give sixty (60) days prior written notice to each
holder of the Notes of the termination of the Revolving Credit Commitment (as
defined in the Revolving Credit Agreement).
(c) Each Co-Issuer will give written notice to each holder of the Notes no
less than six (6) months prior to the expiration of the UCC-1 financing
statements naming the Pledgors as Debtor and filed in favor of the Trustee. Each
Co-Issuer hereby agrees to take, or cause to be taken, all actions (including,
without limitation, the filing of any Uniform Commercial Code Financing
Statements, amendments or continuation statements) necessary to perfect or
otherwise protect the liens and security interests created under the Pledge
Agreements and to obtain the benefits of the Pledge Agreements in accordance
with the terms of this Agreement, the Other Agreements and the Transaction
Documents.
11.4 Insurance.
Each Co-Issuer will, and will cause each Credit Party and its Subsidiaries
to, maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
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11.5 Maintenance of Properties and Business.
Each Co-Issuer will, and will cause each Credit Party and its Subsidiaries
to, maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section 11.5 shall not
prevent any Credit Party or any of its Subsidiaries from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Co-Issuers have concluded that
such discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or otherwise cause a Default or an
Event of Default. Each Co-Issuer will, and will cause each Credit Party and its
Subsidiaries to, operate its businesses properly and efficiently, and in
substantially the manner in which they are presently conducted and operated,
subject to changes in the ordinary course of business.
11.6 Payment of Taxes and Claims.
Each Co-Issuer will, and will cause each Credit Party and its Subsidiaries
to, file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of any Credit Party or any of its
Subsidiaries, provided that neither any Credit Party nor any of its Subsidiaries
need pay any such tax or assessment or claims if (i) the amount, applicability
or validity thereof is contested by such Credit Party or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and such Credit Party
or such Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of such Credit Party or such Subsidiary or (ii) the nonpayment
of all such taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
11.7 Corporate Existence, etc.
Subject to Sections 12.2 and 12.8, each Co-Issuer will, and will cause
each Credit Party to, at all times preserve and keep in full force and effect
the corporate or partnership (as the case may be) existence of itself and its
Subsidiaries and all respective rights and franchises of each Credit Party and
its Subsidiaries unless, in the case of Subsidiaries that are not Credit
Parties, the termination of or failure to preserve and keep in full force and
effect such corporate or partnership existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
11.8 ERISA.
(a) Each Co-Issuer will, and will cause each Credit Party and their ERISA
Affiliates to, take all actions and fulfill all conditions necessary to maintain
any and all Plans in substantial compliance with applicable requirements of
ERISA, the Code and applicable foreign law until
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such Plans are terminated, and the liabilities thereof discharged, in accordance
with applicable law.
(b) No domestic Pension Plan will incur any "accumulated funding
deficiency" (within the meaning of Section 412(a) of the Code), and no foreign
Pension Plan will be in violation of any funding requirement imposed by
applicable foreign law, which deficiency or violation reasonably could be
expected to have a Material Adverse Effect.
11.9 Environmental Law Compliance.
(a) Hazardous Substances. Each Co-Issuer shall, and shall cause each
Credit Party and its Subsidiaries to, at all times comply with all Environmental
Laws the failure to comply with which, individually or in the aggregate,
reasonably could be expected to have a Material Adverse Effect, and indemnify,
pay and hold each holder of Notes harmless from and against any and all losses,
cost (including attorneys' fees), liabilities and damages whatsoever incurred by
such holder by reason of (i) any liability of any Credit Party or any of its
Subsidiaries under any applicable Environmental Laws, (ii) any violation of any
applicable Environmental Laws for which any Credit Party or any of its
Subsidiaries is liable or which is related to any real estate or other facility
owned, leased or operated by any Credit Party or any of its Subsidiaries, or
(iii) the imposition of any governmental Lien for the recovery of environmental
cleanup or response costs expended by reason of any such liability or violation.
(b) Cleanup Orders; Further Assurance. Each Co-Issuer shall promptly
provide each holder with a copy of any notice received by any Credit Party or
any of its Subsidiaries stating that such Credit Party or such Subsidiary has
become liable for the cost of investigating, removing or remediating Hazardous
Materials or subject to a cleanup order or decree, or a fine or penalty issued
or imposed, by any agency having jurisdiction over such Credit Party or any such
Subsidiary if the Co-Issuers believe or reasonably should believe that the
matter that is subject of such notice is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. Upon receipt of such
notice, or if any holder of Notes at any time has a reasonable basis to believe
that any facility owned, leased or operated by any Credit Party or any of its
Subsidiaries has become contaminated or subject to a cleanup or mitigation order
or decree, or a fine or penalty, issued or imposed by any federal, state or
local governmental agency which could reasonably be expected to have a Material
Adverse Effect, then the Co-Issuers agree, upon request from such holder, to
provide such holder, at the Co-Issuers' expense, with such reports,
certificates, engineering studies or other written material or data as such
holder may reasonably require.
11.10 Further Assurances.
Each Co-Issuer will, and will cause each Credit Party and its Subsidiaries
to, promptly execute and deliver all further instruments and documents and take
all further action that may be necessary in order to give effect to the
provisions of this Agreement, the Other Agreements, the Transaction Documents
and the Notes.
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11.11 New Subsidiaries.
No Co-Issuer shall permit any Subsidiary of the Company to exist unless
(a) such Subsidiary shall have executed and delivered to each holder a
Subsidiary Joinder substantially in the form of Attachment 1 to the form of
Subsidiary Guaranty attached hereto as Exhibit 4(b), (b) the shares or
partnerships interests in such Subsidiary shall have been pledged pursuant to a
Pledge Agreement substantially in the form of Exhibit 2 hereto, and (c) a legal
opinion to the effect that each of such agreements is in full force and effect
and is enforceable against such Subsidiary.
11.12 Additional Guarantors; Additional Collateral; Additional Parties to
Subordination Agreement.
If any Person (a) after the date hereof becomes (whether upon its
formation, by acquisition of stock or other interests therein, or otherwise) a
Subsidiary of any Credit Party (a "New Subsidiary"), or (b) that was an Inactive
Subsidiary of a Credit Party ceases to be an Inactive Subsidiary of a Credit
Party but continues to be a Subsidiary thereof, the Co-Issuers shall promptly
furnish notice in writing of such facts to the holders of the Notes, and if the
holders of the Notes, shall so elect (but provided that if the Administrative
Agent, Collateral Agent or any of the Lenders (as such terms are defined in the
Revolving Credit Agreement) shall receive any guaranty or security in respect of
such New Subsidiary the holders of the Notes, shall be deemed to have so
elected) (i) cause such New Subsidiary or formerly Inactive Subsidiary to become
a Guarantor pursuant to an instrument in form, scope, and substance satisfactory
to the holders of the Notes, (ii) deliver or cause to be delivered, or assign,
to the Trustee (x) subject to the Lien in favor of the Trustee under the Pledge
Agreement of the respective Credit Party, the certificates representing shares
of stock or other interests of the New Subsidiary or formerly Inactive
Subsidiary owned by a Credit Party (or Subsidiary thereof), together with
appropriate instruments of transfer required under the Pledge Agreement, and (y)
an amendment to such Pledge Agreement, reflecting the foregoing in the form
thereof prescribed under such Pledge Agreement, and (iii) cause such New
Subsidiary or formerly Inactive Subsidiary to become a party to such documents
as the holders of the Notes may request including, without limitation, the
Acknowledgment and Consent in the form of Exhibit A to the Pledge Agreements,
the effect of which shall be to secure the indebtedness, liabilities and
obligations hereunder and under the Notes, the other Transaction Documents and
the Other Agreements by a first priority Lien on and security interest in (which
Lien and security interest may be pari passu with a like Lien and security
interest in favor of the Collateral Agent for the benefit of the Lenders) the
capital stock of such New Subsidiary or formerly Inactive Subsidiary, provided,
however, that in any event, prior to the time that any New Subsidiary or
formerly Inactive Subsidiary receives the proceeds of, or makes, any loan or
advance or other extension of credit, from or to, or otherwise becomes the
obligor or obligee in respect of any Indebtedness of, any Credit Party or
Subsidiary thereof, the Co-Issuers shall (A) cause to be taken, in respect of
any such obligor, the action referred to in the preceding clauses (i), (ii), and
(iii), and (B) in the case of any such obligee, cause such obligee to become a
party to the Subordination Agreement pursuant to one or more instruments or
agreements satisfactory in form and substance to the holders of the Notes.
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12. NEGATIVE COVENANTS.
Each Co-Issuer covenants that so long as any of the Notes are outstanding:
12.1 Transactions with Affiliates.
Except as set forth on Schedule 12.1 hereto, each Co-Issuer will not, and
will not permit any Credit Party or any of its Subsidiaries to, enter into,
directly or indirectly, any transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of assets of any kind or the rendering of any service) with any
Affiliate (other than another Credit Party or a Wholly-Owned Subsidiary), except
in the ordinary course and pursuant to the reasonable requirements of such
Co-Issuer's or such Credit Party's business and upon fair and reasonable terms
no less favorable to such Co-Issuer or such Credit Party than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
12.2 Merger, Consolidation, etc.
Each Co-Issuer will not, and will not permit any Credit Party or any of
its Subsidiaries to, consolidate with or merge with any other corporation or
convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to any Person unless:
(a) such merger, consolidation, conveyance, transfer, or lease is with or
to another Credit Party or to a Subsidiary of a Credit Party, provided that
neither the Company nor any Co-Issuer may sell or otherwise transfer
substantially all of its assets to any Person or fail to survive any such merger
or consolidation related to it;
(b) (i) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of any Credit Party or any of its Subsidiaries,
as the case may be, shall be a solvent corporation organized and existing under
the laws of the United States or any State thereof (including the District of
Columbia), and, if such Credit Party or such Subsidiary is not such corporation,
(1) such corporation shall have executed and delivered to each holder of any
Notes its assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Agreements, the Transaction
Documents and the Notes, and (2) shall have caused to be delivered to each
holder of any Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof;
(ii) immediately prior to such transaction and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing; and
(iii) immediately prior to such transaction and after giving effect
thereto, each Co-Issuer would be permitted by the provisions of Section
12.4(d) hereof to incur at least $1.00 of additional Indebtedness.
Notwithstanding the foregoing, Lippert may enter into the Proposed
Transaction provided that:
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(A) the conditions set forth in clause (b) above are
satisfied;
(B) the consummation of the Proposed Transaction is in full
compliance with the conditions set forth in Section 11.12 hereof;
(C) the transfer or conveyance of assets are to direct or
indirect wholly-owned subsidiaries of Lippert; and
(D) Lippert has received adequate consideration for such
transfer.
No such conveyance, transfer or lease of substantially all of the assets
of any Credit Party or any of its Subsidiaries shall have the effect of
releasing such Credit Party or its Subsidiaries or any successor corporation
that shall theretofore have become such in the manner prescribed in this Section
12.2 from its liability under this Agreement, the Notes, the Transaction
Documents or the Other Agreements to which it is a party.
12.3 Liens.
Each Co-Issuer will not, and will not permit any Credit Party or any of
its Subsidiaries to, incur, assume or suffer to exist any Lien upon any of its
assets now or hereafter owned, or upon the income or profits thereof, other than
Permitted Liens. In any case wherein any such assets are subjected or become
subject to a Lien in violation of this Section 12.3, the Co-Issuers will make or
cause to be made provision whereby the Notes will be secured equally and ratably
with all obligations secured by such Lien, and in any case the Notes shall have
the benefit, to the full extent that, and with such priority as, the holders may
be entitled under applicable law, of an equitable Lien on such assets securing
(in the manner as aforesaid) the Notes and such other obligations; provided,
however, that any Lien created, incurred or suffered to exist in violation of
this Section 12.3 shall constitute an Event of Default hereunder, whether or not
any such provision is made pursuant to this Section 12.3. In no event shall a
Lien be granted by any Credit Party to the Collateral Agent, Administrative
Agent or the Secured Parties unless concurrently therewith a lien of equal
priority is granted to the Trustee.
12.4 Limitation on Indebtedness.
The Company will not, nor will any Co-Issuer or any of its Subsidiaries,
directly, or indirectly, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder and under the Notes;
(b) Indebtedness created under the Revolving Credit Agreement; provided
that the aggregate principal amount of Indebtedness incurred as permitted by
this clause (b) shall not at any time exceed $30,000,000;
(c) Indebtedness existing on the date hereof which is set forth on
Schedule 6.15 hereto;
(d) all renewals, extensions, substitutions, refinancings or replacements,
in an amount not to exceed the amount so refinanced, of any outstanding
Indebtedness provided that the terms, covenants and restrictions in respect of
such renewals, extensions, substitutions, refundings or
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replacements are not materially more onerous than the existing terms, covenants
and restrictions of such Indebtedness;
(e) Indebtedness of one Credit Party to another Credit Party; provided
that (i) there is adequate consideration for such Indebtedness and there is
evidence of such Indebtedness on each Credit Party's books, (ii) all of the
outstanding capital stock or other equity interests of each such Credit Party
shall be owned 100% directly or indirectly by the Company and the Co-Issuer,
(iii) each of such Credit Parties to or by whom such Indebtedness is owed, or
who owns (directly or indirectly) any stock referred to in the preceding clause
(ii), shall have become a party to a Guarantee Agreement, to the Subordination
Agreement, and/or the Pledge Agreements (or to all) as required by Section 11.12
hereof, (iv) such Indebtedness shall at all times be subject to the provisions
of the Subordination Agreement as Subordinated Debt as defined in the
Subordination Agreement, and (v) such indebtedness shall not be assigned or
transferred by the obligee thereof to any Person other than another Credit Party
such that after giving effect to such assignment or transfer all the conditions
of this proviso are met; and
(f) to the extent not included above in this Section 12.4, other
Indebtedness incurred by the Company or any Co-Issuer or any of its Subsidiaries
(including, without limitation, increases to the Revolving Credit Facility in
excess of $30,000,000); provided that, at the time of incurrence thereof and
after giving effect thereto and to the application of the proceeds thereof,
Consolidated Indebtedness shall not exceed 55% of Total Capitalization of the
Company and its Subsidiaries.
12.5 Restrictive Agreements
Each Co-Issuer will not, and will not permit any Credit Party or any of
its Subsidiaries to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon the ability of any Credit Party or any Subsidiary thereof,
(a) to create, incur, or permit to exist any Lien upon any of its property or
assets or revenues, whether now owned or hereafter acquired, (b) to pay
dividends or make other distributions to the Company or any Co-Issuer with
respect to any shares of its capital stock or other equity interests, (c) to pay
any Indebtedness owed to the Company or any Co-Issuer, (d) to make or permit to
exist loans or advances to the Company or any Co-Issuer, or (e) to sell,
transfer, lease or otherwise dispose of any of its properties or assets to the
Company or any Co-Issuer; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, any Other
Agreements or the Revolving Credit Documents, and (ii) such Credit Party or
Subsidiary may enter into such an agreement in connection with any Permitted
Lien, so long as such prohibition or limitation is by its terms effective only
against the property, assets or revenues subject to such Lien.
12.6 Limitation on Subsidiary Indebtedness and Issuance of Preferred Stock.
None of the Co-Issuers will permit any of its Subsidiaries to, at any
time, directly or indirectly, incur, create, assume, guarantee or become or be
liable in any manner with respect to any Indebtedness or issue any preferred
stock except:
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(i) Indebtedness of such Subsidiary outstanding as of the Closing
Date and set forth on Schedule 6.15 hereto or any refinancing, extension,
renewal or refunding of any such Indebtedness in an amount not to exceed
the amount so refinanced of such Indebtedness; provided that the terms,
covenants and restrictions in respect of such refinancing, extension,
renewal or refunding are not materially more onerous than the existing
terms, covenants and restrictions of such Indebtedness;
(ii) Indebtedness of such Subsidiary in respect of guaranties
delivered in connection with the Revolving Credit Documents;
(iii) preferred stock of such Subsidiary issued on or prior to the
Closing Date;
(iv) subject to Section 12.4(e) hereof, Indebtedness of, or
preferred stock issued by, such Subsidiary to a Co-Issuer or a Subsidiary
of a Co-Issuer; and
(v) other Indebtedness or preferred stock of such Subsidiary,
provided that such Indebtedness and preferred stock together with the
aggregate amount of outstanding Indebtedness and the aggregate liquidation
value of preferred stock of such Subsidiary previously incurred and
outstanding under this paragraph (other than Indebtedness incurred under
(iii) hereof), does not exceed 15% of Consolidated Net Worth.
12.7 Limitation on Restricted Payments.
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, declare, make or pay, or agree to declare, make or pay
or incur any liability to make or pay, or cause or permit to be declared, made
or paid, or set aside any sum or property to declare make or pay any Restricted
Payment, other than (a) cash dividends (or distributions, in the case of
partnerships) from Subsidiaries of the Company to the Company, (b) acquisitions
or purchases by the Company or any of its Subsidiaries of capital stock of any
Subsidiary or capital contributions made by the Company or any of its
Subsidiaries to a Subsidiary and (c) to the extent not covered by the foregoing
clauses (a) and (b), any other Restricted Payments made by the Company provided
that each of the following conditions is satisfied at the time of making such
Restricted Payment and after giving effect thereto:
(i) no Default of Event of Default has occurred and is continuing;
(ii) the Company could incur at least $1.00 of additional
Indebtedness pursuant to Section 12.4(d) hereof; and (iii) the aggregate
amount of such Restricted Payments does not exceed the Restricted Payments
Basket.
12.8 Sale of Assets.
Subject to the provisions of Section 12.2 hereof, no Credit Party will,
nor will it permit or any of its Subsidiaries to, directly or indirectly, in a
single transaction or a series of transactions,
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sell, lease, transfer, abandon or otherwise dispose of or suffer to be sold,
leased transferred, abandoned or otherwise disposed of, (collectively,
"Transfer") assets in excess of 10% of Consolidated Total Assets ("Substantial
Assets"), other than in the ordinary course of business (including without
limitation the disposal of obsolete assets not used or useful in such Credit
Party's business) in any fiscal year, and provided that such Transfer of
Substantial Assets in the aggregate shall not exceed 40% of Consolidated Total
Assets measured as of October 7, 1997, except that:
(i) any Credit Party or any of its Subsidiaries may Transfer its
assets to any Credit Party or any other Wholly-Owned Subsidiary; and
(ii) any Credit Party or any of its Subsidiaries may Transfer its
assets in excess of the limitations set forth above (such assets
collectively the "Excess Assets") only if the proceeds of such sales of
Excess Assets are used to purchase other property of a similar nature of
at least equivalent value (such property the "Excess Replacement Assets")
within one year of such sale, provided, however, that there shall be no
Lien on any of the Excess Replacement Assets.
12.9 Limitation on Investments
No Credit Party will, nor will it permit any of its Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, guarantee (except pursuant to the Guarantee Agreements)
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except Permitted Loans and Investments.
12.10 No Amendments.
The Co-Issuers will not amend in any material respect the Revolving Credit
Agreement or any other agreement entered into in connection therewith without
the prior written consent of the holders of at least 66 2/3% in aggregate
principal amount of the Notes outstanding. Notwithstanding the foregoing, the
Co-Issuers may amend the Revolving Credit Agreement solely to increase the
commitment thereunder to $30,000,000 without the prior consent of the holders of
the Notes.
13. EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) any payment of any principal or Make-Whole Amount, if any, on any Note
shall fail to be made when the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
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(b) any payment of any interest on any Note shall fail to be made for more
than five Business Days after the same shall become due and payable; or
(c) the Company, any Co-Issuer or any Subsidiary shall default in the
performance of or compliance with any term contained in Section 10.1, 10.2,
10.3, 11.7, 12.2, 12.3, 12.4, 12.6 or 12.8 hereof.
(d) the Company, any Credit Party or any Subsidiary defaults in the
performance of or compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 13) or in any
Transaction Document or Other Agreement and such default is not remedied within
30 days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) any of the Co-Issuers or the Company
receiving written notice of such default from any holder of a Note; or
(e) any representation or warranty made in writing by or on behalf of all
or any of the Co-Issuers or any other Credit Party or by any officer of any
Co-Issuer or any other Credit Party in this Agreement, any of the Transaction
Documents or in any writing furnished now or in the future in connection with
the transactions contemplated hereby proves to have been false or incorrect in
any material respect on the date as of which made; or
(f) (i) any Credit Party or any of its Subsidiaries is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or Make-Whole Amount or interest on any Indebtedness that is outstanding
in a principal amount of at least $3 million individually or $5 million in the
aggregate, beyond any period of grace provided with respect thereto, or (ii) any
Credit Party or any of its Subsidiaries is in default in the performance of or
compliance with any term of any evidence of any Indebtedness in principal amount
of at least $3 million individually or $5 million in the aggregate, or of any
mortgage, indenture or other agreement relating thereto or (iii) as a
consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) any Credit Party has become
obligated to purchase or repay Indebtedness before its regular maturity or
before its regularly scheduled dates of payment in principal amount of at least
$3 million individually or $5 million in the aggregate, or (y) one or more
Persons have the right to require any such Credit Party to purchase or repay
such Indebtedness; or
(g) any Credit Party or any of it Subsidiaries (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by any Credit Party or any of its
Subsidiaries, a custodian, receiver,
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trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation any Credit Party or any of its Subsidiaries, or any such petition
shall be filed against any Credit Party or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in
excess of $3,000,000 are rendered against one or more Credit Party and its
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified any Credit Party
or any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $500,000, (iv) any Credit Party or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) any Credit Party or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) any Credit Party or any
of its Subsidiaries establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of any Credit Party or any of its Subsidiaries thereunder; and any
such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect; or
(k) the Company or any Credit Party is in default in the performance of or
compliance with any term of the Revolving Credit Agreement or any agreement
refinancing the Indebtedness thereunder or any note or any other agreement
entered into in connection therewith, beyond any period of grace provided with
respect thereto.
As used in Section 13(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
14. REMEDIES ON DEFAULT, ETC.
14.1 Acceleration.
(a) If an Event of Default with respect to any Credit Party or any of its
Subsidiaries described in paragraph (g) or (h) of Section 13 has occurred, all
the Notes then outstanding shall automatically become immediately due and
payable.
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(b) If any other Event of Default has occurred and is continuing, any holder or
holders of more than 66 2/3% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by written notice or notices
to the Company or any of the Co-Issuers, declare all the Notes then outstanding
to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
13 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by written notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 14.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Co-Issuers
acknowledge, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Co-Issuers (except as herein specifically provided for) and that the provision
for payment of a Make-Whole Amount by the Co-Issuers in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default, is intended
to provide compensation for the deprivation of such right under such
circumstances.
14.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 14.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise,
or pursuant to the terms of the Pledge Agreements.
14.3 Rescission.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 14.1, the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, by written notice to the Company
or any of the Co-Issuers, may rescind and annul any such declaration and its
consequences if (a) the Co-Issuers have paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 19, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No
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rescission and annulment under this Section 14.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
14.4 No Waivers or Election of Remedies, Expenses, Etc.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Co-Issuers under Section 16, the
Co-Issuers will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 14, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
14.5 Co-Issuer Waivers.
Each Co-Issuer hereby waives any right to assert against the holders of
the Notes any defense (legal or equitable), set-off, counterclaim and/or claim
which any Co-Issuer may now or at any time hereafter have against any other
Co-Issuer. Each Co-Issuer hereby waives all rights, benefits and defenses based
upon any legal disability of any other Co-Issuer or any discharge or limitation
of the liability of any other Co-Issuer to the holders, whether consensual or
arising by operation of law or offset or by reason of any bankruptcy,
insolvency, or debtor-relief proceeding or from any other cause or defense,
including, but not limited to, any claim of disability, offset, demand or
defense that any other Co-Issuer may assert or claim under this Agreement or the
Notes. Each Co-Issuer further waives all rights it may have at law or in equity
(including, without limitation, any law subrogating the Co-Issuer to the rights
of any holder of Notes) to seek contribution, indemnification or any other form
of reimbursement from any other Co-Issuer or any other person now or hereafter
primarily or secondarily liable for any obligations of each Co-Issuer under the
Notes, for any disbursement made by any other Co-Issuer under or in connection
with this Agreement or the Notes or otherwise until all the indebtedness,
liabilities, and obligations of the Co-Issuers hereunder, under the other
Transaction Documents and Other Agreements have been indefeasibly paid in full.
The liability of each Co-Issuer shall be joint and several, absolute,
unconditional and irrevocable irrespective of any act, failure to act, delay or
omission whatsoever on the part of a holder, including, without limitation, any
failure to demand, delay in demanding or rescission of a demand for any payment
under any Note or this Agreement, any failure to give to any Co-Issuer notice of
default in the making of any payment due and payable under any Note or this
Agreement or notice of any failure on the part of any Co-Issuer to do any act or
thing or to observe or perform any covenant, condition or agreement by it to be
observed or performed under any Note or this Agreement, or any action taken by
any holder in the exercise of any right or power by any holder, or the failure,
delay or omission by any holder to exercise any such right or power.
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15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
15.1 Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Co-Issuers shall not be affected by any
notice or knowledge to the contrary. The Co-Issuers shall give to any holder of
a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
15.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Co-Issuers shall
execute and deliver, at the Co-Issuers' expense (except as provided below), one
or more new Notes (as requested by the holder thereof) in exchange therefor, in
an aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Co-Issuers may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $1,000,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $1,000,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 8.2. The Notes shall not be transferred except in compliance with the
registration provisions of the Securities Act of 1933, as amended and any
applicable provisions of any state blue sky or securities laws or pursuant to an
available exemption from such registration provisions; provided, however, that
nothing herein shall require the Co-Issuers to register the Notes.
15.3 Replacement of Notes.
Upon receipt by the Company, of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
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(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it; provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $100,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
Each of the Co-Issuers at its own expense shall execute and deliver, in
lieu thereof, the new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
16. PAYMENTS ON NOTES.
16.1 Place of Payment.
Subject to Section 16.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in New York, at
the principal office of The Chase Manhattan Bank in such jurisdiction. The
Co-Issuers may at any time, by notice to each holder of a Note, change the place
of payment of the Notes so long as such place of payment shall be either the
principal office of any of the Co-Issuers in such jurisdiction or the principal
office of a bank or trust company in such jurisdiction.
16.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 16.1 or in such Note to the
contrary, the Co-Issuers will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Co-Issuers in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Co-Issuers made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Co-Issuers pursuant to Section 16.1.
Prior to any sale or other disposition of any Note held by you or your nominee
you will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Co-Issuers in exchange for a new Note or Notes pursuant to
Section 15.2. The Co-Issuers will afford the benefits of this Section 16.2 to
any Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 16.2.
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17. EXPENSES, ETC.
17.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the
Co-Issuers will pay all costs and expenses (including reasonable attorneys' fees
of special counsel and, if reasonably required, local or other counsel) incurred
by you and each Other Purchaser or holder of a Note in connection with such
transactions and in connection with any amendments, waivers or consents under or
in respect of this Agreement, the Transaction Documents, the Other Agreements or
the Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement, the Transaction Documents or the Notes or in responding to
any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Transaction Document or the Notes, or by
reason of being a holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of any Credit Party or any of its Subsidiaries or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Co-Issuers will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if any,
of brokers and finders (other than those retained by you).
17.2 Survival.
The obligations of the Co-Issuers under this Section 17 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement, the Transaction Documents or the Notes, and the
termination of this Agreement.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Co-Issuers pursuant to this Agreement shall be
deemed representations and warranties of the Co-Issuers under this Agreement.
Subject to the preceding sentence, this Agreement, the Notes and the Transaction
Documents embody the entire agreement and understanding between you and the
Co-Issuers and supersede all prior agreements and understandings relating to the
subject matter hereof.
19. AMENDMENT AND WAIVER.
19.1 Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of each of the
Co-Issuers and the holders of 66 2/3% of the Notes then
38
<PAGE>
outstanding, except that no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 14 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 9,
13(a), 13(b), 14, 19 or 22 and any definitions related thereto.
19.2 Solicitation of Holders of Notes.
(a) Solicitation. The Co-Issuers will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Co-Issuers will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 19 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Co-Issuers will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
19.3 Binding Effect, Etc.
Unless the context shall otherwise require, obligations of the Co-Issuers
under this Agreement, the Other Agreements, the Notes or any Transaction
Document shall be joint and several obligations of all Co-Issuers. Any amendment
or waiver consented to as provided in this Section 19 applies equally to all
holders of Notes and is binding upon them and upon each future holder of any
Note and upon the Co-Issuers without regard to whether such Note has been marked
to indicate such amendment or waiver. No such amendment or waiver will extend to
or affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Co-Issuers and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
19.4 Notes held by Co-Issuers, Etc.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding have
approved or consented to any
39
<PAGE>
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company, the Co-Issuers or any of their respective
Affiliates shall be deemed not to be outstanding.
20. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice shall be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule 20, or at such other address as you or
it shall have specified to the Co-Issuers in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Co-Issuers in
writing, or
(iii) if to the Company, to the Company at its address set forth in
Schedule 20, or at such other address as the Company shall have specified
to the holder of each Note in writing; or
(iv) if to Kinro, to Kinro at its address set forth in Schedule 20,
or at such other address as Kinro shall have specified to the holder of
each Note in writing, or
(v) if to Shoals, to Shoals at its address set forth in Schedule 20,
or at such other address as Shoals shall have specified to the holder of
each Note in writing, or
(vi) if to Lippert, to Lippert at its address set forth in Schedule
20, or at such other address as Lippert shall have specified to the holder
of each Note in writing.
Notices under this Section 20 will be deemed given only when actually
received.
21. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents, including, but not limited to the Transaction Documents
and the Other Agreements, received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Co-Issuers agree and stipulate that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
40
<PAGE>
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 21
shall not prohibit the Co-Issuers or any holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
22. CONFIDENTIAL INFORMATION.
For the purposes of this Section 22, "Confidential Information" means
information delivered to you by or on behalf of any Credit Party or any of its
Subsidiaries in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of such Credit Party or such Subsidiary, provided
that such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
any Credit Party or any of its Subsidiaries or (d) constitutes financial
statements delivered to you under Section 8.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you provided that
you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 22, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 22), (v) any Person
from which you offer to purchase any security of the Company or of any Co-Issuer
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 22), (vi) any federal
or state regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party, provided that, with respect to any litigation not involving any
Credit Party, you shall use reasonable efforts to notify the party whose
Confidential Information is being disclosed prior to such disclosure, if
practicable, and if not then after such disclosure, or (z) to the extent you may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under your
Notes and this Agreement. Each holder of a Note, by its acceptance of a Note,
will be deemed to have agreed to be bound by and to be entitled to the benefits
of this Section 22 as though it were a party to this Agreement. On reasonable
request by the Co-Issuers in connection with the delivery to any holder of a
Note of information required to be delivered to such holder under this Agreement
or requested by such holder (other than a holder that is a party to this
Agreement or its nominee), such holder will enter into an agreement with the
Co-Issuers embodying the provisions of this Section 22.
41
<PAGE>
23. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Co-Issuers, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 7. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 23), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Co-Issuers of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 23), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
24. MISCELLANEOUS.
24.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
Any subsequent holder of a Note shall be subject to and party to the
Intercreditor Agreement.
24.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
24.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
24.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by
42
<PAGE>
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
24.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
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.
24.6 Governing Law.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
43
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Co-Issuers, whereupon the foregoing shall become a binding agreement between you
and each of the Co-Issuers.
Very truly yours,
KINRO, INC.
By:
-----------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
-----------------------------------------
Name:
Title:
SHOALS SUPPLY INC.
By:
-----------------------------------------
Name:
Title:
<PAGE>
The foregoing is hereby agreed to as of the date thereof.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By:
----------------------------------
Name:
Title:
<PAGE>
The foregoing is hereby agreed to as of the date thereof.
ING INVESTMENT MANAGEMENT, INC., as
agent for each of the following:
Midwestern United Life Insurance Company
Security Life of Denver Insurance Company
By:
-------------------------------------------
Name: Fred C. Smith
Title: Senior Vice President and Managing Director
ING INVESTMENT MANAGEMENT, INC., as agent
for each of the following:
Equitable Life Insurance Company of Iowa
USG Annuity & Life Company
By:
-------------------------------------------
Name: Fred C. Smith
Title: Senior Vice President and Managing Director
<PAGE>
SCHEDULE A
PURCHASERS
Name Principal Amount
- ---- ----------------
Teachers Insurance and Annuity Association of America $22,500,000
Midwestern United Life Insurance Company $9,600,000
Security Life of Denver Insurance Company $3,900,000
Equitable Life Insurance Company of Iowa $2,000,000
USG Annuity & Life Company $2,000,000
Schedule A-1
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "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.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Asset Sale" shall mean any sale, transfer, lease or other disposition of
any property or asset of any Credit Party or any of its Subsidiaries except a
sale, transfer, lease or other disposition in the ordinary course of business
(a) of cash, (b) of temporary cash investments, (c) of trade receivables, (d) of
inventories, or (e) of any asset by any Credit Party or by a Subsidiary to any
Credit Party or to another Subsidiary.
"Business Day" means (a) for the purposes of Section 9.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York or other cities of principal
place of business of each Co-Issuers are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Closing" is defined in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
Schedule B-1
<PAGE>
"Consolidated Fixed Charges" means the Consolidated Interest Expense plus
one-third of the Lease Rentals expense.
"Consolidated Indebtedness" means all Indebtedness owed or guaranteed
by any Credit Party and any of its Subsidiaries.
"Consolidated Interest Expense" means for any period all amounts that are
classified as interest expense of any Credit Party and its Subsidiaries under
GAAP.
"Consolidated Net Income" means for any period the net income or loss of
the Company and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP after eliminating all offsetting debts and credits
between the Company and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and its Subsidiaries in accordance with GAAP, but excluding: (i)
earning or losses attributable to Minority Interests; (ii) extraordinary gains
or losses; (iii) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary; (iv) net earnings of any business entity (other
than a Subsidiary) in which the Company or any of its Subsidiaries has an
ownership interest unless such net earnings shall have been received in the form
of cash distributions; (v) any portion of net earnings of any Subsidiary of the
Company which for any reason is unavailable for distribution to the Company;
(vi) earnings or losses resulting from any write-up or write-down of assets
other than in the ordinary course of business; (vii) any reversal of any
contingency reserve to the extent such contingency reserve was taken prior to
the date hereof; and (viii) the cumulative effect of a change in accounting
principles.
"Consolidated Net Worth" means, at any time,
(a) the sum of (i) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and its Subsidiaries plus (ii) the
amount of the paid-in capital and retained earnings of the Company and its
Subsidiaries, in each case as such amounts would be shown on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to Minority Interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Total Assets" shall mean the total assets of each Co-Issuer
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP.
"Company" means Drew Industries Incorporated, a Delaware corporation.
"Confidential Information" is defined in Section 20.
"Credit Party" means the Company, each Co-Issuer, and each of the
Guarantors.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
Schedule B-2
<PAGE>
"Default Rate" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes or (ii) the rate announced from time to time by Morgan Guaranty
Trust Company of New York as its prime rate, plus 2% per annum.
"Distribution" means in respect of any corporation, association or other
business entity:
(a) dividends or other distributions or payments on capital stock or other
equity interest of such corporation, association or other business entity
(except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity interests
or of warrants, rights or other options to purchase such stock or other equity
interests (except when solely in exchange for such stock or other equity
interests) unless made, contemporaneously, from the net proceeds of a sale of
such stock or other equity interests.
"EBITDA" means income before income taxes plus interest expense,
depreciation, amortization of tangible assets, amortization of any other
non-cash charge to the extent such charge reduces net income (and as reduced by
an adjustment for the amount of cash payouts of non-cash charges from prior
periods, if applicable), and shall exclude extraordinary gains (or losses) and
any gains (or losses) from the sale or disposition of assets other than in the
ordinary course of business; all on a consolidated basis for the Company and its
Subsidiaries and all calculated in accordance with GAAP.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with any Credit
Party under Section 414 of the Code.
"Event of Default" is defined in Section 13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
Schedule B-3
<PAGE>
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any jurisdiction in which the Credit Party or any of its
Subsidiaries conducts all or any part of its business, or which asserts
jurisdiction over any properties of any Credit Party or any of its
Subsidiaries, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
"Guarantee Agreements" is defined in Section 3.
"Guarantors" Kinro Holding, Inc., Kinro Manufacturing, Inc., Shoals
Holding, Inc., Kinro Texas Limited Partnership; Shoals Supply Texas Limited
Partnership; Kinro Tennessee Limited Partnership; Shoals Supply Tennessee
Limited Partnership; Drew Industries Incorporated and any other Subsidiary
(including any Person that becomes a Subsidiary after the date of the Note
Purchase Agreement).
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
15.1.
"Inactive Subsidiary" means, with respect to any Person, a Subsidiary of
such Person (i) that conducts no business activities on the date of Closing nor
on any date thereafter, (ii) the assets of which Subsidiary have a fair market
value less than the smaller of (x) $50,000 or (y) one-half of one percent (.005)
of the consolidated assets of such Person and its Subsidiaries; and (iii) the
total liabilities of which are less than $25,000; provided that if the assets of
all such Subsidiaries that meet the conditions of clauses (i), (ii) and (iii)
(each, a "Specified Subsidiary"), in the aggregate, exceed either of the
thresholds of clause (ii), then there shall be excluded from the term "Inactive
Subsidiary" the Specified Subsidiary having the greatest assets, and, if
necessary, the Specified Subsidiary having the next greatest assets, and so on,
until the assets of the remaining Specified Subsidiaries, in the aggregate, no
longer exceed either of such thresholds of clause (ii) (such remaining Specified
Subsidiaries constituting the Inactive Subsidiaries); provided further, that no
Credit Party shall be an Inactive Subsidiary.
Schedule B-4
<PAGE>
"Indebtedness" of any Person means, without duplication, (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 similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding accrued
expenses which are payable within one year or current accounts payable in each
case incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty (other than performance guaranties), and (j) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Institutional Investor" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Intercreditor Agreement" is defined in Section 3(b).
"Interest Coverage Ratio" means for any period the ratio of: (i) EBITDA
for such period to (ii) the Consolidated Interest Expense for such period.
"Lease Rentals" means, with respect to any period, the sum of the rental
and other obligations required to be paid during such period by the Company or
any Subsidiary as lessee under all leases of real or personal property (other
than Capital Leases), excluding any amount required to be paid by the lessee
(whether or not therein designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates and similar
charges; provided that, if at the date of determination, any such rental or
other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount of such
obligations (or such portion thereof) (i) shall be assumed to be equal to the
amount of such obligations for the period of 12 consecutive calendar months
immediately preceding the date of determination or (ii) if the related lease was
not in effect during such preceding 12-month period, shall be the amount
estimated by a senior financial officer of the Company on a reasonable basis and
in good faith.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or
Schedule B-5
<PAGE>
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Make-Whole Amount" is defined in Section 9.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole or any Credit Party and its Subsidiaries,
taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, properties or
prospects of any Credit Party and its Subsidiaries, taken as a whole, or (b) the
ability of any Credit Party to perform its obligations under this Agreement, any
Transaction Documents or the Notes, or (c) the validity or enforceability of
this Agreement, any of the Transaction Documents or the Notes or (d) the
security interests granted by the Pledge Agreements.
"Memorandum" is defined in Section 6.3.
"Minority Interests" means any shares of stock of any class of a
Subsidiary of any Person (other than directors' qualifying shares as required by
law) that are not owned by such Person and/or one or more of such Person's
Subsidiaries. Minority Interests shall be valued by valuing "Minority Interests"
consisting of preferred stock at the voluntary or involuntary liquidation value
of such preferred stock, whichever is greater, and by valuing "Minority
Interests" consisting of common stock at the book value of capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes form the book
value of such common stock required by the foregoing method of valuing "Minority
Interests" in preferred stock.
"Modified Fixed Charge Coverage Ratio" means for any period, the ratio of:
(i) EBITDA for such period plus one-third of the Lease Rentals expense to (ii)
Consolidated Fixed Charges for such period.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Proceeds" With respect to the sale or disposition of any assets by
any Credit Party or any of its Subsidiaries (including in connection with any
sale-leaseback), will be defined as the excess, if any, of (i) the aggregate
amount received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other noncash consideration or otherwise, but
only as and when such cash is so received) in connection with such sale or other
disposition of any asset, over (ii) the sum of (a) the principal amount of and
premium, if any, on any Indebtedness which is secured by or which finances any
such asset (other than Indebtedness assumed by the purchaser of such asset) and
which is required to be, and is, repaid in connection with such sale or other
disposition thereof (other than the Notes), (b) the out-of-pocket expenses
incurred by any Credit Party or any of its Subsidiaries in connection with such
sale or other disposition and (c) all taxes, including taxes measure by income,
calculated as if such Credit Party and its Subsidiaries were a separate
consolidated group for tax purposes, and assuming such sale or other disposition
of any asset was the only transaction in which such Credit Party
Schedule B-6
<PAGE>
and its Subsidiaries engaged during the relevant period without giving effect to
any carryforwards, carrybacks or credits.
"New Subsidiary" is defined in Section 11.2.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"Parent Guaranty" is defined in Section 3.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Pension Plan" means any Plan that is an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) that is or would be (if it were a
domestic Plan) subject to Title IV of ERISA.
"Permitted Liens" shall include the following:
(i) Liens existing on the date hereof which are listed on
Schedule 12.3 hereto provided that (x) such Lien shall not apply to
any other property or asset of any Credit Party or any such
Subsidiary thereof and (y) such Lien shall secure only those
obligations which it secures on the date hereof, and extensions,
renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(ii) Liens on fixed or capital assets acquired, constructed or
improved; provided that (i) such security interests secure
Indebtedness permitted hereunder, (ii) such security interests and
the Indebtedness secured thereby are incurred prior to or within 90
days (and in the case of industrial revenue bonds, 360 days) after
such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed
85% of the cost of acquiring, constructing or improving such fixed
or capital assets, (iv) such security interest shall not apply to
any other property or assets of any Credit Party or any Subsidiary
thereof and (v) the aggregate amount of all Indebtedness secured by
purchase money liens on a consolidated basis for the Credit Parties
and the Subsidiaries thereof shall not at any time exceed
$15,000,000; and
(iii) carriers', warehousemen's, mechanics', repairmen's and
other like Liens imposed by law in an aggregate amount not exceeding
$250,000, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being
contested in good faith by appropriate proceedings and adequate
reserves have been established therefor in accordance with GAAP on
the
Schedule B-7
<PAGE>
books of such Credit Party or Subsidiary and the failure to make
payment during such contest could not reasonably be expected to have
a Material Adverse Effect;
(iv) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations in respect
of which adequate reserves shall have been established;
(v) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each
case in the ordinary course of business;
(vi) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business
of any Credit Party or any Subsidiary thereof;
(vii) liens securing indebtedness of one Credit Party to
another Credit Party; provided that (i) such Indebtedness is
permitted under Sections 12.4 or 12.7 hereof (as applicable), (ii)
all of the outstanding capital stock or other equity interests of
each such Credit Party shall be owned 100% directly or indirectly by
the Company, (iii) each of such Credit Parties to or by whom such
Indebtedness is owed, or who owns (directly or indirectly) any stock
referred to in the preceding clause (ii), shall have become party to
the Subsidiary Guaranty and (iv) such indebtedness shall not be
assigned or transferred by the obligee thereof to any Person other
than another Credit Party such that after giving effect to such
assignment and transfer all of the foregoing conditions are
satisfied.
(viii) other liens provided that the aggregate amount of all
Indebtedness secured by such Liens shall not at any time exceed 15%
of Consolidated Net Worth; and
(ix) liens that extend, renew or replace liens permitted by
clauses (i) through (vii).
"Permitted Loans and Investments"
(i) Subject to Section 12.4(e) hereof, Investments, loans and
advances by any Credit Party and any of its Subsidiaries in and to
Wholly-Owned Subsidiaries;
(ii) investments in commercial paper and loan participations
maturing within 270 days from the date of acquisition thereof
having, at such date of acquisition, a rating of A-1 or P-1 or
better from Standard & Poor's Corporation, Moody's Investors
Service, Inc. or by another nationally recognized credit rating
agency;
(iii) direct obligations of, or obligations the principal of
or interest on which are unconditionally guaranteed by the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the
Schedule B-8
<PAGE>
United States of America) (or by any other foreign government of
equal or better credit quality), in each case maturing within one
year from the date of acquisition thereof;
(iv) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has (x) a combined
capital and surplus and undivided profits of not less than
$100,000,000 or (y) assets of not less than $1,000,000,000;
(v) fully collateralized repurchase agreements, having terms
of less than 90 days, for government obligations of the type
specified in (iii) above with a commercial bank or trust company
meeting the requirements of (iv) above;
(vi) investments in addition to those permitted by clauses (i)
through (v) provided that the aggregate amount of such investments
shall not exceed 15% of Consolidated Net Worth; and
(vii) other investments at any time in an amount not to exceed
the Restricted Payments Basket at such time, provided that the
Restricted Payments Basket shall be reduced by the amount of such
investment.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3)
of ERISA) that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by any Credit
Party or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate may have any liability.
"Pledge Agreements" is defined in Section 3(a).
"Pledgee" means The Chase Manhattan Bank in its capacity as trustee
under the Pledge Agreement.
"Pledgor" means each of the Co-Issuers and each other Credit Party
other than Kinro Texas Limited Partnership, Kinro Tennessee Limited
Partnership, Shoals Supply Texas Limited Partnership and Shoals Supply
Tennessee Limited Partnership.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount
upon liquidation or dissolution of such corporation.
"Principal Shareholders" shall mean the Persons who, on the date
hereof, own a majority of the issued and outstanding stock of the Company.
Schedule B-9
<PAGE>
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
choate or inchoate.
"Proposed Transaction" means the transfer by Lippert of certain
assets to direct or indirect wholly-owned subsidiaries of the Company and
Lippert which transaction could not be reasonably be expected to have a
Material Adverse Effect.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
(issued March 13, 1984).
"Required Holders" means, at any time, the holders of at least 66
2/3% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this agreement.
"Restricted Payment" means:
(a) any Distribution in respect of a Credit Party or any Subsidiary
of a Credit Party (other than on account of capital stock or other equity
interests of a Subsidiary of a Credit Party owned legally and beneficially
by such Credit Party or another Subsidiary of such Credit Party),
including, without limitation, any Distribution resulting in the
acquisition by a Credit Party of securities which would constitute
treasury stock, and
(b) any payment, repayment, redemption, retirement, repurchase or
other acquisition, direct, or indirect, by a Credit Party or any
Subsidiary of, on account of, or in respect of, the principal of any
Subordinated Debt (or any installment thereof) prior to the regularly
scheduled maturity date thereof (as in effect on the date such
Subordinated Debt was originally incurred) other than in respect of
Subordinated Debt of one Credit Party to another Credit Party provided
that no Event of Default exists or would exist after such prepayment.
For purposes of this Agreement, the amount of any Restricted Payment
made in property shall be the greater of (x) the Fair Market Value of such
property (as determined in good faith by the board of directors (or
equivalent governing body) of the Person making such Restricted Payment)
and (y) the net book value thereof on the books of such Person, in each
case determined as of the date on which such Restricted Payment is made.
"Restricted Payments Basket" shall mean the excess of (a) sum of (i)
$5 million; plus (ii) 50% of Consolidated Net Income earned subsequent to
September 30, 1997; plus (iii) Net Proceeds received by the Company or a
Co-Issuer from the sale of additional shares of capital stock, over (b)
the amount of (i) all Restricted Payments made in accordance to Section
12.7 and (ii) the Permitted Loans permitted by (vii) of the definition of
Permitted Loans and Investments.
"Revolving Credit Agreement" means the Credit Agreement dated as of
January 28, 1998, by and between the Co-Issuers and The Chase Manhattan
Bank, N.A., as lender and administrative agent and collateral agent.
Schedule B-10
<PAGE>
"Revolving Credit Documents" means the Revolving Credit Agreement
and the other Loan Documents (as defined therein).
"Revolving Credit Note" means the "Note" as defined in the Revolving
Credit Agreement.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Solvent" shall have the meaning given to such term in Section 6.19.
"Subordinated Debt" means any Indebtedness that is in any manner
subordinated in right of payment or security in any respect to
Indebtedness evidenced by the Notes.
"Subordination Agreement" is defined in Section 3(e) hereof.
"Subsidiary" shall mean, for any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly,
owned by such Person, by one or more subsidiaries of such Person or by
such Person and one or more subsidiaries of such Person, (ii) a
partnership in which such Person or a subsidiary of such Person is, at the
date of determination, a general or limited partner of such partnership,
but, in the case of a limited partner, only if such Person or its
subsidiary is entitled to receive more than 50% of the assets of such
partnership upon its dissolution, or (iii) any other Person (other than a
corporation or partnership) in which such Person, a subsidiary of such
Person or such Person and one or more subsidiaries of such Person,
directly or indirectly, at the date of determination thereof, has (A) at
least a majority ownership interest or (B) the power to elect or direct
the election of a majority of the directors, managing member, or other
governing body of such Person.
"Subsidiary Guaranty" is defined in Section 3.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount
of the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the
end of such fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides
for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined.
"Total Capitalization" shall mean the sum of (i) Consolidated
Indebtedness and (ii) Consolidated Net Worth as of the most recently ended
fiscal quarter.
"Transaction Documents" is defined in Section 3(f).
Schedule B-11
<PAGE>
"Trust Agreement" is defined in Section 3(d).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or
more of the Company or a Co-Issuer and the Company's or Co-Issuer's other
Wholly-Owned Subsidiaries at such time.
Schedule B-12
<PAGE>
EXHIBIT 1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENT (AS HEREINAFTER DEFINED).
[FORM OF NOTE]
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. [_____] January 28, 1998
$[_______] PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, KINRO, INC. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to [_______], or registered assigns, the principal sum
of _____________ Dollars on [_____], with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 6.95% per annum from the date hereof, payable semi-annually, on the 28th
day of July and January in each year, commencing with July 28, 2001, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semi-annually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 2% or (ii) the rate announced from time to time by Morgan
Guaranty Trust Company of New York as its prime rate, plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at
Exhibit 1-1
<PAGE>
such other location as designated under Section 11.1 of the Note Purchase
Agreements referred to below, in each case subject to the right of the
registered holder hereof under said Note Purchase Agreements to receive direct
payment in immediately available funds.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Agreement shall be construed and enforced in accordance with
and the rights of the parties shall be governed by, the law of the State of New
York excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
By:_________________________________
KINRO, INC.
Name: ________________________
Title: _______________________
Exhibit 1-2
<PAGE>
By:_________________________________
LIPPERT COMPONENTS, INC.
Name: ________________________
Title: _______________________
By:_________________________________
SHOALS SUPPLY, INC.
Name: ________________________
Title: _______________________
Exhibit 1-3
<PAGE>
EXHIBIT 4.4(a)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
[To Come]
Schedule 4.4(a)-1
<PAGE>
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
[TO BE PROVIDED ON A CASE BY CASE BASIS]
Schedule 4.4(b)-1
<PAGE>
1. AUTHORIZATION OF NOTES.................................................1
2. SALE AND PURCHASE OF NOTES.............................................1
3. TRANSACTION DOCUMENTS..................................................2
4. CLOSING................................................................3
5. CONDITIONS TO CLOSING..................................................3
5.1 Representations and Warranties...................................3
5.2 Performance; No Default..........................................3
5.3 Compliance Certificates..........................................3
5.4 Opinions of Counsel..............................................4
5.5 Purchase Permitted By Applicable Law, Etc........................4
5.6 Sale of Other Notes..............................................4
5.7 Payment of Special Counsel Fees..................................4
5.8 Private Placement Number.........................................5
5.9 Changes in Corporate Structure...................................5
5.10 Proceedings and Documents........................................5
5.11 Transaction Documents............................................5
5.12 Taxes............................................................5
5.13 Legality.........................................................5
6. REPRESENTATIONS AND WARRANTIES OF THE CO-ISSUERS.......................6
6.1 Organization; Power and Authority................................6
6.2 Authorization, Etc...............................................6
6.3 Disclosure.......................................................6
6.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates.......................................................7
6.5 Financial Statements.............................................7
6.6 Compliance with Laws, Other Instruments, Etc.....................8
6.7 Governmental Authorizations, Etc.................................8
6.8 Litigation; Observance of Agreements, Statutes and Orders........8
6.9 Taxes............................................................9
6.10 Title to Property; Leases........................................9
6.11 Licenses, Permits, Etc...........................................9
6.12 Compliance with ERISA............................................9
6.13 Private Offering by the Company and the Co-Issuers..............10
6.14 Use of Proceeds; Margin Regulations.............................11
-i-
<PAGE>
6.15 Existing Indebtedness; Future Liens.............................11
6.16 Foreign Assets Control Regulations, Etc.........................11
6.17 Status under Certain Statutes...................................11
6.18 Environmental Matters...........................................12
6.19 Solvency........................................................12
6.20 Pledge Agreements...............................................13
7. REPRESENTATIONS OF THE PURCHASER......................................13
7.1 Purchase for Investment.........................................13
7.2 Source of Funds.................................................13
8. INFORMATION AS TO COMPANY.............................................14
8.1 Financial and Business Information..............................14
8.2 Officer's Certificate...........................................17
8.3 Inspection......................................................17
9. PREPAYMENT OF THE NOTES...............................................18
9.1 Required Prepayments............................................18
9.2 Optional Prepayments with Make-Whole Amount.....................18
9.3 Allocation of Partial Prepayments...............................19
9.4 Maturity; Surrender, etc........................................19
9.5 Purchase of Notes...............................................19
9.6 Make-Whole Amount...............................................19
9.7 Mandatory Offer to Prepay in Event of Change in Control.........20
10. FINANCIAL COVENANTS...................................................22
10.1 Net Worth.......................................................22
10.2 Interest Coverage Ratio.........................................22
10.3 Modified Fixed Charge Coverage Ratio............................22
11. AFFIRMATIVE COVENANTS.................................................22
11.1 Maintenance of Office...........................................22
11.2 Compliance with Law.............................................23
11.3 Notice of Certain Events and Conditions.........................23
11.4 Insurance.......................................................23
11.5 Maintenance of Properties and Business..........................23
11.6 Payment of Taxes and Claims.....................................24
11.7 Corporate Existence, etc........................................24
-ii-
<PAGE>
11.8 ERISA...........................................................24
11.9 Environmental Law Compliance....................................24
11.10 Further Assurances..............................................25
11.11 New Subsidiaries................................................25
11.12 Additional Guarantors; Additional Collateral; Additional
Parties to Subordination Agreement..............................26
12. NEGATIVE COVENANTS....................................................26
12.1 Transactions with Affiliates....................................26
12.2 Merger, Consolidation, etc......................................27
12.3 Liens...........................................................28
12.4 Limitation on Indebtedness......................................28
12.5 Restrictive Agreements..........................................29
12.6 Limitation on Subsidiary Indebtedness and Issuance of
Preferred Stock.................................................29
12.7 Limitation on Restricted Payments...............................30
12.8 Sale of Assets..................................................30
12.9 Limitation on Investments.......................................31
12.10 No Amendments...................................................31
13. EVENTS OF DEFAULT.....................................................31
14. REMEDIES ON DEFAULT, ETC..............................................33
14.1 Acceleration....................................................33
14.2 Other Remedies..................................................34
14.3 Rescission......................................................34
14.4 No Waivers or Election of Remedies, Expenses, Etc...............34
14.5 Co-Issuer Waivers...............................................35
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................35
15.1 Registration of Notes...........................................35
15.2 Transfer and Exchange of Notes..................................36
15.3 Replacement of Notes............................................36
16. PAYMENTS ON NOTES.....................................................37
16.1 Place of Payment................................................37
16.2 Home Office Payment.............................................37
17. EXPENSES, ETC.........................................................37
17.1 Transaction Expenses............................................37
-iii-
<PAGE>
17.2 Survival........................................................38
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........38
19. AMENDMENT AND WAIVER..................................................38
19.1 Requirements....................................................38
19.2 Solicitation of Holders of Notes................................38
19.3 Binding Effect, Etc.............................................39
19.4 Notes held by Co-Issuers, Etc...................................39
20. NOTICES...............................................................39
21. REPRODUCTION OF DOCUMENTS.............................................40
22. CONFIDENTIAL INFORMATION..............................................40
23. SUBSTITUTION OF PURCHASER.............................................41
24. MISCELLANEOUS.........................................................42
24.1 Successors and Assigns..........................................42
24.2 Payments Due on Non-Business Days...............................42
24.3 Severability....................................................42
24.4 Construction....................................................42
24.5 Counterparts....................................................42
24.6 Governing Law...................................................42
-iv-
<PAGE>
SCHEDULE A INFORMATION RELATING TO PURCHASERS
SCHEDULE B DEFINED TERMS
SCHEDULE 5.9 Changes in Corporate Structure
SCHEDULE 6.3 Disclosure Materials
SCHEDULE 6.4 Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 6.5 Financial Statements
SCHEDULE 6.8 Certain Litigation
SCHEDULE 6.11 Patents, etc.
SCHEDULE 6.14 Use of Proceeds
SCHEDULE 6.15 Existing Indebtedness
SCHEDULE 6.18 Environmental Matters
SCHEDULE 12.1 Transactions with Affiliates
SCHEDULE 12.3 Existing Liens
SCHEDULE 20 Address for Notices
EXHIBIT 1 Form of 6.95% Senior Note due January 28, 2005
EXHIBIT 2 Form of Pledge Agreement
EXHIBIT 3 Form of Intercreditor Agreement
EXHIBIT 4(a) Form of Parent Guaranty
EXHIBIT 4(b) Form of Subsidiary Guaranty
EXHIBIT 5 Form of Trust Agreement
EXHIBIT 5.4(a) Form of Opinion of Special Counsel for the Co-Issuers
Guarantors and Pledgors
EXHIBIT 5.4(b) Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 5.4(c) Form of Opinion of Counsel to the Trustee
EXHIBIT 6 Form of Subordination Agreement
-v-
Exhibit 10.166 - 6.95% Senior Notes
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENTS (AS HEREINAFTER DEFINED). THE
UNDERSIGNED SHALL HAVE NO OBLIGATION TO REGISTER THIS NOTE UNDER THE 1933 ACT.
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. R-1 January 28, 1998
$22,500,000 PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, Kinro, Inc. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to Teachers Insurance and Annuity Association of
America, or registered assigns, the principal sum of TWENTY-TWO MILLION FIVE
HUNDRED THOUSAND DOLLARS on January 28, 2005, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 6.95% per annum from the date hereof, payable
semi-annually, on the 28th day of July and January in each year, commencing with
July 28, 1998, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semi-annually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 2% or (ii) the rate announced from time to time by
Morgan Guaranty Trust Company of New York as its prime rate, plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at such other location as designated under
Section 11.1 of the Note Purchase Agreements referred
<PAGE>
to below, in each case subject to the right of the registered holder hereof
under said Note Purchase Agreements to receive direct payment in immediately
available funds.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
<PAGE>
This Note shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
KINRO, INC.
By:
------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
SHOALS SUPPLY, INC.
By:
------------------------------------
Name:
Title:
3
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENTS (AS HEREINAFTER DEFINED). THE
UNDERSIGNED SHALL HAVE NO OBLIGATION TO REGISTER THIS NOTE UNDER THE 1933 ACT.
USG ANNUITY & LIFE COMPANY
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. R-5 January 28, 1998
$2,000,000 PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, Kinro, Inc. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to USG Annuity & Life Company, or registered assigns,
the principal sum of TWO MILLION DOLLARS on January 28, 2005, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 6.95% per annum from the date hereof,
payable semi-annually, on the 28th day of July and January in each year,
commencing with July 28, 1998, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semi-annually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 2% or (ii) the rate announced from
time to time by Morgan Guaranty Trust Company of New York as its prime rate,
plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at such other location as designated under
Section 11.1 of the Note Purchase Agreements referred to below, in each case
subject to the right of the registered holder hereof under said Note Purchase
Agreements to receive direct payment in immediately available funds.
<PAGE>
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
<PAGE>
This Note shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
KINRO, INC.
By:
------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
SHOALS SUPPLY, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENTS (AS HEREINAFTER DEFINED). THE
UNDERSIGNED SHALL HAVE NO OBLIGATION TO REGISTER THIS NOTE UNDER THE 1933 ACT.
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. R-4 January 28, 1998
$2,000,000 PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, Kinro, Inc. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to Equitable Life Insurance Company of Iowa, or
registered assigns, the principal sum of TWO MILLION DOLLARS on January 28,
2005, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 6.95% per annum from
the date hereof, payable semi-annually, on the 28th day of July and January in
each year, commencing with July 28, 1998, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semi-annually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 2% or (ii) the rate
announced from time to time by Morgan Guaranty Trust Company of New York as its
prime rate, plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at such other location as designated under
Section 11.1 of the Note Purchase Agreements referred
<PAGE>
to below, in each case subject to the right of the registered holder hereof
under said Note Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
<PAGE>
This Note shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
KINRO, INC.
By:
------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
SHOALS SUPPLY, INC.
By:
------------------------------------
Name:
Title:
3
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENTS (AS HEREINAFTER DEFINED). THE
UNDERSIGNED SHALL HAVE NO OBLIGATION TO REGISTER THIS NOTE UNDER THE 1933 ACT.
MIDWESTERN UNITED LIFE INSURANCE COMPANY
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. R-2 January 28, 1998
$9,600,000 PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, Kinro, Inc. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to Midwestern United Life Insurance Company, or
registered assigns, the principal sum of NINE MILLION SIX HUNDRED THOUSAND
DOLLARS on January 28, 2005, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
6.95% per annum from the date hereof, payable semi-annually, on the 28th day of
July and January in each year, commencing with July 28, 1998, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semi-annually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 2% or (ii) the rate announced from time to time by Morgan
Guaranty Trust Company of New York as its prime rate, plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at such other location as designated under
Section 11.1 of the Note Purchase Agreements referred
<PAGE>
to below, in each case subject to the right of the registered holder hereof
under said Note Purchase Agreements to receive direct payment in immediately
available funds.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
<PAGE>
This Note shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
KINRO, INC.
By:
------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
SHOALS SUPPLY, INC.
By:
------------------------------------
Name:
Title:
3
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"). NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN SECTION 15.2 OF THE NOTE PURCHSE AGREEMENTS (AS HEREINAFTER DEFINED). THE
UNDERSIGNED SHALL HAVE NO OBLIGATION TO REGISTER THIS NOTE UNDER THE 1933 ACT.
SECURITY LIFE OF DENVER INSURANCE COMPANY
KINRO, INC.
LIPPERT COMPONENTS, INC.
SHOALS SUPPLY, INC.
6.95% SENIOR NOTE DUE JANUARY 28, 2005
No. R-3 January 28, 1998
$3,900,000 PPN: 49713@AA1
FOR VALUE RECEIVED, each of the undersigned, Kinro, Inc. ("Kinro"),
an Ohio corporation, Shoals Supply, Inc. ("Shoals"), a Delaware corporation and
Lippert Components, Inc. ("Lippert"), a Delaware corporation, hereby jointly and
severally promises to pay to Security Life of Denver Insurance Company, or
registered assigns, the principal sum of THREE MILLION NINE HUNDRED THOUSAND
DOLLARS on January 28, 2005, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
6.95% per annum from the date hereof, payable semi-annually, on the 28th day of
July and January in each year, commencing with July 28, 1998, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semi-annually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 2% or (ii) the rate announced from time to time by Morgan
Guaranty Trust Company of New York as its prime rate, plus 2% per annum.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the office of Drew Industries Incorporated, 200 Mamaroneck Avenue,
White Plains, New York 10601, or at such other location as designated under
Section 11.1 of the Note Purchase Agreements referred
<PAGE>
to below, in each case subject to the right of the registered holder hereof
under said Note Purchase Agreements to receive direct payment in immediately
available funds.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
January 28, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Co-Issuers and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 22 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 7 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount (or such lesser amount as shall
equal the aggregate amount outstanding thereunder) will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Co-Issuers may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Co-Issuers will not be affected by any notice to
the contrary.
The Co-Issuers will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements including,
without limitation, Section 9.1. This Note is also subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
2
<PAGE>
This Note shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of such State that would require the
application of the laws of a jurisdiction other than such State.
KINRO, INC.
By:
------------------------------------
Name:
Title:
LIPPERT COMPONENTS, INC.
By:
------------------------------------
Name:
Title:
SHOALS SUPPLY, INC.
By:
------------------------------------
Name:
Title:
3
EXECUTION COPY
Exhibit 10.167 Pledge Agreement
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of January 28, 1998 by DREW INDUSTRIES,
INCORPORATED, a Delaware corporation, as pledgor (the "Pledgor") and THE CHASE
MANHATTAN BANK, as trustee (the "Pledgee"), for the benefit of the Noteholders
(as hereinafter defined).
W I T N E S S E T H :
WHEREAS:
A. Pursuant to a Note Purchase Agreement, dated as of the date
hereof (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement"), among Kinro, Inc., Lippert Components, Inc. and Shoals
Supply, Inc. (individually, a "Co-Issuer" and collectively, the "Co-Issuers"),
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of Senior Notes, the "Noteholders"), the Noteholders
have agreed to purchase the 6.95% senior notes due January 28, 2005 issued by
the Co-Issuers (the "Senior Notes"), upon the terms and subject to the
conditions set forth therein; and
B. The Noteholders' obligation to purchase the Senior Notes pursuant
to the Note Purchase Agreement is subject, among other conditions, to receipt by
the Noteholders of this Pledge Agreement duly executed by the Pledgor;
NOW, THEREFORE, in consideration of the premises contained herein,
and to induce the Noteholders to purchase the Senior Notes from the Co-Issuers
pursuant to the Note Purchase Agreement, the Pledgor hereby agrees with the
Pledgee, for the benefit of the Noteholders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note Purchase Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Co-Issuer(s)" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Collateral" has the meaning ascribed to such term in Section 2
hereof.
<PAGE>
"Companies" means all Subsidiaries of the Pledgor whether now owned
by the Pledgor or hereinafter acquired and whether now existing or
hereinafter coming into existence.
"Contractual Obligations" has the meaning ascribed to such term in
Section 4(c) hereof.
"Event of Default" means an Event of Default as defined in the Note
Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof, among the Pledgee, the Noteholders and The Chase
Manhattan Bank, as Collateral Agent (as defined in the Revolving Credit
Agreement), as Administrative Agent (as defined in the Revolving Credit
Agreement) and as Trustee.
"Noteholders" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Note Purchase Agreement" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Obligations" means and includes all loans, advances, debts,
liabilities, costs and obligations howsoever arising, owed by Pledgor and
the Co-Issuers to the Noteholders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the terms of the
Note Purchase Agreement, the Senior Notes, the Other Agreements or any of
the Transaction Documents to which it is a party, including all interest,
fees, charges, expenses, attorneys' fees and accountants' fees, chargeable
to and payable by the Pledgor or the Co-Issuers hereunder and thereunder.
"Partnership" has the meaning ascribed to such term in Schedule II
hereto.
"Partnership Documents" has the meaning ascribed to such term in
Schedule II hereto.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Interests" has the meaning ascribed to such term in Section
2(a) hereof.
"Pledged Securities" has the meaning ascribed to such term in
Section 2(b) hereof.
"Pledged Stock" has the meaning ascribed to such term in Section
2(a) hereof.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation,
all dividends, distributions
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or other income from the Pledged Stock and the Pledged Interests,
collections thereon or distributions made with respect thereto or other
payments or property, securities, securities entitlements, investment
property or instruments in respect of the Pledged Stock and the Pledged
Interests.
"Requirement of Law" for any Person means the articles of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of January 28, 1998 by and between The Chase Manhattan Bank, as
administrative agent and as collateral agent and the lenders signatory
thereto.
"Securities Act" has the meaning ascribed to such term in Section
9(a) hereof.
"Senior Notes" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Termination Date" has the meaning ascribed to such term in Section
17 hereof.
2. Pledge; Grant of Security Interest. (a) As security for the
payment and performance in full of the Obligations, the Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Pledgee, and grants to the Pledgee for the ratable benefit
of the Noteholders, a first priority security interest in (i) the shares of
capital stock listed on Schedule I and any shares of stock of any Company
obtained in the future by the Pledgor and the certificates representing all such
shares (the "Pledged Stock"), (ii) all of the Pledgor's partnership interests
and related rights described in Schedule II (if any) and any partnership
interests or other equity interests in any Company obtained in the future by the
Pledgor (the "Pledged Interests"), (iii) all other property (including any
security entitlements) that may be delivered to and held by the Pledgee pursuant
to the terms hereof, (iv) subject to Section 6 hereof, all payments of dividends
and distributions, including, without limitation, all cash, instruments,
securities, security entitlements, investment property and other property, from
time to time received, receivable or otherwise paid or distributed, in respect
of, or in exchange for or upon the conversion of the securities and other
property referred to in clauses (i), (ii) or (iii) above, (v) subject to Section
6 hereof, all rights and privileges of the Pledgor with respect to the
securities (including any security entitlements) and other property referred to
in clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clause (vii)) may be
deposited or held in, and any security entitlements or other rights relating
thereto, and (vii) all proceeds of any of the foregoing (the items referred to
in clauses (i) through (vii) above being collectively referred to as the
"Collateral"). The Pledgee acknowledges that the security interest in the
Collateral granted herein ranks equally and pari passu with the security
interest in favor of the Collateral Agent (as defined in the Revolving Credit
Agreement) pursuant to the Pledge Agreement (as defined in the Revolving Credit
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Agreement) and the rights of the Trustee and the Collateral Agent with respect
to the Collateral shall be subject to the terms and conditions of the
Intercreditor Agreement.
(b) Upon delivery to the Pledgee, any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer satisfactory to the Pledgee, a duly executed
acknowledgment and consent in the form of Exhibit A hereto from each of the
Companies listed on Schedule I hereto and by such other instruments and
documents as the Pledgee may request. Without limiting this Section 2(b), (i)
all other property comprising part of the Collateral shall be accompanied by
proper instruments of assignment duly executed by the Pledgor and such other
instruments or documents as the Pledgee may request, and (ii) upon the grant of
a security interest in partnership interests or other equity interests in any
Person now or hereafter included in the Collateral, there shall be executed and
delivered to the Pledgee such instruments of consent, waiver and recognition,
from the issuer and other equity holders thereof (having provisions comparable
to the Consent, Waiver and Recognition Agreement in the form of Exhibit B
hereto) and such other instruments and documents (including Uniform Commercial
Code financing statements duly executed in proper form for filing in such
offices as the Pledgee shall require) as the Pledgee may request. Each delivery
of Pledged Securities and each such grant of a security interest shall be
accompanied by a schedule describing the securities, security entitlements,
investment property and equity interests theretofore and then being pledged
hereunder, which schedule shall be attached hereto as Schedule I or Schedule II,
as applicable, and made a part hereof (provided that the failure to deliver any
such schedule shall not impair the security interest hereunder of the Pledgee in
any Pledged Securities or Pledged Interests). Each schedule so delivered (except
to the extent in error) shall supercede any prior schedules so delivered.
3. Deliveries. (a) The Pledgor agrees promptly to deliver or cause
to be delivered to the Pledgee any and all Pledged Securities, and any and all
certificates or other instruments or documents representing Collateral, and any
other instruments referred to in Section 2(b) hereof (i) endorsed to the Pledgee
or in blank by an effective endorsement, or (ii) causing the certificate to be
registered in the name of the Pledgee, upon original issue or registration of
transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Pledgee a duly executed Consent, Waiver and Recognition
Agreement in the form of Exhibit B hereto in respect of each Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Pledgee as the registered owner thereof, upon original issue or registration
of transfer or (ii) the issuer agrees that it will comply with instructions with
respect to such uncertificated security originated by the Pledgee without
further consent of the registered owner.
(d) With respect to such of the Collateral as constitutes a
"security entitlement" as defined in Article 8 of the UCC, the Pledgor agrees to
cause the securities intermediary to indicate by book entry that such security
entitlement has been credited to a securities account of the Pledgee.
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4. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee and the Noteholders that:
(a) the Pledgor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral pursuant to, this Pledge Agreement and has
taken all necessary action to authorize its execution, delivery and performance
of, and grant of the Lien on the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law or any
agreement, bond, note or indenture to which the Pledgor is a party or by which
it is bound or its assets affected (the "Contractual Obligation") of the Pledgor
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any shareholder or creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby except as set forth on Schedule 6.8 to the Note Purchase
Agreement;
(f) the shares of Pledged Stock of the Companies listed on
Schedule I constitute all of the issued and outstanding shares of all classes of
the capital stock of such Companies, and (ii) the Pledged Interests listed on
Schedule II hereto (if any) constitute all of the partnership interests of such
Companies;
(g) all of the shares of the Pledged Stock and Pledged
Interests of the Companies listed on Schedule I and Schedule II hereto have been
duly and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Stock and the Pledged Interests of the Companies
listed on Schedule I and Schedule II hereto, free and clear of any and all Liens
or options in favor of, or claims of, any other Person, except the Lien created
by this Pledge Agreement;
(i) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid first-
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priority Lien on, and perfected security interest in, the Pledged Stock for the
benefit of the Noteholders, enforceable as such against the Pledgor, all
creditors of the Pledgor and any Persons purporting to purchase any of the
Collateral from the Pledgor; and
(j) upon filing Uniform Commercial Code financing statements
in the locations set forth on Schedule III hereto, naming the Pledgor as debtor
and the Pledgee as secured party, the Pledgee will have a valid perfected first
lien and security interest in such Pledged Interests as security for the payment
and performance of the Obligations.
All representation and warranties made under this Pledge Agreement shall
be deemed to be made, and shall be true and correct, at and as of the date
hereof. All representations and warranties made under this Pledge Agreement
shall survive, and not be waived by, the execution hereof by the Pledgee, any
investigation or inquiry by the Pledgee or any Noteholder, or the purchase of
the Senior Notes pursuant to the Note Purchase Agreement.
5. Covenants. The Pledgor covenants and agrees with the Pledgee and
the Noteholders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock or the Pledged Interests, become entitled to receive or shall
receive any stock certificate or certificated partnership interest (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of or in
exchange for any shares of the Pledged Stock or the Pledged Interests, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent for
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee hereunder as
Collateral.
(b) Without the prior written consent of the Pledgee, the
Pledgor will not (i) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement, or (iii) take any action which, in the
Pledgee's reasonable judgment, could impair the Collateral or result in a
violation of any provision of the Note Purchase Agreement or this Pledge
Agreement. The Pledgor will defend the right, title and interest of the Pledgee
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Pledgee, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Pledgee may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted, including, without limitation, delivering
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<PAGE>
to the Pledgee on the date hereof or at any time hereafter irrevocable proxies
in respect of the Pledged Stock in the form of Exhibit C hereto. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the Pledgee, duly
endorsed in a manner reasonably satisfactory to the Pledgee, to be held as
Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement;
provided, however, that the Pledgor shall have no obligation hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of the Pledgee.
6. Dividends or Distributions; Voting Rights. (a) In the event of
the occurrence of any Event of Default, the Pledgee shall have the right to
require that all cash dividends and distributions payable with respect to any
part of the Pledged Stock and cash distributions in respect of the Pledged
Interests be paid to the Pledgee to be held by the Pledgee as additional
security hereunder until applied to the Obligations.
(b) Any or all shares of the Pledged Stock or the Pledged
Interests held by the Pledgee may, at the option of the Pledgee or its nominee,
be registered in the name of the Pledgee or its nominee. If at any time the
Pledged Interests are represented or evidenced by any certificates, the same
shall promptly be delivered to the Pledgee in pledge hereunder together with any
instruments of transfer requested by the Pledgor. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall be permitted to
exercise all voting rights with respect to the Pledged Stock and the Pledged
Interests; provided, however, that the Pledgee shall have the right to vote in
respect of Pledged Stock and the Pledged Interests in connection with any
corporate or partnership action necessary for the voluntary commencement of a
proceeding or filing of a petition under the Federal bankruptcy laws or any
applicable provincial bankruptcy or insolvency laws commencing a bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the issuer of such Pledged Stock or the
Pledged Interests, or the appointment of a trustee or receiver or assignment for
the benefit of creditors, or any similar or related action, or to consent to any
of the foregoing and the Pledgor shall not vote in favor of or approve any such
action without the prior written consent of the Pledgee.
7. Rights of the Pledgee Upon an Event of Default. (a) The Pledgee
or its nominee may, without notice, and after the occurrence of any Event of
Default, exercise all voting and/or other consensual rights and corporate or
partnership rights at any meeting of any corporation and/or partnership issuing
any of the shares, interests, security entitlements or other investment property
included in the Collateral and exercise any and all rights, privileges or
options pertaining to any item of Collateral as if it were the absolute owner
thereof, including, without limitation, the right to receive dividends or other
distributions payable thereon, and the right to exchange, at its discretion, any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation or partnership issuing
any of such shares or partnership interests or upon the exercise by any such
issuer of any right,
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privilege or option pertaining to any Collateral, and in connection therewith,
to deposit and deliver any and all of the Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Pledgee shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor or against any other Person that may be or become liable in
respect of all or any part of the Obligations or against any other collateral
security therefor, guarantee thereof or right of offset with respect thereto.
The Pledgee shall not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor shall
the Pledgee be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
0ther action whatsoever with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing,
the Pledgee may exercise, in addition to all other rights and remedies granted
in this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Companies or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Pledgee or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Pledgee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Pledgee shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in the
manner provided in the Intercreditor Agreement, and only after such application
and after the payment by the Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by the
Pledgee of any of its rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 days before such sale
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or other disposition. The Pledgor further waives and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of the Code.
9. Private Sales. (a) The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Interests, by reason of certain prohibitions contained in the Securities Act of
1933 (the "Securities Act") and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the Pledgee than if such sale were a public sale and agrees that
such circumstances shall not, in and of themselves, result in a determination
that such sale was not made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock or the
Pledged Interests for the period of time necessary to permit the Companies to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(b) Upon the occurrence of an Event of Default and at
Pledgee's request, the Pledgor agrees to use the Pledgor's best efforts to cause
the Companies to disseminate publicly all information required to be
disseminated pursuant to the Securities Exchange Act of 1934, as amended, in the
event that the Companies or the Pledgor is required to file reports under such
Act, or to otherwise make available such information as to permit the public or
private sale of the Collateral in accordance with the terms of this Pledge
Agreement. The Pledgor further agrees to use the Pledgor's best efforts to cause
the Companies to cooperate with the Pledgee in taking whatever additional action
may be required to effect such public or private sale of the Collateral.
(c) The Pledgor further agrees to do or cause to be done all
such other acts as may be necessary to make any sale or sales of all or any
portion of the Pledged Stock or the Pledged Interests pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of the covenant
contained in this paragraph 9(c) will cause irreparable injury to the Pledgee,
that the Pledgee has no adequate remedy at law in respect of such breach and, as
a consequence, that such covenant shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenant.
10. Limitation on Duties Regarding Collateral. The Pledgee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. Neither the Pledgee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
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12. Severability; Paragraph Headings. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The paragraph
headings used in this Pledge Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in the
interpretation hereof.
13. No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Pledgee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Pledgee would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Pledgee. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Pledgee and the Noteholders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices and other communications under this Pledge
Agreement shall be in writing and shall be personally delivered, transmitted by
telecopy with a confirming copy sent by postage prepaid registered or certified
mail, or sent by overnight courier to the parties as follows:
To the Pledgee: The Chase Manhattan Bank,
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
with a copy to: Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn:. Securities Division, Thompson Team, C. Tackney
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Midwestern United Life Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Security Life of Denver Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Equitable Life Insurance Company of Iowa
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
USG Annuity & Life Company
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
To the Pledgor: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
All such notices shall be effective upon receipt. Any party may change its
address for purposes hereof by notice to the other party.
16. Irrevocable Authorization and Instruction to Pledgor. The
Pledgor hereby authorizes and instructs the Companies to comply with any
instruction received by it from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Companies shall be fully protected in
so complying.
17. Termination. After the Termination Date (as defined below), this
Pledge Agreement shall terminate and the Pledgee, at the request and expense of
the Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the termination of this Pledge Agreement as to the
Pledgor, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the
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Collateral of the Pledgor as may be in the possession of the Pledgee and as has
not theretofore been sold or otherwise applied or released pursuant to this
Pledge Agreement, together with any moneys at the time held by the Pledgee
hereunder. As used in this Pledge Agreement, "Termination Date" shall mean the
date upon which no Senior Note remains outstanding and when the Pledgee has been
notified in writing by each Noteholder that all Obligations have been
indefeasibly paid in full.
18. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
19. Payment Free of Taxes, Etc. All payments made by the Pledgor
under this Pledge Agreement shall be made by the Pledgor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Pledgor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge
Agreement. Upon request by the Pledgee, the Pledgor shall furnish evidence
satisfactory to the Pledgee that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory bodies
have been obtained and made and that all requisite taxes, levies and charges
have been paid.
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IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
DREW INDUSTRIES INCORPORATED
By: ___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGEMENT AND CONSENT
Reference is made to that certain Pledge Agreement, dated as of January
28, 1998, made by DREW INDUSTRIES INCORPORATED, a Delaware corporation, in favor
of The Chase Manhattan Bank,, as trustee for the benefit of the Noteholders (in
such capacity, the "Pledgee"). Each capitalized term used herein shall have the
meaning prescribed therein.
[Name of Company], one of the Companies referred to in the foregoing
Pledge Agreement (the "Pledge Agreement"), hereby acknowledges receipt of a copy
of such Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [Name of Company]
agrees to notify the Pledgee promptly in writing of the occurrence of any of the
events described in paragraphs 5(a) of the Pledge Agreement. [Name of Company]
further agrees that the terms of paragraph 9(b) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of paragraph 9 of the Pledge
Agreement.
[NAME OF COMPANY]
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT B
Intentionally Omitted
15
<PAGE>
EXHIBIT C
IRREVOCABLE PROXY
KNOWN ALL MEN BY THERE PRESENTS that, the undersigned does hereby make,
constitute and appoint THE CHASE MANHATTAN BANK, as trustee (the "Trustee") for
the benefit of the Noteholders (as hereinafter defined), and each of the
Trustee's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital of ________________, a ______________ corporation (hereinafter
referred to as the "Corporation"), which it now or hereafter may own or hold,
including, without limitation, the right, on his behalf, to demand the call by
any proper officer of the Corporation pursuant to the provisions of its
Certificate of Incorporation or By-Laws and as permitted by law of a meeting of
its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Trustee and to its officers and employees in
consideration of the acquisition of the Senior Notes (as defined in the Pledge
Agreement) by Teachers Insurance and Annuity Association of America, Midwestern
United Life Insurance Company, Security Life of Denver Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, the
"Noteholders"), and in order to carry out the covenant of the undersigned
contained in a certain Pledge Agreement of even date herewith by and between the
undersigned and the Trustee, for the ratable benefit of the Noteholders (as
amended, modified and supplemented "Pledge Agreement"), and this Proxy shall not
be revocable or revoked by the undersigned, shall be binding upon its successors
and assigns until the payment in full of all of the Obligations (as such term is
defined in the aforesaid Pledge Agreement and may be exercised only after an
Event of Default under the Note Purchase Agreement (as such terms are defined in
the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 28th day of January, 1998.
DREW INDUSTRIES INCORPORATED
By:___________________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
Kinro, Inc. 140 100%
Shoals Supply, Inc. 10 100%
Lippert Components, Inc. 10 100%
<PAGE>
SCHEDULE II
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
PARTNERSHIP INTERESTS
(a) All of the present and future right, title and interest as a
partner in any partnership (including the partnership listed in Annex 1 hereto,
if any) and any successor(s) thereto or assignee(s) thereof (each, a
"Partnership"), of the Pledgor and the rights, interest and benefits in respect
thereof of the Pledgor arising under the agreements, documents and/or
certificates (including, without limitation, any publicly filed documents)
constituting or governing each such Partnership (the "Partnership Documents"),
and all other benefits pertaining thereto and any and all general intangibles
and accounts now owned or hereafter arising or acquired relating to the
Pledgor's interest in any Partnership and/or any of the foregoing rights,
interest or benefits; including, without limitation, (i) all distributions by,
and any other payments from each Partnership, and all present and future rights
to receive any distributions or other payments from each Partnership, whether
the same constitute distributions of capital, surplus or profits, or derive from
any other source including, without limitation, any such distribution or payment
derived from, representing, based upon, measured by, or otherwise in respect of,
(x) the operating revenues of any Partnership, or (y) any sale, assignment,
transfer or other disposition (or transaction having comparable effect) of any
assets of any Partnership, any mortgaging, encumbering or other financing or
refinancing of any assets of any Partnership, any insurance proceeds or
condemnation awards in respect of any assets of any Partnership, any merger,
consolidation or recapitalization of any Partnership, any redemption or
liquidation of the interest of the Pledgor in any Partnership, or any
contribution of any property to any Partnership by any partner therein; and (ii)
without limiting clause (i), any other payments or distributions, and any rights
to receive the same, from any Partnership, from any partner or partners therein,
or from any other party, in respect of (A) any sale, assignment, transfer,
encumbrance or other disposition (or transaction having comparable effect) of
any partner's interest in any Partnership or any rights in respect thereof, and
(B) any payments of principal, interest or of any other character in respect of
any debt owed by any Partnership or any partner therein to the Pledgor (all of
which property and rights referred to in one or more of clauses (i) or (ii) are
referred to collectively as the "Pledged Interests"); and
(b) the proceeds, products, rents, issues and profits of the Pledged
Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
<PAGE>
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
<PAGE>
EXECUTION COPY
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of January 28, 1998 by KINRO, INC., an
Ohio corporation, as pledgor (the "Pledgor") and THE CHASE MANHATTAN BANK, as
trustee (the "Pledgee"), for the benefit of the Noteholders (as hereinafter
defined).
W I T N E S S E T H :
WHEREAS:
A. Pursuant to a Note Purchase Agreement, dated as of the date
hereof (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement"), among Kinro, Inc., Lippert Components, Inc. and Shoals
Supply, Inc. (individually, a "Co-Issuer" and collectively, the "Co-Issuers"),
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of Senior Notes, the "Noteholders"), the Noteholders
have agreed to purchase the 6.95% senior notes due January 28, 2005 issued by
the Co-Issuers (the "Senior Notes"), upon the terms and subject to the
conditions set forth therein; and
B. The Noteholders' obligation to purchase the Senior Notes pursuant
to the Note Purchase Agreement is subject, among other conditions, to receipt by
the Noteholders of this Pledge Agreement duly executed by the Pledgor;
NOW, THEREFORE, in consideration of the premises contained herein,
and to induce the Noteholders to purchase the Senior Notes from the Co-Issuers
pursuant to the Note Purchase Agreement, the Pledgor hereby agrees with the
Pledgee, for the benefit of the Noteholders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note Purchase Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Co-Issuer(s)" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Collateral" has the meaning ascribed to such term in Section 2
hereof.
"Companies" means all Subsidiaries of the Pledgor whether now owned
by the Pledgor or hereinafter acquired and whether now existing or
hereinafter coming into existence.
<PAGE>
"Contractual Obligations" has the meaning ascribed to such term in
Section 4(c) hereof.
"Event of Default" means an Event of Default as defined in the Note
Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof, among the Pledgee, the Noteholders and The Chase
Manhattan Bank, as Collateral Agent (as defined in the Revolving Credit
Agreement), as Administrative Agent (as defined in the Revolving Credit
Agreement) and as Trustee.
"Noteholders" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Note Purchase Agreement" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Obligations" means and includes all loans, advances, debts,
liabilities, costs and obligations howsoever arising, owed by Pledgor and
the Co-Issuers to the Noteholders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the terms of the
Note Purchase Agreement, the Senior Notes, the Other Agreements or any of
the Transaction Documents to which it is a party, including all interest,
fees, charges, expenses, attorneys' fees and accountants' fees, chargeable
to and payable by the Pledgor or the Co-Issuers hereunder and thereunder.
"Partnership" has the meaning ascribed to such term in Schedule II
hereto.
"Partnership Documents" has the meaning ascribed to such term in
Schedule II hereto.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Interests" has the meaning ascribed to such term in Section
2(a) hereof.
"Pledged Securities" has the meaning ascribed to such term in
Section 2(b) hereof.
"Pledged Stock" has the meaning ascribed to such term in Section
2(a) hereof.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation,
all dividends, distributions or other income from the Pledged Stock and
the Pledged Interests, collections thereon or distributions made with
respect thereto or other payments or property, securities, securities
entitlements, investment property or instruments in respect of the Pledged
Stock and the Pledged Interests.
2
<PAGE>
"Requirement of Law" for any Person means the articles of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of January 28, 1998 by and between The Chase Manhattan Bank, as
administrative agent and as collateral agent and the lenders signatory
thereto.
"Securities Act" has the meaning ascribed to such term in Section
9(a) hereof.
"Senior Notes" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Termination Date" has the meaning ascribed to such term in Section
17 hereof.
2. Pledge; Grant of Security Interest. (a) As security for the
payment and performance in full of the Obligations, the Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Pledgee, and grants to the Pledgee for the ratable benefit
of the Noteholders, a first priority security interest in (i) the shares of
capital stock listed on Schedule I (if any) and any shares of stock of any
Company obtained in the future by the Pledgor and the certificates representing
all such shares (the "Pledged Stock"), (ii) all of the Pledgor's partnership
interests and related rights described in Schedule II and any partnership
interests or other equity interests in any Company obtained in the future by the
Pledgor (the "Pledged Interests"), (iii) all other property (including any
security entitlements) that may be delivered to and held by the Pledgee pursuant
to the terms hereof, (iv) subject to Section 6 hereof, all payments of dividends
and distributions, including, without limitation, all cash, instruments,
securities, security entitlements, investment property and other property, from
time to time received, receivable or otherwise paid or distributed, in respect
of, or in exchange for or upon the conversion of the securities and other
property referred to in clauses (i), (ii) or (iii) above, (v) subject to Section
6 hereof, all rights and privileges of the Pledgor with respect to the
securities (including any security entitlements) and other property referred to
in clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clause (vii)) may be
deposited or held in, and any security entitlements or other rights relating
thereto, and (vii) all proceeds of any of the foregoing (the items referred to
in clauses (i) through (vii) above being collectively referred to as the
"Collateral"). The Pledgee acknowledges that the security interest in the
collateral granted herein ranks equally and pari passu with the security
interest in favor of the Collateral Agent (as defined in the Revolving Credit
Agreement) pursuant to the Pledge Agreement (as defined in the Revolving Credit
Agreement) and the rights of the Trustee and the Collateral Agent with respect
to the Collateral shall be subject to the terms and conditions of the
Intercreditor Agreement.
(b) Upon delivery to the Pledgee, any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer
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<PAGE>
satisfactory to the Pledgee, a duly executed acknowledgment and consent in the
form of Exhibit A hereto from each of the Companies listed on Schedule I hereto
and by such other instruments and documents as the Pledgee may request. Without
limiting this Section 2(b), (i) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the Pledgor and such other instruments or documents as the Pledgee
may request, and (ii) upon the grant of a security interest in partnership
interests or other equity interests in any Person now or hereafter included in
the Collateral, there shall be executed and delivered to the Pledgee such
instruments of consent, waiver and recognition, from the issuer and other equity
holders thereof (having provisions comparable to the Consent, Waiver and
Recognition Agreement in the form of Exhibit B hereto) and such other
instruments and documents (including Uniform Commercial Code financing
statements duly executed in proper form for filing in such offices as the
Pledgee shall require) as the Pledgee may request. Each delivery of Pledged
Securities and each such grant of a security interest shall be accompanied by a
schedule describing the securities, security entitlements, investment property
and equity interests theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule I or Schedule II, as applicable,
and made a part hereof (provided that the failure to deliver any such schedule
shall not impair the security interest hereunder of the Pledgee in any Pledged
Securities or Pledged Interests). Each schedule so delivered (except to the
extent in error) shall supercede any prior schedules so delivered.
3. Deliveries. (a) The Pledgor agrees promptly to deliver or cause
to be delivered to the Pledgee any and all Pledged Securities, and any and all
certificates or other instruments or documents representing Collateral, and any
other instruments referred to in Section 2(b) hereof (i) endorsed to the Pledgee
or in blank by an effective endorsement, or (ii) causing the certificate to be
registered in the name of the Pledgee, upon original issue or registration of
transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Pledgee a duly executed Consent, Waiver and Recognition
Agreement in the form of Exhibit B hereto in respect of each Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Pledgee as the registered owner thereof, upon original issue or registration
of transfer or (ii) the issuer agrees that it will comply with instructions with
respect to such uncertificated security originated by the Pledgee without
further consent of the registered owner.
(d) With respect to such of the Collateral as constitutes a
"security entitlement" as defined in Article 8 of the UCC, the Pledgor agrees to
cause the securities intermediary to indicate by book entry that such security
entitlement has been credited to a securities account of the Pledgee.
4. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee and the Noteholders that:
(a) the Pledgor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral
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<PAGE>
pursuant to, this Pledge Agreement and has taken all necessary action to
authorize its execution, delivery and performance of, and grant of the Lien on
the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law or any
agreement, bond, note or indenture to which the Pledgor is a party or by which
it is bound or its assets affected (the "Contractual Obligation") of the Pledgor
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any shareholder or creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby except as set forth in Schedule 6.8 to the Note Purchase
Agreement;
(f) the shares of Pledged Stock of the Companies listed on
Schedule I constitute all of the issued and outstanding shares of all classes of
the capital stock of such Companies, and (ii) the Pledged Interests listed on
Schedule II hereto constitute all of the partnership interests of such
Companies;
(g) all of the shares of the Pledged Stock and Pledged
Interests of the Companies listed on Schedule I and Schedule II hereto have been
duly and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Stock and the Pledged Interests of the Companies
listed on Schedule I (if any) and Schedule II hereto, free and clear of any and
all Liens or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement;
(i) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid first-priority Lien on, and perfected security interest
in, the Pledged Stock for the benefit of the Noteholders, enforceable as such
against the Pledgor, all creditors of the Pledgor and any Persons purporting to
purchase any of the Collateral from the Pledgor; and
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<PAGE>
(j) upon filing Uniform Commercial Code financing statements
in the locations set forth on Schedule III hereto, naming the Pledgor as debtor
and the Pledgee as secured party, the Pledgee will have a valid perfected first
lien and security interest in such Pledged Interests as security for the payment
and performance of the Obligations.
All representation and warranties made under this Pledge Agreement shall
be deemed to be made, and shall be true and correct, at and as of the date
hereof. All representations and warranties made under this Pledge Agreement
shall survive, and not be waived by, the execution hereof by the Pledgee, any
investigation or inquiry by the Pledgee or any Noteholder, or the purchase of
the Senior Notes pursuant to the Note Purchase Agreement.
5. Covenants. The Pledgor covenants and agrees with the Pledgee and
the Noteholders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock or the Pledged Interests, become entitled to receive or shall
receive any stock certificate or certificated partnership interest (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of or in
exchange for any shares of the Pledged Stock or the Pledged Interests, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent for
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee hereunder as
Collateral.
(b) Without the prior written consent of the Pledgee, the
Pledgor will not (i) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement, or (iii) take any action which, in the
Pledgee's reasonable judgment, could impair the Collateral or result in a
violation of any provision of the Note Purchase Agreement or this Pledge
Agreement. The Pledgor will defend the right, title and interest of the Pledgee
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Pledgee, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Pledgee may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted, including, without limitation, delivering to
the Pledgee on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit C hereto. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered
6
<PAGE>
to the Pledgee, duly endorsed in a manner reasonably satisfactory to the
Pledgee, to be held as Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement;
provided, however, that the Pledgor shall have no obligation hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of the Pledgee.
6. Dividends or Distributions; Voting Rights. (a) In the event of
the occurrence of any Event of Default, the Pledgee shall have the right to
require that all cash dividends and distributions payable with respect to any
part of the Pledged Stock and cash distributions in respect of the Pledged
Interests be paid to the Pledgee to be held by the Pledgee as additional
security hereunder until applied to the Obligations.
(b) Any or all shares of the Pledged Stock or the Pledged
Interests held by the Pledgee may, at the option of the Pledgee or its nominee,
be registered in the name of the Pledgee or its nominee. If at any time the
Pledged Interests are represented or evidenced by any certificates, the same
shall promptly be delivered to the Pledgee in pledge hereunder together with any
instruments of transfer requested by the Pledgor. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall be permitted to
exercise all voting rights with respect to the Pledged Stock and the Pledged
Interests; provided, however, that the Pledgee shall have the right to vote in
respect of Pledged Stock and the Pledged Interests in connection with any
corporate or partnership action necessary for the voluntary commencement of a
proceeding or filing of a petition under the Federal bankruptcy laws or any
applicable provincial bankruptcy or insolvency laws commencing a bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the issuer of such Pledged Stock or the
Pledged Interests, or the appointment of a trustee or receiver or assignment for
the benefit of creditors, or any similar or related action, or to consent to any
of the foregoing and the Pledgor shall not vote in favor of or approve any such
action without the prior written consent of the Pledgee.
7. Rights of the Pledgee Upon an Event of Default. (a) The Pledgee
or its nominee may, without notice, and after the occurrence of any Event of
Default, exercise all voting and/or other consensual rights and corporate or
partnership rights at any meeting of any corporation and/or partnership issuing
any of the shares, interests, security entitlements or other investment property
included in the Collateral and exercise any and all rights, privileges or
options pertaining to any item of Collateral as if it were the absolute owner
thereof, including, without limitation, the right to receive dividends or other
distributions payable thereon, and the right to exchange, at its discretion, any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation or partnership issuing
any of such shares or partnership interests or upon the exercise by any such
issuer of any right, privilege or option pertaining to any Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without liability except
to account for property actually received by it, but the Pledgee shall have no
duty to
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<PAGE>
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor or against any other Person that may be or become liable in
respect of all or any part of the Obligations or against any other collateral
security therefor, guarantee thereof or right of offset with respect thereto.
The Pledgee shall not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor shall
the Pledgee be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing,
the Pledgee may exercise, in addition to all other rights and remedies granted
in this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Companies or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Pledgee or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Pledgee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Pledgee shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in the
manner provided in the Intercreditor Agreement, and only after such application
and after the payment by the Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by the
Pledgee of any of its rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 days before such sale or other
disposition. The Pledgor further waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code.
8
<PAGE>
9. Private Sales. (a) The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Interests, by reason of certain prohibitions contained in the Securities Act of
1933 (the "Securities Act") and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the Pledgee than if such sale were a public sale and agrees that
such circumstances shall not, in and of themselves, result in a determination
that such sale was not made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock or the
Pledged Interests for the period of time necessary to permit the Companies to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(b) Upon the occurrence of an Event of Default and at
Pledgee's request, the Pledgor agrees to use the Pledgor's best efforts to cause
the Companies to disseminate publicly all information required to be
disseminated pursuant to the Securities Exchange Act of 1934, as amended, in the
event that the Companies or the Pledgor is required to file reports under such
Act, or to otherwise make available such information as to permit the public or
private sale of the Collateral in accordance with the terms of this Pledge
Agreement. The Pledgor further agrees to use the Pledgor's best efforts to cause
the Companies to cooperate with the Pledgee in taking whatever additional action
may be required to effect such public or private sale of the Collateral.
(c) The Pledgor further agrees to do or cause to be done all
such other acts as may be necessary to make any sale or sales of all or any
portion of the Pledged Stock or the Pledged Interests pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of the covenant
contained in this paragraph 9(c) will cause irreparable injury to the Pledgee,
that the Pledgee has no adequate remedy at law in respect of such breach and, as
a consequence, that such covenant shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenant.
10. Limitation on Duties Regarding Collateral. The Pledgee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. Neither the Pledgee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. Severability; Paragraph Headings. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
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<PAGE>
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The paragraph headings used in this Pledge Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
13. No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Pledgee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Pledgee would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Pledgee. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Pledgee and the Noteholders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices and other communications under this Pledge
Agreement shall be in writing and shall be personally delivered, transmitted by
telecopy with a confirming copy sent by postage prepaid registered or certified
mail, or sent by overnight courier to the parties as follows:
To the Pledgee: The Chase Manhattan Bank,
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
with a copy to: Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn:. Securities Division, Thompson Team, C. Tackney
10
<PAGE>
Midwestern United Life Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Security Life of Denver Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Equitable Life Insurance Company of Iowa
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
USG Annuity & Life Company
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
To the Pledgor: Kinro, Inc.
4381 Green Oaks Boulevard
Suite 200
Arlington, Texas 76016
with a copy to: Drew Industries, Incorporated.
200 Mamaroneck Avenue
White Plains, New York 10601
All such notices shall be effective upon receipt. Any party may change its
address for purposes hereof by notice to the other party.
16. Irrevocable Authorization and Instruction to Pledgor. The
Pledgor hereby authorizes and instructs the Companies to comply with any
instruction received by it from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Companies shall be fully protected in
so complying.
11
<PAGE>
17. Termination. After the Termination Date (as defined below), this
Pledge Agreement shall terminate and the Pledgee, at the request and expense of
the Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the termination of this Pledge Agreement as to the
Pledgor, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
the Pledgor as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this Pledge
Agreement, together with any moneys at the time held by the Pledgee hereunder.
As used in this Pledge Agreement, "Termination Date" shall mean the date upon
which no Senior Note remains outstanding and when the Pledgee has been notified
in writing by each Noteholder that all Obligations have been indefeasibly paid
in full.
18. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
19. Payment Free of Taxes, Etc. All payments made by the Pledgor
under this Pledge Agreement shall be made by the Pledgor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Pledgor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge
Agreement. Upon request by the Pledgee, the Pledgor shall furnish evidence
satisfactory to the Pledgee that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory bodies
have been obtained and made and that all requisite taxes, levies and charges
have been paid.
12
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
KINRO, INC.
By: ___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGEMENT AND CONSENT
Reference is made to that certain Pledge Agreement, dated as of January
28, 1998, made by KINRO, INC., an Ohio corporation, in favor of The Chase
Manhattan Bank,, as trustee for the benefit of the Noteholders (in such
capacity, the "Pledgee"). Each capitalized term used herein shall have the
meaning prescribed therein.
[Name of Company], one of the Companies referred to in the foregoing
Pledge Agreement (the "Pledge Agreement"), hereby acknowledges receipt of a copy
of such Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [Name of Company]
agrees to notify the Pledgee promptly in writing of the occurrence of any of the
events described in paragraphs 5(a) of the Pledge Agreement. [Name of Company]
further agrees that the terms of paragraph 9(b) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of paragraph 9 of the Pledge
Agreement.
[NAME OF COMPANY]
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT B
Intentionally Omitted
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<PAGE>
EXHIBIT C
IRREVOCABLE PROXY
KNOWN ALL MEN BY THERE PRESENTS that, the undersigned does hereby make,
constitute and appoint THE CHASE MANHATTAN BANK, as trustee (the "Trustee") for
the benefit of the Noteholders (as hereinafter defined), and each of the
Trustee's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital of ________________, a ______________ corporation (hereinafter
referred to as the "Corporation"), which it now or hereafter may own or hold,
including, without limitation, the right, on his behalf, to demand the call by
any proper officer of the Corporation pursuant to the provisions of its
Certificate of Incorporation or By-Laws and as permitted by law of a meeting of
its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Trustee and to its officers and employees in
consideration of the acquisition of the Senior Notes (as defined in the Pledge
Agreement) by Teachers Insurance and Annuity Association of America, Midwestern
United Life Insurance Company, Security Life of Denver Insurance Company,
Equitable Life Insurance Company of Iowa and USG Annuity and Life Company
(collectively, the "Noteholders"), and in order to carry out the covenant of the
undersigned contained in a certain Pledge Agreement of even date herewith by and
between the undersigned and the Trustee, for the ratable benefit of the
Noteholders (as amended, modified and supplemented the "Pledge Agreement"), and
this Proxy shall not be revocable or revoked by the undersigned, shall be
binding upon its successors and assigns until the payment in full of all of the
Obligations (as such term is defined in the aforesaid Pledge Agreement and may
be exercised only after an Event of Default under the Note Purchase Agreement
(as such terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 28th day of January, 1998.
KINRO, INC.
By: ___________________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
Kinro Manufacturing, Inc. 10 100%
Kinro Holding, Inc. 10 100%
<PAGE>
SCHEDULE II
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
PARTNERSHIP INTERESTS
(a) All of the present and future right, title and interest as a
partner in any partnership (including the partnership listed in Annex 1 hereto,
if any) and any successor(s) thereto or assignee(s) thereof (each, a
"Partnership"), of the Pledgor and the rights, interest and benefits in respect
thereof of the Pledgor arising under the agreements, documents and/or
certificates (including, without limitation, any publicly filed documents)
constituting or governing each such Partnership (the "Partnership Documents"),
and all other benefits pertaining thereto and any and all general intangibles
and accounts now owned or hereafter arising or acquired relating to the
Pledgor's interest in any Partnership and/or any of the foregoing rights,
interest or benefits; including, without limitation, (i) all distributions by,
and any other payments from each Partnership, and all present and future rights
to receive any distributions or other payments from each Partnership, whether
the same constitute distributions of capital, surplus or profits, or derive from
any other source including, without limitation, any such distribution or payment
derived from, representing, based upon, measured by, or otherwise in respect of,
(x) the operating revenues of any Partnership, or (y) any sale, assignment,
transfer or other disposition (or transaction having comparable effect) of any
assets of any Partnership, any mortgaging, encumbering or other financing or
refinancing of any assets of any Partnership, any insurance proceeds or
condemnation awards in respect of any assets of any Partnership, any merger,
consolidation or recapitalization of any Partnership, any redemption or
liquidation of the interest of the Pledgor in any Partnership, or any
contribution of any property to any Partnership by any partner therein; and (ii)
without limiting clause (i), any other payments or distributions, and any rights
to receive the same, from any Partnership, from any partner or partners therein,
or from any other party, in respect of (A) any sale, assignment, transfer,
encumbrance or other disposition (or transaction having comparable effect) of
any partner's interest in any Partnership or any rights in respect thereof, and
(B) any payments of principal, interest or of any other character in respect of
any debt owed by any Partnership or any partner therein to the Pledgor (all of
which property and rights referred to in one or more of clauses (i) or (ii) are
referred to collectively as the "Pledged Interests"); and
(b) the proceeds, products, rents, issues and profits of the Pledged
Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
<PAGE>
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
<PAGE>
EXECUTION COPY
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of January 28, 1998 by KINRO HOLDING,
INC., a New York corporation, as pledgor (the "Pledgor") and THE CHASE MANHATTAN
BANK, as trustee (the "Pledgee"), for the benefit of the Noteholders (as
hereinafter defined).
W I T N E S S E T H :
WHEREAS:
A. Pursuant to a Note Purchase Agreement, dated as of the date
hereof (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement"), among Kinro, Inc., Lippert Components, Inc. and Shoals
Supply, Inc. (individually, a "Co-Issuer" and collectively, the "Co-Issuers"),
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of Senior Notes, the "Noteholders"), the Noteholders
have agreed to purchase the 6.95% senior notes due January 28, 2005 issued by
the Co-Issuers (the "Senior Notes"), upon the terms and subject to the
conditions set forth therein; and
B. The Noteholders' obligation to purchase the Senior Notes pursuant
to the Note Purchase Agreement is subject, among other conditions, to receipt by
the Noteholders of this Pledge Agreement duly executed by the Pledgor;
NOW, THEREFORE, in consideration of the premises contained herein,
and to induce the Noteholders to purchase the Senior Notes from the Co-Issuers
pursuant to the Note Purchase Agreement, the Pledgor hereby agrees with the
Pledgee, for the benefit of the Noteholders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note Purchase Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Co-Issuer(s)" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Collateral" has the meaning ascribed to such term in Section 2
hereof.
"Companies" means all Subsidiaries of the Pledgor whether now owned
by the Pledgor or hereinafter acquired and whether now existing or
hereinafter coming into existence.
<PAGE>
"Contractual Obligations" has the meaning ascribed to such term in
Section 4(c) hereof.
"Event of Default" means an Event of Default as defined in the Note
Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof, among the Pledgee, the Noteholders and The Chase
Manhattan Bank, as Collateral Agent (as defined in the Revolving Credit
Agreement), as Administrative Agent (as defined in the Revolving Credit
Agreement) and as Trustee.
"Noteholders" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Note Purchase Agreement" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Obligations" means and includes all loans, advances, debts,
liabilities, costs and obligations howsoever arising, owed by Pledgor and
the Co-Issuers to the Noteholders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the terms of the
Note Purchase Agreement, the Senior Notes, the Other Agreements or any of
the Transaction Documents to which it is a party, including all interest,
fees, charges, expenses, attorneys' fees and accountants' fees, chargeable
to and payable by the Pledgor or the Co-Issuers hereunder and thereunder.
"Partnership" has the meaning ascribed to such term in Schedule II
hereto.
"Partnership Documents" has the meaning ascribed to such term in
Schedule II hereto.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Interests" has the meaning ascribed to such term in Section
2(a) hereof.
"Pledged Securities" has the meaning ascribed to such term in
Section 2(b) hereof.
"Pledged Stock" has the meaning ascribed to such term in Section
2(a) hereof.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation,
all dividends, distributions or other income from the Pledged Stock and
the Pledged Interests, collections thereon or distributions made with
respect thereto or other payments or property, securities, securities
entitlements, investment property or instruments in respect of the Pledged
Stock and the Pledged Interests.
2
<PAGE>
"Requirement of Law" for any Person means the articles of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of January 28, 1998 by and between The Chase Manhattan Bank, as
administrative agent and as collateral agent and the lenders signatory
thereto.
"Securities Act" has the meaning ascribed to such term in Section
9(a) hereof.
"Senior Notes" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Termination Date" has the meaning ascribed to such term in Section
17 hereof.
2. Pledge; Grant of Security Interest. (a) As security for the
payment and performance in full of the Obligations, the Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Pledgee, and grants to the Pledgee for the ratable benefit
of the Noteholders, a first priority security interest in (i) the shares of
capital stock listed on Schedule I (if any) and any shares of stock of any
Company obtained in the future by the Pledgor and the certificates representing
all such shares (the "Pledged Stock"), (ii) all of the Pledgor's partnership
interests and related rights described in Schedule II and any partnership
interests or other equity interests in any Company obtained in the future by the
Pledgor (the "Pledged Interests"), (iii) all other property (including any
security entitlements) that may be delivered to and held by the Pledgee pursuant
to the terms hereof, (iv) subject to Section 6 hereof, all payments of dividends
and distributions, including, without limitation, all cash, instruments,
securities, security entitlements, investment property and other property, from
time to time received, receivable or otherwise paid or distributed, in respect
of, or in exchange for or upon the conversion of the securities and other
property referred to in clauses (i), (ii) or (iii) above, (v) subject to Section
6 hereof, all rights and privileges of the Pledgor with respect to the
securities (including any security entitlements) and other property referred to
in clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clause (vii)) may be
deposited or held in, and any security entitlements or other rights relating
thereto, and (vii) all proceeds of any of the foregoing (the items referred to
in clauses (i) through (vii) above being collectively referred to as the
"Collateral"). The Pledgee acknowledges that the security interest in the
collateral granted herein ranks equally and pari passu with the security
interest in favor of the Collateral Agent (as defined in the Revolving Credit
Agreement) pursuant to the Pledge Agreement (as defined in the Revolving Credit
Agreement) and the rights of the Trustee and the Collateral Agent with respect
to the Collateral shall be subject to the terms and conditions of the
Intercreditor Agreement.
(b) Upon delivery to the Pledgee, any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer
3
<PAGE>
satisfactory to the Pledgee, a duly executed acknowledgment and consent in the
form of Exhibit A hereto from each of the Companies listed on Schedule I hereto
and by such other instruments and documents as the Pledgee may request. Without
limiting this Section 2(b), (i) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the Pledgor and such other instruments or documents as the Pledgee
may request, and (ii) upon the grant of a security interest in partnership
interests or other equity interests in any Person now or hereafter included in
the Collateral, there shall be executed and delivered to the Pledgee such
instruments of consent, waiver and recognition, from the issuer and other equity
holders thereof (having provisions comparable to the Consent, Waiver and
Recognition Agreement in the form of Exhibit B hereto) and such other
instruments and documents (including Uniform Commercial Code financing
statements duly executed in proper form for filing in such offices as the
Pledgee shall require) as the Pledgee may request. Each delivery of Pledged
Securities and each such grant of a security interest shall be accompanied by a
schedule describing the securities, security entitlements, investment property
and equity interests theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule I or Schedule II, as applicable,
and made a part hereof (provided that the failure to deliver any such schedule
shall not impair the security interest hereunder of the Pledgee in any Pledged
Securities or Pledged Interests). Each schedule so delivered (except to the
extent in error) shall supercede any prior schedules so delivered.
3. Deliveries. (a) The Pledgor agrees promptly to deliver or cause
to be delivered to the Pledgee any and all Pledged Securities, and any and all
certificates or other instruments or documents representing Collateral, and any
other instruments referred to in Section 2(b) hereof (i) endorsed to the Pledgee
or in blank by an effective endorsement, or (ii) causing the certificate to be
registered in the name of the Pledgee, upon original issue or registration of
transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Pledgee a duly executed Consent, Waiver and Recognition
Agreement in the form of Exhibit B hereto in respect of each Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Pledgee as the registered owner thereof, upon original issue or registration
of transfer or (ii) the issuer agrees that it will comply with instructions with
respect to such uncertificated security originated by the Pledgee without
further consent of the registered owner.
(d) With respect to such of the Collateral as constitutes a
"security entitlement" as defined in Article 8 of the UCC, the Pledgor agrees to
cause the securities intermediary to indicate by book entry that such security
entitlement has been credited to a securities account of the Pledgee.
4. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee and the Noteholders that:
(a) the Pledgor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral
4
<PAGE>
pursuant to, this Pledge Agreement and has taken all necessary action to
authorize its execution, delivery and performance of, and grant of the Lien on
the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law or any
agreement, bond, note or indenture to which the Pledgor is a party or by which
it is bound or its assets affected (the "Contractual Obligation") of the Pledgor
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any shareholder or creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby;
(f) the shares of Pledged Stock of the Companies listed on
Schedule I constitute all of the issued and outstanding shares of all classes of
the capital stock of such Companies, and (ii) the Pledged Interests listed on
Schedule II hereto constitute all of the partnership interests of such Companies
except as set forth on Schedule 6.8 to the Note Purchase Agreement;
(g) all of the shares of the Pledged Stock and Pledged
Interests of the Companies listed on Schedule I and Schedule II hereto have been
duly and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Stock and the Pledged Interests of the Companies
listed on Schedule I (if any) and Schedule II hereto, free and clear of any and
all Liens or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement;
(i) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid first-priority Lien on, and perfected security interest
in, the Pledged Stock for the benefit of the Noteholders, enforceable as such
against the Pledgor, all creditors of the Pledgor and any Persons purporting to
purchase any of the Collateral from the Pledgor; and
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<PAGE>
(j) upon filing Uniform Commercial Code financing statements
in the locations set forth on Schedule III hereto, naming the Pledgor as debtor
and the Pledgee as secured party, the Pledgee will have a valid perfected first
lien and security interest in such Pledged Interests as security for the payment
and performance of the Obligations.
All representation and warranties made under this Pledge Agreement shall
be deemed to be made, and shall be true and correct, at and as of the date
hereof. All representations and warranties made under this Pledge Agreement
shall survive, and not be waived by, the execution hereof by the Pledgee, any
investigation or inquiry by the Pledgee or any Noteholder, or the purchase of
the Senior Notes pursuant to the Note Purchase Agreement.
5. Covenants. The Pledgor covenants and agrees with the Pledgee and
the Noteholders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock or the Pledged Interests, become entitled to receive or shall
receive any stock certificate or certificated partnership interest (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of or in
exchange for any shares of the Pledged Stock or the Pledged Interests, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent for
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee hereunder as
Collateral.
(b) Without the prior written consent of the Pledgee, the
Pledgor will not (i) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement, or (iii) take any action which, in the
Pledgee's reasonable judgment, could impair the Collateral or result in a
violation of any provision of the Note Purchase Agreement or this Pledge
Agreement. The Pledgor will defend the right, title and interest of the Pledgee
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Pledgee, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Pledgee may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted, including, without limitation, delivering to
the Pledgee on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit C hereto. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered
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<PAGE>
to the Pledgee, duly endorsed in a manner reasonably satisfactory to the
Pledgee, to be held as Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement;
provided, however, that the Pledgor shall have no obligation hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of the Pledgee.
6. Dividends or Distributions; Voting Rights. (a) In the event of
the occurrence of any Event of Default, the Pledgee shall have the right to
require that all cash dividends and distributions payable with respect to any
part of the Pledged Stock and cash distributions in respect of the Pledged
Interests be paid to the Pledgee to be held by the Pledgee as additional
security hereunder until applied to the Obligations.
(b) Any or all shares of the Pledged Stock or the Pledged
Interests held by the Pledgee may, at the option of the Pledgee or its nominee,
be registered in the name of the Pledgee or its nominee. If at any time the
Pledged Interests are represented or evidenced by any certificates, the same
shall promptly be delivered to the Pledgee in pledge hereunder together with any
instruments of transfer requested by the Pledgor. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall be permitted to
exercise all voting rights with respect to the Pledged Stock and the Pledged
Interests; provided, however, that the Pledgee shall have the right to vote in
respect of Pledged Stock and the Pledged Interests in connection with any
corporate or partnership action necessary for the voluntary commencement of a
proceeding or filing of a petition under the Federal bankruptcy laws or any
applicable provincial bankruptcy or insolvency laws commencing a bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the issuer of such Pledged Stock or the
Pledged Interests, or the appointment of a trustee or receiver or assignment for
the benefit of creditors, or any similar or related action, or to consent to any
of the foregoing and the Pledgor shall not vote in favor of or approve any such
action without the prior written consent of the Pledgee.
7. Rights of the Pledgee Upon an Event of Default. (a) The Pledgee
or its nominee may, without notice, and after the occurrence of any Event of
Default, exercise all voting and/or other consensual rights and corporate or
partnership rights at any meeting of any corporation and/or partnership issuing
any of the shares, interests, security entitlements or other investment property
included in the Collateral and exercise any and all rights, privileges or
options pertaining to any item of Collateral as if it were the absolute owner
thereof, including, without limitation, the right to receive dividends or other
distributions payable thereon, and the right to exchange, at its discretion, any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation or partnership issuing
any of such shares or partnership interests or upon the exercise by any such
issuer of any right, privilege or option pertaining to any Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without liability except
to account for property actually received by it, but the Pledgee shall have no
duty to
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<PAGE>
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor or against any other Person that may be or become liable in
respect of all or any part of the Obligations or against any other collateral
security therefor, guarantee thereof or right of offset with respect thereto.
The Pledgee shall not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor shall
the Pledgee be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing,
the Pledgee may exercise, in addition to all other rights and remedies granted
in this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Companies or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Pledgee or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Pledgee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Pledgee shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in the
manner provided in the Intercreditor Agreement, and only after such application
and after the payment by the Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by the
Pledgee of any of its rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 days before such sale or other
disposition. The Pledgor further waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code.
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<PAGE>
9. Private Sales. (a) The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Interests, by reason of certain prohibitions contained in the Securities Act of
1933 (the "Securities Act") and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the Pledgee than if such sale were a public sale and agrees that
such circumstances shall not, in and of themselves, result in a determination
that such sale was not made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock or the
Pledged Interests for the period of time necessary to permit the Companies to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so. (b)
Upon the occurrence of an Event of Default and at Pledgee's request, the Pledgor
agrees to use the Pledgor's best efforts to cause the Companies to disseminate
publicly all information required to be disseminated pursuant to the Securities
Exchange Act of 1934, as amended, in the event that the Companies or the Pledgor
is required to file reports under such Act, or to otherwise make available such
information as to permit the public or private sale of the Collateral in
accordance with the terms of this Pledge Agreement. The Pledgor further agrees
to use the Pledgor's best efforts to cause the Companies to cooperate with the
Pledgee in taking whatever additional action may be required to effect such
public or private sale of the Collateral.
(c) The Pledgor further agrees to do or cause to be done all
such other acts as may be necessary to make any sale or sales of all or any
portion of the Pledged Stock or the Pledged Interests pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of the covenant
contained in this paragraph 9(c) will cause irreparable injury to the Pledgee,
that the Pledgee has no adequate remedy at law in respect of such breach and, as
a consequence, that such covenant shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenant.
10. Limitation on Duties Regarding Collateral. The Pledgee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. Neither the Pledgee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. Severability; Paragraph Headings. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
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<PAGE>
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The paragraph headings used in this Pledge Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
13. No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Pledgee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Pledgee would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Pledgee. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Pledgee and the Noteholders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices and other communications under this Pledge
Agreement shall be in writing and shall be personally delivered, transmitted by
telecopy with a confirming copy sent by postage prepaid registered or certified
mail, or sent by overnight courier to the parties as follows:
To the Pledgee: The Chase Manhattan Bank,
950 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
with a copy to: Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn:. Securities Division, Thompson Team, C. Tackney
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Midwestern United Life Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Security Life of Denver Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Equitable Life Insurance Company of Iowa
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
USG Annuity & Life Company
c/o ING Investment Management, LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
To the Pledgor: Kinro Holding, Inc.
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
All such notices shall be effective upon receipt. Any party may change its
address for purposes hereof by notice to the other party.
16. Irrevocable Authorization and Instruction to Pledgor. The
Pledgor hereby authorizes and instructs the Companies to comply with any
instruction received by it from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Companies shall be fully protected in
so complying.
17. Termination. After the Termination Date (as defined below), this
Pledge Agreement shall terminate and the Pledgee, at the request and expense of
the Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the termination of this Pledge Agreement as to the
Pledgor, and will duly assign, transfer and deliver
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to the Pledgor (without recourse and without any representation or warranty)
such of the Collateral of the Pledgor as may be in the possession of the Pledgee
and as has not theretofore been sold or otherwise applied or released pursuant
to this Pledge Agreement, together with any moneys at the time held by the
Pledgee hereunder. As used in this Pledge Agreement, "Termination Date" shall
mean the date upon which no Senior Note remains outstanding and when the Pledgee
has been notified in writing by each Noteholder that all Obligations have been
indefeasibly paid in full.
18. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
19. Payment Free of Taxes, Etc. All payments made by the Pledgor
under this Pledge Agreement shall be made by the Pledgor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Pledgor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge
Agreement. Upon request by the Pledgee, the Pledgor shall furnish evidence
satisfactory to the Pledgee that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory bodies
have been obtained and made and that all requisite taxes, levies and charges
have been paid.
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IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
KINRO HOLDING, INC.
By: ___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGEMENT AND CONSENT
Reference is made to that certain Pledge Agreement, dated as of January
28, 1998, made by KINRO HOLDING, INC., a New York corporation, in favor of The
Chase Manhattan Bank,, as trustee for the benefit of the Noteholders (in such
capacity, the "Pledgee"). Each capitalized term used herein shall have the
meaning prescribed therein.
[Name of Company], one of the Companies referred to in the foregoing
Pledge Agreement (the "Pledge Agreement"), hereby acknowledges receipt of a copy
of such Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [Name of Company]
agrees to notify the Pledgee promptly in writing of the occurrence of any of the
events described in paragraphs 5(a) of the Pledge Agreement. [Name of Company]
further agrees that the terms of paragraph 9(b) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of paragraph 9 of the Pledge
Agreement.
[NAME OF COMPANY]
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT B
CONSENT, WAIVER AND RECOGNITION AGREEMENT
CONSENT, WAIVER AND RECOGNITION AGREEMENT (as it may be amended or
modified hereafter, this "Agreement") dated as of January 28, 1998, by and among
KINRO MANUFACTURING, INC., a Delaware corporation (the "General Partner"), KINRO
HOLDING, INC., a New York corporation (the "Limited Partner"; together with the
General Partner, the "Partners"), KINRO TEXAS LIMITED PARTNERSHIP, a Texas
limited partnership, and KINRO TENNESSEE LIMITED PARTNERSHIP, a Tennessee
limited partnership (the "Partnerships"; together with the General Partner and
the Limited Partner, the "Partnership Parties") in favor of THE CHASE MANHATTAN
BANK, a New York banking corporation as trustee (the "Trustee") for the benefit
of the Noteholders (as hereinafter defined).
Reference is hereby made to the Note Purchase Agreement, dated as of
January 28, 1998 (as amended, supplemented or modified from time to time, the
"Note Purchase Agreement") among Kinro, Inc., Shoals Supply, Inc. and Lippert
Components, Inc. as Co-Issuers (the "Co-Issuers"), and Teachers Insurance and
Annuity Association of America, Midwestern United Life Insurance Company,
Security Life of Denver Insurance Company, Equitable Life Insurance Company of
Iowa and USG Annuity & Life Company (together with each future holder of Senior
Notes the "Noteholders"). Terms used herein as defined terms and not otherwise
defined herein shall have the meanings given thereto in the Note Purchase
Agreement.
The Noteholders have agreed to purchase from the Co-Issuers the
Senior Notes upon the terms and subject to the conditions specified in the Note
Purchase Agreement. The obligations of the Noteholders to purchase the Senior
Notes are conditioned on, among other things, the execution and delivery of this
Agreement.
WHEREAS, the General Partner is the sole general partner of each
Partnership; and
WHEREAS, the Limited Partner is the sole limited partner of each
Partnership;
NOW, THEREFORE, in consideration of the premises and the agreements
herein, and for other and good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Partnership Parties hereby
agree in favor of the Co-Issuers as follows:
1. The General Partner and each Partnership each hereby consents to
and approves the execution, delivery and performance by the Limited Partner of
the Pledge Agreement made by the Limited Partner in favor of the Trustee for the
ratable benefit of the Noteholders (as amended, supplemented or modified from
time to time the "Pledge Agreement"), pursuant to which the Limited Partner has
granted, assigned and pledged to the Trustee for the ratable benefit of the
Noteholders, a security interest in all of its right, title and interest in each
Partnership and related rights under the governing and constituent documents of
each
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Partnership, including all distributions, and all proceeds of the foregoing, all
as collateral security for the Obligations (as more particularly described in
the Pledge Agreement, the "Collateral").
2. Notwithstanding anything to the contrary contained in the
respective Agreement of Limited Partnership of each Partnership, or in any other
governing and/or constituent documents of either Partnership (collectively and
individually, as amended or otherwise modified from time to time, its respective
"Partnership Documents"), each of the Partnership Parties hereby unconditionally
and irrevocably agrees that (i) all conditions to the effectiveness of the
Transfer (as such term is defined in the Agreement of Limited Partnership of
each Partnership as in effect on the date hereof) constituted by the grant,
assignment and pledge to the Trustee described in the preceding paragraph are
hereby deemed to have been satisfied, and such Transfer (as so defined) is fully
recognized, and (ii) upon written notice to the Partnerships from the Trustee
that an Event of Default has occurred and is continuing, the Noteholders may
sell or otherwise dispose of, or succeed to or otherwise retain, any and all of
the respective right, title and interest of the Limited Partner in the
Partnerships free of any restrictions on transfer imposed by any provision of
any Partnership Agreement and the Noteholders and/or their transferees may at
their election be admitted as limited partners of such Partnerships. Each
Partner waives the application of any contrary provision of any Partnership
Documents in connection with (i) the grant, assignment and pledge under the
Pledge Agreement and (ii) the subsequent enforcement of the remedies (including
disposition of the Collateral) of the Trustee and the Noteholders under the
Pledge Agreement after an Event of Default.
3. Each Partner hereby irrevocably directs each Partnership to make
payment to the Trustee to the extent provided in any written notice from the
Trustee, and agrees that the Partnerships shall have no liability to the Limited
Partner for honoring any written notice from the Trustee as to any such
distributions or payments, regardless of whether it may be subsequently
established that the Trustee was not entitled to give such notice. Until any
such written notice from the Trustee, each Partnership may, to the extent
permitted by the Note Purchase Agreement, continue to remit to the Limited
Partner all distributions on account of the Collateral. The General Partner
agrees that at any time during which distributions are to be made to the Trustee
or its assignee as provided above, the Partnership shall not unreasonably
withhold or delay distributions or maintain unreasonable reserves.
4. Each Partnership Party (i) acknowledges and agrees that neither
the Trustee nor any Noteholder shall as a consequence of any term or provision
of this Agreement or of the Pledge Agreement assume, or be deemed to have
assumed, any obligation or liability of any Partner, whether arising under any
Partnership Documents or otherwise, and whether to any creditor of the
Partnership, to the Limited Partner, or to any other person or party, and (ii)
agrees that neither the Trustee nor any Noteholder shall by virtue of the
possession or exercise of any rights under the Pledge Agreement or hereunder, be
obligated as a partner or otherwise to any Partnership, to any Partner therein,
to any creditor of any Partnership, or to any other person or party, for any
contribution of cash or other property, or in respect of any liability of any
Partnership or any Partner therein (whether by way of indemnity, contribution or
otherwise), or to provide any credit to any Partnership or any accommodation
thereof.
5. All notices permitted or required under this Agreement shall be
in writing and shall be given in the manner provided in the Pledge Agreement.
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6. Each Partnership Party represents and warrants that it has the
full power and authority to enter into and perform this Agreement, and that this
Agreement constitutes the binding obligation of such Partnership Party
enforceable in accordance with its terms (except as such enforceability may be
limited by bankruptcy or insolvency laws affecting creditors' rights generally
or by the application of principles of equity).
7. This Agreement shall be binding on each Partnership Party and
each of its successors, transferees and assigns and shall inure, together with
all rights and remedies of the Noteholders and the Trustee hereunder, to the
benefit of the Noteholders and the Trustee and their successors, transferees and
assigns.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
9. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, this Consent, Waiver and Recognition Agreement
has been executed and delivered as of the date first set forth above.
THE CHASE MANHATTAN BANK KINRO MANUFACTURING, INC.
as Trustee
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
KINRO HOLDING, INC.
By: _____________________________
Name:
Title:
KINRO TEXAS LIMITED PARTNERSHIP
By: Kinro Manufacturing, Inc.,
general partner
By: _____________________________
Name:
Title:
KINRO TENNESSEE LIMITED
PARTNERSHIP
By: Kinro Manufacturing, Inc.,
general partner
By: _____________________________
Name:
Title:
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<PAGE>
EXHIBIT C
IRREVOCABLE PROXY
KNOWN ALL MEN BY THERE PRESENTS that, the undersigned does hereby make,
constitute and appoint THE CHASE MANHATTAN BANK, as trustee (the "Trustee") for
the benefit of the Noteholders (as hereinafter defined), and each of the
Trustee's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital of ________________, a ______________ corporation (hereinafter
referred to as the "Corporation"), which it now or hereafter may own or hold,
including, without limitation, the right, on his behalf, to demand the call by
any proper officer of the Corporation pursuant to the provisions of its
Certificate of Incorporation or By-Laws and as permitted by law of a meeting of
its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Trustee and to its officers and employees in
consideration of the acquisition of the Senior Notes (as defined in the Pledge
Agreement) by Teachers Insurance and Annuity Association of America, Midwestern
United Life Insurance Company, Security Life of Denver Insurance Company,
Equitable Life Insurance Company of Iowa and USG Annuity & Life Company and ING
Investment Management Company (collectively, the "Noteholders"), and in order to
carry out the covenant of the undersigned contained in a certain Pledge
Agreement of even date herewith by and between the undersigned and the Trustee,
for the ratable benefit of the Noteholders (as amended, modified and
supplemented the "Pledge Agreement"), and this Proxy shall not be revocable or
revoked by the undersigned, shall be binding upon its successors and assigns
until the payment in full of all of the Obligations (as such term is defined in
the aforesaid Pledge Agreement and may be exercised only after an Event of
Default under the Note Purchase Agreement (as such terms are defined in the
aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 28th day of January, 1998.
KINRO HOLDING, INC.
By: _____________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
<PAGE>
SCHEDULE II
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
PARTNERSHIP INTERESTS
(a) All of the present and future right, title and interest as a
partner in any partnership (including the partnership listed in Annex 1 hereto)
and any successor(s) thereto or assignee(s) thereof (each, a "Partnership"), of
the Pledgor and the rights, interest and benefits in respect thereof of the
Pledgor arising under the agreements, documents and/or certificates (including,
without limitation, any publicly filed documents) constituting or governing each
such Partnership (the "Partnership Documents"), and all other benefits
pertaining thereto and any and all general intangibles and accounts now owned or
hereafter arising or acquired relating to the Pledgor's interest in any
Partnership and/or any of the foregoing rights, interest or benefits; including,
without limitation, (i) all distributions by, and any other payments from each
Partnership, and all present and future rights to receive any distributions or
other payments from each Partnership, whether the same constitute distributions
of capital, surplus or profits, or derive from any other source including,
without limitation, any such distribution or payment derived from, representing,
based upon, measured by, or otherwise in respect of, (x) the operating revenues
of any Partnership, or (y) any sale, assignment, transfer or other disposition
(or transaction having comparable effect) of any assets of any Partnership, any
mortgaging, encumbering or other financing or refinancing of any assets of any
Partnership, any insurance proceeds or condemnation awards in respect of any
assets of any Partnership, any merger, consolidation or recapitalization of any
Partnership, any redemption or liquidation of the interest of the Pledgor in any
Partnership, or any contribution of any property to any Partnership by any
partner therein; and (ii) without limiting clause (i), any other payments or
distributions, and any rights to receive the same, from any Partnership, from
any partner or partners therein, or from any other party, in respect of (A) any
sale, assignment, transfer, encumbrance or other disposition (or transaction
having comparable effect) of any partner's interest in any Partnership or any
rights in respect thereof, and (B) any payments of principal, interest or of any
other character in respect of any debt owed by any Partnership or any partner
therein to the Pledgor (all of which property and rights referred to in one or
more of clauses (i) or (ii) are referred to collectively as the "Pledged
Interests"); and
(b) the proceeds, products, rents, issues and profits of the Pledged
Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
Kinro Texas L.P.
Kinro Tennessee L.P.
<PAGE>
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
Limited Partnership Debtor Locations
- ------------------- ------ ---------
A. Kinro Texas Limited Kinro Holding, Inc. 1. NY S/S
Partnership 2. NY - Westchester County
B. Kinro Tennessee Limited Kinro Holding, Inc. 1. NY S/S
Partnership 2. NY - Westchester County
<PAGE>
EXECUTION COPY
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of January 28, 1998 by SHOALS HOLDING,
INC., a New York corporation, as pledgor (the "Pledgor") and THE CHASE MANHATTAN
BANK, as trustee (the "Pledgee"), for the benefit of the Noteholders (as
hereinafter defined).
W I T N E S S E T H :
WHEREAS:
A. Pursuant to a Note Purchase Agreement, dated as of the date
hereof (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement"), among Kinro, Inc., Lippert Components, Inc. and Shoals
Supply, Inc. (individually, a "Co-Issuer" and collectively, the "Co-Issuers"),
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of Senior Notes, the "Noteholders"), the Noteholders
have agreed to purchase the 6.95% senior notes due January 28, 2005 issued by
the Co-Issuers (the "Senior Notes"), upon the terms and subject to the
conditions set forth therein; and
B. The Noteholders' obligation to purchase the Senior Notes pursuant
to the Note Purchase Agreement is subject, among other conditions, to receipt by
the Noteholders of this Pledge Agreement duly executed by the Pledgor;
NOW, THEREFORE, in consideration of the premises contained herein,
and to induce the Noteholders to purchase the Senior Notes from the Co-Issuers
pursuant to the Note Purchase Agreement, the Pledgor hereby agrees with the
Pledgee, for the benefit of the Noteholders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note Purchase Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Co-Issuer(s)" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Collateral" has the meaning ascribed to such term in Section 2
hereof.
"Companies" means all Subsidiaries of the Pledgor whether now owned
by the Pledgor or hereinafter acquired and whether now existing or
hereinafter coming into existence.
<PAGE>
"Contractual Obligations" has the meaning ascribed to such term in
Section 4(c) hereof.
"Event of Default" means an Event of Default as defined in the Note
Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof, among the Pledgee, the Noteholders and The Chase
Manhattan Bank, as Collateral Agent (as defined in the Revolving Credit
Agreement), as Administrative Agent (as defined in the Revolving Credit
Agreement) and as Trustee.
"Noteholders" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Note Purchase Agreement" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Obligations" means and includes all loans, advances, debts,
liabilities, costs and obligations howsoever arising, owed by Pledgor and
the Co-Issuers to the Noteholders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the terms of the
Note Purchase Agreement, the Senior Notes, the Other Agreements or any of
the Transaction Documents to which it is a party, including all interest,
fees, charges, expenses, attorneys' fees and accountants' fees, chargeable
to and payable by the Pledgor or the Co-Issuers hereunder and thereunder.
"Partnership" has the meaning ascribed to such term in Schedule II
hereto.
"Partnership Documents" has the meaning ascribed to such term in
Schedule II hereto.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Interests" has the meaning ascribed to such term in Section
2(a) hereof.
"Pledged Securities" has the meaning ascribed to such term in
Section 2(b) hereof.
"Pledged Stock" has the meaning ascribed to such term in Section
2(a) hereof.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation,
all dividends, distributions or other income from the Pledged Stock and
the Pledged Interests, collections thereon or distributions made with
respect thereto or other payments or property, securities, securities
entitlements, investment property or instruments in respect of the Pledged
Stock and the Pledged Interests.
2
<PAGE>
"Requirement of Law" for any Person means the articles of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of January 28, 1998 by and between The Chase Manhattan Bank, as
administrative agent and as collateral agent and the lenders signatory
thereto.
"Securities Act" has the meaning ascribed to such term in Section
9(a) hereof.
"Senior Notes" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Termination Date" has the meaning ascribed to such term in Section
17 hereof.
2. Pledge; Grant of Security Interest. (a) As security for the
payment and performance in full of the Obligations, the Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Pledgee, and grants to the Pledgee for the ratable benefit
of the Noteholders, a first priority security interest in (i) the shares of
capital stock listed on Schedule I (if any) and any shares of stock of any
Company obtained in the future by the Pledgor and the certificates representing
all such shares (the "Pledged Stock"), (ii) all of the Pledgor's partnership
interests and related rights described in Schedule II and any partnership
interests or other equity interests in any Company obtained in the future by the
Pledgor (the "Pledged Interests"), (iii) all other property (including any
security entitlements) that may be delivered to and held by the Pledgee pursuant
to the terms hereof, (iv) subject to Section 6 hereof, all payments of dividends
and distributions, including, without limitation, all cash, instruments,
securities, security entitlements, investment property and other property, from
time to time received, receivable or otherwise paid or distributed, in respect
of, or in exchange for or upon the conversion of the securities and other
property referred to in clauses (i), (ii) or (iii) above, (v) subject to Section
6 hereof, all rights and privileges of the Pledgor with respect to the
securities (including any security entitlements) and other property referred to
in clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clause (vii)) may be
deposited or held in, and any security entitlements or other rights relating
thereto, and (vii) all proceeds of any of the foregoing (the items referred to
in clauses (i) through (vii) above being collectively referred to as the
"Collateral"). The Pledgee acknowledges that the security interest in the
collateral granted herein ranks equally and pari passu with the security
interest in favor of the Collateral Agent (as defined in the Revolving Credit
Agreement) pursuant to the Pledge Agreement (as defined in the Revolving Credit
Agreement) and the rights of the Trustee and the Collateral Agent with respect
to the Collateral shall be subject to the terms and conditions of the
Intercreditor Agreement.
(b) Upon delivery to the Pledgee, any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer satisfactory to the Pledgee, a duly executed
acknowledgment and consent in the form of Exhibit A hereto from each
3
<PAGE>
of the Companies listed on Schedule I hereto and by such other instruments and
documents as the Pledgee may request. Without limiting this Section 2(b), (i)
all other property comprising part of the Collateral shall be accompanied by
proper instruments of assignment duly executed by the Pledgor and such other
instruments or documents as the Pledgee may request, and (ii) upon the grant of
a security interest in partnership interests or other equity interests in any
Person now or hereafter included in the Collateral, there shall be executed and
delivered to the Pledgee such instruments of consent, waiver and recognition,
from the issuer and other equity holders thereof (having provisions comparable
to the Consent, Waiver and Recognition Agreement in the form of Exhibit B
hereto) and such other instruments and documents (including Uniform Commercial
Code financing statements duly executed in proper form for filing in such
offices as the Pledgee shall require) as the Pledgee may request. Each delivery
of Pledged Securities and each such grant of a security interest shall be
accompanied by a schedule describing the securities, security entitlements,
investment property and equity interests theretofore and then being pledged
hereunder, which schedule shall be attached hereto as Schedule I or Schedule II,
as applicable, and made a part hereof (provided that the failure to deliver any
such schedule shall not impair the security interest hereunder of the Pledgee in
any Pledged Securities or Pledged Interests). Each schedule so delivered (except
to the extent in error) shall supercede any prior schedules so delivered.
3. Deliveries. (a) The Pledgor agrees promptly to deliver or cause
to be delivered to the Pledgee any and all Pledged Securities, and any and all
certificates or other instruments or documents representing Collateral, and any
other instruments referred to in Section 2(b) hereof (i) endorsed to the Pledgee
or in blank by an effective endorsement, or (ii) causing the certificate to be
registered in the name of the Pledgee, upon original issue or registration of
transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Pledgee a duly executed Consent, Waiver and Recognition
Agreement in the form of Exhibit B hereto in respect of each Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Pledgee as the registered owner thereof, upon original issue or registration
of transfer or (ii) the issuer agrees that it will comply with instructions with
respect to such uncertificated security originated by the Pledgee without
further consent of the registered owner. (d) With respect to such of the
Collateral as constitutes a "security entitlement" as defined in Article 8 of
the UCC, the Pledgor agrees to cause the securities intermediary to indicate by
book entry that such security entitlement has been credited to a securities
account of the Pledgee.
4. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee and the Noteholders that:
(a) the Pledgor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral pursuant to, this Pledge Agreement and has
taken all necessary action to authorize its execution,
4
<PAGE>
delivery and performance of, and grant of the Lien on the Collateral pursuant
to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law or any
agreement, bond, note or indenture to which the Pledgor is a party or by which
it is bound or its assets affected (the "Contractual Obligation") of the Pledgor
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any shareholder or creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby except as set forth on Exhibit 6.8 to the Note Purchase
Agreement;
(f) the shares of Pledged Stock of the Companies listed on
Schedule I constitute all of the issued and outstanding shares of all classes of
the capital stock of such Companies, and (ii) the Pledged Interests listed on
Schedule II hereto constitute all of the partnership interests of such
Companies;
(g) all of the shares of the Pledged Stock and Pledged
Interests of the Companies listed on Schedule I and Schedule II hereto have been
duly and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Stock and the Pledged Interests of the Companies
listed on Schedule I (if any) and Schedule II hereto, free and clear of any and
all Liens or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement;
(i) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid first-priority Lien on, and perfected security interest
in, the Pledged Stock for the benefit of the Noteholders, enforceable as such
against the Pledgor, all creditors of the Pledgor and any Persons purporting to
purchase any of the Collateral from the Pledgor; and
(j) upon filing Uniform Commercial Code financing statements
in the locations set forth on Schedule III hereto, naming the Pledgor as debtor
and the Pledgee as
5
<PAGE>
secured party, the Pledgee will have a valid perfected first lien and security
interest in such Pledged Interests as security for the payment and performance
of the Obligations.
All representation and warranties made under this Pledge Agreement shall
be deemed to be made, and shall be true and correct, at and as of the date
hereof. All representations and warranties made under this Pledge Agreement
shall survive, and not be waived by, the execution hereof by the Pledgee, any
investigation or inquiry by the Pledgee or any Noteholder, or the purchase of
the Senior Notes pursuant to the Note Purchase Agreement.
5. Covenants. The Pledgor covenants and agrees with the Pledgee and
the Noteholders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock or the Pledged Interests, become entitled to receive or shall
receive any stock certificate or certificated partnership interest (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of or in
exchange for any shares of the Pledged Stock or the Pledged Interests, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent for
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee hereunder as
Collateral.
(b) Without the prior written consent of the Pledgee, the
Pledgor will not (i) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement, or (iii) take any action which, in the
Pledgee's reasonable judgment, could impair the Collateral or result in a
violation of any provision of the Note Purchase Agreement or this Pledge
Agreement. The Pledgor will defend the right, title and interest of the Pledgee
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Pledgee, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Pledgee may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted, including, without limitation, delivering to
the Pledgee on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit C hereto. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the Pledgee, duly
endorsed in a manner reasonably satisfactory to the Pledgee, to be held as
Collateral pursuant to this Pledge Agreement.
6
<PAGE>
(d) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement;
provided, however, that the Pledgor shall have no obligation hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of the Pledgee.
6. Dividends or Distributions; Voting Rights. (a) In the event of
the occurrence of any Event of Default, the Pledgee shall have the right to
require that all cash dividends and distributions payable with respect to any
part of the Pledged Stock and cash distributions in respect of the Pledged
Interests be paid to the Pledgee to be held by the Pledgee as additional
security hereunder until applied to the Obligations.
(b) Any or all shares of the Pledged Stock or the Pledged
Interests held by the Pledgee may, at the option of the Pledgee or its nominee,
be registered in the name of the Pledgee or its nominee. If at any time the
Pledged Interests are represented or evidenced by any certificates, the same
shall promptly be delivered to the Pledgee in pledge hereunder together with any
instruments of transfer requested by the Pledgor. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall be permitted to
exercise all voting rights with respect to the Pledged Stock and the Pledged
Interests; provided, however, that the Pledgee shall have the right to vote in
respect of Pledged Stock and the Pledged Interests in connection with any
corporate or partnership action necessary for the voluntary commencement of a
proceeding or filing of a petition under the Federal bankruptcy laws or any
applicable provincial bankruptcy or insolvency laws commencing a bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the issuer of such Pledged Stock or the
Pledged Interests, or the appointment of a trustee or receiver or assignment for
the benefit of creditors, or any similar or related action, or to consent to any
of the foregoing and the Pledgor shall not vote in favor of or approve any such
action without the prior written consent of the Pledgee.
7. Rights of the Pledgee Upon an Event of Default. (a) The Pledgee
or its nominee may, without notice, and after the occurrence of any Event of
Default, exercise all voting and/or other consensual rights and corporate or
partnership rights at any meeting of any corporation and/or partnership issuing
any of the shares, interests, security entitlements or other investment property
included in the Collateral and exercise any and all rights, privileges or
options pertaining to any item of Collateral as if it were the absolute owner
thereof, including, without limitation, the right to receive dividends or other
distributions payable thereon, and the right to exchange, at its discretion, any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation or partnership issuing
any of such shares or partnership interests or upon the exercise by any such
issuer of any right, privilege or option pertaining to any Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without liability except
to account for property actually received by it, but the Pledgee shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
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<PAGE>
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor or against any other Person that may be or become liable in
respect of all or any part of the Obligations or against any other collateral
security therefor, guarantee thereof or right of offset with respect thereto.
The Pledgee shall not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor shall
the Pledgee be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing,
the Pledgee may exercise, in addition to all other rights and remedies granted
in this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Companies or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Pledgee or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Pledgee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Pledgee shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in the
manner provided in the Intercreditor Agreement, and only after such application
and after the payment by the Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by the
Pledgee of any of its rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 days before such sale or other
disposition. The Pledgor further waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code.
9. Private Sales. (a) The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Interests, by reason of certain prohibitions contained in the Securities Act of
1933 (the "Securities Act") and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales thereof
8
<PAGE>
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the Pledgee than if such sale were a public sale and agrees that
such circumstances shall not, in and of themselves, result in a determination
that such sale was not made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock or the
Pledged Interests for the period of time necessary to permit the Companies to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(b) Upon the occurrence of an Event of Default and at
Pledgee's request, the Pledgor agrees to use the Pledgor's best efforts to cause
the Companies to disseminate publicly all information required to be
disseminated pursuant to the Securities Exchange Act of 1934, as amended, in the
event that the Companies or the Pledgor is required to file reports under such
Act, or to otherwise make available such information as to permit the public or
private sale of the Collateral in accordance with the terms of this Pledge
Agreement. The Pledgor further agrees to use the Pledgor's best efforts to cause
the Companies to cooperate with the Pledgee in taking whatever additional action
may be required to effect such public or private sale of the Collateral.
(c) The Pledgor further agrees to do or cause to be done all
such other acts as may be necessary to make any sale or sales of all or any
portion of the Pledged Stock or the Pledged Interests pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of the covenant
contained in this paragraph 9(c) will cause irreparable injury to the Pledgee,
that the Pledgee has no adequate remedy at law in respect of such breach and, as
a consequence, that such covenant shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenant.
10. Limitation on Duties Regarding Collateral. The Pledgee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. Neither the Pledgee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. Severability; Paragraph Headings. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The paragraph
headings used in this Pledge Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in the
interpretation hereof.
9
<PAGE>
13. No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Pledgee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Pledgee would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Pledgee. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Pledgee and the Noteholders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices and other communications under this Pledge
Agreement shall be in writing and shall be personally delivered, transmitted by
telecopy with a confirming copy sent by postage prepaid registered or certified
mail, or sent by overnight courier to the parties as follows:
To the Pledgee: The Chase Manhattan Bank,
450 West 33rd Street
15th Floor
New York, New York 10081
Attention: Corporate Trustee Administrative Department
with a copy to: Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn:. Securities Division, Thompson Team, C. Tackney
Midwestern United Life Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
10
<PAGE>
Security Life of Denver Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Equitable Life Insurance Company of Iowa
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
USG Annuity & Life Company
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
To the Pledgor: Shoals Holding, Inc.
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
All such notices shall be effective upon receipt. Any party may change its
address for purposes hereof by notice to the other party.
16. Irrevocable Authorization and Instruction to Pledgor. The
Pledgor hereby authorizes and instructs the Companies to comply with any
instruction received by it from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Companies shall be fully protected in
so complying.
17. Termination. After the Termination Date (as defined below), this
Pledge Agreement shall terminate and the Pledgee, at the request and expense of
the Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the termination of this Pledge Agreement as to the
Pledgor, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
the Pledgor as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this Pledge
Agreement, together with any moneys at the time held by the Pledgee hereunder.
As used in this Pledge Agreement, "Termination Date" shall mean the date upon
which no Senior Note remains outstanding and when the Pledgee has been notified
in writing by each Noteholder that all Obligations have been indefeasibly paid
in full.
11
<PAGE>
18. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
19. Payment Free of Taxes, Etc. All payments made by the Pledgor
under this Pledge Agreement shall be made by the Pledgor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Pledgor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge
Agreement. Upon request by the Pledgee, the Pledgor shall furnish evidence
satisfactory to the Pledgee that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory bodies
have been obtained and made and that all requisite taxes, levies and charges
have been paid.
12
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
SHOALS HOLDING, INC.
By: ___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGEMENT AND CONSENT
Reference is made to that certain Pledge Agreement, dated as of January
28, 1998, made by SHOALS HOLDING, INC., a New York corporation, in favor of The
Chase Manhattan Bank,, as trustee for the benefit of the Noteholders (in such
capacity, the "Pledgee"). Each capitalized term used herein shall have the
meaning prescribed therein.
[Name of Company], one of the Companies referred to in the foregoing
Pledge Agreement (the "Pledge Agreement"), hereby acknowledges receipt of a copy
of such Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [Name of Company]
agrees to notify the Pledgee promptly in writing of the occurrence of any of the
events described in paragraphs 5(a) of the Pledge Agreement. [Name of Company]
further agrees that the terms of paragraph 9(b) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of paragraph 9 of the Pledge
Agreement.
[NAME OF COMPANY]
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT B
CONSENT, WAIVER AND RECOGNITION AGREEMENT
CONSENT, WAIVER AND RECOGNITION AGREEMENT (as it may be amended or
modified hereafter, this "Agreement") dated as of January 28, 1998, by and among
SHOALS SUPPLY, INC., a Delaware corporation (the "General Partner"), SHOALS
HOLDING, INC., a New York corporation (the "Limited Partner"; together with the
General Partner, the "Partners"), SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP, a
Texas limited partnership, and SHOALS SUPPLY TENNESSEE LIMITED PARTNERSHIP, a
Tennessee limited partnership (the "Partnerships"; together with the General
Partner and the Limited Partner, the "Partnership Parties") in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation as trustee (the "Trustee")
for the benefit of the Noteholders (as hereinafter defined).
Reference is hereby made to the Note Purchase Agreement, dated as of
January 28, 1998 (as amended, supplemented or modified from time to time, the
"Note Purchase Agreement") among Kinro, Inc., Shoals Supply, Inc. and Lippert
Components, Inc. as Co-Issuers (the "Co-Issuers"), and Teachers Insurance and
Annuity Association of America, Midwestern United Life Insurance Company,
Security Life of Denver Insurance Company, Equitable Life Insurance Company of
Iowa and USG Annuity & Life Company (together with each future holder of Senior
Notes the "Noteholders"). Terms used herein as defined terms and not otherwise
defined herein shall have the meanings given thereto in the Note Purchase
Agreement.
The Noteholders have agreed to purchase from the Co-Issuers the
Senior Notes upon the terms and subject to the conditions specified in the Note
Purchase Agreement. The obligations of the Noteholders to purchase the Senior
Notes are conditioned on, among other things, the execution and delivery of this
Agreement.
WHEREAS, the General Partner is the sole general partner of each
Partnership; and
WHEREAS, the Limited Partner is the sole limited partner of each
Partnership;
NOW, THEREFORE, in consideration of the premises and the agreements
herein, and for other and good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Partnership Parties hereby
agree in favor of the Co-Issuers as follows:
1. The General Partner and each Partnership each hereby consents to
and approves the execution, delivery and performance by the Limited Partner of
the Pledge Agreement made by the Limited Partner in favor of the Trustee for the
ratable benefit of the Noteholders (as amended, supplemented or modified from
time to time the "Pledge Agreement"), pursuant to which the Limited Partner has
granted, assigned and pledged to the Trustee for the ratable benefit of the
Noteholders, a security interest in all of its right, title and interest in each
15
<PAGE>
Partnership and related rights under the governing and constituent documents of
each Partnership, including all distributions, and all proceeds of the
foregoing, all as collateral security for the Obligations (as more particularly
described in the Pledge Agreement, the "Collateral").
2. Notwithstanding anything to the contrary contained in the
respective Agreement of Limited Partnership of each Partnership, or in any other
governing and/or constituent documents of either Partnership (collectively and
individually, as amended or otherwise modified from time to time, its respective
"Partnership Documents"), each of the Partnership Parties hereby unconditionally
and irrevocably agrees that (i) all conditions to the effectiveness of the
Transfer (as such term is defined in the Agreement of Limited Partnership of
each Partnership as in effect on the date hereof) constituted by the grant,
assignment and pledge to the Trustee described in the preceding paragraph are
hereby deemed to have been satisfied, and such Transfer (as so defined) is fully
recognized, and (ii) upon written notice to the Partnerships from the Trustee
that an Event of Default has occurred and is continuing, the Noteholders may
sell or otherwise dispose of, or succeed to or otherwise retain, any and all of
the respective right, title and interest of the Limited Partner in the
Partnerships free of any restrictions on transfer imposed by any provision of
any Partnership Agreement and the Noteholders and/or their transferees may at
their election be admitted as limited partners of such Partnerships. Each
Partner waives the application of any contrary provision of any Partnership
Documents in connection with (i) the grant, assignment and pledge under the
Pledge Agreement and (ii) the subsequent enforcement of the remedies (including
disposition of the Collateral) of the Trustee and the Noteholders under the
Pledge Agreement after an Event of Default.
3. Each Partner hereby irrevocably directs each Partnership to make
payment to the Trustee to the extent provided in any written notice from the
Trustee, and agrees that the Partnerships shall have no liability to the Limited
Partner for honoring any written notice from the Trustee as to any such
distributions or payments, regardless of whether it may be subsequently
established that the Trustee was not entitled to give such notice. Until any
such written notice from the Trustee, each Partnership may, to the extent
permitted by the Note Purchase Agreement, continue to remit to the Limited
Partner all distributions on account of the Collateral. The General Partner
agrees that at any time during which distributions are to be made to the Trustee
or its assignee as provided above, the Partnership shall not unreasonably
withhold or delay distributions or maintain unreasonable reserves.
4. Each Partnership Party (i) acknowledges and agrees that neither
the Trustee nor any Noteholder shall as a consequence of any term or provision
of this Agreement or of the Pledge Agreement assume, or be deemed to have
assumed, any obligation or liability of any Partner, whether arising under any
Partnership Documents or otherwise, and whether to any creditor of the
Partnership, to the Limited Partner, or to any other person or party, and (ii)
agrees that neither the Trustee nor any Noteholder shall by virtue of the
possession or exercise of any rights under the Pledge Agreement or hereunder, be
obligated as a partner or otherwise to any Partnership, to any Partner therein,
to any creditor of any Partnership, or to any other person or party, for any
contribution of cash or other property, or in respect of any liability of any
Partnership or any Partner therein (whether by way of indemnity, contribution or
otherwise), or to provide any credit to any Partnership or any accommodation
thereof.
16
<PAGE>
5. All notices permitted or required under this Agreement shall be
in writing and shall be given in the manner provided in the Pledge Agreement.
6. Each Partnership Party represents and warrants that it has the
full power and authority to enter into and perform this Agreement, and that this
Agreement constitutes the binding obligation of such Partnership Party
enforceable in accordance with its terms (except as such enforceability may be
limited by bankruptcy or insolvency laws affecting creditors' rights generally
or by the application of principles of equity).
7. This Agreement shall be binding on each Partnership Party and
each of its successors, transferees and assigns and shall inure, together with
all rights and remedies of the Noteholders and the Trustee hereunder, to the
benefit of the Noteholders and the Trustee and their successors, transferees and
assigns.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
9. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
17
<PAGE>
IN WITNESS WHEREOF, this Consent, Waiver and Recognition Agreement
has been executed and delivered as of the date first set forth above.
THE CHASE MANHATTAN BANK SHOALS SUPPLY, INC.
as Trustee
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
SHOALS HOLDING, INC.
By: _____________________________
Name:
Title:
SHOALS SUPPLY TEXAS LIMITED
PARTNERSHIP
By: Shoals Supply, Inc.,
general partner
By: _____________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE LIMITED
PARTNERSHIP
By: Shoals Supply, Inc.,
general partner
By: _____________________________
Name:
Title:
18
<PAGE>
EXHIBIT C
IRREVOCABLE PROXY
KNOWN ALL MEN BY THERE PRESENTS that, the undersigned does hereby make,
constitute and appoint THE CHASE MANHATTAN BANK, as trustee (the "Trustee") for
the benefit of the Noteholders (as hereinafter defined), and each of the
Trustee's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital of ________________, a ______________ corporation (hereinafter
referred to as the "Corporation"), which it now or hereafter may own or hold,
including, without limitation, the right, on his behalf, to demand the call by
any proper officer of the Corporation pursuant to the provisions of its
Certificate of Incorporation or By-Laws and as permitted by law of a meeting of
its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Trustee and to its officers and employees in
consideration of the acquisition of the Senior Notes (as defined in the Pledge
Agreement) by Teachers Insurance and Annuity Association of America, Midwestern
United Life Insurance Company, Security Life of Denver Insurance Company,
Equitable Life Insurance Company of Iowa and USG Annuity & Life Company
(collectively, the "Noteholders"), and in order to carry out the covenant of the
undersigned contained in a certain Pledge Agreement of even date herewith by and
between the undersigned and the Trustee, for the ratable benefit of the
Noteholders, and this Proxy shall not be revocable or revoked by the
undersigned, shall be binding upon its successors and assigns until the payment
in full of all of the Obligations (as such term is defined in the aforesaid
Pledge Agreement and may be exercised only after an Event of Default under the
Note Purchase Agreement (as such terms are defined in the aforesaid Pledge
Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 28th day of January, 1998.
SHOALS HOLDING, INC.
By: _____________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
<PAGE>
SCHEDULE II
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
PARTNERSHIP INTERESTS
(a) All of the present and future right, title and interest as a
partner in any partnership (including the partnerships listed in Annex 1 hereto,
if any) and any successor(s) thereto or assignee(s) thereof (each, a
"Partnership"), of the Pledgor and the rights, interest and benefits in respect
thereof of the Pledgor arising under the agreements, documents and/or
certificates (including, without limitation, any publicly filed documents)
constituting or governing each such Partnership (the "Partnership Documents"),
and all other benefits pertaining thereto and any and all general intangibles
and accounts now owned or hereafter arising or acquired relating to the
Pledgor's interest in any Partnership and/or any of the foregoing rights,
interest or benefits; including, without limitation, (i) all distributions by,
and any other payments from each Partnership, and all present and future rights
to receive any distributions or other payments from each Partnership, whether
the same constitute distributions of capital, surplus or profits, or derive from
any other source including, without limitation, any such distribution or payment
derived from, representing, based upon, measured by, or otherwise in respect of,
(x) the operating revenues of any Partnership, or (y) any sale, assignment,
transfer or other disposition (or transaction having comparable effect) of any
assets of any Partnership, any mortgaging, encumbering or other financing or
refinancing of any assets of any Partnership, any insurance proceeds or
condemnation awards in respect of any assets of any Partnership, any merger,
consolidation or recapitalization of any Partnership, any redemption or
liquidation of the interest of the Pledgor in any Partnership, or any
contribution of any property to any Partnership by any partner therein; and (ii)
without limiting clause (i), any other payments or distributions, and any rights
to receive the same, from any Partnership, from any partner or partners therein,
or from any other party, in respect of (A) any sale, assignment, transfer,
encumbrance or other disposition (or transaction having comparable effect) of
any partner's interest in any Partnership or any rights in respect thereof, and
(B) any payments of principal, interest or of any other character in respect of
any debt owed by any Partnership or any partner therein to the Pledgor (all of
which property and rights referred to in one or more of clauses (i) or (ii) are
referred to collectively as the "Pledged Interests"); and
(b) the proceeds, products, rents, issues and profits of the Pledged
Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
Shoals Supply Texas
Limited Partnership
Shoals Supply Tennessee
Limited Partnership
<PAGE>
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
<TABLE>
<CAPTION>
Limited Partnership Debtor Locations
- ------------------- ------ ---------
<S> <C> <C>
A. Shoals Supply Texas Shoals Holding, Inc. 1. New York Secretary of State
Limited Partnership 2. New York - Westchester County
B. Shoals Supply Tennessee Shoals Holding, Inc. 1. New York Secretary of State
Limited Partnership 2. New York - Westchester County
</TABLE>
<PAGE>
EXECUTION COPY
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of January 28, 1998 by SHOALS SUPPLY,
INC., a New York corporation, as pledgor (the "Pledgor") and THE CHASE MANHATTAN
BANK, as trustee (the "Pledgee"), for the benefit of the Noteholders (as
hereinafter defined).
W I T N E S S E T H :
WHEREAS:
A. Pursuant to a Note Purchase Agreement, dated as of the date
hereof (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement"), among Kinro, Inc., Lippert Components, Inc. and Shoals
Supply, Inc. (individually, a "Co-Issuer" and collectively, the "Co-Issuers"),
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of Senior Notes, the "Noteholders"), the Noteholders
have agreed to purchase the 6.95% senior notes due January 28, 2005 issued by
the Co-Issuers (the "Senior Notes"), upon the terms and subject to the
conditions set forth therein; and
B. The Noteholders' obligation to purchase the Senior Notes pursuant
to the Note Purchase Agreement is subject, among other conditions, to receipt by
the Noteholders of this Pledge Agreement duly executed by the Pledgor;
NOW, THEREFORE, in consideration of the premises contained herein,
and to induce the Noteholders to purchase the Senior Notes from the Co-Issuers
pursuant to the Note Purchase Agreement, the Pledgor hereby agrees with the
Pledgee, for the benefit of the Noteholders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note Purchase Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in effect
in the State of New York.
"Co-Issuer(s)" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Collateral" has the meaning ascribed to such term in Section 2
hereof.
"Companies" means all Subsidiaries of the Pledgor whether now owned
by the Pledgor or hereinafter acquired and whether now existing or
hereinafter coming into existence.
<PAGE>
"Contractual Obligations" has the meaning ascribed to such term in
Section 4(c) hereof.
"Event of Default" means an Event of Default as defined in the Note
Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof, among the Pledgee, the Noteholders and The Chase
Manhattan Bank, as Collateral Agent (as defined in the Revolving Credit
Agreement), as Administrative Agent (as defined in the Revolving Credit
Agreement) and as Trustee.
"Noteholders" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Note Purchase Agreement" has the meaning ascribed to such term in
paragraph A of the WHEREAS clauses.
"Obligations" means and includes all loans, advances, debts,
liabilities, costs and obligations howsoever arising, owed by Pledgor and
the Co-Issuers to the Noteholders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the terms of the
Note Purchase Agreement, the Senior Notes, the Other Agreements or any of
the Transaction Documents to which it is a party, including all interest,
fees, charges, expenses, attorneys' fees and accountants' fees, chargeable
to and payable by the Pledgor or the Co-Issuers hereunder and thereunder.
"Partnership" has the meaning ascribed to such term in Schedule II
hereto.
"Partnership Documents" has the meaning ascribed to such term in
Schedule II hereto.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Interests" has the meaning ascribed to such term in Section
2(a) hereof.
"Pledged Securities" has the meaning ascribed to such term in
Section 2(b) hereof.
"Pledged Stock" has the meaning ascribed to such term in Section
2(a) hereof.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation,
all dividends, distributions or other income from the Pledged Stock and
the Pledged Interests, collections thereon or distributions made with
respect thereto or other payments or property, securities, securities
entitlements, investment property or instruments in respect of the Pledged
Stock and the Pledged Interests.
2
<PAGE>
"Requirement of Law" for any Person means the articles of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of January 28, 1998 by and between The Chase Manhattan Bank,, as
administrative agent and as collateral agent and the lenders signatory
thereto.
"Securities Act" has the meaning ascribed to such term in Section
9(a) hereof.
"Senior Notes" has the meaning ascribed to such term in paragraph A
of the WHEREAS clauses.
"Termination Date" has the meaning ascribed to such term in Section
17 hereof.
2. Pledge; Grant of Security Interest. (a) As security for the
payment and performance in full of the Obligations, the Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Pledgee, and grants to the Pledgee for the ratable benefit
of the Noteholders, a first priority security interest in (i) the shares of
capital stock listed on Schedule I and any shares of stock of any Company
obtained in the future by the Pledgor and the certificates representing all such
shares (the "Pledged Stock"), (ii) all of the Pledgor's partnership interests
and related rights described in Schedule II (if any) and any partnership
interests or other equity interests in any Company obtained in the future by the
Pledgor (the "Pledged Interests"), (iii) all other property (including any
security entitlements) that may be delivered to and held by the Pledgee pursuant
to the terms hereof, (iv) subject to Section 6 hereof, all payments of dividends
and distributions, including, without limitation, all cash, instruments,
securities, security entitlements, investment property and other property, from
time to time received, receivable or otherwise paid or distributed, in respect
of, or in exchange for or upon the conversion of the securities and other
property referred to in clauses (i), (ii) or (iii) above, (v) subject to Section
6 hereof, all rights and privileges of the Pledgor with respect to the
securities (including any security entitlements) and other property referred to
in clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clause (vii)) may be
deposited or held in, and any security entitlements or other rights relating
thereto, and (vii) all proceeds of any of the foregoing (the items referred to
in clauses (i) through (vii) above being collectively referred to as the
"Collateral"). The Pledgee acknowledges that the security interest in the
collateral granted herein ranks equally and pari passu with the security
interest in favor of the Collateral Agent (as defined in the Revolving Credit
Agreement) pursuant to the Pledge Agreement (as defined in the Revolving Credit
Agreement) and the rights of the Trustee and the Collateral Agent with respect
to the Collateral shall be subject to the terms and conditions of the
Intercreditor Agreement.
(b) Upon delivery to the Pledgee, any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer satisfactory to the
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Pledgee, a duly executed acknowledgment and consent in the form of Exhibit A
hereto from each of the Companies listed on Schedule I hereto and by such other
instruments and documents as the Pledgee may request. Without limiting this
Section 2(b), (i) all other property comprising part of the Collateral shall be
accompanied by proper instruments of assignment duly executed by the Pledgor and
such other instruments or documents as the Pledgee may request, and (ii) upon
the grant of a security interest in partnership interests or other equity
interests in any Person now or hereafter included in the Collateral, there shall
be executed and delivered to the Pledgee such instruments of consent, waiver and
recognition, from the issuer and other equity holders thereof (having provisions
comparable to the Consent, Waiver and Recognition Agreement in the form of
Exhibit B hereto) and such other instruments and documents (including Uniform
Commercial Code financing statements duly executed in proper form for filing in
such offices as the Pledgee shall require) as the Pledgee may request. Each
delivery of Pledged Securities and each such grant of a security interest shall
be accompanied by a schedule describing the securities, security entitlements,
investment property and equity interests theretofore and then being pledged
hereunder, which schedule shall be attached hereto as Schedule I or Schedule II,
as applicable, and made a part hereof (provided that the failure to deliver any
such schedule shall not impair the security interest hereunder of the Pledgee in
any Pledged Securities or Pledged Interests). Each schedule so delivered (except
to the extent in error) shall supercede any prior schedules so delivered.
3. Deliveries. (a) The Pledgor agrees promptly to deliver or cause
to be delivered to the Pledgee any and all Pledged Securities, and any and all
certificates or other instruments or documents representing Collateral, and any
other instruments referred to in Section 2(b) hereof (i) endorsed to the Pledgee
or in blank by an effective endorsement, or (ii) causing the certificate to be
registered in the name of the Pledgee, upon original issue or registration of
transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Pledgee a duly executed Consent, Waiver and Recognition
Agreement in the form of Exhibit B hereto in respect of each Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Pledgee as the registered owner thereof, upon original issue or registration
of transfer or (ii) the issuer agrees that it will comply with instructions with
respect to such uncertificated security originated by the Pledgee without
further consent of the registered owner.
(d) With respect to such of the Collateral as constitutes a
"security entitlement" as defined in Article 8 of the UCC, the Pledgor agrees to
cause the securities intermediary to indicate by book entry that such security
entitlement has been credited to a securities account of the Pledgee.
4. Representations and Warranties. The Pledgor represents and
warrants to the Pledgee and the Noteholders that:
(a) the Pledgor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral
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pursuant to, this Pledge Agreement and has taken all necessary action to
authorize its execution, delivery and performance of, and grant of the Lien on
the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law or any
agreement, bond, note or indenture to which the Pledgor is a party or by which
it is bound or its assets affected (the "Contractual Obligation") of the Pledgor
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any shareholder or creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the transactions
contemplated hereby, except as set forth on Schedule 6.8 to the Note Purchase
Agreement;
(f) the shares of Pledged Stock of the Companies listed on
Schedule I constitute all of the issued and outstanding shares of all classes of
the capital stock of such Companies, and (ii) the Pledged Interests listed on
Schedule II hereto constitute all of the partnership interests of such
Companies;
(g) all of the shares of the Pledged Stock and Pledged
Interests of the Companies listed on Schedule I and Schedule II hereto have been
duly and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Stock and the Pledged Interests of the Companies
listed on Schedule I and Schedule II hereto, free and clear of any and all Liens
or options in favor of, or claims of, any other Person, except the Lien created
by this Pledge Agreement;
(i) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid first-priority Lien on, and perfected security interest
in, the Pledged Stock for the benefit of the Noteholders, enforceable as such
against the Pledgor, all creditors of the Pledgor and any Persons purporting to
purchase any of the Collateral from the Pledgor; and
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<PAGE>
(j) upon filing Uniform Commercial Code financing statements
in the locations set forth on Schedule III hereto, naming the Pledgor as debtor
and the Pledgee as secured party, the Pledgee will have a valid perfected first
lien and security interest in such Pledged Interests as security for the payment
and performance of the Obligations.
All representation and warranties made under this Pledge Agreement shall
be deemed to be made, and shall be true and correct, at and as of the date
hereof. All representations and warranties made under this Pledge Agreement
shall survive, and not be waived by, the execution hereof by the Pledgee, any
investigation or inquiry by the Pledgee or any Noteholder, or the purchase of
the Senior Notes pursuant to the Note Purchase Agreement.
5. Covenants. The Pledgor covenants and agrees with the Pledgee and
the Noteholders that, from and after the date of this Pledge Agreement until the
Obligations are paid in full:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock or the Pledged Interests, become entitled to receive or shall
receive any stock certificate or certificated partnership interest (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of or in
exchange for any shares of the Pledged Stock or the Pledged Interests, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent for
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required, together with an undated stock power
covering such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee hereunder as
Collateral.
(b) Without the prior written consent of the Pledgee, the
Pledgor will not (i) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Pledge Agreement, or (iii) take any action which, in the
Pledgee's reasonable judgment, could impair the Collateral or result in a
violation of any provision of the Note Purchase Agreement or this Pledge
Agreement. The Pledgor will defend the right, title and interest of the Pledgee
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Pledgee, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Pledgee may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted, including, without limitation, delivering to
the Pledgee on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit C hereto. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered
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<PAGE>
to the Pledgee, duly endorsed in a manner reasonably satisfactory to the
Pledgee, to be held as Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge Agreement;
provided, however, that the Pledgor shall have no obligation hereunder with
respect to liabilities arising from the gross negligence or willful misconduct
of the Pledgee.
6. Dividends or Distributions; Voting Rights. (a) In the event of
the occurrence of any Event of Default, the Pledgee shall have the right to
require that all cash dividends and distributions payable with respect to any
part of the Pledged Stock and cash distributions in respect of the Pledged
Interests be paid to the Pledgee to be held by the Pledgee as additional
security hereunder until applied to the Obligations.
(b) Any or all shares of the Pledged Stock or the Pledged
Interests held by the Pledgee may, at the option of the Pledgee or its nominee,
be registered in the name of the Pledgee or its nominee. If at any time the
Pledged Interests are represented or evidenced by any certificates, the same
shall promptly be delivered to the Pledgee in pledge hereunder together with any
instruments of transfer requested by the Pledgor. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall be permitted to
exercise all voting rights with respect to the Pledged Stock and the Pledged
Interests; provided, however, that the Pledgee shall have the right to vote in
respect of Pledged Stock and the Pledged Interests in connection with any
corporate or partnership action necessary for the voluntary commencement of a
proceeding or filing of a petition under the Federal bankruptcy laws or any
applicable provincial bankruptcy or insolvency laws commencing a bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the issuer of such Pledged Stock or the
Pledged Interests, or the appointment of a trustee or receiver or assignment for
the benefit of creditors, or any similar or related action, or to consent to any
of the foregoing and the Pledgor shall not vote in favor of or approve any such
action without the prior written consent of the Pledgee.
7. Rights of the Pledgee Upon an Event of Default. (a) The Pledgee
or its nominee may, without notice, and after the occurrence of any Event of
Default, exercise all voting and/or other consensual rights and corporate or
partnership rights at any meeting of any corporation and/or partnership issuing
any of the shares, interests, security entitlements or other investment property
included in the Collateral and exercise any and all rights, privileges or
options pertaining to any item of Collateral as if it were the absolute owner
thereof, including, without limitation, the right to receive dividends or other
distributions payable thereon, and the right to exchange, at its discretion, any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation or partnership issuing
any of such shares or partnership interests or upon the exercise by any such
issuer of any right, privilege or option pertaining to any Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without liability except
to account for property actually received by it, but the Pledgee shall have no
duty to
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exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor or against any other Person that may be or become liable in
respect of all or any part of the Obligations or against any other collateral
security therefor, guarantee thereof or right of offset with respect thereto.
The Pledgee shall not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor shall
the Pledgee be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be continuing,
the Pledgee may exercise, in addition to all other rights and remedies granted
in this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Companies or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Pledgee or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Pledgee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Pledgee shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in the
manner provided in the Intercreditor Agreement, and only after such application
and after the payment by the Pledgee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by the
Pledgee of any of its rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 5 days before such sale or other
disposition. The Pledgor further waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code.
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9. Private Sales. (a) The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock or the Pledged
Interests, by reason of certain prohibitions contained in the Securities Act of
1933 (the "Securities Act") and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the Pledgee than if such sale were a public sale and agrees that
such circumstances shall not, in and of themselves, result in a determination
that such sale was not made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Pledged Stock or the
Pledged Interests for the period of time necessary to permit the Companies to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(b) Upon the occurrence of an Event of Default and at
Pledgee's request, the Pledgor agrees to use the Pledgor's best efforts to cause
the Companies to disseminate publicly all information required to be
disseminated pursuant to the Securities Exchange Act of 1934, as amended, in the
event that the Companies or the Pledgor is required to file reports under such
Act, or to otherwise make available such information as to permit the public or
private sale of the Collateral in accordance with the terms of this Pledge
Agreement. The Pledgor further agrees to use the Pledgor's best efforts to cause
the Companies to cooperate with the Pledgee in taking whatever additional action
may be required to effect such public or private sale of the Collateral.
(c) The Pledgor further agrees to do or cause to be done all
such other acts as may be necessary to make any sale or sales of all or any
portion of the Pledged Stock or the Pledged Interests pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of the covenant
contained in this paragraph 9(c) will cause irreparable injury to the Pledgee,
that the Pledgee has no adequate remedy at law in respect of such breach and, as
a consequence, that such covenant shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenant.
10. Limitation on Duties Regarding Collateral. The Pledgee's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. Neither the Pledgee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. Severability; Paragraph Headings. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
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remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The paragraph headings used in this Pledge Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
13. No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Pledgee, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Pledgee would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Pledgee. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Pledgee and the Noteholders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices and other communications under this Pledge
Agreement shall be in writing and shall be personally delivered, transmitted by
telecopy with a confirming copy sent by postage prepaid registered or certified
mail, or sent by overnight courier to the parties as follows:
To the Pledgee: The Chase Manhattan Bank,
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
with a copy to: Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017
Attn:. Securities Division, Thompson Team, C. Tackney
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Midwestern United Life Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Security Life of Denver Insurance Company
c/o ING Investment Management, Inc.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
Equitable Life Insurance Company of Iowa
c/o ING Investment Management LLC
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
USG Annuity & Life Company
c/o ING Investment Management LLC.
5780 Powers Ferry Road, N.W.
Suite 300
Atlanta, GA 30327
Attention: Andrew Gaffney
To the Pledgor: Shoals Supply, Inc.
4381 Green Oaks Boulevard
Suite 200
Arlington, Tx 76016
with a copy to: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
All such notices shall be effective upon receipt. Any party may change its
address for purposes hereof by notice to the other party.
16. Irrevocable Authorization and Instruction to Pledgor. The
Pledgor hereby authorizes and instructs the Companies to comply with any
instruction received by it from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Companies shall be fully protected in
so complying.
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17. Termination. After the Termination Date (as defined below), this
Pledge Agreement shall terminate and the Pledgee, at the request and expense of
the Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the termination of this Pledge Agreement as to the
Pledgor, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
the Pledgor as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this Pledge
Agreement, together with any moneys at the time held by the Pledgee hereunder.
As used in this Pledge Agreement, "Termination Date" shall mean the date upon
which no Senior Note remains outstanding and when the Pledgee has been notified
in writing by each Noteholder that all Obligations have been indefeasibly paid
in full.
18. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
19. Payment Free of Taxes, Etc. All payments made by the Pledgor
under this Pledge Agreement shall be made by the Pledgor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Pledgor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Pledge
Agreement. Upon request by the Pledgee, the Pledgor shall furnish evidence
satisfactory to the Pledgee that all requisite authorizations and approvals by,
and notices to and filings with, governmental authorities and regulatory bodies
have been obtained and made and that all requisite taxes, levies and charges
have been paid.
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IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
SHOALS SUPPLY, INC.
By: ___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGEMENT AND CONSENT
Reference is made to that certain Pledge Agreement, dated as of January
28, 1998, made by SHOALS SUPPLY, INC., a Delaware corporation, in favor of The
Chase Manhattan Bank,, as trustee for the benefit of the Noteholders (in such
capacity, the "Pledgee"). Each capitalized term used herein shall have the
meaning prescribed therein.
[Name of Company], one of the Companies referred to in the foregoing
Pledge Agreement (the "Pledge Agreement"), hereby acknowledges receipt of a copy
of such Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [Name of Company]
agrees to notify the Pledgee promptly in writing of the occurrence of any of the
events described in paragraphs 5(a) of the Pledge Agreement. [Name of Company]
further agrees that the terms of paragraph 9(b) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it under or pursuant to or arising out of paragraph 9 of the Pledge
Agreement.
[NAME OF COMPANY]
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT B
CONSENT, WAIVER AND RECOGNITION AGREEMENT
CONSENT, WAIVER AND RECOGNITION AGREEMENT (as it may be amended or
modified hereafter, this "Agreement") dated as of January 28, 1998, by and among
SHOALS SUPPLY, INC., a Delaware corporation (the "General Partner"), SHOALS
HOLDING, INC., a New York corporation (the "Limited Partner"; together with the
General Partner, the "Partners"), SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP, a
Texas limited partnership, and SHOALS SUPPLY TENNESSEE LIMITED PARTNERSHIP, a
Tennessee limited partnership (the "Partnerships"; together with the General
Partner and the Limited Partner, the "Partnership Parties") in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation as trustee (the "Trustee")
for the benefit of the Noteholders (as hereinafter defined).
Reference is hereby made to the Note Purchase Agreement, dated as of
January 28, 1998 (as amended, supplemented or modified from time to time, the
"Note Purchase Agreement") among Kinro, Inc., Shoals Supply, Inc. and Lippert
Components, Inc. as Co-Issuers (the "Co-Issuers"), and Teachers Insurance and
Annuity Association of America, Midwestern United Life Insurance Company,
Security Life of Denver Insurance Company, Equitable Life Insurance Company of
Iowa and USG Annuity & Life Company (together with each future holder of Senior
Notes the "Noteholders"). Terms used herein as defined terms and not otherwise
defined herein shall have the meanings given thereto in the Note Purchase
Agreement.
The Noteholders have agreed to purchase from the Co-Issuers the
Senior Notes upon the terms and subject to the conditions specified in the Note
Purchase Agreement. The obligations of the Noteholders to purchase the Senior
Notes are conditioned on, among other things, the execution and delivery of this
Agreement.
WHEREAS, the General Partner is the sole general partner of each
Partnership; and
WHEREAS, the Limited Partner is the sole limited partner of each
Partnership;
NOW, THEREFORE, in consideration of the premises and the agreements
herein, and for other and good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Partnership Parties hereby
agree in favor of the Co-Issuers as follows:
1. The General Partner and each Partnership each hereby consents to
and approves the execution, delivery and performance by the Limited Partner of
the Pledge Agreement made by the Limited Partner in favor of the Trustee for the
ratable benefit of the Noteholders (as amended, supplemented or modified from
time to time the "Pledge Agreement"), pursuant to which the Limited Partner has
granted, assigned and pledged to the Trustee for the ratable benefit of the
Noteholders, a security interest in all of its right, title and interest in each
15
<PAGE>
Partnership and related rights under the governing and constituent documents of
each Partnership, including all distributions, and all proceeds of the
foregoing, all as collateral security for the Obligations (as more particularly
described in the Pledge Agreement, the "Collateral").
2. Notwithstanding anything to the contrary contained in the
respective Agreement of Limited Partnership of each Partnership, or in any other
governing and/or constituent documents of either Partnership (collectively and
individually, as amended or otherwise modified from time to time, its respective
"Partnership Documents"), each of the Partnership Parties hereby unconditionally
and irrevocably agrees that (i) all conditions to the effectiveness of the
Transfer (as such term is defined in the Agreement of Limited Partnership of
each Partnership as in effect on the date hereof) constituted by the grant,
assignment and pledge to the Trustee described in the preceding paragraph are
hereby deemed to have been satisfied, and such Transfer (as so defined) is fully
recognized, and (ii) upon written notice to the Partnerships from the Trustee
that an Event of Default has occurred and is continuing, the Noteholders may
sell or otherwise dispose of, or succeed to or otherwise retain, any and all of
the respective right, title and interest of the Limited Partner in the
Partnerships free of any restrictions on transfer imposed by any provision of
any Partnership Agreement and the Noteholders and/or their transferees may at
their election be admitted as limited partners of such Partnerships. Each
Partner waives the application of any contrary provision of any Partnership
Documents in connection with (i) the grant, assignment and pledge under the
Pledge Agreement and (ii) the subsequent enforcement of the remedies (including
disposition of the Collateral) of the Trustee and the Noteholders under the
Pledge Agreement after an Event of Default.
3. Each Partner hereby irrevocably directs each Partnership to make
payment to the Trustee to the extent provided in any written notice from the
Trustee, and agrees that the Partnerships shall have no liability to the Limited
Partner for honoring any written notice from the Trustee as to any such
distributions or payments, regardless of whether it may be subsequently
established that the Trustee was not entitled to give such notice. Until any
such written notice from the Trustee, each Partnership may, to the extent
permitted by the Note Purchase Agreement, continue to remit to the Limited
Partner all distributions on account of the Collateral. The General Partner
agrees that at any time during which distributions are to be made to the Trustee
or its assignee as provided above, the Partnership shall not unreasonably
withhold or delay distributions or maintain unreasonable reserves.
4. Each Partnership Party (i) acknowledges and agrees that neither
the Trustee nor any Noteholder shall as a consequence of any term or provision
of this Agreement or of the Pledge Agreement assume, or be deemed to have
assumed, any obligation or liability of any Partner, whether arising under any
Partnership Documents or otherwise, and whether to any creditor of the
Partnership, to the Limited Partner, or to any other person or party, and (ii)
agrees that neither the Trustee nor any Noteholder shall by virtue of the
possession or exercise of any rights under the Pledge Agreement or hereunder, be
obligated as a partner or otherwise to any Partnership, to any Partner therein,
to any creditor of any Partnership, or to any other person or party, for any
contribution of cash or other property, or in respect of any liability of any
Partnership or any Partner therein (whether by way of indemnity, contribution or
otherwise), or to provide any credit to any Partnership or any accommodation
thereof.
16
<PAGE>
5. All notices permitted or required under this Agreement shall be
in writing and shall be given in the manner provided in the Pledge Agreement.
6. Each Partnership Party represents and warrants that it has the
full power and authority to enter into and perform this Agreement, and that this
Agreement constitutes the binding obligation of such Partnership Party
enforceable in accordance with its terms (except as such enforceability may be
limited by bankruptcy or insolvency laws affecting creditors' rights generally
or by the application of principles of equity).
7. This Agreement shall be binding on each Partnership Party and
each of its successors, transferees and assigns and shall inure, together with
all rights and remedies of the Noteholders and the Trustee hereunder, to the
benefit of the Noteholders and the Trustee and their successors, transferees and
assigns.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
9. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
17
<PAGE>
IN WITNESS WHEREOF, this Consent, Waiver and Recognition Agreement
has been executed and delivered as of the date first set forth above.
THE CHASE MANHATTAN BANK SHOALS SUPPLY, INC.
as Trustee
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
SHOALS HOLDING, INC.
By: _____________________________
Name:
Title:
SHOALS SUPPLY TEXAS LIMITED
PARTNERSHIP
By: Shoals Supply, Inc.,
general partner
By: _____________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE LIMITED
PARTNERSHIP
By: Shoals Supply, Inc.,
general partner
By: _____________________________
Name:
Title:
18
<PAGE>
EXHIBIT C
IRREVOCABLE PROXY
KNOWN ALL MEN BY THERE PRESENTS that, the undersigned does hereby make,
constitute and appoint THE CHASE MANHATTAN BANK, as trustee (the "Trustee") for
the benefit of the Noteholders (as hereinafter defined), and each of the
Trustee's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital of ________________, a ______________ corporation (hereinafter
referred to as the "Corporation"), which it now or hereafter may own or hold,
including, without limitation, the right, on his behalf, to demand the call by
any proper officer of the Corporation pursuant to the provisions of its
Certificate of Incorporation or By-Laws and as permitted by law of a meeting of
its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Trustee and to its officers and employees in
consideration of the acquisition of the Senior Notes (as defined in the Pledge
Agreement) by Teachers Insurance and Annuity Association of America, Midwestern
United Life Insurance Company, Security Life of Denver Insurance Company,
Equitable Life Insurance Company of Iowa and USG Annuioty & Life Company
(collectively, the "Noteholders"), and in order to carry out the covenant of the
undersigned contained in a certain Pledge Agreement of even date herewith by and
between the undersigned and the Trustee, for the ratable benefit of the
Noteholders (as amended, modified and supplemented the "Pledge Agreement"), and
this Proxy shall not be revocable or revoked by the undersigned, shall be
binding upon its successors and assigns until the payment in full of all of the
Obligations (as such term is defined in the aforesaid Pledge Agreement and may
be exercised only after an Event of Default under the Note Purchase Agreement
(as such terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 28th day of January, 1998.
SHOALS SUPPLY, INC.
By: _____________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
Shoals Holding, Inc. 10 100%
<PAGE>
SCHEDULE II
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
PARTNERSHIP INTERESTS
(a) All of the present and future right, title and interest as a
partner in any partnership (including the partnerships listed in Annex 1 hereto,
if any) and any successor(s) thereto or assignee(s) thereof (each, a
"Partnership"), of the Pledgor and the rights, interest and benefits in respect
thereof of the Pledgor arising under the agreements, documents and/or
certificates (including, without limitation, any publicly filed documents)
constituting or governing each such Partnership (the "Partnership Documents"),
and all other benefits pertaining thereto and any and all general intangibles
and accounts now owned or hereafter arising or acquired relating to the
Pledgor's interest in any Partnership and/or any of the foregoing rights,
interest or benefits; including, without limitation, (i) all distributions by,
and any other payments from each Partnership, and all present and future rights
to receive any distributions or other payments from each Partnership, whether
the same constitute distributions of capital, surplus or profits, or derive from
any other source including, without limitation, any such distribution or payment
derived from, representing, based upon, measured by, or otherwise in respect of,
(x) the operating revenues of any Partnership, or (y) any sale, assignment,
transfer or other disposition (or transaction having comparable effect) of any
assets of any Partnership, any mortgaging, encumbering or other financing or
refinancing of any assets of any Partnership, any insurance proceeds or
condemnation awards in respect of any assets of any Partnership, any merger,
consolidation or recapitalization of any Partnership, any redemption or
liquidation of the interest of the Pledgor in any Partnership, or any
contribution of any property to any Partnership by any partner therein; and (ii)
without limiting clause (i), any other payments or distributions, and any rights
to receive the same, from any Partnership, from any partner or partners therein,
or from any other party, in respect of (A) any sale, assignment, transfer,
encumbrance or other disposition (or transaction having comparable effect) of
any partner's interest in any Partnership or any rights in respect thereof, and
(B) any payments of principal, interest or of any other character in respect of
any debt owed by any Partnership or any partner therein to the Pledgor (all of
which property and rights referred to in one or more of clauses (i) or (ii) are
referred to collectively as the "Pledged Interests"); and
(b) the proceeds, products, rents, issues and profits of the Pledged
Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
<PAGE>
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
EXECUTION COPY
- --------------------------------------------------------------------------------
Exhibit 10.168 - Guarantee Agreement
GUARANTEE AGREEMENT
Between
DREW INDUSTRIES INCORPORATED
And
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
MIDWESTERN UNITED LIFE INSURANCE COMPANY, SECURITY LIFE
OF DENVER INSURANCE COMPANY, EQUITABLE LIFE INSURANCE
COMPANY OF IOWA AND USG ANNUITY & LIFE COMPANY
Dated as of January 28, 1998
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of January 28, 1998, (this "Guarantee")
is by and between Drew Industries Incorporated, a corporation organized under
the laws of the State of Delaware (the "Parent Guarantor"), and Teachers
Insurance and Annuity Association of America and ING Investment Management, Inc.
as agent for Midwestern United Life Insurance Company and Security Life of
Denver Insurance Company and ING Investment Management LLC, as agent for
Equitable Life Insurance Company of Iowa and USG Annuity & Life Company (the
"Initial Noteholders").
WITNESSETH:
WHEREAS, pursuant to the terms of a Note Purchase Agreement of even date
herewith (as amended, modified and supplemented from time to time, the "Note
Purchase Agreement") among Kinro, Inc., an Ohio corporation, Lippert Components,
Inc., a Delaware corporation and Shoals Supply, Inc., a Delaware corporation,
each a direct, wholly owned subsidiary of the Parent Guarantor (the
"Co-Issuers") and the Initial Noteholders, the Co-Issuers have on this date
issued and sold to the Initial Noteholders their 6.95% senior notes due January
28, 2005 in the aggregate principal amount of U.S. $40,000,000, copies of which
are attached hereto as Schedule 1 (the "Notes"); and
WHEREAS, capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Note Purchase Agreement.
NOW, THEREFORE, in order to induce, and in consideration of, the purchase
by the Initial Noteholders of the Notes, it is hereby agreed as follows:
SECTION 1. GUARANTEE OF CO-ISSUER OBLIGATIONS.
ss. 1.1 Obligations Guaranteed. The Parent Guarantor hereby irrevocably,
absolutely and unconditionally guarantees, to the Initial Noteholders and to
each subsequent registered holder from time to time of the Notes (the Initial
Noteholders and each subsequent registered holder of the Notes being hereinafter
referred to as a "Noteholder"), (a) the full, due and punctual payment in cash
in U.S. Dollars of the principal of, Make-Whole Amount, if any, and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any Co-Issuer, whether or not a claim for such
interest is allowable in any such case or proceeding) on the Notes, and any
other amount due and payable under the Notes, as and when such payment shall
become due and payable, whether by lapse of time, upon redemption or prepayment,
by extension or by acceleration or declaration, or otherwise (including, to the
extent legally enforceable, interest due on overdue payments of principal,
Make-Whole Amount, if any, or interest at the rate set forth in the Notes) in
coin or currency of the United States of America which at the time of payment or
demand therefor shall be legal tender for the payment of public and private
debts, (b) the full and prompt payment, performance and observance by each
Co-Issuer of each and all of the covenants and agreements required to be
performed or observed by such Co-Issuer under the terms of the Notes and/or the
Note Purchase Agreement, and (c) the full and prompt payment in cash in U.S.
Dollars, upon demand by any Noteholder of all costs
<PAGE>
and expenses, legal or otherwise (including attorneys fees) which any Co-Issuer
is obligated to pay pursuant to the Notes and/or the Note Purchase Agreement and
such expenses, if any, as shall have been expended or incurred in the
enforcement of any right or privilege under the Notes or Note Purchase
Agreement, and in each and every case irrespective of the validity, regularity,
or enforcement of the Notes or the Note Purchase Agreement or any of the terms
thereof. The guarantee of the Notes herein provided is a guarantee of the
immediate and timely payment in cash in U.S. Dollars of the principal of, and
Make-Whole Amount, if any, and interest on, the Notes and all other amounts
guaranteed hereunder as and when the same are due and payable and shall not be
deemed to be a guarantee only of the collectibility of such payments and that in
consequence thereof the Noteholders may sue the Parent Guarantor directly upon
any such principal, Make-Whole Amount, interest and all other amounts guaranteed
hereunder becoming so due and payable or upon any failure of any Co-Issuer to
perform any obligation under the Notes or the Note Purchase Agreement or failure
of the Parent Guarantor to perform any other term or provision hereof.
The Parent Guarantor agrees that it shall not make a payment on any
guaranty securing the Note (as defined in the Revolving Credit Agreement) unless
concurrently therewith it shall make payment hereunder to the Noteholders on the
obligations guaranteed hereunder on a pari passu basis with respect to any such
payment on or in respect of any such payment on or in respect of any guaranty
securing the Note (as defined in the Revolving Credit Agreement).
ss. 1.2 General Provisions Relating to the Guarantee. The Parent Guarantor
hereby agrees that the Noteholders, with or without any further notice to or
assent from the Parent Guarantor, to the fullest extent permitted by law, may,
without in any manner affecting the liability of the Parent Guarantor under this
Guarantee, and upon such terms and conditions as the Noteholders may deem
advisable,
(1) extend in whole or in part (by renewal or otherwise),
modify, change, compromise, release or extend the duration of the
time for the performance or payment of any indebtedness, liability
or obligation of the Co-Issuers or of any other Person secondarily
or otherwise liable for any indebtedness, liability or obligations
of the Co-Issuers on the Notes, or waive any default with respect
thereto, or waive, modify, amend or change any provision of the Note
Purchase Agreement or any other agreement to which any Co-Issuer is
a party; or
(2) sell, release, surrender, modify, impair, exchange or
substitute any and all property, of any nature and from whomsoever
received, held by, or for the benefit of, any such Noteholder as
direct or indirect security for the payment or performance of any
indebtedness, liability or obligation of any Co-Issuer or of any
other Person secondarily or otherwise liable for any indebtedness,
liability or obligation of any Co-Issuer on the Notes; or
(3) settle, adjust or compromise any claim of any Co-Issuer
against any other Person secondarily or otherwise liable for any
indebtedness, liability or obligation of any Co-Issuer on the Notes;
and
2
<PAGE>
the Parent Guarantor hereby waives, to the fullest extent permitted by law, any
and all defenses, counterclaims or offsets which it might or could have by
reason thereof.
The Parent Guarantor hereby waives, to the fullest extent permitted by
law: (1) notice of acceptance of this Guarantee by the Noteholders or of the
creation, renewal or accrual of any liability of the Co-Issuers, present or
future, or of the reliance of the Noteholders upon this Guarantee (it being
understood that every indebtedness, liability and obligation described in 1.1
hereof shall conclusively be presumed to have been created, contracted or
incurred in reliance upon the execution of this Guarantee); (2) demand of
payment by the Noteholders from the Co-Issuers or any other Person indebted in
any manner on or for any of the indebtedness, liability or obligations hereby
guaranteed; and (3) presentment for the payment by the Noteholders or any other
Person of the Notes or any other instrument, protest thereof and notice of its
dishonor to any party thereto and to the Parent Guarantor. To the fullest extent
permitted by law, the obligations of the Parent Guarantor under this Guarantee
and the rights of the Noteholders to enforce such obligations by any
proceedings, whether by action at law, suit in equity or otherwise, shall not be
subject to any reduction, limitation, impairment or termination, whether by
reason of any claim of any character whatsoever or otherwise and shall not be
subject to any set-off, counterclaim (other than any compulsory counterclaim),
recoupment or termination whatsoever.
ss. 1.3 Obligation Absolute and Unconditional. The obligations of the
Parent Guarantor under this Guarantee shall be irrevocable, absolute and
unconditional and shall remain in full force and effect until the entire
principal, Make-Whole Amount, if any, and interest on the Notes and all other
sums due pursuant to 1.1 hereof shall have been indefeasibly paid in cash in
U.S. Dollars and, to the fullest extent permitted by law, such obligations shall
not be affected, modified or impaired upon the happening from time to time of
any event, including, without limitation, any of the following, whether or not
with notice to or the consent of the Parent Guarantor:
(a) the power or authority or the lack of power or authority of the
Co-Issuers to issue the Notes or to execute and deliver the Note Purchase
Agreement or any instrument or agreement executed pursuant thereto or in
connection therewith, and irrespective of the validity or legality of the
Notes or the Note Purchase Agreement or of any defense whatsoever that any
Co-Issuer may or might have to the payment of the Notes (principal,
Make-Whole Amount, if any, and interest) or to the performance or
observance of any of the provisions or conditions of the Note Purchase
Agreement, or the existence or continuance of any Co-Issuer as a legal
entity;
(b) any failure to present the Notes for payment or to demand
payment thereof, or to give the Parent Guarantor or the Co-Issuers notice
of dishonor for non-payment of the Notes, when and as the same may become
due and payable, or notice of any failure on the part of any Co-Issuer to
do any act or thing or to perform or to keep any covenant or agreement by
it to be done, kept or performed under the terms of the Notes or the Note
Purchase Agreement;
(c) the acceptance of any security or any guarantee, any extension
of the obligation of the Notes, either indefinitely or for any period of
time, or any other
3
<PAGE>
modification in the obligation of the Notes or of the Note Purchase
Agreement or the Co-Issuers thereon, or in connection therewith, or any
sale, release, substitution or exchange of any security;
(d) any act or failure to act with regard to the Notes or the Note
Purchase Agreement or anything which might vary the risk of the Parent
Guarantor;
(e) any action taken under this Guarantee in the exercise of any
right or power hereby conferred or any failure or omission on the part of
the Noteholders to first enforce any right or security given under the
Notes or the Note Purchase Agreement or any failure or omission on the
part of the Noteholders to first enforce any right against the Co-Issuers;
(f) the waiver, compromise, settlement, release or termination of
any or all of the obligations, covenants or agreements of the Co-Issuers
contained in the Notes or the Note Purchase Agreement or of the Parent
Guarantor contained in this Guarantee;
(g) the failure to give notice to the Co-Issuers or the Parent
Guarantor of the occurrence of any Default or Event of Default under the
terms and provisions of the Notes, the Note Purchase Agreement or this
Guarantee;
(h) the extension of the time for payment of any principal of,
Make-Whole Amount or interest on the Notes owing or payable on the Notes
or of the time of or for performance of any obligations, covenants or
agreements under or arising out of the Note Purchase Agreement or the
extension or the renewal of any thereof;
(i) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in the Note Purchase
Agreement or the Notes;
(j) any failure, omission, delay or lack on the part of the
Noteholders to enforce, assert or exercise any right, power or remedy
conferred on the Noteholders in the Note Purchase Agreement or the Notes
or any other act or acts on the part of the holders from time to time of
the Notes;
(k) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization or arrangement under
bankruptcy or similar laws, composition with creditors or readjustment of,
or other similar procedures affecting the Parent Guarantor or any
Co-Issuer or any of the assets of any of them, or any allegation or
contest of the validity of the Note Purchase Agreement or the
disaffirmance of the Note Purchase Agreement in any such proceeding (it
being understood that the obligations of the Parent Guarantor under this
Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment made with respect to the Notes is rescinded
or must otherwise be restored or returned by the Noteholders upon the
insolvency, bankruptcy or reorganization of any Co-Issuer or the Parent
Guarantor, all as though such payment had not been made);
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<PAGE>
(l) any event or action or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law of
the Parent Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Guarantee;
(m) the invalidity or unenforceability of the Notes or the Note
Purchase Agreement;
(n) the invalidity or unenforceability of the obligations of the
Parent Guarantor under this Guarantee, the absence of any action to
enforce such obligations of the Parent Guarantor, any waiver or consent by
the Parent Guarantor with respect to any of the provisions hereof or any
other circumstances which might otherwise constitute a discharge or
defense by the Parent Guarantor, including, without limitation, any
failure or delay in the enforcement of the obligations of the Parent
Guarantor with respect to this Guarantee or of notice thereof, or any suit
or other action brought by any shareholder or creditor of, or by, the
Parent Guarantor or any other Person, for any reason, including, without
limitation, any suit or action in any way attacking or involving any
issue, matter or thing in respect of this Guarantee, the Notes or any
other agreement;
(o) the default or failure of the Parent Guarantor fully to perform
any of its covenants or obligations set forth in this Guarantee;
(p) the impossibility or illegality of performance on the part of
the Parent Guarantor, the Co-Issuers or any other Person of any
obligations it may have under this Guarantee, the Notes, the Note Purchase
Agreement or any other agreement or instrument;
(q) in respect of the Co-Issuers or any other Person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not
imputable to the Co-Issuers or any other Person, or other impossibility of
performance through fire, explosion, accident, labor disturbance, floods,
droughts, embargoes, wars (whether or not declared), civil commotions,
acts of God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any U.S. Federal or
state or other regulatory body or agency, change of law or any other
causes affecting performance, or other force majeure, whether or not
beyond the control of the Co-Issuers or any other Person and whether or
not of the kind hereinbefore specified;
(r) any attachment, claim, demand, charge, lien, order, process,
encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or any claims,
demands, charges or liens of any nature, foreseen or unforeseen, incurred
by any Person, or against any sums payable under this Guarantee, so that
such sums would be rendered inadequate or would be unavailable to make the
payments herein provided;
5
<PAGE>
(s) the failure of the Parent Guarantor to receive any benefit or
consideration from or as a result of its execution, delivery and
performance of this Guarantee; or
(t) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Parent Guarantor in respect
of the obligations of the Parent Guarantor under this Guarantee, other
than the indefeasible payment in cash in U.S. Dollars or performance of
such obligations;
provided, however, that the specific enumeration of the above-mentioned acts,
failures or omissions shall not be deemed to exclude any other acts, failures or
omissions, though not specifically mentioned above, it being the purpose and
intent of this paragraph that the obligations of the Parent Guarantor hereunder
shall be irrevocable, absolute and unconditional to the extent herein specified
and shall not be discharged, impaired or varied except by the indefeasible
payment in cash in U.S. Dollars to the holders thereof of the principal of,
Make-Whole Amount, if any, interest on the Notes and all other amounts
guaranteed hereunder, and then only to the extent of such payments. Without
limiting any of the other terms or provisions hereof, it is understood and
agreed that in order to hold the Parent Guarantor liable hereunder, there shall
be no obligation on the part of the Noteholders to resort, in any manner or
form, for payment, to any Co-Issuer, to any other Person or to the properties or
estates of any of the foregoing. All rights of the Noteholders pursuant thereto
or to the Note Purchase Agreement or this Guarantee may be transferred or
assigned at any time or from time to time to the transferee of the Notes who
becomes the registered holder thereof and shall be considered to be transferred
or assigned to such registered holder upon the transfer of the Notes whether
with or without the consent of or notice to the Parent Guarantor or the
Co-Issuers. Without limiting the foregoing, it is understood that repeated and
successive demands may be made and recoveries may be had hereunder as and when,
from time to time, any Co-Issuer shall default under the terms of the Notes or
the Note Purchase Agreement and that notwithstanding recovery hereunder for or
in respect of any given default or defaults by any Co-Issuer under the Notes or
the Note Purchase Agreement, this Guarantee shall remain in full force and
effect and shall apply to each and every subsequent default.
ss. 1.4 Payments Under Guarantee. In the event of the failure of the
Noteholders punctually to receive any payment required to be made to it pursuant
to the terms of the Notes, whether by reason of the failure of the Co-Issuers
punctually to make any payment of interest on the Notes, or any other event or
condition resulting in the failure of the Noteholders to receive funds in U.S.
Dollars in the full amount of such payment in a timely manner, the Parent
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether by demand, by declaration of
acceleration, or otherwise, as if such payment were made by the Co-Issuers in
the manner required by the Notes or the Note Purchase Agreement. If the
Noteholders shall have the right to declare the Notes due and payable, and
acceleration of the payment of the Notes is stayed, enjoined or otherwise
prevented, the Parent Guarantor, upon demand therefor by the Noteholders, shall
pay the Make-Whole Amount, if any, and any other amount due and payable under
the Notes to the Noteholders as if acceleration had occurred in accordance with
the terms thereof. In the event of the failure of the Co-Issuers to make payment
to a Noteholder of any other amount due and payable to such Noteholder pursuant
to the terms of the Notes and/or the Note Purchase Agreement, the Parent
Guarantor shall, promptly upon receipt of written demand therefor from such
Noteholders,
6
<PAGE>
accompanied by a statement of the nature and amount of such required payment,
promptly pay such amount, in U.S. Dollars, directly to such Noteholder.
ss. 1.5 No Subrogation. Notwithstanding the satisfaction by the Parent
Guarantor of any liability hereunder and notwithstanding any other term,
provision or condition in the Note Purchase Agreement, the Transaction Documents
or the Other Agreements until 370 days following the last payment or transfer by
or on behalf of the Parent Guarantor with respect to the obligations guaranteed
hereby and all other sums due under the Note Purchase Agreement, other
Transaction Documents and the Other Agreements (the "Period"), the Parent
Guarantor shall not have any right of subrogation, contribution, reimbursement
or indemnity whatsoever or any right of recourse to or with respect to the
assets or property of the Co-Issuers or to any collateral for the Notes with
respect to obligations owing to the Parent Guarantor arising out of the Parent
Guarantor's performance of its obligations under this Guarantee. In connection
with the foregoing, during the Period the Parent Guarantor expressly waives any
and all rights of subrogation of the Noteholders against the Co-Issuers with
respect to obligations owing to the Parent Guarantor arising out of the Parent
Guarantor's performance of its obligations under this Guarantee, and the Parent
Guarantor hereby waives any rights to enforce any remedy which the Noteholders
may have against the Co-Issuers and any right to participate in any collateral
for the Notes with respect to obligations owed to the Parent Guarantor arising
out of the Parent Guarantor's performance under this Guarantee. In addition to
and without in any way limiting the foregoing, during the Period the Parent
Guarantor hereby subordinates any and all indebtedness of the Co-Issuers now or
hereafter owed to the Parent Guarantor arising out of the Parent Guarantor's
performance of its obligations under this Guarantee to all indebtedness of the
Co-Issuers to the Noteholders, and agrees with the Noteholders that the Parent
Guarantor shall not demand or accept any payment of principal or interest from
the Co-Issuers with respect to such indebtedness, shall not claim any off-set or
other reduction of the Parent Guarantor's obligations hereunder because of any
such indebtedness and shall not take any action to obtain any of the collateral
from the Notes in satisfaction of any such indebtedness. Further, the Parent
Guarantor shall not have any right of recourse against the Noteholders by reason
of any action the Noteholders may take or omit to take under the provisions of
this Guarantee or under the provisions of any of the Transaction Documents, the
Agreement, the Other Agreements or the Notes.
ss. 1.6 Preference. The Parent Guarantor agrees that to the extent the
Co-Issuers makes any payment in cash on the Notes, which payment or any part
thereof is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, or is required to be repaid to a trustee, receiver or
any other Person under any bankruptcy code, common law or equitable cause, then
and to the extent of such payment, the obligation or the part thereof intended
to be satisfied shall be revived and continued in full force and effect with
respect to the Parent Guarantor's obligations hereunder, as if said payment had
not been made. The liability of the Parent Guarantor hereunder shall not be
reduced or discharged, in whole or in part, by any payment to any holder of the
Notes from any source that is thereafter paid, returned or refunded in whole or
in part by reason of the assertion of a claim of any kind relating thereto,
including, but not limited to, any claim for breach of contract, breach of
warranty, preference, illegality, invalidity or fraud asserted by any account
debtor or by any other Person.
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ss. 1.7 Marshalling. No Noteholder shall be under any obligation (a) to
marshal any assets in favor of the Parent Guarantor or in payment of any or all
of the liabilities of the Co-Issuers under or in respect of the Notes or the
obligation of the Parent Guarantor hereunder or (b) to pursue any other remedy
that the Parent Guarantor may or may not be able to pursue itself and that may
lighten the Parent Guarantor's burden, any right to which the Parent Guarantor
hereby expressly waives to the fullest extent permitted by law.
ss. 1.8 Benefit to Noteholders. This Guarantee is entered into by the
Initial Noteholders and the Parent Guarantor for the benefit of the Noteholders
and is intended to confer certain rights on the Noteholders, to the extent
herein expressly provided, with the same effect as if each Noteholder were a
party hereto.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS.
ss. 2.1 Representations, Warranties and Covenants.
(a) The Parent Guarantor has examined the Note Purchase Agreement,
including the exhibits and schedules thereto and all of the representations and
warranties set forth in the Note Purchase Agreement, to the extent the same
relate to the Parent Guarantor, are true and correct.
(b) The Parent Guarantor agrees to be bound by, and to comply with all of
the terms, covenants and provisions of the Note Purchase Agreement, to the
extent the same impose obligations in respect of or grants rights against it as
a Parent Guarantor or otherwise.
SECTION 3. AMENDMENTS, WAIVERS AND CONSENTS.
ss. 3.1 Consent Required. Any term, covenant, agreement or condition of
this Guarantee may, with the consent of the Parent Guarantor, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Parent Guarantor shall have
obtained the consent in writing of the Noteholders.
ss. 3.2 Effect of Amendment or Waiver. Any such amendment or waiver shall
be binding upon each future Noteholder and upon the Parent Guarantor, whether or
not the Notes shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
SECTION 4. INTERPRETATION OF AGREEMENT; DEFINITIONS.
ss. 4.1 Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and the
following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks are generally not open for business in New York.
"Co-Issuers" shall have the meaning assigned thereto in the preamble at
the beginning of this Guarantee.
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"Default" shall have the meaning assigned thereto in the Notes.
"Event of Default" shall have the meaning assigned thereto in the Notes.
"GAAP" shall mean generally accepted accounting principles in the United
States at the time.
"guarantees" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
whether directly or indirectly, any Indebtedness of any Person in any manner.
For the purposes of all computations made under this Guarantee, a guarantee in
respect of any Indebtedness shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness which has been guaranteed.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person.
"Initial Noteholders" shall have the meaning assigned thereto in the
preamble at the beginning of this Guarantee.
"Make-Whole Amount" shall have the meaning assigned thereto in the Note
Purchase Agreement.
"Notes" shall have the meaning assigned thereto in the first recital at
the beginning of this Guarantee.
"Noteholders" shall have the meaning assigned thereto in 1.1 hereof.
"Note Purchase Agreement" shall have the meaning assigned thereto in the
first recital at the beginning of this Guarantee.
"Parent Guarantor" shall mean Drew Industries Incorporated, a Delaware
corporation.
"Person" shall mean an individual, partnership, corporation, joint
venture, association, joint stock company, business, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
"U.S. $" or "U.S. Dollars" shall mean lawful money of the United States of
America in same day immediately available freely transferable funds.
ss. 4.2 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Guarantee, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Guarantee.
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ss. 4.3 Directly or Indirectly. Where any provision in this Guarantee
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
SECTION 5. MISCELLANEOUS.
ss. 5.1 Successors and Assigns. All covenants and agreements in this
Guarantee shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not.
ss. 5.2 Notices. All notices and communications provided for hereunder
shall be in writing and sent by (a) facsimile if the sender on the same day
sends a confirming copy of such notice by either a recognized overnight delivery
service or personal delivery, or (b) personal delivery, or (c) a recognized
overnight delivery service, and (i) if to the Initial Note Purchasers, at the
address therefor set forth on Schedule 20 attached to the Note Purchase
Agreement, (ii) if to any subsequent Noteholders, at the address designated by
such Noteholder to the Co-Issuers and (iii) if to the Parent Guarantor, at 200
Mamaroneck Avenue, White Plains, New York 10601, Attention: President (fax
number (914) 428-4581), or to such other address as such parties shall have
notified the others in writing. Any demand, notice or other communication given
by personal delivery shall be conclusively deemed to have been given on the day
of actual delivery thereof and, if given by overnight courier, on the first
Business Day following the deposit thereof with overnight courier and, if given
by facsimile, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such normal
business hours next occur if not given during such hours on any day.
ss. 5.3 Descriptive Headings. The descriptive headings of the several
Sections of this Guarantee are inserted for convenience only and do not
constitute a part of this Guarantee.
ss. 5.4 Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK AND BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF SUCH STATE.
This Guarantee may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
ss. 5.5 Consent to Jurisdiction and Venue. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY (I) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTEE MAY BE BROUGHT IN EITHER THE
SUPREME COURT OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, (II) CONSENTS TO THE JURISDICTION OF EACH
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING (SOLELY FOR SUCH PURPOSES),
AND (III) WAIVES ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND COVENANTS THAT IT WILL NOT SEEK TO CHALLENGE THE
JURISDICTION OF ANY SUCH COURT OR SEEK TO OUST THE JURISDICTION OF ANY SUCH
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COURT, WHETHER ON THE BASIS OF INCONVENIENT FORUM OR OTHERWISE. THE PARENT
GUARANTOR (SOLELY FOR SUCH PURPOSES) IRREVOCABLY CONSENTS TO THE SERVICE OF ANY
AND ALL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAIL, SO LONG AS
COPIES OF SUCH PROCESS SHALL BE SENT TO THE PARENT GUARANTOR AT ITS ADDRESS FOR
NOTICES PROVIDED IN ss.5.1 HEREOF. ALL MAILINGS UNDER THIS ss.5.4 SHALL BE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED. NOTHING IN THIS ss.5.4
SHALL AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST THE
PARENT GUARANTOR OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER
JURISDICTION.
ss. 5.6 Counterparts. This Guarantee may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original.
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WITNESS, the execution of this Guarantee as of the date first above written.
DREW INDUSTRIES INCORPORATED
By:
------------------------------
Name:
Title:
The foregoing Guarantee is
hereby accepted as of the date
first above written.
TEACHERS INSURANCE AND ANNUITY
OF AMERICA
By:
------------------------------
Name:
Title:
ING INVESTMENT MANAGEMENT, INC.,
as agent for Midwestern United Life Insurance
Company and Security Life of Denver
Insurance Company
By:
------------------------------
Name: Fred C. Smith
Title: Senior Vice President and
Managing Director
ING INVESTMENT MANAGEMENT, LLC,
as agent for Equitable Life Insurance
Company of Iowa and USG Annuity & Life
Company
By:
------------------------------
Name: Fred C. Smith
Title: Senior Vice President and
Managing Director
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TABLE OF CONTENTS
Page
SECTION 1. GUARANTEE OF CO-ISSUER OBLIGATIONS.................................1
ss. 1.1 Obligations Guaranteed.............................................1
ss. 1.2 General Provisions Relating to the Guarantee.......................2
ss. 1.3 Obligation Absolute and Unconditional..............................3
ss. 1.4 Payments Under Guarantee...........................................6
ss. 1.5 No Subrogation.....................................................6
ss. 1.6 Preference.........................................................7
ss. 1.7 Marshalling........................................................7
ss. 1.8 Benefit to Noteholders.............................................7
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS..........................8
ss. 2.1 Representations, Warranties and Covenants..........................8
SECTION 3. AMENDMENTS, WAIVERS AND CONSENTS...................................8
ss. 3.1 Consent Required...................................................8
ss. 3.2 Effect of Amendment or Waiver......................................8
SECTION 4. INTERPRETATION OF AGREEMENT; DEFINITIONS...........................8
ss. 4.1 Definitions........................................................8
ss. 4.2 Accounting Principles..............................................9
ss. 4.3 Directly or Indirectly.............................................9
SECTION 5. MISCELLANEOUS.....................................................10
ss. 5.1 Successors and Assigns............................................10
ss. 5.2 Notices...........................................................10
ss. 5.3 Descriptive Headings..............................................10
ss. 5.4 Governing Law.....................................................10
ss. 5.5 Consent to Jurisdiction and Venue.................................10
ss. 5.6 Counterparts......................................................11
-i-
EXECUTION COPY
Exhibit - 10.169 - Subsidiary Guaranty
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY, dated as of January 28, 1998, is executed by
each of the undersigned (each such entity and each entity which hereafter
executes and delivers a Subsidiary Joinder in substantially the form of
Attachment 1 hereto to be referred to herein as a "Guarantor"), in favor of
Teachers Insurance and Annuity Association of America, Midwestern United Life
Insurance Company, Security Life of Denver Insurance Company, Equitable Life
Insurance Company of Iowa, USG Annuity & Life Company and each of the other
holders from time to time of the 6.95% Senior Notes due January 28, 2005 (the
"Notes") issued by Kinro, Inc., Lippert Components, Inc. and Shoals Supply, Inc.
(the "Co-Issuers") (collectively, together with each future holder of Senior
Notes, the "Noteholders").
RECITALS
A. The Co-Issuers and the original Noteholders have entered into a Note
Purchase Agreement, dated as of the date hereof (as it may be amended, modified
and supplemented from time to time, the "Agreement"), pursuant to which
$40,000,000 in aggregate principal amount of the Notes were issued. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
assigned thereto in the Agreement.
B. Each Guarantor is a direct or indirect Subsidiary of a Co-Issuer. Each
Guarantor acknowledges that the issuance of the Notes by the Co-Issuers pursuant
to the Agreement will benefit each such Guarantor by making funds available to
such Guarantor through the Co-Issuers and by enhancing the financial strength of
the consolidated group of which each Guarantor and the Co-Issuers are members.
C. The execution and delivery of this Subsidiary Guaranty by each existing
Subsidiary of the Co-Issuers is a condition precedent to the execution and
delivery by the original Noteholders of the Agreement and the Co-Issuers have
covenanted in the Agreement that Subsidiary Joinders shall be duly executed by
each future Subsidiary of the Co-Issuers.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Guarantor hereby agrees with the Noteholders as follows:
1. Definitions and Interpretation.
(a) Definitions. When used in this Subsidiary Guaranty, the following
terms shall have the following respective meanings:
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"Adjusted Net Worth" shall mean, with respect to a Guarantor at any
time, the remainder of (i) the fair value of the assets of such Guarantor
as of such date, minus (ii) the fair value of the liabilities of such
Guarantor as of such date (excluding, however, any liability of such
Guarantor hereunder), such assets and liabilities to be determined in
accordance with any state or federal fraudulent conveyance or transfer law
which is applicable to this Subsidiary Guaranty.
"Agreement" shall have the meaning given to that term in the Recital
A hereof.
"Aggregate Guaranty Payments" shall mean, with respect to any
Guarantor at any time, the aggregate net amount of all payments made by
such Guarantor under this Subsidiary Guaranty (including, without
limitation, under Paragraph 5 hereof) at or prior to such time.
"Co-Issuers" shall have the meaning given to that term in the
preamble hereof.
"Disallowed Post-Commencement Interest and Expenses" shall mean
interest computed at the rate provided in the Agreement and claims for
reimbursement, costs, expenses or indemnities under the terms of the
Agreement, the Subsidiary Guaranty or the Notes accruing or claimed at any
time after the commencement of any Insolvency Proceeding, if the claim for
such interest, reimbursement, costs, expenses or indemnities is not
allowable, allowed or enforceable against the Co-Issuers in such
Insolvency Proceeding.
"Fair Share" shall mean, with respect to any Guarantor at any time,
an amount equal to (i) a fraction, the numerator which is the Maximum
Guaranty Amount of such Guarantor and the denominator of which is the
aggregate Maximum Guaranty Amounts of all Guarantors, multiplied by (ii)
the aggregate amount paid by all Funding Guarantors under this Subsidiary
Guaranty at or prior to such time.
"Fair Share Shortfall" shall mean, with respect to any Guarantor at
any time, the amount, if any, by which the Fair Share of such Guarantor at
such time exceeds the Aggregate Guaranty Payments of such Guarantor at
such time.
"Funding Guarantor" shall have the meaning given to that term in
Paragraph 5 hereof.
"Guaranteed Obligations" shall mean all principal (including any
prepayments of principal), premium, if any, and all interest on the Notes,
and all other indebtedness and obligations of the Co-Issuers to the
Noteholders under the Agreement and the Notes, including, without
limitation, all fees, taxes, charges, expenses, attorneys' fees and
accountants' fees chargeable to the Co-Issuers or payable by the
Co-Issuers thereunder.
"Guarantor" shall have the meaning given to that term in the
preamble hereof.
"Insolvency Proceeding" shall mean any case or proceeding under the
United States Bankruptcy Code or any other similar law, rule or regulation
of the United States or any jurisdiction or any other action or proceeding
for the reorganization, liquidation, appointment of a receiver,
rearrangement of debts, marshalling of assets or similar action relating
to any Co-Issuer or any Guarantor, their respective creditors or any
substantial
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part of their respective assets, whether or not any such case, proceeding
or action is voluntary or involuntary.
"Maximum Guaranty Amount" shall mean, with respect to any Guarantor,
at any time, the greatest of (a) ninety-five percent (95%) of the Adjusted
Net Worth of such Guarantor at such time, (b) ninety-five percent (95%) of
the Adjusted Net Worth of such Guarantor on the date hereof and (c) the
value derived by such Guarantor from the Guaranteed Obligations incurred
at or prior to such time.
"Notes" shall have the meaning given to that term in the preamble
hereof.
"Noteholders" shall have the meaning given to that term in the
preamble hereof.
"Subsidiary Joinder" shall mean an instrument substantially in the
form of Attachment 1 hereto.
Unless otherwise indicated in this Subsidiary Guaranty, all accounting
terms used in this Subsidiary Guaranty shall be construed, and all accounting
and financial computations hereunder or thereunder shall be computed, in
accordance with GAAP.
2. Guaranty.
(a) Payment Guaranty. Each Guarantor unconditionally guarantees and
promises to pay and perform as and when due, whether at stated maturity, upon
acceleration or otherwise, any and all of the Guaranteed Obligations. If any
Insolvency Proceeding relating to any Co-Issuer is commenced, each Guarantor
further unconditionally guarantees and promises to pay and perform, upon the
demand of any Noteholder any Guaranteed Obligations allocable to such Noteholder
(including any related Disallowed Post-Commencement Interest and Expenses) in
accordance with the terms of the Agreement and the Notes, whether or not such
obligations are then due and payable by the Co-Issuers and whether or not such
obligations are modified, reduced or discharged in such Insolvency Proceeding.
This Subsidiary Guaranty is a guaranty of payment and not of collection.
(b) Continuing Guaranty. This Subsidiary Guaranty is an irrevocable
continuing guaranty of the Guaranteed Obligations which shall continue in effect
until all of the Guaranteed Obligations have been fully, finally and
indefeasibly paid. If any payment on any Guaranteed Obligation is set aside,
avoided or rescinded or otherwise recovered from any Noteholder, such recovered
payment shall constitute a Guaranteed Obligation hereunder and, if this
Subsidiary Guaranty was previously released or terminated, it automatically
shall be fully reinstated, as if such payment was never made.
(c) Independent Obligation. The liability of each Guarantor hereunder is
independent of the Guaranteed Obligations and of the obligations of each other
Guarantor hereunder, and a separate action or actions may be brought and
prosecuted against each Guarantor irrespective of whether action is brought
against any Co-Issuer, any other Guarantor or any other guarantor of the
Guaranteed Obligations or whether any Co-Issuer, any other Guarantor or any
other guarantor of the Guaranteed Obligations is joined in any such action or
actions.
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(d) Fraudulent Transfer Limitation. If, in any action to enforce this
Subsidiary Guaranty, any court of competent jurisdiction determines that
enforcement against any Guarantor for the full amount of the Guaranteed
Obligations is not lawful under or would be subject to avoidance under Section
548 of the United States Bankruptcy Code or any applicable provision of any
comparable law of any state or other jurisdiction, the liability of such
Guarantor under this Subsidiary Guaranty shall be limited to the maximum amount
lawful and not subject to such avoidance.
(e) Maximum Guaranty Amount. The liability of each Guarantor under this
Subsidiary Guaranty shall not at any time exceed such Guarantor's Maximum
Guaranty Amount; provided, however, that the Noteholders may permit the
Guaranteed Obligations to exceed the foregoing limitation without affecting each
Guarantor's liability hereunder.
(f) Each Guarantor agrees that it shall not make any payment on or in
respect of any guaranty securing the Note (as defined in the Revolving Credit
Agreement) unless concurrently therewith it shall make a payment hereunder to
the Noteholders on Guaranteed Obligations on a pari passu basis with respect to
such payment or in respect of any such guaranty securing the Note (as defined in
the Revolving Credit Agreement).
3. Authorizations, Waivers, Etc.
(a) Authorizations. Each Guarantor authorizes the Noteholders, in their
discretion, without notice to such Guarantor, irrespective of any change in the
financial condition of any of the Co-Issuers, such Guarantor, any other
Guarantor or any other guarantor of the Guaranteed Obligations since the date
hereof, and without affecting or impairing in any way the liability of such
Guarantor hereunder, from time to time to:
(i) renew, compromise, extend, accelerate or otherwise change the
time for payment or performance of, or otherwise amend or modify the
Agreement and the Notes or change the terms of the Guaranteed Obligations
or any part thereof, including increase or decrease of the rate of
interest thereon;
(ii) accept and hold security for the payment or performance of the
Guaranteed Obligations and exchange, enforce, waive or release any such
security; apply such security and direct the order or manner of sale
thereof; and purchase such security at public or private sale;
(iii) otherwise exercise any right or remedy they may have against
the Co-Issuers, such Guarantor, any other Guarantor, any other guarantor
of the Guaranteed Obligations;
(iv) settle, compromise with, release or substitute any one or more
makers, endorsers or guarantors of the Guaranteed Obligations; and
(v) assign the Guaranteed Obligations, this Subsidiary Guaranty, the
Agreement or the Notes in whole or in part to the extent provided herein
and in the Agreement and the Notes.
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(b) Waivers. Each Guarantor hereby waives:
(i) any right to require any Noteholder to (A) proceed against any
Co-Issuer, any other Guarantor or any other guarantor of the Guaranteed
Obligations, (B) proceed against or exhaust any security received from any
Co-Issuer, such Guarantor, any other Guarantor or any other guarantor of
the Guaranteed Obligations or otherwise marshall the assets of any
Co-Issuer, such Guarantor, any other Guarantor or any other guarantor of
the Guaranteed Obligations or (C) pursue any other remedy in the
Noteholder's power whatsoever;
(ii) any defense arising by reason of the application by the
Co-Issuers of the proceeds of any borrowing;
(iii) any defense resulting from the absence, impairment or loss of
any right of reimbursement, subrogation, contribution or other right or
remedy of Guarantor against any Co-Issuer, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any security, whether resulting
from an election by any Noteholder to foreclose upon security by
nonjudicial sale, or otherwise;
(iv) any setoff or counterclaim of any Co-Issuer or any defense
which results from any disability or other defense of such Co-Issuer or
the cessation or stay of enforcement from any cause whatsoever of the
liability of such Co-Issuer (including, without limitation, the lack of
validity or enforceability of any of the Subsidiary Guaranty, the
Agreement and the Notes);
(v) any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more
burdensome than the obligation of the principal;
(vi) all presentments, demands for performance, notices of
non-performance, notices delivered under the Agreement, the Subsidiary
Guaranty and the Notes, protests, notice of dishonor, and notices of
acceptance of this Subsidiary Guaranty and of the existence, creation or
incurring of new or additional Guaranteed Obligations and notices of any
public or private foreclosure sale;
(vii) the benefit of any statute of limitations to the extent
permitted by law;
(viii) any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(ix) any right to be informed by any Noteholder of the financial
condition of any Co-Issuer, any other Guarantor or any other guarantor of
the Guaranteed Obligations or any change therein or any other
circumstances bearing upon the risk of nonpayment or nonperformance of the
Guaranteed Obligations;
(x) until all of the Guaranteed Obligations have been fully, finally
and indefeasibly paid, any right to revoke this Subsidiary Guaranty;
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(xi) any defense arising from an election for the application of
Section 1111(b)(2) of the United States Bankruptcy Code which applies to
the Guaranteed Obligations;
(xii) any defense based upon any borrowing or grant of a security
interest under Section 364 of the United States Bankruptcy Code; and
(xiii) any right it may have to a fair value hearing to determine
the size of a deficiency judgment following any foreclosure on any
security for the Guaranteed Obligations.
(c) Financial Condition of the Co-Issuers, Etc. Each Guarantor is fully
aware of the financial condition and affairs of the Co-Issuers. Each Guarantor
has executed this Subsidiary Guaranty without reliance upon any representation,
warranty, statement or information concerning the Co-Issuers furnished to such
Guarantor by any Noteholder and has, independently and without reliance on any
Noteholder, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Co-Issuers and of other circumstances affecting the risk of nonpayment or
nonperformance of the Guaranteed Obligations. Each Guarantor is in a position to
obtain, and assumes full responsibility for obtaining, any additional
information about the financial condition and affairs of the Co-Issuers and of
other circumstances affecting the risk of nonpayment or nonperformance of the
Guaranteed Obligations and will, independently and without reliance upon any
Noteholder, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own appraisals and decisions in
taking or not taking action in connection with this Subsidiary Guaranty.
4. No Subrogation.
Notwithstanding the satisfaction by the Guarantors of any liability
hereunder and notwithstanding any other term, provision or condition in the Note
Purchase Agreement, the Transaction Documents or the Other Agreements, until 370
days following the last payment or transfer by or on behalf of the Guarantors
with respect to the Guaranteed Obligations and other sums due under the Note
Purchase Agreement, other Transaction Documents and the Other Agreements (the
"Period"), none of the Guarantors shall have any right of subrogation,
contribution, reimbursement or indemnity whatsoever or any right of recourse to
or with respect to the assets or property of the Co-Issuers or to any collateral
for the Notes with respect to obligations owing to the Guarantors arising out of
their performance of their obligations under this Guaranty. In connection with
the foregoing during the Period, each Guarantor expressly waives any and all
rights of subrogation of the Noteholders against the Co-Issuers with respect to
obligations owing to such Guarantor arising out of its performance of its
obligations under this Guaranty, and each Guarantor hereby waives any rights to
enforce any remedy which the Noteholders may have against the Co-Issuers and any
right to participate in any collateral for the Notes with respect to obligations
owing to such Guarantor arising out of its performance of its obligations under
this Guaranty. In addition to and without in any way limiting the foregoing
during the Period, each Guarantor hereby subordinates any and all indebtedness
of the Co-Issuers now or hereafter owed to such Guarantor arising out of such
Guarantor's performance of its
6
<PAGE>
obligations under this Guaranty to all indebtedness of the Co-Issuers to the
Noteholders, and agrees with the Noteholders that such Guarantor shall not
demand or accept any payment of principal or interest from the Co-Issuers with
respect to such indebtedness, shall not claim any off-set or other reduction of
such Guarantor's obligations hereunder because of any such indebtedness and
shall not take any action to obtain any of the collateral from the Notes in
satisfaction of any such indebtedness. Further, each Guarantor shall not have
any right of recourse against the Noteholders by reason of any action the
Noteholders may take or omit to take under the provisions of this Subsidiary
Guaranty or under the provisions of any of the Transaction Documents, this
Agreement, the Other Agreements or the Notes.
5. Contribution among Guarantors.
The Guarantors desire to allocate among themselves, in a fair and
equitable manner, their rights of contribution from each other when any payment
is made by any Guarantor under this Subsidiary Guaranty. Accordingly, if any
payment is made by any Guarantor under this Subsidiary Guaranty (a "Funding
Guarantor") that exceeds its Fair Share, the Funding Guarantor shall be entitled
to a contribution from each other Guarantor in the amount of such other
Guarantor's Fair Share Shortfall, so that all such contributions shall cause
each Guarantor's Aggregate Guaranty Payments to equal its Fair Share. The
amounts payable as contributions hereunder shall be determined by the Funding
Guarantor as of the date on which the related payment or distribution is made by
the Funding Guarantor, and such determination shall be binding on the other
Guarantors absent manifest error. The allocation and right of contribution among
the Guarantors set forth in this Paragraph 5 shall not be construed to limit in
any way the liability of any Guarantor under this Subsidiary Guaranty or the
amount of the Guaranteed Obligations.
6. Indemnification by Guarantors.
Without limitation of any other obligations of Guarantors or remedies of
the Noteholders under this Guaranty, the Guarantors shall indemnify, defend and
save and hold harmless the Noteholders from and against, and shall pay on
demand, any and all losses, liabilities, damages, and reasonable costs and
expenses (including the reasonable fees and disbursements of the Noteholders'
legal counsel) suffered or incurred by any Noteholder as a result of any failure
of any of the Guaranteed Obligations to be the legal, valid and binding
obligations of the Co-Issuers, enforceable against the Co-Issuers in accordance
with their terms, except as enforcement may be limited by bankruptcy, insolvency
or other similar Laws affecting the rights of creditors generally.
7. Representations, Warranties and Covenants.
(a) Each Guarantor has examined the Agreement, including the exhibits and
schedules thereto and all of the representations and warranties set forth in the
Agreement, to the extent the same relate to such Guarantor, are true and
correct.
(b) Each Guarantor agrees to be bound by, and to comply with all of the
terms, covenants and provisions of the Agreement, to the extent the same impose
obligations in respect of or grants rights against it as a Guarantor or
otherwise.
7
<PAGE>
8. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices, requests,
demands, consents, instructions or other communications to or upon any Guarantor
or any Noteholder under this Subsidiary Guaranty shall be in writing and faxed,
mailed or delivered, if to a Guarantor, at its respective facsimile number or
address set forth below or in the respective Subsidiary Joinder for such
Guarantor or, if to any Noteholder, at the address or facsimile number specified
beneath the heading "All other communications" under the name of such Noteholder
in Schedule 20 to the Agreement (or to such other facsimile number or address
for any party as indicated in any notice given by that party to the other
parties). All such notices and communications shall be effective (i) when sent
by overnight service of recognized standing, on the second Business Day
following the deposit with such service; (ii) when mailed, first class postage
prepaid and addressed as aforesaid through the United States Postal Service,
upon receipt; (iii) when delivered by hand, upon delivery; and (iv) when faxed,
upon confirmation of receipt.
Guarantors: Kinro Holding, Inc.
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
Kinro Manufacturing, Inc.
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
Kinro Texas Limited Partnership
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
8
<PAGE>
Kinro Tennessee Limited Partnership
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
Shoals Holding, Inc.
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
Shoals Supply Texas Limited Partnership
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
Shoals Supply Tennessee Limited Partnership
c/o Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
with copies to: Drew Industries, Inc.
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone (914) 428-9098
Facsimile: (914) 428-4581
(b) Payments. Each Guarantor shall make all payments required hereunder to
any Noteholder in accordance with the payment information set forth on Schedule
20 to the Agreement on demand. If any amounts required to be paid by a Guarantor
under this Subsidiary Guaranty are not paid when due, such Guarantor shall pay
interest on the aggregate, outstanding
9
<PAGE>
balance of such amounts from the date due until those amounts are paid in full
at a rate equal to the Default Rate.
(c) Expenses. Each Guarantor shall pay on demand (i) all fees and
expenses, including attorneys' fees and expenses, incurred by the Noteholders in
connection with the preparation, execution and delivery of, and the exercise of
its duties under, this Subsidiary Guaranty and the preparation, execution and
delivery of amendments and waivers hereunder and (ii) all fees and expenses,
including attorneys' fees and expenses, incurred by the Noteholders in
connection with the enforcement or attempted enforcement of this Subsidiary
Guaranty or any of the Guaranteed Obligations or in preserving any of the
Noteholders' rights and remedies (including, without limitation, all such fees
and expenses incurred in connection with any "workout" or restructuring
affecting the Agreement, the Notes, the Subsidiary Guaranty or the Guaranteed
Obligations or any bankruptcy or similar proceeding involving Guarantor, any
other Guarantor, the Co-Issuers or any of their affiliates).
(d) Waivers; Amendments. This Subsidiary Guaranty may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by each Guarantor and the Required Holders. Each waiver or consent under
any provision hereof shall be effective only in the specific instances for the
purpose for which given. No failure or delay on any Noteholder's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(e) Assignments. This Subsidiary Guaranty shall be binding upon and inure
to the benefit of the Noteholders, the Guarantors and their respective
successors and assigns; provided, however, that no Guarantor may assign or
transfer any of its rights and obligations under this Subsidiary Guaranty
without the prior written consent of the Required Holders. All references in
this Subsidiary Guaranty to any Person shall be deemed to include all permitted
successors and assigns of such Person.
(f) Cumulative Rights, etc. The rights, powers and remedies of the
Noteholders under this Subsidiary Guaranty shall be in addition to all rights,
powers and remedies given to the Noteholders by virtue of any applicable law,
rule or regulation of any Governmental Authority, the Agreement, the Notes or
any other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
any Noteholder's rights hereunder. Each Guarantor waives any right to require
any Noteholder to proceed against any Person or to pursue any remedy in such
Noteholder's power.
(g) Payments Free of Taxes, Etc. All payments made by each Guarantor under
this Subsidiary Guaranty shall be made by each Guarantor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, each Guarantor shall pay upon demand
any stamp or other taxes, levies or charges of any jurisdiction with respect to
the execution, delivery, registration, performance and enforcement of this
Subsidiary Guaranty. If any taxes, levies, charges or other amounts are required
to be withheld from any amounts payable to any Noteholder hereunder, the amounts
so payable to such Noteholder shall be increased to the extent necessary to
yield to such Noteholder (after payment
10
<PAGE>
of all such amounts) any such amounts payable hereunder in the amounts specified
in this Subsidiary Guaranty. Upon request by any Noteholder, each Guarantor
shall furnish evidence satisfactory to such Noteholder that all requisite
authorizations and approvals by, and notices to and filings with, governmental
authorities and regulatory bodies have been obtained and made and that all
requisite taxes, levies and charges have been paid.
(h) Partial Invalidity. If at any time any provision of this Subsidiary
Guaranty is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Subsidiary Guaranty nor the legality, validity
or enforceability of such provision under the law of any other jurisdiction
shall in any way be affected or impaired thereby.
(i) Joint and Several Obligation. The obligations of the Guarantors under
this Subsidiary Guaranty are joint and several obligations of each Guarantor and
may be freely enforced against each Guarantor, for the full amount of the
Guaranteed Obligations, without regard to whether enforcement is sought or
available against any other Guarantor.
(j) Governing Law. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO CONFLICTS OF LAW RULES.
(k) Jury Trial. EACH GUARANTOR AND THE NOTEHOLDERS, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY.
(l) Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS SUBSIDIARY GUARANTY MAY BE BROUGHT BY ANY NOTEHOLDER 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 SUBSIDIARY GUARANTY
OR ITS RESPECTIVE SUBSIDIARY JOINDER, EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURT. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE BASED ON THE
GROUNDS OF FORUM NONCONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTION.
(m) Counterpart. This Subsidiary Guaranty may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original.
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Subsidiary Guaranty to
be executed as of the day and year first above written.
KINRO HOLDING, INC.
By:____________________________________
Name:
Title:
KINRO MANUFACTURING, INC.
By:____________________________________
Name:
Title:
SHOALS HOLDING, INC.
By:____________________________________
Name:
Title:
KINRO TEXAS LIMITED PARTNERSHIP
By: Kinro Manufacturing, Inc.,
its general partner
By:_______________________________
Name:
Title:
KINRO TENNESSEE LIMITED PARTNERSHIP
By: Kinro Manufacturing, Inc.,
its general partner
By:_______________________________
Name:
Title:
<PAGE>
SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP
By: Shoals Supply, Inc.,
its general partner
By:_______________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE
LIMITED PARTNERSHIP
By: Shoals Supply, Inc.,
its general partner
By:_______________________________
Name:
Title:
13
<PAGE>
ATTACHMENT 1
SUBSIDIARY JOINDER
THIS SUBSIDIARY JOINDER (this "Joinder"), dated as of January 28, 1998, is
executed by [NEW SUBSIDIARY], a _________ [corporation] [partnership] [etc.]
(the "New Subsidiary") in favor of each of the holders from time to time of the
6.95% Senior Notes due January 28, 2005 (the "Notes") issued by Kinro, Inc.,
Lippert Components, Inc. and Shoals Supply, Inc. (the "Co-Issuers")
(collectively, together with each future holder of Senior Notes, the
"Noteholders").
RECITALS
A. The Co-Issuers and the original Noteholders have entered into a Note
Purchase Agreement, dated as of January 28, 1998 (as it may be amended from time
to time, the "Agreement"), pursuant to which $40,000,000 in aggregate principal
amount of the Notes were issued.
B. The New Subsidiary is a direct or indirect Subsidiary of a Co-Issuer
and acknowledges that the issuance of the Notes by the Co-Issuers pursuant to
the Agreement will benefit the New Subsidiary by making funds available to the
New Subsidiary through the Co-Issuers and by enhancing the financial strength of
the consolidated group of which the New Subsidiary and the Co-Issuers are
members.
C. The execution and delivery of the Subsidiary Guaranty by the then
existing Subsidiaries of the Co-Issuers was a condition precedent to the
execution and delivery by the original Noteholders of the Agreement and the
Co-Issuers have covenanted in the Agreement that Subsidiary Joinders shall be
duly executed by each future Subsidiary of the Co-Issuers.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the New Subsidiary hereby agrees with the Noteholders as follows:
1. Definitions and Interpretation. Unless otherwise defined herein, all
capitalized terms used herein and defined in the Subsidiary Guaranty shall have
the respective meanings given to those terms in the Subsidiary Guaranty.
2. Agreement to be Bound. The New Subsidiary agrees that, on and as of the
Effective Date, it shall become a Guarantor under the Subsidiary Guaranty and
shall be bound by all the provisions of the Subsidiary Guaranty to the same
extent as if the New Subsidiary had executed the Subsidiary Guaranty on the
Closing Date.
<PAGE>
3. Waiver. Without limiting the generality of the waivers in the Subsidiary
Guaranty, the New Subsidiary specifically agrees to be bound by the Subsidiary
Guaranty and waives any right to notice of acceptance of its execution of this
Joinder and of its agreement to be bound by the Subsidiary Guaranty.
4. Governing Law. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the New Subsidiary has caused this Joinder to be
executed by its duly authorized officer.
[NEW SUBSIDIARY]
By:________________________
Name:
Title:
Address:
[_________________________]
[_________________________]
[_________________________]
Attn: [___________________]
Telephone: [(___) ___-____]
Facsimile: [(___) ___-____]
2
Exhibit 10.171 - Subordination Agreement
SUBORDINATION AGREEMENT dated as of January 28, 1998 made by DREW
INDUSTRIES INCORPORATED, a Delaware corporation (the "Company") and each direct
and indirect Subsidiary of the Company (each, together with the Company, a
"Credit Party"), with and in favor of TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA, ING INVESTMENT MANAGEMENT, INC., as agent for Midwestern Life
Insurance Company and ING INVESTMENT MANAGEMENT LLC, as agent for Equitable Life
Insurance Company of Iowa and USG Annuity & Life Company (collectively, together
with each future holder of the Notes (as defined in the Note Purchase Agreement
referred to below), the "Noteholders").
Reference is hereby made to the Note Purchase Agreement, dated as of
January 28, 1998 (as amended, supplemented, or modified from time to time, the
"Note Purchase Agreement") among Kinro, Inc., an Ohio corporation, Shoals
Supply, Inc., a Delaware corporation, and Lippert Components, Inc., a Delaware
corporation (collectively the "Co-Issuers"), and the Noteholders. Terms used
herein as defined terms and not otherwise defined shall have the meanings given
thereto in the Note Purchase Agreement.
The Noteholders have agreed to purchase the Notes subject to the
conditions specified in the Note Purchase Agreement. Each Co-Issuer is a direct
subsidiary of the Company. The Credit Parties may make loans and advances to
other Credit Parties upon the terms and conditions contained in the Note
Purchase Agreement, including, without limitation, the subordination of such
obligations to the obligations of the Credit Parties under the Note Purchase
Agreement, the Transaction Documents and the other Agreements. The obligations
of the Noteholders to purchase the Notes is conditioned on, among other things,
the execution and delivery by each Credit Party of a Subordination Agreement in
the form hereof.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1.01 Definitions, Terms. References to this "Agreement" shall be
to this Subordination Agreement as amended, supplemented, or otherwise modified
from time to time. The term "Senior Obligations" shall mean, collectively, the
due and punctual payment of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Notes when and as due, whether at maturity,
by acceleration, upon one or more dates on which repayment or prepayment is
required, or otherwise, and (ii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (x) of the
Co-Issuers to one or more of the
<PAGE>
Noteholders under the Note Purchase Agreement, (y) of the Guarantors under the
Guarantee Agreements, and (z) of the Co-Issuers and of the other Credit Parties
under any Transaction Documents to which the Co-Issuers or such other Credit
Parties are or are to be parties. The term "Subordinated Debt" shall mean any
and all Indebtedness, obligations and liabilities that is or was at any time
owed by any Credit Party to any other Credit Party (including all interest
accrued or to accrue thereon up to the date of such full payment thereof) of
every kind and nature whatsoever, whether represented by negotiable instruments
or other writings, whether direct or indirect, absolute or contingent, due or
not due, secured or unsecured, original, renewed, modified or extended, now in
existence or hereafter incurred, originally contracted with the Credit Party or
with another Person, and whether contracted alone or jointly and/or severally
with another or others.
Section 2.01 Subordination. Each Credit Party hereby agrees that all
claims and demands, and all interest accrued or that may hereafter accrue
thereon, in respect of any Subordinated Debt are subject and subordinate to the
prior indefeasible payment and satisfaction in full in cash of all Senior
Obligations. In furtherance of and not in limitation of the foregoing:
(i) no payment or prepayment of any principal or interest on
account of, and no repurchase, redemption or other retirement (whether at
the option of the holder or otherwise) of Subordinated Debt shall be made,
if at the time of such payment, prepayment, repurchase, redemption or
retirement or immediately after giving effect thereto there shall exist a
Default or Event of Default;
(ii) in the event of any insolvency or bankruptcy proceedings,
and any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relating to any Credit Party or to
its creditors, as such or to its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of
any Credit Party, whether or not involving insolvency or bankruptcy, then
the holders of Senior Obligations shall be entitled to receive final,
indefeasible payment in full in cash of all Senior Obligations (including
interest thereon accruing after the commencement of any such proceedings,
whether or not allowed or allowable as a claim in such proceedings),
before the holders of the Subordinated Debt (including any other Credit
Party) shall be entitled to receive any payment or other distribution on
account of the Subordinated Debt, and to that end the holders of Senior
Obligations shall be entitled to receive distributions of any kind or
character, whether in cash or property or securities, which may be payable
or deliverable in any such proceedings in respect of the Subordinated
Debt;
(iii) in the event that any Subordinated Debt is declared due
and payable before its expressed maturity because of the occurrence of an
event of default (under circumstances when the provisions of the foregoing
paragraphs (i) or (ii) are not applicable), the holders of the Senior
Obligations outstanding at the time such Subordinated Debt so becomes due
and payable because of such occurrence of such an event of default shall
be entitled to receive final, indefeasible payment in full in cash of all
Senior Obligations before the holders of the Subordinated Debt (including
any Credit
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<PAGE>
Party) are entitled to receive any payment or other distribution on
account of the Subordinated Debt;
(iv) in the event that, notwithstanding the occurrence of any
of the events described in paragraphs (i), (ii) and (iii), any such
payment or distribution of assets of any Credit Party of any kind or
character, whether in cash, property or securities, shall be received by
the holders of Subordinated Debt (including any Credit Party) before all
Senior Obligations are finally and indefeasibly paid in full in cash, such
payment or distribution shall be held in trust for the benefit of, and
shall be promptly paid over or delivered to the holders of such Senior
Obligations or their representative or representatives or as their
respective interests may appear, for application to the payment of all
Senior Obligations remaining unpaid to the extent necessary to pay such
Senior Obligations in full in cash, in accordance with the terms thereof,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Obligations; and
(v) no holder of Senior Obligations shall be prejudiced in its
right to enforce subordination of the Subordinated Debt by any act or
failure to act on the part of any Credit Party.
Section 2.02 No Payment or Security. Each Credit Party agrees not to make
payment (except if permitted under Section 2.01 hereof) of, or give any security
for, an Subordinated Debt.
Section 2.03 Waiver, No Limitations. (a) Each Credit Party waives any and
all notice of the acceptance of the subordination hereunder and of the creation
or accrual of any of the Senior Obligations or of any renewals, extensions,
increases, or other modifications thereof from time to time, or of the reliance
of any Noteholder upon this Agreement.
(b) Nothing contained herein shall constitute or be deemed to be a
waiver or to limit any rights in any insolvency proceeding or under applicable
law of any Noteholder, including in respect of any claim that any payment in
respect of Subordinated Debt, whether or not permitted under Section 2.01
hereof, is a preferential transfer or otherwise should be set aside or recovered
for the benefit of creditors of any Credit Party.
Section 2.04 No Impairment of Subordination. Each holder of Subordinated
Debt hereby consents that the liability of each Credit party or of any other
party for or upon the Senior Obligations may from time to time, in whole or in
part be renewed, increased, extended, or modified, in any and all respects, or
accelerated, compromised, settled or released, and that any collateral security
and Liens for the Senior Obligations, or any guarantee or other accommodation in
respect thereof may, from time to time, in whole or in part, be exchanged, sold,
released or surrendered by any Noteholder, as it may deem advisable, or that any
security interest may be unperfected, and that the financial condition, legal
status, corporate structure or identity, entity classification, affiliation, or
any other characteristic affecting any Credit Party, or affecting any Senior
Obligation, may change in any respect whatsoever, and any other fact or
circumstance may occur that would, but for this specific provision to the
contrary, relieve such
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<PAGE>
holder of Subordinated Debt from the provisions of this Agreement, all without
impairing the subordination contained in this Agreement and without any notice
to or assent from such holder of Subordinated Debt.
Section 2.05 Proof of Claim, Past Default. (a) Each holder of Subordinated
Debt hereby irrevocably authorizes the Noteholders and irrevocably constitutes
and appoints the Noteholders as its attorney in fact with full power (coupled
with an interest, and with power of substitution) in the name, place and stead
of such holder of Subordinated Debt and whether or not a default exists with
respect to the Subordinated Debt, to file proofs of claim for the full, amount
of the Subordinated Debt held by it against any obligor in respect thereof or
such obligor's property in any statutory or non-statutory proceeding affecting
such obligor or the Subordinated Debt or any other proceeding and to vote the
full amount of the Subordinated Debt (i) for or against any proposal or
resolution; (ii) for a trustee or trustees or for a committee of creditors; or
(iii) for the acceptance or rejection of any proposed arrangement, plan of
reorganization, composition, settlement or extension and in connection with any
such proceeding.
(b) After the occurrence and during the continuation of a Default or
Event of Default, should any payment or distribution or collateral security or
proceeds of any collateral security be received or collected by the holder of
any Subordinated Debt for or on account of any Subordinated Debt, prior to the
time that all Senior Obligations have been fully, finally, and indefeasibly paid
in cash, such holder of Subordinated Debt shall forthwith deliver the same to
the Noteholders, in precisely the form received (with the endorsement of such
holder of Subordinated Debt where necessary), for application on account of the
Senior Obligations (or, in the case of collateral security, delivery to the
Trustee, for such application thereby) and such holder of Subordinated Debt
agrees that, until so delivered, the same shall be deemed received by such
holder of Subordinated Debt as trustee for the Noteholders in trust for the
Noteholders; and in the event of the failure of such holder of Subordinated Debt
to endorse any instrument for the payment of money so received payable to its
order, the Noteholders or any officer or employee thereof is hereby irrevocably
constituted and appointed attorney in fact for such holder of Subordinated Debt,
with full power (coupled with an interest and with full power of substitution)
to make any such endorsement. In the event that such holder of Subordinated Debt
fails to make such delivery, such holder of Subordinated Debt agrees to
immediately pay to the Noteholders an amount equivalent to any such payment or
the value of such security received.
Section 2.06 No Transfer. Each Credit Party represents and warrants to the
Noteholders that such Credit Party has not (except for the benefit of the
Noteholders) granted any security interest in or made any other transfer or
assignment of any Subordinated Debt (except to the Noteholders) and agrees that
such Credit Party will not grant a security interest therein or make any other
transfer or assignment thereof (except to or as designated by the Noteholders).
Section 2.07 Instruments. Each Credit Party represents and warrants to the
Noteholders that as of the date hereof the Subordinated Debt is not represented
by any instruments or other writings. Each Credit Party agrees that at no time
hereafter will any part of the Subordinated
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<PAGE>
Debt be represented by any instruments or other writings, except such
instruments or other writings, if any, (i) that in each case bear a legend
clearly referring to this Agreement and setting forth that the obligations
represented by such instruments or writings are subject to the subordination
hereunder, and (ii) true copies of which shall have been delivered to the
Noteholders promptly after execution thereof. Subordinated Debt not evidenced by
an instrument or document shall nevertheless be deemed subordinated by virtue of
this Agreement.
Section 2.08 Statements of Account, Books and Records. Each holder of
Subordinated Debt further hereby agrees that it will render to any Noteholder
upon demand, from time to time, a statement of the account of each Credit Party
with it. Each holder of Subordinated Debt agrees that its respective books and
records, and financial statements, will appropriately show that the Subordinated
Debt is subject to this Agreement.
Section 2.09 Other Subordination Provisions. The subordination hereunder
shall be in addition to, and shall not limit or be limited by, any subordination
provisions contained in any Guarantee Agreement or other Transaction Document.
Section 3.01 Representation and Warranties. Each Credit Party represents
and warrants to the Noteholders that all representations and warranties relating
to it in the Note Purchase Agreement are true and correct.
Section 4.01 Amendment; Waiver. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by any Credit Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Noteholders. Any such waiver, consent or approval shall be effective only
in the specific instance and for the purpose for which given. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in the same, similar or other circumstances.
No waiver of any breach or default of or by any Credit Party under this
Agreement shall be deemed a waiver of any other previous breach or default or
any thereafter occurring.
Section 4.02 Survival; Severability.
(a) All covenants, agreements, representations and warranties made
by the Credit Parties herein and in the certificates or other instruments
prepared or delivered in correction with or pursuant to this Agreement, the Note
Purchase Agreement or any Transaction Document (i) shall be considered to have
been relied upon by the Noteholders and shall survive the purchase of the Notes,
and the execution and delivery to the Noteholders of any Notes, regardless of
any investigation made by the Noteholders, and (ii) shall continue in full force
and effect as long as any of the Notes are outstanding and unpaid.
(b) Any provision of this Agreement that is illegal, invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such illegality, invalidity or unenforceability without
invalidating the remaining provisions hereof or affecting the legality, validity
or enforceability of such provisions in any other jurisdiction. The parties
hereto agree to negotiate in good faith to replace any illegal, invalid or
unenforceable provision
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<PAGE>
of this Agreement with a legal, valid and enforceable provision that, to the
extent possible, will preserve the economic bargain of this Agreement, or to
otherwise amend this Agreement to achieve such result.
Section 4.03 Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Credit Party that are contained in this Agreement shall
bind and inure to the benefit of each party hereto and their respective
successors and assigns. No Credit Party may assign or transfer any of its rights
or obligations hereunder except as expressly contemplated by this Agreement, the
Note Purchase Agreement or the Transaction Documents (and any such attempted
assignment shall be void).
Section 4.04 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
Section 4.05 Headings. The Article and Section headings in this Agreement
are for convenience only and shall not affect the construction hereof.
Section 4.06 Notices. Notices, consents and other communications provided
for herein shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 20 of the Note Purchase Agreement.
Communications and notices to any Credit Party shall be given to it at its
address set forth in Schedule A hereto.
Section 4.07 Counterparts, Additional Parties. (a) This Agreement may be
executed in separate counterparts (telecopy of any executed counterpart having
the same effect as manual delivery thereof), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
Agreement.
(b) Upon execution and delivery after the date hereof by the
Noteholders and a Subsidiary of the Company of an instrument in the form of
Exhibit 4.07(b) hereto, such Subsidiary shall become a party hereto with the
same force an effect as if originally named herein. The execution and delivery
of such instrument shall not require the consent of any Credit Party. The rights
and obligations of each Credit Party and each other holder of Subordinated Debt
hereunder shall remain in full force and effect notwithstanding the addition of,
or the failure to add, any Person as a party hereto, in each case whether or not
required under the Note Purchase Agreement.
Section 4.08 Jurisdiction, Consent to Service of Process.
(a) Each Credit Party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, the Note Purchase Agreement or the Transaction
Documents, or
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<PAGE>
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any Noteholder may otherwise have to bring any action or proceeding
relating to this Agreement, the Note Purchase Agreement or the Transaction
Documents against any Credit Party or its properties in the courts of any
jurisdiction.
(b) Each Credit Party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in the preceding paragraph. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 4.06. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
Section 4.09 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE NOTE PURCHASE AGREEMENT, NOTES OR THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed and delivered by their respective
officers or representatives as of the day and year first above written.
DREW INDUSTRIES INCORPORATED
By:_____________________________________________________
Name:
Title:
KINRO, INC.
By:_____________________________________________________
Name:
Title:
SHOALS SUPPLY, INC.
By:_____________________________________________________
Name:
Title:
LIPPERT COMPONENTS, INC.
By:_____________________________________________________
Name:
Title:
KINRO HOLDING, INC.
By:_____________________________________________________
Name:
Title:
SHOALS HOLDING, INC.
By:_____________________________________________________
Name:
Title:
[Signature Page to Subordination Agreement Continued]
<PAGE>
KINRO MANUFACTURING, INC.
By:_____________________________________________________
Name:
Title:
KINRO TEXAS LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By:_____________________________________________________
Name:
Title:
KINRO TENNESSEE LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By:_____________________________________________________
Name:
Title:
SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By:_____________________________________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By:_____________________________________________________
Name:
Title:
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA
By:_____________________________________________________
Name:
Title:
[Signature Page to Subordination Agreement Continued]
<PAGE>
ING INVESTMENT MANAGEMENT, INC., as agent for each of
the following:
Midwestern Life Insurance Company
Security Life of Denver Insurance Company
By:_____________________________________________________
Name: Fred C. Smith
Title: Senior Vice President and Managing Director
ING INVESTMENT MANAGEMENT, LLC., as agent for each of
the following:
Equitable Life Insurance Company of Iowa
USG Annuity & Life Company
By:_____________________________________________________
Name: Fred C. Smith
Title: Senior Vice President and Managing Director
<PAGE>
Schedule A
to
Subordination Agreement
Addresses for Notice
Party Mailing Address County
----- --------------- ------
Drew Industries Incorporated 200 Mamaroneck Avenue Westchester
White Plains, NY 10601
Kirtro, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
Shoals Supply, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
Lippert Components, Inc. 608 Wright Avenue Gratiot
Alma, Michigan 48801
Kinro Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
Shoals Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
Kinro Manufacturing, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
Kinro Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
Kinro Tennessee Limited 311 Greenway Boulevard Greene and
Partnership Dayton, TN 37321 Montgomery
Shoals Supply Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
Shoals Supply Tennessee 190 Durham Road Rhea
Limited Partnership Maynardville, TN 37807
Exhibit 10.172 - $25,000,000 Revolving Credit Facility
============================================================
$25,000,000 Revolving Credit Facility
CREDIT AGREEMENT
dated as of
January 28, 1998
among
KINRO, INC.
SHOALS SUPPLY, INC.
LIPPERT COMPONENTS, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
============================================================
<PAGE>
CREDIT AGREEMENT dated as of January 28, 1998, among KINRO, INC., an Ohio
corporation, SHOALS SUPPLY, INC., a Delaware corporation, LIPPERT
COMPONENTS, INC., a Delaware corporation, the LENDERS party hereto, and
THE CHASE MANHATTAN BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.011. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder (and, where
applicable, under the Guarantee Agreements and the Subordination Agreement).
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "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.
"Controlling" and "Controlled" have meanings correlative thereto. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"Alternate Base Rate" means, for any day, a rate per annum 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%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds
<PAGE>
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitments. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate Margin" means, for any day, with respect to any
Loan, the General Margin as specified in Schedule 1.01-1 hereto.
"Approved Subordinated Debt" means Indebtedness subordinated to the
Obligations of the Borrowers under this Agreement and the other Loan Documents
on terms approved in writing by the Administrative Agent and the Required
Lenders.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Asset Sale" shall mean any sale, transfer, lease or other
disposition of any property or asset of any Credit Party or any of its
Subsidiaries except a sale, transfer, lease or other disposition in the ordinary
course of business (a) of cash, (b) of temporary cash investments, (c) of trade
receivables, (d) of inventories, or (e) of any asset by any Credit Party or by a
Subsidiary to any Credit Party or to another Subsidiary.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means each of Kinro, Inc., an Ohio corporation, Shoals
Supply, Inc., a Delaware corporation, and Lippert Components, Inc., a Delaware
corporation.
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<PAGE>
"Borrowing" means a group of Loans, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Request" means a request by a Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Lease" means, at any time a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
the Rose Group, of shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Company; (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Company by Persons who were neither (i) nominated
by the board of directors of the Company nor (ii) appointed by directors so
nominated; (c) the acquisition of direct or indirect Control of the Company by
any Person or group other than the Rose Group; or (d) the ownership by any
Person other than the Company of any capital stock of a Borrower, or the
ownership by any Person other than a Borrower, or the Subsidiary of the Borrower
that is the owner thereof as of the Effective Date (or such later date on which
the Guarantor becomes a Guarantor hereunder), of any capital stock or other
equity interest in any Guarantor.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.13(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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<PAGE>
"Collateral" means any property or rights in which, pursuant to the
Security Documents, there has been granted (or purported to have been granted)
to the Collateral Agent for the ratable benefit of the Lenders, a security
interest.
"Collateral Agent" means the Chase Manhattan Bank as Collateral
Agent under the Pledge Agreement.
"Company" means Drew Industries Incorporated, a Delaware
corporation.
"Company Guarantee" has the meaning given to such term in Section
4.01(a).
"Consolidated Fixed Charges" means, for any period, the Consolidated
Interest Expense plus one-third of the Lease Rentals expense.
"Consolidated Indebtedness" means, as of the date of determination,
all Indebtedness owed or guaranteed by any Credit Party and any of its
Subsidiaries.
"Consolidated Interest Expense" means, for any period, all amounts
that are classified as interest expense of any Credit Party and its Subsidiaries
under GAAP.
"Consolidated Net Income" means, for any period, the net income or
loss of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP after eliminating all offsetting
debts and credits between the Company and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Subsidiaries in accordance with
GAAP, but excluding: (i) earning or losses attributable to Minority Interests;
(ii) extraordinary gains or losses; (iii) net earnings and losses of any
Subsidiary accrued prior to the date it became a Subsidiary; (iv) net earnings
of any business entity (other than a Subsidiary) in which the Company or any of
its Subsidiaries has an ownership interest unless such net earnings shall have
been received in the form of cash distributions; (v) any portion of net earnings
of any Subsidiary of the Company which for any reason is unavailable for
distribution to the Company; (vi) earnings or losses resulting from any write-up
or write-down of assets other than in the ordinary course of business; (vii) any
reversal of any contingency reserve to the extent such contingency reserve was
taken prior to the date hereof; and (viii) the cumulative effect of a change in
accounting principles.
"Consolidated Net Worth" means, as of the date of determination, (a)
the sum of (i) the par value (or value stated on the books of the corporation)
of the capital stock (but excluding treasury stock and capital stock subscribed
and unissued) of the Company and its Subsidiaries plus (ii) the amount of the
paid-in capital and retained earnings of the Company and its Subsidiaries, in
each case as such amounts would be shown on a consolidated balance sheet of the
Company and its Subsidiaries as of such date prepared in accordance with GAAP,
minus (b) to the extent included in clause (a), all amounts properly
attributable to Minority Interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Total Assets" means, as of the date of determination,
the total assets of the Borrowers and their Subsidiaries, determined on a
consolidated basis in conformity with GAAP.
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<PAGE>
"Credit Party" means each Borrower, each Guarantor, and each Person
who is required to become a party to the Subordination Agreement pursuant to
Section 5.09.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Distribution" means in respect of any corporation, association or
other business entity: (a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation, association or other
business entity (except distributions in such stock or other equity interest);
and (b) the redemption or acquisition of such stock or other equity interests or
of warrants, rights or other options to purchase such stock or other equity
interests (except when solely in exchange for such stock or other equity
interests) unless made, contemporaneously, from the net proceeds of a sale of
such stock or other equity interests.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBIDTA" means, for any period, income before income taxes plus
interest expense, depreciation, amortization of tangible assets, amortization of
any other non-cash charge to the extent such charge reduces net income (and as
reduced by an adjustment for the amount of cash payouts of non-cash charges from
prior periods, if applicable), and shall exclude extraordinary gains (or losses)
and any gains (or losses) from the sale or disposition of assets other than in
the ordinary course of business; all on a consolidated basis for the Company and
its Subsidiaries and all calculated in accordance with GAAP.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Credit Party or any
Subsidiary thereof directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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<PAGE>
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Credit Party, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by any Credit Party or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by any Credit Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by any Credit Party or any of its ERISA Affiliates
of any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by any Credit Party or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from any
Credit Party or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning given to such term in Article
VII.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of a Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which a Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Borrowers
under Section 2.17(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.15(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from a Borrower with respect to such withholding tax pursuant to Section
2.15(a).
"Existing Credit Agreement" means the Credit Agreement dated as of
May 15, 1997 to which the Credit Parties, The Chase Manhattan Bank as
administrative agent and certain lenders are parties, as amended through the
date hereof.
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<PAGE>
"Fair Market Value" means at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and na
informed and willing seller (neither being under a compulsion to buy or sell).
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) 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 that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrowers are located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
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"Guarantor" means each of (i) the Company, (ii) each Person listed
on Schedule 1.01-2 hereto, and (iii) each Person who is required to become a
Guarantor pursuant to Section 5.09.
"Guarantee Agreement" has the meaning given to such term in Section
4.01(a).
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Hedging Exposure Amount" means the maximum aggregate amount (giving
effect to any netting agreements) that the Borrowers or any of them would be
required to pay at any time if all of its or their Hedging Agreements were
terminated at such time.
"Inactive Subsidiary" means, with respect to any Person, a
Subsidiary of such Person (i) that conducts no business activities on the
Effective Date hereof nor on any date thereafter, (ii) the assets of which
Subsidiary have a fair market value less than the smaller of (x) $50,000 or (y)
one-half of one percent (.5%) of the consolidated assets of such Person and its
Subsidiaries; and (iii) the total liabilities of which are less than $25,000;
provided that if the assets of all such Subsidiaries that meet the conditions of
clauses (i), (ii) and (iii) (each, a "Specified Subsidiary"), in the aggregate,
exceed either of the thresholds of clause (ii), then there shall be excluded
from the term "Inactive Subsidiary" the Specified Subsidiary having the greatest
assets, and, if necessary, the Specified Subsidiary having the next greatest
assets, and so on, until the assets of the remaining Specified Subsidiaries, in
the aggregate, no longer exceed either of such thresholds of clause (ii) (such
remaining Specified Subsidiaries constituting the Inactive Subsidiaries);
provided further, that no Credit Party shall be an Inactive Subsidiary.
"Indebtedness" of any Person means, without duplication, (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 similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding accrued
expenses which are payable within one year or current accounts payable in each
case incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty (other than performance guaranties) and (j) all
obligations, contingent or otherwise, of
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such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Coverage Ratio" means, for any period, the ratio of : (i)
EBITDA for such period to (ii) the Consolidated Interest Expense for such
period.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date hereof between the Administrative Agent and the Lenders and the
Trustee for the holders of Senior Notes and the holders of the Senior Notes and
any amendments, supplements or replacements thereof.
"Interest Election Request" means a request by a Borrower to convert
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three,
six, or twelve months (if such twelve month period is available to all Lenders)
thereafter, as the Borrower thereof may elect, provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless 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, and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and,
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Interest Rate Protection Merchant" shall mean a Lender which
provides Hedging Agreements to the Borrowers or either of them for interest rate
protection.
"Interest Rate Hedging Exposure Amount" means the Hedging Exposure
Amount attributable to Interest Rate Hedging Agreements.
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"Interest Rate Hedging Agreement" shall mean a Hedging Agreement
between a Borrower and an Interest Rate Protection Merchant which provides for
interest rate protection. Interest Rate Hedging Agreements shall not be required
hereunder to have participation by more than one Lender.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as
the issuer of a Letter of Credit.
"LC Disbursement" means a payment made by the Issuing Bank pursuant
to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the undrawn amount
of each Letter of Credit at such time plus (b) the aggregate amount of all LC
Disbursements that have not yet been reimbursed at such time. The LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.
"Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by the
Company or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee (whether or not therein designated as rental or additional rental)
on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges; provided that, if at the date of determination, any
such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to be equal
to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (ii) if the related
lease was not in effect during such preceding 12-month period, shall be the
amount estimated by a senior financial officer of the Company on a reasonable
basis and in good faith.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter of Credit" means (x) letter of credit #P-396861 in the
amount of $400,00 issued by The Chase Manhattan Bank for the benefit of Atlantic
Mutual Insurance, for the account of Lippert, and (y) any renewal, extension,
amendment or modification of either of the letters of credit described in (x).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar
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Borrowing for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock stockholder agreements, voting trust agreements and all similar
arrangements).
"Lippert Components, Inc." means Lippert Components, Inc., a
Delaware corporation.
"Loan Documents" means this Agreement, the Notes or any other
promissory notes delivered pursuant hereto, the Security Documents, the
Guarantee Agreements, the Subordination Agreement, and any applications
heretofore or hereafter made in respect of the Letter of Credit, and any
instruments or agreements executed and delivered pursuant to any of the
foregoing, in each case as supplemented, amended or modified from time to time,
and any document, instrument, or agreement supplementing, amending, or
modifying, or waiving any provision of, any of the foregoing.
"Loans" means the revolving loans made by the Lenders pursuant to
Section 2.03 of this Agreement.
"Mandatory Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Revolving Credit Commitments representing more than
75% of the sum of the aggregate Revolving Credit Exposures and unused Revolving
Credit Commitments hereunder at such time.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole or any Credit Party and its Subsidiaries,
taken as a whole.
"Material Adverse Effect" means a Material adverse effect on (a) the
business, operations, affairs, financial condition, assets, properties or
prospects of any Credit Party and its Subsidiaries, taken as a whole, or (b) the
ability of any Credit Party to perform its obligations under this Agreement or
any of the other Loan Documents, or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or (d) the security interests
granted by the Pledge Agreements.
"Maturity Date" means May 17, 2002.
"Minority Interests" means any shares of stock of any class of a
Subsidiary of any Person (other than directors' qualifying shares as required by
law) that are not owned by such Person and/or one or more of such Person's
Subsidiaries. Minority Interests shall be valued by
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valuing "Minority Interests" consisting of preferred stock at the voluntary or
involuntary liquidation value of such preferred stock, whichever is greater, and
by valuing "Minority Interests" consisting of common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to reflect any
changes form the book value of such common stock required by the foregoing
method of valuing "Minority Interests" in preferred stock.
"Modified Fixed Charge Coverage Ratio" means, for any period, the
ratio of: (i) EBITDA for such period plus one-third of the Lease Rentals expense
to (ii) Consolidated Fixed Charges for such period.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Proceeds" means with respect to the sale or disposition of any
assets by any Credit Party or any of its Subsidiaries (including in connection
with any sale-leaseback), the excess, if any, of (i) the aggregate amount
received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other noncash consideration or otherwise, but
only as and when such cash is so received) in connection with such sale or other
disposition of any asset, over (ii) the sum of (a) the principal amount of and
premium, if any, on any Indebtedness which is secured by or which finances any
such asset (other than Indebtedness assumed by the purchaser of such asset) and
which is required to be, and is, repaid in connection with such sale or other
disposition thereof (other than the Loans or the Senior Notes), (b) the
out-of-pocket expenses incurred by any Credit Party or any of its Subsidiaries
in connection with such sale or other disposition and (c) all taxes, including
taxes measured by income, calculated as if such Credit Party and its
Subsidiaries were a separate consolidated group for tax purposes, and assuming
such sale or other disposition of any asset was the only transaction in which
such Credit Party and its Subsidiaries engaged during the relevant period
without giving effect to any carryforwards, carrybacks or credits.
"Note" means a Revolving Credit Note.
"Obligations" means, without duplication, all obligations defined as
"Obligations" in the Pledge Agreement.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Permitted Liens" shall include the following: (i) Liens existing on
the date hereof which are listed on Schedule 3.05 hereto, provided that (x) such
Lien shall not apply to any other property or asset of any Credit Party or any
such Subsidiary thereof and (y) such Lien shall secure
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only those obligations which it secures on the date hereof; and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof; (ii) Liens on fixed or capital assets acquired, constructed or
improved; provided that (x) such security interests secure Indebtedness
permitted hereunder, (y) such security interests and the Indebtedness secured
thereby are incurred prior to or within 90 days (and in the case of industrial
revenue bonds, 360 days) after such acquisition or the completion of such
construction or improvement, (z) the Indebtedness secured thereby does not
exceed 85% of the cost of acquiring, constructing or improving such fixed or
capital assets, (aa) such security interest shall not apply to any other
property or assets of any Credit Party or any Subsidiary thereof and (ab) the
aggregate amount of all Indebtedness secured by purchase money liens on a
consolidated basis for the Credit Parties and the Subsidiaries thereof shall not
at any time exceed $15,000,000; (iii) carriers', warehousemen's, mechanics',
repairmen's and other like Liens imposed by law in an aggregate amount not
exceeding $250,000 arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established therefor in accordance with GAAP on the books of such Credit Party
or Subsidiary and as to which the failure to make payment during such contest
could not reasonably be expected to have a Material Adverse Effect; (iv) pledges
and deposits made in the ordinary course of business in compliance with workers'
compensation, unemployment insurance and other social security laws or
regulations in respect of which adequate reserves shall have been established;
(v) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
(vi) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of any Credit Party or any Subsidiary thereof; (vii) liens securing
indebtedness of one Credit Party to another Credit party; provided that (x) such
Indebtedness is permitted under Sections 6.04 or 6.07 hereof (as applicable),
(y) all of the outstanding capital stock or other equity interests of each such
Credit Party shall be owned 100% directly or indirectly by the Company, (z) each
of such Credit Parties to or by whom such Indebtedness is owed, or who owns
(directly or indirectly) any stock referred to in the preceding clause (y),
shall have become party to the Subsidiary Guarantee and (aa) such indebtedness
shall not be assigned or transferred by the obligee thereof to any Person other
than another Credit Party such that after giving effect to such assignment and
transfer all of the foregoing conditions are satisfied; (viii) other Liens,
provided that the aggregate amount of all Indebtedness secured by such Liens
shall not at any time exceed 15% of Consolidated Net Worth; and (ix) Liens that
extend, renew or replace Liens permitted by clauses (i) through (vii).
"Permitted Loans and Investments" means (i) subject to Section
6.04(f) hereof, investments, loans and advances by any Credit Party and any of
its Subsidiaries in and to Wholly-Owned Subsidiaries; (ii) investments in
commercial paper and loan participations maturing within 270 days from the date
of acquisition thereof having, at such date of acquisition, a rating of A-1 or
P-1 or better from Standard & Poor's Corporation, Moody's Investors Service,
Inc. or by another nationally recognized credit rating agency; (iii) direct
obligations of, or obligations the principal of or interest on which are
unconditionally guaranteed by the United States of America (or by any agency
thereof to the extent such obligations are backed by the frill faith and credit
of the United States of America) (or by any other foreign government of equal or
better credit quality), in each case maturing within one year from the date of
acquisition thereof; (iv) investments in certificates
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of deposit, banker's acceptances and time deposits maturing within one year from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof which has (x) a combined capital and surplus and undivided profits
of not less than $100,000,000 or (y) assets of not less than $1,000,000,000; (v)
fully collateralized repurchase agreements, having terms of less than 90 days,
for government obligations of the type specified in (iii) above with a
commercial bank or trust company meeting the requirements of (iv) above; (vi)
investments in addition to those permitted by clauses (i) through (v) provided
that the aggregate amount of such investments shall not exceed 15% of
Consolidated Net Worth; and (vii) other investments at any time in an amount not
to exceed the Restricted Payments Basket at such time, provided that the
Restricted Payments Basket shall be reduced by the amount of such investment.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Credit
Party or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" has the meaning given to such term in Section
4.01(a).
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Proposed Transaction" means the transfer by Lippert of certain
assets to direct or indirect wholly-owned subsidiaries of the Company and
Lippert which transaction could not be reasonably be expected to have a Material
Adverse Effect.
"Register" has the meaning given to such term in Section 9.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Revolving Credit Commitments representing more than
66-2/3% of the sum of the aggregate Revolving Credit Exposures and aggregate
unused Revolving Credit Commitments hereunder at such time.
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"Restricted Payment" means: (i) any Distribution in respect of a
Credit Party or any Subsidiary of a Credit Party (other than on account of
capital stock or other equity interests of a Subsidiary of a Credit Party owned
legally and beneficially by such Credit Party or another Subsidiary of such
Credit Party), including, without limitation, any Distribution resulting in the
acquisition by a Credit Party of securities which would constitute treasury
stock, and (ii) any payment, repayment, redemption, retirement, repurchase or
other acquisition, direct, or indirect, by a Credit Party or any Subsidiary
thereof, on account of, or in respect of, the principal of any Subordinated Debt
(or any installment thereof) prior to the regularly scheduled maturity date
thereof (as in effect on the date such Subordinated Debt was originally
incurred) other than in respect of Subordinated Debt of one Credit Party to
another Credit Party provided that no Event of Default exists or would exist
after such prepayment.
For purposes of this Agreement, the amount of any Restricted Payment made
in property shall be the greater of (x) the Fair Market Value of such property
(as determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"Restricted Payments Basket" shall mean the excess of (i) the sum of
(a) $5,000,000; plus (b) 50% of Consolidated Net Income earned subsequent to
September 30, 1997; plus (c) Net Proceeds received by the Company or a Borrower
from the sale of additional shares of capital stock, over (ii) the amount of all
Restricted Payments previously made in accordance with Section 6.01, and (b) the
Indebtedness permitted by clause (vii) of the definition of Permitted Loans and
Investments.
"Revolving Credit Commitment" means, with respect to each Lender,
the commitment of each Lender to make Loans hereunder as set forth in Section
2.01, and to acquire participations in the Letter of Credit as set forth in
Section 2.04 as the same may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Revolving Credit Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Credit Commitments, as applicable, which amount is $25,000,000 in
the aggregate (which amount shall include the undrawn amount of the Letter of
Credit).
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans and its
LC Exposure at such time.
"Revolving Credit Note" has the meaning given to such term in
Section 4.01(d).
"Rose Group" means Edward W.Rose, III, together with the Persons
listed on Schedule 1.01-A hereto.
"S&P" means Standard & Poor's.
"Secured Parties" means the Lenders, the Administrative Agent, the
Collateral Agent, the Issuing Bank and any Interest Rate Protection Merchant.
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"Security Documents" means each of the agreements, instruments, and
documents referred to in the last sentence of Section 4.01(a) and any
instruments or agreements executed and delivered pursuant to any of the
foregoing, in each case as supplemented, amended or modified from time to time,
and any document, instrument or agreement supplementing, amending or modifying,
or waiving any provision of, any of the foregoing.
"Senior Note Purchase Agreement" means collectively the Senior Note
Purchase Agreement or Agreements dated as of January 28, 1998 between the
Borrowers and the purchasers signatories thereto and any amendments or
supplements thereto
"Senior Note Purchase" shall mean the closing on the Effective Date
of the issuance of the Senior Notes.
"Senior Note - Revolving Credit Note Prepayment Event" shall have
the meaning provided in Section 6.04(b).
"Senior Notes" shall mean the senior notes of the Borrowers in the
aggregate principal amount of $40,000,000 due January 28, 2005 and issued
pursuant to the Senior Note Purchase Agreement, and any amendments, replacements
or substitutes therefor. The Revolving Credit Notes and the Loans are not
subordinated to or otherwise subject to the Senior Notes.
"Statutory Reserve Rate" means 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 reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) 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 and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Debt" means any Indebtedness that is in any manner
subordinated in right of payment or security in any respect to the Obligations.
"Subordination Agreement" has the meaning given to such term in
Section 4.01(a).
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the
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general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"Subsidiary Guarantee" has the meaning given to such term in Section
4.01(a).
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, 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 is not 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 Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not 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 is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Capitalization" means the sum of (i) Consolidated
Indebtedness and (ii) Consolidated Net Worth, each as of the most recently ended
fiscal quarter.
"Transactions" means the execution, delivery and performance by each
Credit Party of this Agreement and each other Loan Document to which such Credit
Party is a party, the creation of the security interests contemplated by the
Security Documents, the borrowing of Loans (in the case of the Borrowers), the
use of the proceeds of Loans and the other transactions contemplated by the Loan
Documents.
"Trustee" shall mean the trustee for the Senior Notes.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, or the
Alternate Base Rate.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company [or a Borrower] and the Company's or Borrower's other Wholly-Owned
Subsidiaries at such time.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
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SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a "Eurodollar
Loan"). Borrowings also may be classified and referred to by Type (e.g., a
"Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Revolving Credits
SECTION 2.01. Revolving Credit Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Loans to the Borrowers
or any of them from time to time during the Availability Period in an aggregate
principal amount that will not result in such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrowers may
borrow, prepay and reborrow Loans.
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SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Revolving Credit Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Revolving Credit Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, (i) each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower thereof may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $500,000. At the time that each
ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $50,000 and not less than $100,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Revolving Credit Commitments or that is required to finance
the reimbursement of an LC Disbursement as contemplated by Section 2.04(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of eight (8) Eurodollar
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
Borrower thereof shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing, or (b) in the case of an ABR Borrowing, not later than 12:00 noon,
New York City time, on the date of the proposed Borrowing; provided that any
such notice of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(e) may be given not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower thereunder. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
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(iii) whether such Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower thereof shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Letter of Credit. (a) General. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to the Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Amendment, Renewal, Extension. Whenever Lippert desires
the Issuing Bank to amend the Letter of Credit, Lippert shall give the Issuing
Bank (at least five Business Days in advance of the requested date of amendment)
a signed, written request identifying the Letter of Credit, specifying the
requested amendment and providing such other information as may be necessary to
prepare such amendment. Each such request and amendment shall be in form and
substance satisfactory to the Issuing Bank in its sole discretion. Each such
amendment shall require the written consent of all the Lenders in their sole
discretion; provided, however, that at the written request of Lippert in the
form of Exhibit 2.04 hereto accompanied by the certificate of the chief
financial officer of the Company in the form therein prescribed, received by the
Issuing Bank not more than 60 nor less than 30 days before the then stated
expiration date of the Letter of Credit, the Issuing Bank shall issue an
amendment to extend the then stated expiration date of the Letter of Credit to a
date not later than the earlier of (i) one year from such then stated expiration
date or (ii) thirty (30) days before the Maturity Date; provided further,
however, that the Issuing Bank shall not issue such amendment if the Issuing
Bank shall have received notice that any of the conditions to a Borrowing (other
than a request under Section 2.03) are not then satisfied. The Issuing Bank
shall furnish to Lippert and the Administrative Agent a copy of each amendment
to the Letter of Credit promptly following the issuance thereof.
(c) Participations. Without any further action on the part of
the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender,
and each Lender hereby acquires from the Issuing Bank, a participation in the
Letter of Credit equal to such Lender's Applicable Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank,
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such Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrowers on the date due as provided in
paragraph (d) of this Section, or of any reimbursement payment required to be
refunded to a Borrower for any reason. Each Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of the Letter of Credit is absolute and unconditional and shall not be affected
by any circumstance whatsoever, including any amendment, renewal or extension
(if permitted hereunder) of the Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Revolving Credit
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(d) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of the Letter of Credit, the Borrowers shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrowers shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrowers prior to such time on
such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrowers receive such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrowers receive such
notice, if such notice is not received prior to such time on the day of receipt;
provided that, if such LC Disbursement is not less than $100,000, the Borrowers
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with an ABR Borrowing
in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing. If the Borrowers fail to make such payment when due,
the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrowers in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrowers, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrowers pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrowers of their obligation to reimburse such LC
Disbursement.
(e) Obligations Absolute. The obligation of the Borrowers to
reimburse LC Disbursements as provided in paragraph (d) of this Section is the
joint and several obligation of each Borrower, shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of the Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under the Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement
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therein being untrue or inaccurate in any respect, (iii) payment by the Issuing
Bank under the Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, or (iv)
any other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, either
Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
the Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to the
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrowers to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each Borrower to the extent permitted by
applicable law) suffered by the Borrowers that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under the Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of the Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(f) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under the Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrowers by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(g) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.11(e) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Lender
pursuant to paragraph (d) of this Section to reimburse the Issuing Bank shall be
for the account of such Lender to the extent of such payment.
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(h) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrowers receive notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Lenders with LC Exposures representing greater
than 66-2/3% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrowers shall deposit in an account with the
Collateral Agent, in the name of the Collateral Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default described in clause (h) or (i) of
Article VII. Such deposit shall be held by the Collateral Agent as collateral
for the payment and performance of the Obligations. The Collateral Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Collateral Agent and at the Borrowers' risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrowers for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 66-2/3% of the total LC Exposure), be applied to
satisfy other Obligations. If the Borrowers are required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to either
Borrower within three Business Days after all Events of Default have been cured
or waived.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower thereof by promptly crediting the amounts so received, in like
funds, to an account of the Borrower thereof maintained with the Administrative
Agent in New York City and designated by such Borrower in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.04(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower
thereof a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the Borrowers (jointly and severally) and the applicable Lender (severally)
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower thereof to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds
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Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrowers, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower thereof may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower thereof may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the
appropriate Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if such Borrower were requesting a Borrowing of the Type resulting from
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the appropriate Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being elected with respect
to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to
such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period contemplated by the
definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower thereof shall be deemed to
have selected an Interest Period of one month's duration.
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(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower thereof fails to deliver a timely Interest
Election Request in accordance herewith with respect to a Eurodollar Borrowing
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, then,
(i) no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Revolving Commitments. (a)
Unless previously terminated, the Revolving Credit Commitments shall terminate
on the Maturity Date.
(b) The Borrowers may at any time terminate, or from time to
time reduce, the Revolving Credit Commitments; provided that (i) each reduction
of the Revolving Credit Commitments shall be in an amount that is an integral
multiple of $100,000 and not less than $100,000 and (ii) the Borrowers shall not
terminate or reduce the Revolving Credit Commitments if, after giving effect to
any concurrent prepayment of the Revolving Loans in accordance with Section
2.09, the sum of the Revolving Credit Exposures would exceed the total Revolving
Credit Commitments.
(c) The Borrowers shall notify the Administrative Agent of any
election to terminate or reduce the Revolving Credit Commitments under paragraph
(b) of this Section at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrowers pursuant to this Section shall be irrevocable. Any termination or
reduction of the Revolving Credit Commitments shall be permanent. Each reduction
of the Revolving Credit Commitments shall be made ratably among the Lenders in
accordance with their respective Revolving Credit Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrowers
hereby, jointly and severally, unconditionally promise to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan, together with any accrued but unpaid interest thereon, on
the Maturity Date; such promise of each Borrower to repay each Loan shall apply
unconditionally to each Loan irrespective of which Borrower was the Borrower of
such Loan.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
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(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein absent manifest error;
provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the (joint and
several) obligation of the Borrowers to repay the Loans in accordance with the
terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrowers shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans; Mandatory Reduction of Revolving Credit
Commitments. (a) The Borrowers shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, without premium or penalty,
subject, however, to prior notice in accordance with paragraph (b) of this
Section and subject to the other applicable terms and provisions hereof,
including, without limitation, Section 2.14. The Borrowers shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any such prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 11:00 A.M., New York City time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the Borrower of such Borrowing, the
prepayment date, and the respective principal amounts of each such Borrowing (or
portion thereof) to be prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each such prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing, shall be
applied first to ABR Loans outstanding, and then to outstanding Eurodollar
Loans, subject to Section 2.14. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11.
(b) In the event of a prepayment of the Senior Notes, or any
of them, which would constitute a Senior Note-Revolving Credit Note Prepayment
Event, the Borrowers shall, simultaneously with any such prepayment of the
Senior Notes or any of them, prepay Loans in an amount which shall be the
product of the outstanding Loans and the percentage (the "Reduction Percentage")
of the then aggregate outstanding principal of the Senior Notes being so paid
down.
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Concurrently therewith, the Revolving Credit Commitments shall automatically and
permanently be reduced by the greater of (x) the principal amount of Loans so
paid or (y) the product of the then aggregate Revolving Credit Commitments and
the Reduction Percentage.
(c) The Borrowers shall deliver to the Administrative Agent,
at the time of each prepayment or reduction required under Section 2.09(b), a
certificate signed by the Chief Financial Officer of the Company setting forth
in reasonable detail the calculation of the amount of any such prepayment or
reduction of the Revolving Credit Commitment under Section 2.09(b). All
prepayments of Borrowings under Section 2.09(b) shall be subject to Section
2.14, but shall otherwise be without premium or penalty. All prepayments of
Borrowings under Section 2.09(b) shall be accompanied by accrued interest on the
principal amount being prepaid to but excluding the date of payment.
(d) Amounts to be applied pursuant to Section 2.09(b) to the
prepayment of Loans shall be applied first to reduce outstanding ABR Loans. Any
amounts remaining after each such application and required to be applied to
prepayment pursuant to Section 2.09(b) shall, at the option of the Borrower, be
applied to prepay Eurodollar Loans, immediately and/or shall be deposited in the
Prepayment Account (as defined below). The Administrative Agent shall apply any
cash deposited in the Prepayment Account to prepay Eurodollar Loans on the last
day of their respective Interest Periods (or, at the direction of the Borrowers,
on any earlier date) until all outstanding Eurodollar Loans to be prepaid have
been prepaid or until all the allocable cash on deposit with respect to such
Loans has been exhausted. For purposes of this Agreement, "Prepayment Account"
shall mean an account established by the Borrowers with the Administrative Agent
and over which the Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal for application in
accordance with this Section 2.09(d). The Administrative Agent will, at the
request of the Borrowers, invest amounts on deposit in the Prepayment Account in
Permitted Investments maturing prior to the last day of the applicable Interest
Periods of the Eurodollar Loans to be prepaid, as the case may be; provided,
however, that (i) the Administrative Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Administrative
Agent to be in, or would result in any, violation of any law, statute, rule or
regulation and (ii) the Administrative Agent shall have no obligation to invest
amounts on deposit in the Prepayment Account if a Default or an Event of Default
shall have occurred and be continuing. The Borrowers shall, jointly and
severally, indemnify the Administrative Agent for any losses relating to the
investments so that the amount available to prepay Eurodollar Loans on the last
day of the applicable Interest Periods is not less than the amount that would
have been available had no investments been made pursuant thereto. Other than
any interest earned on such investments, the Prepayment Account shall not bear
interest. Interest or profits, if any, on such investments shall be deposited in
the Prepayment Account and reinvested as specified above. If the maturity of the
Loans has been accelerated pursuant to Article VII, the Administrative Agent
may, in its sole discretion, apply all amounts on deposit in the Prepayment
Account to satisfy any of the Obligations. Each Borrower hereby grants to the
Administrative Agent, for its benefit and the benefit of the Issuing Bank and
the Lenders, to secure the Obligations, a security interest in the Prepayment
Account. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the Borrowing.
SECTION 2.10. Fees. (a) The Borrowers agree, jointly and severally, to pay
to the Administrative Agent for the account of each Lender a commitment fee,
which shall accrue at
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the rate of 3/8 of 1% per annum on the daily unused amount of the Revolving
Credit Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Revolving Credit
Commitment terminates. Accrued commitment fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Revolving Credit Commitments terminate, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Borrowers agree, jointly and severally, to pay (i) to
the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in the Letter of Credit, which shall accrue at a
rate of 1% per annum on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender's Revolving Credit Commitment terminates
and the date on which such Lender ceases to have any LC Exposure, and (ii) to
the Issuing Bank the Issuing Bank's standard fees with respect to the amendment,
renewal or extension of the Letter of Credit or processing of drawings
thereunder. Participation fees accrued through and including the last day of
March, June, September and December of each year shall be payable on the third
Business Day following such last day, commencing on the first such date to occur
after the Effective Date; provided that all such fees shall be payable on the
date on which the Revolving Credit Commitments terminate and any such fees
accruing after the date on which the Revolving Credit Commitments terminate
shall be payable on demand. Any other fees payable to the Issuing Bank pursuant
to this paragraph shall be payable within 10 days after demand. All
participation fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders. Fees paid shall not be
refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate Margin.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrowers
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.
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(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and upon termination of the
Revolving Credit Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate,
or Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(or Lender) of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing
Bank; or
(ii) impose on any Lender or the Issuing Bank or the
London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
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and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or on
the capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in the
Letter of Credit held by, such Lender, or the Letter of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrowers
will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such compensation;
provided that the Borrowers shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Borrowers of the Change in Law giving
rise to such increased costs or reductions and of such Lender's or the Issuing
Bank's intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered pursuant hereto,
or (d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrowers
pursuant to Section 2.17, then, in any such event,
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the Borrowers shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrowers hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if any
of the Borrowers shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrowers
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrowers by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by a Borrower to a Governmental Authority, the Borrowers
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, and a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
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(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrowers as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.13, 2.14, or 2.15, or otherwise) and under
any other Loan Document prior to 1:00 p.m., New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, or 2.15, and 9.03 shall be made directly to the Persons entitled thereto.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise (including by virtue of any security), obtain payment
in respect of any principal of or interest on any of its Loans or participations
in LC Disbursements resulting in such Lender's receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any
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payment made by a Borrower pursuant to and in accordance with the express terms
of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to a Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(d) or (e), 2.05(b) or paragraph (d) of
this Section, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.13, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrowers
hereby agree, jointly and severally, to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if
the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate,
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without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrowers
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Credit Commitment is being assigned, the Issuing Bank), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrowers to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrowers jointly and severally represent and warrant to the
Lenders that:
SECTION 3.01. Organization; Powers. Each Credit Party and its Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect in respect of such Credit Party, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within
the corporate or partnership (as applicable) powers of the Credit Parties and
have been duly authorized by all necessary corporate, partnership (if
applicable), and, if required, stockholder or partner action. This Agreement and
each other Loan Document has been duly executed and delivered by each Credit
Party that is a party thereto and constitutes a legal, valid and binding
obligation of such Credit Party, enforceable in accordance with its respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts; No Defaults. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws, certificate of
limited partnership, agreement of limited partnership, or other organizational
documents of any Credit Party or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Credit Party or any of
its Subsidiaries or its assets, or give rise to a
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right thereunder to require any payment to be made by any Credit Party or any of
its Subsidiaries, and (d) will not result in the creation or imposition of any
Lien (except in favor of the Collateral Agent) on any asset now owned or
hereafter acquired of any Credit Party or any of its Subsidiaries. No Credit
Party is in default in any manner under any provision of any indenture or other
agreement or instrument evidencing Indebtedness, or any other material agreement
or instrument to which it is a party or by which it or any of its properties or
assets are or may be bound.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Company has heretofore furnished to the Lenders (i) its consolidated balance
sheet and statements of income, stockholders equity and cash flows as of and for
the fiscal year ended December 31, 1996, reported on by KPMG Peat Marwick LLP,
independent public accountants, and (ii) consolidating balance sheets of the
Company and its Subsidiaries setting forth such information separately for the
Company and each Subsidiary thereof and related consolidating statements of
operations for the Company and its Subsidiaries setting forth such information
separately for the Company and each Subsidiary thereof as of and for the fiscal
year ending December 31, 1996, and including in comparative form the figures for
the preceding fiscal year, certified by its chief financial officer. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Company and of its
Subsidiaries as of such dates and for such periods in accordance with GAAP. In
addition, the Company has delivered to the Lenders the Company's Form 8-K/A1,
amendment to the Current Report on Form 8-K dated October 7, 1997, as filed with
the Securities and Exchange Commission. This filing contains the audited
financial statements of Lippert as of and for the periods ended September 30,
1997, as well as the pro forma combined financial statements of the Company and
Lippert.
(b) Since December 31, 1996, there has been no material
adverse change in the business, assets, operations, prospects or condition,
financial or otherwise, of any Credit Party. Except as disclosed on Schedules
3.04 or 6.04 annexed hereto, the Credit Parties have no liabilities, contingent
or otherwise, not disclosed on the financial statements referred to in Section
3.04, other than in respect of goods and services arising in the ordinary course
of business.
SECTION 3.05. Properties. (a) Each Credit Party and its Subsidiaries has
good and marketable title (free of Liens except such as are set forth on
Schedule 3.05 annexed hereto or are otherwise Permitted Liens) to, or valid
leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes. No Credit Party is a party to any
contract, agreement, lease or instrument (other than the Loan Documents) the
performance of which, either unconditionally or upon the happening of any event,
will result in or require the creation of a Lien (except in favor of the
Collateral Agent) on any of its property or assets (now owned or hereafter
acquired) or otherwise result in a violation of any Loan Documents.
(b) Each Credit Party owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by such Credit Party and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party.
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SECTION 3.06. Litigation and Environmental Matters. (a) Except as
disclosed on Schedule 3.06 annexed hereto, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Borrower, threatened against or affecting
any Credit Party or any of its Subsidiaries (i) which, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect in respect of any Credit Party or (ii) that involve this
Agreement or the Transactions.
(b) Except as set forth in Schedule 3.06, and except with
respect to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect in respect of any
Credit Party, neither any Credit Party nor any of its Subsidiaries (i) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change
in the status of the matters disclosed on Schedule 3.06 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect in respect of any Credit Party.
SECTION 3.07. Compliance with Laws and Agreements. Each Credit Party and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status; Margin Regulations.
No Credit Party nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935. No Credit Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board). No part of the proceeds of any Loan or of
the Letter of Credit will be used, directly or indirectly and whether
immediately, incidentally or ultimately, 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.
SECTION 3.09. Taxes. Each Credit Party and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except Taxes (i) the amount of which is not individually or in the aggregate
Material, or (ii) that are being contested in good faith by appropriate
proceedings and for which such Credit Party or such Subsidiary, as applicable,
has set aside on its books adequate reserves.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is
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reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect in respect of any Credit Party. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $250,000 the fair market value of the assets of such Plan,
and the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $350,000 the
fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Subsidiaries. The direct and indirect Subsidiaries of the
Company, including, without limitation, all Subsidiaries of each Borrower, and
their respective business forms, jurisdictions of organization, addresses, and
respective equity owners, are set forth on Schedule 3.11A. Except as so
disclosed on Schedule 3.11A, no Credit Party has any direct or indirect
Subsidiaries or investments in, or joint ventures or partnerships with, any
Person as of the Effective Date. As of the Effective Date, the Persons listed on
Schedule 3.11B hereto are the only Subsidiaries of the Company other than the
Borrowers and Inactive Subsidiaries.
SECTION 3.12. SEC Matters. The Company is current in all required
disclosure and otherwise in compliance in all respects with applicable federal
and state securities laws and/or rules and regulations of the Securities and
Exchange Commission, and with applicable state securities laws and/or rules and
regulations of state securities authorities and of any stock exchanges or other
self regulatory organizations having jurisdiction of the Company and/or its
securities.
SECTION 3.13. Labor Matters. Except as set forth on Schedule 3.13, there
are no strikes or other material labor disputes or grievances pending or, to the
knowledge of either Borrower, threatened, against any Credit Party. Except as
set forth on Schedule 3.13 hereto, no Credit Party is a party to any collective
bargaining agreement.
SECTION 3.14. Solvency. After giving effect to the Transactions to occur
on the Effective Date (and including with respect to any Credit Party which is a
Guarantor any rights of contribution of such Credit Party), (i) the fair
saleable value of the assets of the Credit Parties and their Subsidiaries, in
the aggregate, will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of the Credit Parties and their Subsidiaries as they mature, (ii)
the assets of each Credit Party and its Subsidiaries will not constitute
unreasonably small capital to carry out their businesses as conducted or as
proposed to be conducted, including the capital needs of such Credit Party and
its Subsidiaries (taking into account the particular capital requirements of the
businesses conducted by such entities and the projected capital requirements and
capital availability of such businesses) and (iii) the Credit Parties do not
intend to, or intend to permit any of their Subsidiaries to, and do not believe
that they or any of their Subsidiaries will, incur debts beyond their ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by them and the amounts to be payable on or in respect of
their obligations).
SECTION 3.15. Security Documents. The Pledge Agreement, upon execution and
delivery by the parties thereto, will create in favor of the Collateral Agent,
for the ratable benefit of
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the Secured Parties (as such term is defined in the Pledge Agreement), a legal,
valid and enforceable security interest in the Collateral (as such term is
defined in the Pledge Agreement) and, when (i) such Collateral consisting of
corporate stock is delivered to the Collateral Agent together with duly
executed, undated instruments of transfer, and (ii) financing statements in
appropriate form in respect of limited partnership interests constituting
Collateral thereunder are filed in the offices specified therein, the Pledge
Agreement and the Lien created thereunder will constitute a fully perfected
first priority Lien on, and security interest in such Collateral, in each case
prior and superior in right to any other Person.
SECTION 3.16. Restrictive Agreements. No Credit Party nor any Subsidiary
thereof is a party to any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of such Credit Party or
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Credit Party or Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or other
equity interests; other than (i) restrictions and conditions imposed by law or
by this Agreement and (ii) restrictions and conditions existing on the date
hereof identified on Schedule 3.16.
SECTION 3.17. Disclosure. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which each Credit
Party or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect in respect of any Credit Party. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrowers or any other Credit Party to the Administrative Agent
or any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement. The Administrative Agent shall have received (i) from each
person listed on Schedule 1.01-2 hereto, a duly executed counterpart of the
Guarantee Agreement in the form of Exhibit 4.01-1 hereto (as it may be
supplemented, amended or modified from time to time, a "Subsidiary Guarantee");
(ii) from the Company, a duly executed Guarantee Agreement in the form of
Exhibit 4.01-2 hereto (as it may be supplemented, amended, or modified from time
to time, the "Company Guarantee"; together with each Subsidiary Guarantee, a
"Guarantee Agreement"); and
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(iii) from each Credit Party, a duly executed counterpart of the Subordination
Agreement in the form of Exhibit 4.01-3 hereto (as it may be supplemented,
amended or modified from time to time, the "Subordination Agreement"). The
Collateral Agent shall have received from each Credit Party other than those
that are limited partnerships, the duly executed Pledge and Security Agreement
in the form of Exhibit 4.01-4 hereto (as it may be supplemented, amended, or
modified from time to time, the "Pledge Agreement") together with (x)
certificates representing the corporate securities pledged thereunder together
with related undated stock powers endorsed in blank, (y) Form UCC-1 financing
statements in respect of all partnership interests in which a security interest
is granted thereunder, and (z) instruments of consent, waiver, and recognition
in the form of Exhibit 2.01 to the Pledge Agreement duly executed by each Credit
Party that is a partnership and by each partner therein.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent, the Collateral Agent,
and the Lenders and dated the Effective Date) of Gilbert, Segall & Young LLP,
counsel for the Credit Parties, substantially in the form of Exhibit B, covering
such matters relating to the Credit Parties, this Agreement, the other Loan
Documents or the Transactions as the Required Lenders shall reasonably request.
The Borrowers hereby request such counsel to deliver such opinion.
(c) The Administrative Agent shall have received (i) a copy of
the certificate of incorporation, including all amendments thereto, of each
Credit Party that is a corporation, and a copy of the certificate of limited
partnership of each Credit Party that is a limited partnership, in each case
certified as of a recent date by the Secretary of State of the state of its
organization, (ii) a certificate as to the good standing of each Credit Party as
of a recent date, from the Secretary of State of the state of its organization;
(iii) a certificate of the Secretary or Assistant Secretary of each Borrower and
each Guarantor, or of the managing general partner of each Guarantor that is a
limited partnership, dated the Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such Borrower or such
Guarantor or, in the case of a Guarantor that is a limited partnership, its
agreement of limited partnership, as in effect on the Effective Date and at all
times since a date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Borrower or such Guarantor (or, in the
case of a Guarantor that is a limited partnership, by the Board of Directors of
its managing general partner), authorizing the execution, delivery and
performance of the Loan Documents and (in the case of each Borrower) the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect as of the Effective Date,
(C) that the certificate of incorporation of the Borrower or such Guarantor, or,
in the case of a Guarantor that is a limited partnership, its certificate of
limited partnership, has not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to clause
(ii) above and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Borrower or such Guarantor (or the managing general
partner of such Guarantor that is a limited partnership); (iii) a certificate of
another officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (ii) above; and (iv)
such other documents as the Lenders or their counsel or counsel for the
Administrative Agent and the Collateral Agent may reasonably request.
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(d) Each Lender requesting the same shall have received a duly
executed Revolving Credit Note (each, a "Revolving Credit Note", which term
shall also include all amendments and replacements thereof or substitutions
therefor), in the form of Exhibit 4.01-5 hereto.
(e) Concurrently with the consummation of the transactions
contemplated hereby on the Effective Date:
(i) (x) the Senior Note Purchase Agreement shall have
closed and the Company shall have received the principal amount of
$40,000,000 in cash for the issuance of the Senior Notes, and (y) the
Administrative Agent shall have received a copy of the Note Purchase
Agreement and of the Subsidiary and Company guaranties, the pledge
agreement or agreements, subordination agreement or agreements and the
collateralized trust agreement of the Credit Parties or any of them
referred to therein, certified as true, correct and complete by the
President, a Vice President or a Financial Officer of the Company;
(ii) the Intercreditor Agreement shall have been
executed and delivered by all parties thereto; and
(iii) the Borrowers shall have repaid in full the
principal of all loans outstanding, and other fees amounts due under, the
Existing Credit Agreement and under each agreement related thereto, and
the Administrative Agent shall have received duly executed documentation
either evidencing or necessary for (A) the termination of the Existing
Credit Agreement and each other agreement related thereto, and (B) the
cancellation of all commitments thereunder.
(f) After giving effect to the Transactions, on the Effective
Date, the Credit Parties shall have no Indebtedness other than (i) Indebtedness
under the Loan Documents and (ii) Indebtedness permitted under Section 6.04.
(g) On the Effective Date, the Administrative Agent shall have
received a certificate of the chief executive officer of the Company containing
a description, satisfactory to the Administrative Agent in its discretion, of
the structure of ownership and voting relationships among the Company, the
Borrowers, and each other Credit Party.
(h) On the Effective Date, immediately prior to the
effectiveness hereof, there shall be no Default or Event of Default (as such
terms are used in the Existing Credit Agreement) under the Existing Credit
Agreement, and the respective chief executive officers of the Company and of
each Borrower shall have delivered to the Bank certificates to such effect.
(i) All legal matters incident to this Agreement and the
Borrowing hereunder shall be satisfactory to the Lenders and their counsel and
to counsel for the Administrative Agent, and the Collateral Agent.
(j) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a Vice
President or a Financial Officer of each
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Borrower, confirming compliance with the conditions set forth in paragraphs (a)
and (b) of Section 4.02.
(k) The Lenders shall be satisfied that the consummation of
the Transactions will not (i) violate any applicable law, statute, rule or
regulation or (ii) conflict with, or result in a default or event of default
under any material agreement of any Credit Party or Subsidiary thereof.
(l) The Lenders shall have received evidence satisfactory to
them that there has been no material adverse change in the business, assets,
operations, prospects or conditions, financial or otherwise, of any Credit Party
since December 31, 1996.
(m) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all expenses required to be
reimbursed or paid by the Borrowers hereunder.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
January 28, 1998 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, or to continue or convert any Loan, is
subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrowers set
forth in this Agreement shall be true and correct on and as of the date of such
Borrowing or the date of such continuation or conversion, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or such continuation or conversion, as applicable, no Default shall
have occurred and be continuing.
Each Borrowing and each continuation or conversion of any Loan shall be deemed
to constitute a representation and warranty by the Borrowers on the date thereof
as to the matters specified in paragraphs (a) and (b) of this Section.
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ARTICLE V
Affirmative Covenants
Until the Revolving Credit Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and the Letter of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrowers covenant and agree, jointly and severally, with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrowers
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Company, (i) its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by KPMG Peat Marwick LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, and (ii) consolidating balance sheets setting forth such information
separately for the Company and for each Borrower as of the end of such fiscal
year and consolidating statements of operations setting forth such information
separately for the Company and for each Borrower for such fiscal year, such
consolidating balance sheet and consolidating statements of operations to be
certified by the chief financial officer of the Company as fairly presenting the
financial condition and results of operations of the Company and each Borrower
as of the end of, and for, such fiscal period in accordance with GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Company, (i) its consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal quarter (except in the case of the
statements of cash flows) and the then elapsed portion of the fiscal year,
setting forth in each case (except in the case of stockholders' equity) in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Company and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes, and (ii) consolidating balance sheets of the Company and
of each Borrower setting forth such information separately for the Company and
for each Borrower and related consolidating statements of operations of the
Company and of each Borrower setting forth such information separately for the
Company and each Borrower as of the end of and for such quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or in the case of
the balance sheets, as of the end of) the previous fiscal year, all of which
shall be certified by the chief financial officer of the Company as fairly
presenting the financial condition and results of operations therein shown in
accordance with GAAP consistently applied subject to normal year-end adjustments
and the absence of footnotes;
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(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of the
Company (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Section 6.07 and (iii) stating
whether any change in the application of GAAP in respect of the audited
financial statements referred to in Section 3.04 has occurred and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines), and promptly after receipt by the Company, a copy of each
management letter (if prepared) of such accounting firm (together with any
response thereto prepared by the Company);
(e) promptly (i) after the same become publicly available,
copies of all periodic and other reports, proxy statements and other materials
filed by the Company or any Subsidiary thereof with the Securities and Exchange
Commission, or any Govern mental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may be;
and (ii) copies of any documents and information furnished to any other
government agency (except if in the ordinary course of business), including the
Internal Revenue Service;
(f) promptly, a copy of any amendment or waiver of any
provision of any agreement or instrument referred to in Section 6.12;
(g) promptly, a copy of any certificate or notice given by any
Credit Party to the holders of the Senior Notes or any of them pursuant to
Sections 8.1(d), 8.2(e), 9.7 or 11.3 of the Note Purchase Agreement or received
by any Credit Party from the holders of the Senior Notes or any of them pursuant
to Section 9.7 or 14.1(b) thereof; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of each Credit Party or any Subsidiary thereof, or compliance with the terms of
this Agreement or the other Loan Documents, as the Administrative Agent, the
Collateral Agent, or any Lender may reasonably request.
SECTION 5.02. Notices of Certain Events. The Borrowers will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting any Credit Party or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect
in respect of such Credit Party;
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(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of any Credit Party and its Subsidiaries in an aggregate
amount exceeding $125,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect in respect of any Credit
Party.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of a Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Credit Party will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.04. Payment of Obligations. Each Credit Party will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect in
respect of such Credit Party before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Credit Party or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party, and (d) the same shall be paid or discharged or fully and
adequately bonded before it might become a Lien upon any property or asset of
such Credit Party or Subsidiary.
SECTION 5.05. Maintenance of Properties; Insurance. Each Credit Party
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations, including,
without limitation, insurance against fire, and public liability insurance
against such risks and in such amounts, and having such deductible amounts as
are customary, with companies in the same or similar businesses and which is no
less than may be required by law.
SECTION 5.06. Books and Records; Inspection Rights. Each Credit Party
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Credit Party will,
and will cause each of its Subsidiaries to, permit any representatives
designated by the Administrative Agent, the Collateral Agent, or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, and to
verify the status of any Collateral, all at such reasonable times and as often
as reasonably requested.
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SECTION 5.07. Compliance with Laws; Environmental Laws. (a) Each Credit
Party will, and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect in respect of such Credit Party.
(b) Without limiting the preceding paragraph, each Credit
Party will, and will cause each of its Subsidiaries to (i) comply in all
material respects with, and use reasonable best efforts to ensure compliance in
all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws; and (ii) conduct and complete (or cause to be
conducted and completed) all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and in
a timely fashion comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws except
to the extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect in respect of any Credit Party;
SECTION 5.08. Use of Proceeds and Letter of Credit. The proceeds of the
Revolving Loans will be used to repay the indebtedness of the Borrowers under
the Existing Credit Agreement, for permitted capital expenditures, for permitted
acquisitions, and for working capital purposes. No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the Regulations of the Board, including Regulations G, U
and X. The Letter of Credit will be used only to support payment obligations of
Lippert to the beneficiary thereof.
SECTION 5.09. Additional Guarantors; Additional Collateral; Additional
Parties to Subordination Agreement. If any Person (a) after the date hereof
becomes (whether upon its formation, by acquisition of stock or other interests
therein, or otherwise) a Subsidiary of any Credit Party (a "New Subsidiary"), or
(b) that was an Inactive Subsidiary of a Credit Party ceases to be an Inactive
Subsidiary of a Credit Party but continues to be a Subsidiary thereof, the
Borrowers shall promptly furnish notice in writing of such facts to the
Administrative Agent and, if the Administrative Agent and the Required Lenders,
shall so elect (but provided that if the Trustee or any of the holders of the
Senior Notes shall receive any guaranty or security in respect of such New
Subsidiary the Administrative Agent and the Required Lenders, shall be deemed to
have so elected) (i) cause such New Subsidiary or formerly Inactive Subsidiary
to become a Guarantor pursuant to an instrument in form, scope, and substance
satisfactory to the Administrative Agent, (ii) deliver or cause to be delivered,
or assign, to the Collateral Agent (x) subject to the Lien in favor of the
Collateral Agent under the Pledge Agreement, the certificates representing
shares of stock or other interests of the New Subsidiary or formerly Inactive
Subsidiary owned by a Credit Party (or Subsidiary thereof), together with
appropriate instruments of transfer required under the Pledge Agreement, and (y)
an amendment to the Pledge Agreement, reflecting the foregoing in the form
thereof prescribed under the Pledge Agreement; and (iii) cause such New
Subsidiary or formerly Inactive Subsidiary to become a party to the Security
Documents pursuant to one or more instruments or agreements satisfactory in form
and substance to the Collateral Agent, the effect of which shall be to secure
the Obligations by a first priority Lien on and security interest in (which Lien
and security interest may be pari passu with a like Lien and security interest
in the Trustee for the benefit of the holders of the Senior Notes) the capital
stock of such New Subsidiary or formerly
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Inactive Subsidiary, provided, however, that in any event, prior to the time
that any New Subsidiary or formerly Inactive Subsidiary receives the proceeds
of, or makes, any loan or advance or other extension of credit, from or to, or
otherwise becomes the obligor or obligee in respect of any Indebtedness of, any
Credit Party or Subsidiary thereof, the Borrowers shall (A) cause to be taken,
in respect of any such obligor, the action referred to in the preceding clauses
(i), (ii), and (iii), and (B) in the case of any such obligee, cause such
obligee to become a party to the Subordination Agreement pursuant to one or more
instruments or agreements satisfactory in form and substance to the
Administrative Agent.
SECTION 5.10. Further Assurances. (a) Each Credit Party will, and will
cause its Subsidiaries to, execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including,
without limitation, filing Uniform Commercial Code and other financing
statements and the establishment of and deposit of Collateral into custody
accounts) that may be required under applicable law, or that the Required
Lenders, the Administrative Agent, or the Collateral Agent, may request, in
order to effectuate the transactions contemplated by the Loan Documents and in
order to grant, preserve, protect and perfect the validity and first priority of
the security interests created or intended to be created by the Security
Documents, it being understood that it is the intent of the parties that the
Obligations shall be secured by, among other things, all the interests of each
Borrower in each Subsidiary or Affiliate and of each Guarantor (other than the
Company) in each Subsidiary or Affiliate, including any such interests acquired
subsequent to the Effective Date. Such security interests and Liens will be
created under the Security Documents and other security agreements, and other
instruments and documents in form and substance satisfactory to the Required
Lenders, and the Borrowers shall deliver or cause to be delivered to the Lenders
all such instruments and documents (including legal opinions, and lien searches)
as the Required Lenders shall reasonably request to evidence compliance with
this Section 5.10. The Borrowers agree to provide such evidence as the Required
Lenders shall reasonably request as to the perfection and priority status of
each such security interest and Lien (which Lien and security interest may be
coordinate with a like Lien and security interest in the Trustee for the benefit
of the holders of the Senior Notes).
ARTICLE VI
Negative Covenants
Until the Revolving Credit Commitments have expired or terminated
and the principal of and interest on each Loan and all fees payable hereunder
have been paid in full and the Letter of Credit shall have expired or terminated
and all LC Disbursements shall have been reimbursed, the Borrowers covenant and
agree, jointly and severally, with the Lenders that:
SECTION 6.01. Transactions with Affiliates. Except as set forth on
Schedule 6.01 annexed hereto, each Borrower shall not, and shall not permit any
other Credit Party or any of its or their Subsidiaries to, enter into, directly
or indirectly, any transaction or Material group of related transactions
(including, without limitation, the purchase, lease, sale or exchange of assets
of any kind or the rendering of any service) with any Affiliate (other than
another Credit Party or a Wholly-Owned Subsidiary), except in the ordinary
course and pursuant to the reasonable requirements of such Borrower's or such
other Credit Party's business and upon fair and reasonable
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terms no less favorable to such Borrower or such other Credit Party than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
SECTION 6.02. Merger, Consolidation, etc. Each Borrower shall not, and
shall permit any other Credit Party or any of its or their Subsidiaries to,
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless: (i) such merger, consolidation, conveyance,
transfer, or lease is with or to another Credit Party, provided, that neither
the Company nor any Borrower may sell or otherwise transfer substantially all of
its assets to any Person or fail to survive any such merger or consolidation
related to it; (ii) (a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of any Credit Party or any of its
Subsidiaries, as the case may be, shall be a solvent corporation organized and
existing under the laws of the United States or any State thereof (including the
District of Columbia), and, if such Credit Party or such Subsidiary is not such
corporation, (b) such corporation shall have executed and delivered to the
Administrative Agent its assumption of the obligations due and punctual
performance and observance of each covenant and condition of this Agreement and
the other Loan Documents, and (c) shall have caused to be delivered to the
Administrative Agent an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Administrative Agent,
to the effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof;
(iii) immediately prior to such transaction and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing; and (iv)
immediately prior to such transaction and after giving effect thereto, each
Borrower would be permitted by the provisions of Section 6.04(d) hereof to incur
at least $1.00 of additional Indebtedness. Notwithstanding the foregoing,
Lippert may enter into the Proposed Transaction provided that: (a) the
conditions set forth in clause (ii) above are satisfied; (b) the consummation of
the Proposed Transaction is in full compliance with the conditions set forth in
Section 5.09 hereof; (c) the transfer or conveyance of assets are to direct or
indirect wholly-owned subsidiaries of Lippert; and (d) Lippert has received
adequate consideration for such transfer.
No such conveyance, transfer or lease of substantially all of the assets of any
Credit Party or any of its Subsidiaries shall have the effect of releasing such
Credit Party or its Subsidiaries or any successor corporation that shall
theretofore have become such in the manner prescribed in this Section 6.02 from
its liability under this Agreement, the Notes, or the other Loan Documents to
which it is a party.
No such conveyance, transfer or lease otherwise permitted under this Section
6.02 shall be permissible if it would result in a violation of Article VII (m)
or (n) hereof.
SECTION 6.03. Liens. No Borrower shall, nor shall it permit any other
Credit Party or any of its or their Subsidiaries to, incur, assume or suffer to
exist any Lien upon any of its assets now or hereafter owned, or upon the income
or profits thereof, other than Permitted Liens. In any case wherein any such
assets are subjected or become subject to a Lien in violation of this Section
6.03, the Borrowers will make or cause to be made provision whereby the
Obligations will be secured equally and ratably with all obligations secured by
such Lien, and in any case the Notes shall have the benefit, to the full extent
that, and with such priority as the holders may be entitled
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under applicable law, of an equitable Lien on such assets securing (in the
manner as aforesaid) the Notes and such other obligations; provided, however,
that any Lien created, incurred or suffered to exist in violation of this
Section 6.03 shall constitute an Event of Default hereunder, whether or not any
such provision is made pursuant to this Section 6.03. In no event shall a Lien
be granted by any Credit Party in respect of any of its property to any of the
holders of the Senior Notes or the Trustee for their benefit unless concurrently
therewith a Lien of equal priority (and on the same property) is granted to the
Collateral Agent for the benefit of the Lenders.
SECTION 6.04. Indebtedness. The Company will not, nor will any Borrower
permit any of its or their Subsidiaries, directly or indirectly, create, incur,
assume or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder or under the other Loan
Documents;
(b) Indebtedness of a Credit Party in respect of the Senior
Notes not in excess of the lesser of (x) $40,000,000 or (y) the lowest
outstanding principal balance from time to time due thereon after the original
issuance of such Senior Notes as the same shall reduce from time to time in
accordance with the schedule of payments therein; provided, however, that the
Credit Parties shall not prepay all or in part the Senior Notes or any of them
except as specifically required in the Note Purchase Agreement (but solely as in
effect as of the date hereof) unless the Loans shall be prepaid concurrently
therewith as provided in Section 2.09(b)(2), pari passu with the Senior Notes (a
"Senior Note - Revolving Note Prepayment Event");
(c) Indebtedness existing on the date hereof and set forth in
Schedule 6.04 annexed hereto;
(d) All renewals, extensions, substitutions, refinancings, or
replacements, in an amount not to exceed the amount so refinanced, of any
outstanding Indebtedness (excluding from this Section 6.04(d) the Indebtedness
referred to in Section 6.04(b)) provided that the terms, covenants and
restrictions in respect of such renewals, extensions, substitutions, refundings
or replacements are note more materially onerous than the existing terms,
covenants and restrictions of such Indebtedness;
(e) Interest Rate Hedging Exposure Amount to Interest Rate
Protection Merchants not exceeding $1,000,000 in the aggregate;
(f) Indebtedness of one Credit Party to another Credit Party
(other than the Company); provided the (i) there is adequate consideration for
such Indebtedness and there is evidence of such Indebtedness on each Credit
Party's books, (ii) all of the outstanding capital stock or other equity
interests of each such Credit Party shall be owned 100% directly or indirectly
by the Company and a Borrower, (iii) each of such Credit Parties to or by whom
such Indebtedness is owned, or who owns (directly or indirectly) any stock
referred to in the preceding clause (ii), shall have become a party to a
Guarantee Agreement, to the Subordination Agreement, and/or the Pledge Agreement
(or to all of them) as contemplated by Section 5.09 hereof, (iv) such
Indebtedness shall at all times be subject to the provisions of the
Subordination Agreement as Subordinated Debt as defined in the Subordination
Agreement, and (v) such Indebtedness shall not
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be assigned or transferred by the obligee thereof to any Person other than
another Credit Party such that after giving effect to such assignment or
transfer all the conditions of this proviso are met; and
(g) to the extent not included above in this Section 6.04,
other Indebtedness incurred by the Company or any Borrower or any of its or
their Subsidiaries; provided that, at the time of incurrence thereof and after
giving effect thereto and to the application of the proceeds thereof,
Consolidated Indebtedness shall not exceed 55% of Total Capitalization of the
Company and its Subsidiaries.
SECTION 6.05. Restrictive Agreements. Each Borrower shall not, and shall
not permit any other Credit Party or any of its or their Subsidiaries to,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon the
ability of any Credit Party or any Subsidiary thereof, (i) to create incur or
permit to exist any Lien upon any of its property or assets or revenues, whether
now or hereafter acquired, (ii) to pay dividends or make other distributions to
the Company or any Borrower with respect to any shares of its capital stock or
other equity interests, (iii) to pay any Indebtedness owed to the Company or any
Borrower, (iv) to make or permit to exist loans or advances to the Company or
any Borrower, or (v) to sell transfer, lease or otherwise dispose of any of its
properties or assets to the Company or any Borrower; provided that (x) the
foregoing shall not apply to restrictions and conditions imposed by law or by
this Agreement or the Senior Note Agreement, and (y) such Credit Party or
Subsidiary may enter into such an agreement in connection with any Permitted
Lien, so long as such prohibition or limitation is by its terms effective only
against the property, assets or revenues subject to such Lien.
SECTION 6.06. Limitation on Subsidiary Indebtedness and Issuance of
Preferred Stock. None of the Borrowers shall permit any of its Subsidiaries to,
at any time, directly or indirectly, incur, create, assume, guarantee or become
or be liable in any manner with respect to any Indebtedness or issue any
preferred stock except:
(i) Indebtedness of such Subsidiary outstanding as of
the Effective Date and set forth on Schedule 6.06 annexed hereto or any
refinancing, extension, renewal or refunding of any such Indebtedness in
an amount not to exceed the amount so refinanced of such Indebtedness;
provided that the terms, covenants and restrictions in respect of such
refinancing, extension, renewal or refunding are not materially more
onerous than the existing terms, covenants and restrictions of such
Indebtedness;
(ii) Indebtedness of such Subsidiary in respect of
guaranties delivered pursuant to the Senior Note Agreement;
(iii) preferred stock of such Subsidiary issued on or
prior to the Effective Date;
(iv) subject to Section 6.04(f) hereof, Indebtedness of,
or preferred stock issued by, such Subsidiary to a Borrower or a
Subsidiary of a Borrower; and
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(v) other Indebtedness or preferred stock of such
Subsidiary, provided that such Indebtedness and preferred stock together
with the aggregate amount of outstanding Indebtedness and the aggregate
liquidation value of preferred stock of such Subsidiary previously
incurred and outstanding under this Section 6.06 (other than Indebtedness
incurred under (iii) hereof), does not exceed 15% of Consolidated Net
Worth.
SECTION 6.07. Limitation on Restricted Payments. No Credit Party shall,
nor shall it permit any of its Subsidiaries to, directly or indirectly, declare,
make or pay, or agree to declare, make or pay or incur any liability to make or
pay, or cause or permit to be declared, made or paid, or set aside any sum or
property to declare, make or pay any Restricted Payment, other than (a) cash
dividends (or distributions, in the case of partnerships) from Subsidiaries of
the Company to the Company, (b) acquisitions or purchases by the Company or any
of its Subsidiaries of capital stock of any Subsidiary or capital contributions
made by the Company or any of its Subsidiaries to a Subsidiary and (c) to the
extent not covered by the foregoing clauses (a) and (b), any other Restricted
Payments made by the Company provided that each of the following conditions is
satisfied at the time of making such Restricted Payment and after giving effect
thereto:
(i) no Default of Event of Default has occurred and is
continuing;
(ii) the Company could incur at least $1.00 of
additional Indebtedness pursuant to Section 6.04(d) hereof, and
(iii) the aggregate amount of such Restricted Payments
does not exceed the Restricted Payments Basket.
SECTION 6.08. Sale of Assets. Subject to the provisions of Section 6.02
hereof, no Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, in a single transaction or a series of transactions,
sell, lease, transfer, abandon or other-wise dispose of or suffer to be sold,
leased, transferred, abandoned or otherwise disposed of (collectively,
"Transfer") assets in excess of 10% of Consolidated Total Asset ("Substantial
Assets") other than in the ordinary course of business (including without
limitation the disposal of obsolete assets not used or useful in such Credit
Party's business) in any fiscal year, and provided that such Transfer of
Substantial Assets in the aggregate shall not exceed 40% of Consolidated Total
Assets measured as of October 7, 1997, except that:
(i) any Credit Party or any of its Subsidiaries may
Transfer its assets to any Credit Party or any other Wholly-Owned
Subsidiary; and
(ii) any Credit Party or any of its Subsidiaries may
Transfer its assets in excess of the limitations set forth above (such
assets collectively the "Excess Assets") only if the proceeds of such
sales of Excess Assets are used to purchase other property of a similar
nature of at least equivalent value (such property the "Excess Replacement
Assets") within one year of such sale, provided, however, that there shall
be no Lien on any of the Excess Replacement Assets.
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SECTION 6.09. Limitation on Investments. No Credit Party shall, nor shall
it permit any of its Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger) any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee
(except pursuant to this Agreement or the Senior Note Agreement) any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit,
except Permitted Loans and Investments.
SECTION 6.10. Hedging Agreements. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, enter into any Hedging Agreement for purposes
of speculation or investment, or otherwise outside of the ordinary course of the
business of such Credit Party.
SECTION 6.11. Certain Financial Covenants.
(a) The Company and its Subsidiaries, on a consolidated basis,
shall have, at the end of each fiscal quarter, a minimum Consolidated Net Worth
of not less than Thirty-Nine Million ($39,000,000) Dollars plus fifty (50%)
percent of Consolidated Net Income (but only if a positive number) since
September 30, 1997.
(b) The Company and its Subsidiaries, on a consolidated basis,
shall have, at the conclusion of each twelve month period ending on the last day
of each fiscal quarter following the date hereof and at all times during such
period, an Interest Coverage Ratio of not less than 3.00:1.00.
(c) The Company and its Subsidiaries, on a consolidated basis,
shall have, at the conclusion of each twelve month period ending on the last day
of each fiscal quarter following the date hereof and at all times during such
period, a Modified Fixed Charge Coverage Ratio of not less than 2.00:1.00.
SECTION 6.12. Amendment of Certain Documents. No Credit Party shall, nor
will it permit any of its Subsidiaries to:
(a) Permit the termination of, or any amendment, waiver or
modification to, the Certificate of Incorporation or By-Laws, or Certificate of
Limited Partnership or Agreement of Limited Partnership, as the case may be, of
any Credit Party or Subsidiary thereof except for amendments, modifications or
waivers that are not adverse in any respect to the Lenders, the Administrative
Agent, the Collateral Agent, or the Issuing Bank.
(b) Amend in any material respect the Note Purchase Agreement,
the Senior Notes or any other agreement entered into in connection therewith
without the prior written consent of the Required Lenders.
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ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrowers shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement 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 otherwise;
(b) the Borrowers shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in clause (a)
of this Article) payable under this Agreement, when and as the same shall become
due and payable;
(c) any representation or warranty made or deemed made by or
on behalf of any Credit Party or any Subsidiary thereof in or in connection with
this Agreement or any other Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any other Loan Document, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) the Credit Parties shall fail to observe or perform in any
material respect any covenant, condition or agreement contained in Article V or
in Article VI hereof, or in any Guarantee Agreement, the Subordination Agreement
or in any Security Document;
(e) the Credit Parties shall fail to observe or perform any
other covenant, condition or agreement contained in this Agreement (other than
those specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) (i) The Borrowers shall fail to make a payment of any
principal of or premium or Make-Whole Amount (as defined in the Senior Note
Agreement) or interest in respect of the Indebtedness evidenced by the Senior
Notes that is outstanding beyond any period of grace provided with respect
thereto; (ii) any Credit Party or any of its Subsidiaries is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or interest on any Indebtedness (excluding the Indebtedness evidenced by
the Senior Notes) that is outstanding in a principal amount of at least
$3,000,000 individually or $5,000,000 in the aggregate beyond any period of
grace provided with respect thereto, or (iii) any Credit Party or any of its
Subsidiaries is in default in the performance of or compliance with any term of
(x) the Notes, the Senior Note Agreement or any guaranty or pledge agreement
securing the Senior Notes or (y) any evidence of any Indebtedness (excluding the
Indebtedness evidenced by the Senior Notes) in principal amount of at least
$3,000,000 individually or $5,000,000 in the aggregate, or of any mortgage,
indenture or other agreement relating thereto, or (iv) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Indebtedness to convert such Indebtedness
into equity interest), (x) any Credit Party has become
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obligated to purchase (A) or repay the Senior Notes before their regular
maturity or before their regularly scheduled dates of repayment, or (B) any
other Indebtedness before its regular maturity or before its regularly scheduled
dates of payment in a principal amount of at least $3,000,000 individually or
$5,000,000 in the aggregate, or (y) one or more Persons have the right to
require any such Credit Party to purchase or repay any such Indebtedness
referred to in (A) or (B) (provided, however, that for the purposes of this
paragraph (f) the "principal amount" of the obligations of any Credit Party or
Subsidiary in respect of any Hedging Agreements at any time shall be treated as
Indebtedness in an amount which shall be equal to the maximum aggregate amount
(giving effect to any netting agreements) that any such Person would be required
to pay if such Hedging Agreement were terminated at such time.);
(g) [intentionally omitted];
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any Credit Party or any Subsidiary thereof or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, seques trator,
conservator or similar official for any Credit Party or for any Subsidiary
thereof or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) any Credit Party or any Subsidiary thereof shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for such Credit Party or any
Subsidiary thereof or for a substantial part of its 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 or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) any Credit Party or any Subsidiary thereof shall become
unable, admit in writing or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 shall be rendered against any Credit
Party and/or any Subsidiary thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Credit Party or any Subsidiary thereof to enforce
any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of any Credit
Party in an aggregate amount exceeding (i) $150,000 in any year or (ii) $350,000
for all periods; or
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(m) a Change in Control shall occur; or
(n) any of Leigh J. Abrams, David L. Webster, or Fredric M.
Zinn shall cease to be actively involved in the management of the Company's
operations on a full time day to day basis and the individual or individuals
succeeding to their functions shall not be appointed in a timely manner or shall
not have appropriate experience and qualifications therefor; or
(o) (i) any security interest in favor of the Collateral Agent
created or purported to be created under the Pledge Agreement, or under any
other Security Document, shall, in any such case, no longer provide the lien or
priority contemplated by such Security Document or any party having granted any
such security interests (or any successor thereto or representative thereof)
shall make any claim or assertion to such effect, or (ii) any Credit Party (or
any successor thereto or representative thereof) shall claim or assert that this
Agreement or any Guarantee Agreement or any right or remedy of the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
hereunder shall not be enforceable in accordance with its terms, or any Person
(other than the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender) shall claim or assert that any other Loan Document or any right or
remedy of the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender thereunder shall not be enforceable in accordance with its terms;
then, and in every such event (other than an event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrowers, take any of the following actions, at the
same or different times: (i) terminate the Revolving Credit Commitments, and
thereupon the Revolving Credit Commitments shall terminate immediately, (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers, (iii) require cash
collateral as contemplated by Section 2.04(h), and (iv) enforce rights or cause
the enforcement of rights or exercise or cause the exercise of any remedies
available under any Loan Document or otherwise; and in case of any event
described in clause (h) or (i) of this Article, the Revolving Credit Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.
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ARTICLE VIII
The Agents
Each of the Lenders and the Issuing Bank hereby irrevocably appoints (i)
The Chase Manhattan Bank as Administrative Agent, and (ii) The Chase Manhattan
Bank as Collateral Agent, (the Administrative Agent and the Collateral Agent,
for purposes of this Article being referred to individually as an "Agent" and
collectively as the "Agents"), and authorizes the Agents to take such actions on
its behalf and to exercise such powers as are delegated to such Agent by the
terms of this Agreement or by the terms of any other Loan Documents, together
with such actions and powers as are reasonably incidental thereto.
Each bank serving as an Agent shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Credit Party
or any Subsidiary or other Affiliate thereof as if it were not an Agent.
None of the Agents shall have any duties or obligations except those
expressly set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, (a) the Agents shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) no Agent shall have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that such
Agent is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, no Agent shall have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to any Credit Party or any
of its Subsidiaries that is communicated to or obtained by such Agent or any of
its Affiliates in any capacity; provided, however, that Agents shall give
Lenders immediate written notice of any action taken or notice received or given
by any of them pursuant to the Intercreditor Agreement. No Agent shall be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. No Agent shall be
deemed to have knowledge of any Default unless and until written notice thereof
is given to such Agent by the Borrowers or a Lender, and no Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document. The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
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Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for any
Credit Party), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
Each Agent may perform any and all of its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by it including,
without limitation, its duties, rights and powers under any Loan Documents in
respect of the Collateral or any portion thereof. Each Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Agent.
Subject to the foregoing, each Agent (including but not limited to the
Administrative Agent) acting under or in respect of the Collateral, shall act
for the ratable benefit of the Lenders and the Issuing Bank as appropriate
hereunder (unless otherwise provided herein or in any other Loan Documents) and
shall be entitled to the exculpations, privileges, indemnities and other
protections provided for the benefit of the Agent herein or therein.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, any Agent may resign at any time by notifying the Lenders,
the Issuing Bank and the Borrowers. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrowers, to appoint a
successor. If no successor shall have been so appointed by the Required 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 and the Issuing Bank, appoint a successor Agent which shall be a bank
with an office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as an Agent by a successor, such successor shall
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 as such. The fees payable by the Borrowers to a successor
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrowers and such successor. After any Agent's resignation,
the provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents 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. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this
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Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrowers or to any of the Borrowers, to the
Borrowers c/o the Company at 200 Mamaroneck Avenue, White Plains, New York
10601, Attention of Leigh J. Abrams (Telecopy No. 914-428-4581);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Bank Services Group, One Chase Manhattan Tower, New York,
New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658), with
copies to The Chase Manhattan Bank, 106 Corporate Park Drive, White Plains, New
York 10604, Attention of Frank Apollo (Telecopy No. (914) 993-2222);
(c) if to the Issuing Bank, to The Chase Manhattan Bank, 106
Corporate Park Drive, White Plains, New York 10604, Attention of Frank Apollo
(Telecopy No. (914) 993-7905); and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties 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.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in
exercising any right or power hereunder or under any other Loan Document 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 a 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
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder or under any other Loan Document are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provision of this Agree ment or any other Loan Document or consent to any
departure by the Borrowers or any other Credit Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
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Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
(b) Neither this Agreement or any of the other Loan Documents
nor any provision hereof or thereof may be waived, amended or modified except
(a) in the case of this Agreement, pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders,
and (b) in the case of any Security Document, pursuant to an agreement entered
into by the parties thereto and consented to by the Required Lenders; provided
that no such agreement shall (i) increase the Revolving Credit Commitment of any
Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Revolving Credit Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.16(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) release any
material Collateral under any Security Document or release any guarantor under
any Guarantee Agreement except as expressly permitted thereby or hereby, without
the prior consent of each Lender, (vi) waive, amend, or modify any provision of
Section 6.09 or 6.11 without the prior written consent of the Mandatory Lenders;
or (vii) change any of the provisions of this Section or the definition of
"Required Lenders" or "Mandatory Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or under any other Loan Document or make any
determination or grant any consent hereunder or thereunder, without the written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, or the Issuing Bank hereunder or thereunder without the prior
written consent of the Administrative Agent, the Collateral Agent, or the
Issuing Bank, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall
pay (i) all reasonable out-of-pocket expenses incurred by each of the
Administrative Agent, the Collateral Agent, and the Issuing Bank, and its
respective Affiliates, including the reasonable fees, charges and disbursements
of counsel for such Persons, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement and the other Loan Documents, or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
amendment, renewal or extension of the Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights against any Credit
Party in connection with this Agreement or the other Loan Documents, including
its rights against any Credit Party under this Section, or against any Credit
Party in connection with the Loans made hereunder or the Letter of Credit, or
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any Collateral, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letter of
Credit, or Collateral.
(b) The Borrowers shall indemnify the Administrative Agent,
the Collateral Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document, or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby or thereby (other than in connection with disputes between
parties hereto other than Credit Parties regarding obligations of such other
parties), (ii) any Loan or the Letter of Credit or the use of the proceeds
therefrom (including any refusal by the Issuing Bank to honor a demand for
payment under the Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by and Credit Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Credit
Party or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrowers fail to pay any amount
required to be paid to the Administrative Agent, the Collateral Agent, or the
Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Administrative Agent, the Collateral Agent, or the Issuing
Bank, as the case may be, such Lender's Applicable Percentage (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent, the Collateral
Agent, or the Issuing Bank in its capacity as such; and provided further that
the action of the Collateral Agent, or the Issuing Bank giving rise to the same
did not constitute gross negligence or willful misconduct by such Person.
(d) To the extent permitted by applicable law, the Borrowers
shall not assert, and each Borrower hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document, or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or the Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
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SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
and the other Loan Documents shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns
permitted hereby and thereby, except that the Borrowers may not assign or
otherwise transfer any of their rights or obligations hereunder or thereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by a Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, the Collateral Agent, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Collateral Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender, the Borrowers and the Administrative Agent
(and, in the case of an assignment of all or a portion of a Revolving Credit
Commitment or any Lender's obligations in respect of its LC Exposure and the
Issuing Bank) must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Revolving Credit Commitment,
the amount of the Revolving Credit Commitment of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 unless the Borrowers and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500
(provided, however, that such fee shall not be charged for an assignment to an
Affiliate of a Lender), and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; and
provided further that any consent of the Borrowers otherwise required under this
paragraph shall not be required if an Event of Default has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement and the other Loan
Documents, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the 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 2.13, 2.14, 2.15 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
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(c) The Administrative Agent, acting for this purpose as an
agent of the Borrowers, shall maintain at one of its offices in The City of New
York 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 of, and principal amount of the Loans and LC Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers, the Collateral Agent, the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers, the
Administrative Agent, or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment and the Loans owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers, the Administrative
Agent, the Issuing Bank 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. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrowers agree that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrowers' prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the
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Borrowers are notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement and the
Revolving Credit Note issued to it to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and by the Borrowers and the other
Credit Parties in the other Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Documents shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or the
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letter of Credit and the Revolving
Credit Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents, and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
thereto relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the
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invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates 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 obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of a Borrower
against any of and all the obligations of the Borrowers now or hereafter
existing under this Agreement or any other Loan Document held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or such other Loan Document and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
(b) Each Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against either Borrower or
its properties in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any court referred to in paragraph (b) of this Section. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING
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DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement or any other Loan
Document, (g) with the consent of the Borrowers or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis from
a source other than the Borrowers. For the purposes of this Section,
"Information" means all information received from the Borrowers relating to the
Borrowers or their businesses, other than any such information that is available
to the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender on a nonconfidential basis prior to disclosure by the Borrowers; provided
that, in the case of information received from the Borrowers after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with
-64-
<PAGE>
all Charges payable in respect thereof, shall be limited to the Maximum Rate
and, to the extent lawful, the interest and Charges that would have been payable
in respect of such Loan but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
ARTICLE X
Three Borrowers
Each Borrower agrees that the representations and warranties made by, and
the liabilities, obligations, and covenants of and applicable to any of, any two
of, or all of the Borrowers under this Agreement, shall in every case (whether
or not specifically so stated in each such case herein) be joint and several.
Every notice by or to any Borrower shall be deemed also to constitute notice by
and to the other Borrowers, every act or omission by any Borrower also shall be
binding upon the other Borrowers, and the Administrative Agent, the Collateral
Agent, the Issuing Bank, and the Lenders are fully authorized by each Borrower
to act and rely also upon the representations and warranties, covenants,
notices, acts, and omissions of the other Borrowers.
[Balance of Page Intentionally Left Blank]
-65-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
KINRO, INC.
By ________________________________
Name:
Title:
SHOALS SUPPLY, INC.
By ________________________________
Name:
Title:
LIPPERT COMPONENTS, INC.
By ________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
By ________________________________
Name:
Title:
KEYBANK, NATIONAL ASSOCIATION
By ________________________________
Name:
Title:
-66-
<PAGE>
EXHIBIT A
Form Of
Assignment And Acceptance
Reference is made to the Credit Agreement dated as of January 28,
1998 (as amended and in effect on the date hereof, the "Credit Agreement"),
among Kinro, Inc., an Ohio corporation, Shoals Supply, Inc., a Delaware
corporation, Lippert Components, Inc., a Delaware corporation, the Lenders named
therein and The Chase Manhattan Bank, as Administrative Agent for the Lenders.
Terms defined in the Credit Agreement are used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under (x) the Credit Agreement and the other Loan Documents,
including, without limitation, the interests set forth on the reverse hereof in
the Revolving Credit Commitment of the Assignor on the Assignment Date and Loans
owing to the Assignor which are outstanding on the Assignment Date, together
with the participations in the Letter of Credit and LC Disbursements held by the
Assignor on the Assignment Date, but excluding accrued interest and fees to and
excluding the Assignment Date and (y) the Intercreditor Agreement. The Assignee
hereby acknowledges receipt of a copy of the Credit Agreement. From and after
the Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and the Intercreditor Agreement and, to the
extent of the Assigned Interest, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Loan Documents and under the Intercreditor Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.15(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The [Assignee/Assignor] shall pay the fee
payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit
Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
-1-
<PAGE>
("Assignment Date"):
================================================================================
Facility Principal Amount Assigned Percentage Assigned of
Revolving Credit
Commitment (set forth, to
at least 8 decimals, as a
percentage of the aggregate
Revolving Credit
Commitments of all
Lenders thereunder)
- --------------------------------------------------------------------------------
Revolving Credit $ %
Commitment Assigned:
- --------------------------------------------------------------------------------
Loans:
================================================================================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor], as Assignor
By: ________________________________
Name:
Title:
[Name of Assignee], as Assignee
By: ________________________________
Name:
Title:
-2-
<PAGE>
The undersigned hereby consent to the within assignment:*
Kinro, Inc. The Chase Manhattan Bank,
as Administrative Agent,
By:________________________________ By:________________________________
Name: Name:
Title: Title:
Shoals Supply, Inc. The Chase Manhattan Bank,
as Issuing Bank
By:________________________________ By:________________________________
Name: Name:
Title: Title:
Lippert Components, Inc.
By:________________________________
Name: Name:
Title: Title:
- ----------
* Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
-3-
<PAGE>
EXHIBIT B
Opinion Of Counsel For The Credit Parties
[TO BE SUPPLIED]
-1-
<PAGE>
SCHEDULE 1.01-1
- --------------------------------------------------------------------------------
Alternate Base Eurodollar
Rate Loans Loans
- --------------------------------------------------------------------------------
General Margins 0.00% 1.00%
- --------------------------------------------------------------------------------
-1-
<PAGE>
SCHEDULE 1.01-1A
Additional Members of the Rose Group:
================================================================================
Name:
- --------------------------------------------------------------------------------
Leigh J. Abrams
- --------------------------------------------------------------------------------
Evelyn D. Potter Rose
- --------------------------------------------------------------------------------
Marshall B. Payne
- --------------------------------------------------------------------------------
Kathleen Wright
- --------------------------------------------------------------------------------
Payne & Madole
- --------------------------------------------------------------------------------
Cardinal Investment Company, Inc. Pension Plan
- --------------------------------------------------------------------------------
Cardinal Investment Company, Inc. Profit Sharing Plan
- --------------------------------------------------------------------------------
Harvey J. Kaplan
- --------------------------------------------------------------------------------
Susan Payne Madole
- --------------------------------------------------------------------------------
Robert B. Payne, Jr.
- --------------------------------------------------------------------------------
Fredric M. Zinn
- --------------------------------------------------------------------------------
David L. Webster
- --------------------------------------------------------------------------------
Ralph C. Pepper
- --------------------------------------------------------------------------------
Domenic D. Gattuso
- --------------------------------------------------------------------------------
Robert B. Payne, Sr.
- --------------------------------------------------------------------------------
Scout Ventures
- --------------------------------------------------------------------------------
James F. Gero
- --------------------------------------------------------------------------------
Catherine A. Gero
- --------------------------------------------------------------------------------
Kirk Dunk
- --------------------------------------------------------------------------------
Michelle Gass
- --------------------------------------------------------------------------------
Laura Fagan
- --------------------------------------------------------------------------------
Roger Todd Rankin
- --------------------------------------------------------------------------------
Rankin Investment Corporation
- --------------------------------------------------------------------------------
Larry Schoenbrun as Trustee of the Evelyn Potter Rose 1990 Irrevocable Trust
- --------------------------------------------------------------------------------
Gene H. Bishop
- --------------------------------------------------------------------------------
David Wachsman
- --------------------------------------------------------------------------------
John F. Cupak
- --------------------------------------------------------------------------------
-1-
<PAGE>
- --------------------------------------------------------------------------------
Robert Alpert
- --------------------------------------------------------------------------------
Metrocenter Properties, Inc.
- --------------------------------------------------------------------------------
Atlas Capital LP
- --------------------------------------------------------------------------------
Celia F. Rankin
- --------------------------------------------------------------------------------
Harvey F. Milman
================================================================================
-2-
<PAGE>
SCHEDULE 1.01-2
================================================================================
Name of Guarantor State of Organization
- --------------------------------------------------------------------------------
1. Kinro Holding, Inc. New York
- --------------------------------------------------------------------------------
2. Kinro Manufacturing, Inc. Delaware
- --------------------------------------------------------------------------------
3. Shoals Holding, Inc. New York
- --------------------------------------------------------------------------------
4. Kinro Texas Limited Partnership Texas
- --------------------------------------------------------------------------------
5. Shoals Supply Texas Limited Partnership Texas
- --------------------------------------------------------------------------------
6. Kinro Tennessee Limited Partnership Tennessee
- --------------------------------------------------------------------------------
7. Shoals Supply Tennessee Limited Partnership Tennessee
================================================================================
-1-
<PAGE>
SCHEDULE 2.01
=========================================================
Revolving
Lender Credit Commitment
---------------------------------------------------------
The Chase Manhattan Bank $15,000,000
---------------------------------------------------------
KeyBank, National Association 10,000,000
---------------------------------------------------------
TOTAL $25,000,000
=========================================================
-1-
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions.............................................. 1
SECTION 1.01. Defined Terms............................................ 1
SECTION 1.02. Classification of Loans and Borrowings................... 17
SECTION 1.03. Terms Generally.......................................... 18
SECTION 1.04. Accounting Terms; GAAP................................... 18
ARTICLE II The Revolving Credits.................................... 18
SECTION 2.01. Revolving Credit Commitments............................. 18
SECTION 2.02. Loans and Borrowings..................................... 18
SECTION 2.03. Requests for Borrowings.................................. 19
SECTION 2.04. Letter of Credit......................................... 20
SECTION 2.05. Funding of Borrowings.................................... 23
SECTION 2.06. Interest Elections....................................... 24
SECTION 2.07. Termination and Reduction of Revolving Commitments....... 25
SECTION 2.08. Repayment of Loans; Evidence of Debt..................... 25
SECTION 2.09. Prepayment of Loans; Mandatory Reduction of
Revolving Credit Commitments............................. 26
SECTION 2.10. Fees..................................................... 28
SECTION 2.11. Interest................................................. 29
SECTION 2.12. Alternate Rate of Interest............................... 29
SECTION 2.13. Increased Costs.......................................... 30
SECTION 2.14. Break Funding Payments................................... 31
SECTION 2.15. Taxes.................................................... 31
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs.............................................. 32
SECTION 2.17. Mitigation Obligations; Replacement of Lenders........... 34
ARTICLE III Representations and Warranties........................... 35
SECTION 3.01. Organization; Powers..................................... 35
SECTION 3.02. Authorization; Enforceability............................ 35
SECTION 3.03. Governmental Approvals; No Conflicts; No Defaults........ 35
SECTION 3.04. Financial Condition; No Material Adverse Change.......... 35
SECTION 3.05. Properties............................................... 36
SECTION 3.06. Litigation and Environmental Matters..................... 36
SECTION 3.07. Compliance with Laws and Agreements...................... 37
SECTION 3.08. Investment and Holding Company Status; Margin
Regulations.............................................. 37
SECTION 3.09. Taxes.................................................... 37
SECTION 3.10. ERISA.................................................... 37
SECTION 3.11. Subsidiaries............................................. 37
SECTION 3.12. SEC Matters.............................................. 38
-i-
<PAGE>
Page
----
SECTION 3.13. Labor Matters............................................ 38
SECTION 3.14. Solvency................................................. 38
SECTION 3.15. Security Documents....................................... 38
SECTION 3.16. Restrictive Agreements................................... 38
SECTION 3.17. Disclosure............................................... 39
ARTICLE IV Conditions............................................... 39
SECTION 4.01. Effective Date........................................... 39
SECTION 4.02. Each Credit Event........................................ 42
ARTICLE V Affirmative Covenants.................................... 42
SECTION 5.01. Financial Statements and Other Information............... 42
SECTION 5.02. Notices of Certain Events................................ 44
SECTION 5.03. Existence; Conduct of Business........................... 45
SECTION 5.04. Payment of Obligations................................... 45
SECTION 5.05. Maintenance of Properties; Insurance..................... 45
SECTION 5.06. Books and Records; Inspection Rights..................... 45
SECTION 5.07. Compliance with Laws..................................... 45
SECTION 5.08. Use of Proceeds and Letter of Credit..................... 46
SECTION 5.09. Additional Guarantors.................................... 46
SECTION 5.10. Further Assurances....................................... 46
ARTICLE VI Negative Covenants....................................... 47
SECTION 6.01. Transactions with Affiliates............................. 47
SECTION 6.02. Merger, Consolidation, etc............................... 47
SECTION 6.03. Liens.................................................... 48
SECTION 6.04. Indebtedness............................................. 48
SECTION 6.05. Restrictive Agreements................................... 49
SECTION 6.06. Limitation on Subsidiary Indebtedness and Issuance
of Preferred Stock....................................... 49
SECTION 6.07. Limitation on Restricted Payments........................ 50
SECTION 6.08. Sale of Assets........................................... 50
SECTION 6.09. Limitation on Investments................................ 51
SECTION 6.10. Hedging Agreements....................................... 51
SECTION 6.11. Certain Financial Covenants.............................. 51
SECTION 6.12. Amendment of Certain Documents........................... 51
ARTICLE VII Events of Default........................................ 52
ARTICLE VIII The Agents............................................... 55
-ii-
<PAGE>
Page
----
ARTICLE IX Miscellaneous............................................ 57
SECTION 9.01. Notices.................................................. 57
SECTION 9.02. Waivers; Amendments...................................... 57
SECTION 9.03. Expenses; Indemnity; Damage Waiver....................... 58
SECTION 9.04. Successors and Assigns................................... 60
SECTION 9.05. Survival................................................. 62
SECTION 9.06. Counterparts; Integration; Effectiveness................. 62
SECTION 9.07. Severability............................................. 62
SECTION 9.08. Right of Setoff.......................................... 63
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO
SERVICE OF PROCESS....................................... 63
SECTION 9.10. WAIVER OF JURY TRIAL..................................... 64
SECTION 9.11. Headings................................................. 64
SECTION 9.12. Confidentiality.......................................... 64
SECTION 9.13. Interest Rate Limitation................................. 65
ARTICLE X Three Borrowers.......................................... 65
EXHIBIT A -- Form Of Assignment And Acceptance
EXHIBIT B -- Opinion Of Counsel For The Borrowers
EXHIBIT 2.04 -- Letter of Credit Extension Request
EXHIBIT 4.01-1 -- Subsidiary Guarantee
EXHIBIT 4.01-2 -- Company Guaranty
EXHIBIT 4.01-3 -- Subordination Agreement
EXHIBIT 4.01-4 -- Pledge Agreement
EXHIBIT 4.01-5 -- Revolving Credit Note
SCHEDULE 1.01-1 -- Applicable Rate Margins
SCHEDULE 1.01-A-1 -- Additional Members of The Rose Group
SCHEDULE 1.01-2 -- Subsidiary Guarantors
SCHEDULE 2.01 -- Revolving Credit Commitments
SCHEDULE 3.04 -- Undisclosed Liabilities
SCHEDULE 3.05 -- Liens
SCHEDULE 3.06 -- Litigation and Related Matters
SCHEDULE 3.10 -- Investments, Joint Ventures, Partnerships
SCHEDULE 3.11A -- Subsidiaries of the Company
SCHEDULE 3.11B -- Subsidiaries of the Company (excluding
Inactive Subsidiaries)
SCHEDULE 3.16 -- Certain Restrictions and Conditions
SCHEDULE 6.04 -- Indebtedness
SCHEDULE 6.06 -- Subsidiary Indebtedness
-iii-
Exhibit 4.01-5
to
Credit Agreement
Exhibit 10.173 - Company Guarantee Agreement
CONFORMED COPY
[FORM OF]
REVOLVING CREDIT NOTE
$15,000,000 New York, New York
_____________, 1998
FOR VALUE RECEIVED, the undersigned, KINRO, INC., an Ohio corporation,
SHOALS SUPPLY, INC., a Delaware corporation, and LIPPERT COMPONENTS, INC., a
Delaware corporation (the "Borrowers"), hereby jointly and severally,
unconditionally promise to pay to the order of ________________________ (the
"Lender"), at the office of The Chase Manhattan Bank (the "Administrative
Agent") at One Chase Manhattan Tower, New York, New York 10081 on the Maturity
Date in lawful money of the United States of America and in immediately
available funds, the principal amount of (a) ________________ DOLLARS
($____________), or, if less, (b) the aggregate unpaid principal amount of all
Loans made by the Lender pursuant to the Credit Agreement (referred to below).
The Borrowers further agree, jointly and severally, to pay interest on the
unpaid principal amount outstanding hereunder from time to time from the date
hereof in like money at such office at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to record on the schedule annexed
hereto or on a continuation thereof the date, Type and amount of each Loan made
pursuant to the Credit Agreement, each continuation thereof, each conversion of
all or a portion thereof to another Type, the date and amount of each payment or
repayment of principal thereof and, in the case of Eurodollar Loans, the length
of each Interest Period with respect thereto; provided, however, that the
failure to make any such recordation shall not affect the obligations of the
Borrowers in respect of such Loans.
This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement dated as of January __, 1998 (the "Credit Agreement"), among the
Borrowers, the Lenders party thereto and The Chase Manhattan Bank as
Administrative Agent, is secured as provided therein and in the Security
Documents, is entitled to the benefits of the Guarantee Agreements as provided
in the Credit Agreement and the Guarantee Agreement, and is subject to optional
and mandatory prepayment as set forth in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
<PAGE>
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their defined
meanings unless otherwise defined herein. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
KINRO, INC.
By:___________________________________
Name:
Title:
SHOALS SUPPLY, INC.
By:___________________________________
Name:
Title:
LIPPERT COMPONENTS, INC.
By:___________________________________
Name:
Title:
-2-
<PAGE>
SCHEDULE 1
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND PAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
========================================================================================================
Amount of Amount of Unpaid
ABR Loans Eurodollars Loans Principal
Amount of Amount of Converted to Converted to Balance of Notation
Date ABR Loans Principal Repaid Eurodollar Loans ABR Loans ABR Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
-3-
<PAGE>
SCHEDULE 2
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND PAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
========================================================================================================
Amount of Amount of Unpaid
Amount of Amount of Eurodollar Loans ABR Loans Principal
Eurodollar Principal Converted to Converted to Balance of Notation
Date Loans Repaid ABR Loans Eurodollar Loans Eurodollar Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
-4-
Exhibit 4.01-5
to
Credit Agreement
Exhibit 10.174 - $10,000,000 Revolving Credit Note
CONFORMED COPY
[FORM OF]
REVOLVING CREDIT NOTE
$10,000,000 New York, New York
_____________, 1998
FOR VALUE RECEIVED, the undersigned, KINRO, INC., an Ohio corporation,
SHOALS SUPPLY, INC., a Delaware corporation, and LIPPERT COMPONENTS, INC., a
Delaware corporation (the "Borrowers"), hereby jointly and severally,
unconditionally promise to pay to the order of ________________________ (the
"Lender"), at the office of The Chase Manhattan Bank (the "Administrative
Agent") at One Chase Manhattan Tower, New York, New York 10081 on the Maturity
Date in lawful money of the United States of America and in immediately
available funds, the principal amount of (a) ________________ DOLLARS
($____________), or, if less, (b) the aggregate unpaid principal amount of all
Loans made by the Lender pursuant to the Credit Agreement (referred to below).
The Borrowers further agree, jointly and severally, to pay interest on the
unpaid principal amount outstanding hereunder from time to time from the date
hereof in like money at such office at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to record on the schedule annexed
hereto or on a continuation thereof the date, Type and amount of each Loan made
pursuant to the Credit Agreement, each continuation thereof, each conversion of
all or a portion thereof to another Type, the date and amount of each payment or
repayment of principal thereof and, in the case of Eurodollar Loans, the length
of each Interest Period with respect thereto; provided, however, that the
failure to make any such recordation shall not affect the obligations of the
Borrowers in respect of such Loans.
This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement dated as of January __, 1998 (the "Credit Agreement"), among the
Borrowers, the Lenders party thereto and The Chase Manhattan Bank as
Administrative Agent, is secured as provided therein and in the Security
Documents, is entitled to the benefits of the Guarantee Agreements as provided
in the Credit Agreement and the Guarantee Agreement, and is subject to optional
and mandatory prepayment as set forth in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
<PAGE>
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their defined
meanings unless otherwise defined herein. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
KINRO, INC.
By:___________________________________
Name:
Title:
SHOALS SUPPLY, INC.
By:___________________________________
Name:
Title:
LIPPERT COMPONENTS, INC.
By:___________________________________
Name:
Title:
-2-
<PAGE>
SCHEDULE 1
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND PAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
========================================================================================================
Amount of Amount of Unpaid
ABR Loans Eurodollars Loans Principal
Amount of Amount of Converted to Converted to Balance of Notation
Date ABR Loans Principal Repaid Eurodollar Loans ABR Loans ABR Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
-3-
<PAGE>
SCHEDULE 2
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND PAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
========================================================================================================
Amount of Amount of Unpaid
Amount of Amount of Eurodollar Loans ABR Loans Principal
Eurodollar Principal Converted to Converted to Balance of Notation
Date Loans Repaid ABR Loans Eurodollar Loans Eurodollar Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
-4-
Exhibit 4.01-2
to the
Credit Agreement
Exhibit 10.175 - Company Guarantee Agreement
COMPANY GUARANTEE AGREEMENT dated as of January 28, 1998 made by
DREW INDUSTRIES INCORPORATED, a Delaware corporation (the "Guarantor"), with and
in favor of THE CHASE MANHATTAN BANK, a New York banking corporation as agent
(in such capacity, the "Administrative Agent") for the Lenders (as defined in
the Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January
28, 1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among Kinro, Inc., an Ohio corporation, Shoals Supply, Inc., a
Delaware corporation, and Lippert Components, Inc., a Delaware corporation, as
Borrowers (the "Borrowers"), the financial institutions party thereto as lenders
(the "Lenders") and The Chase Manhattan Bank as administrative agent (in such
capacity the "Administrative Agent"). Terms used herein as defined terms and not
otherwise defined herein shall have the meanings given thereto in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrowers upon the
terms and subject to the conditions specified in the Credit Agreement. The
Guarantor is the owner of all the issued and outstanding capital stock of each
of the Borrowers. The obligations of the Lenders to make Loans are conditioned
on, among other things, the execution and delivery by the Guarantor hereunder of
a guarantee agreement in the form hereof.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1.01. Definitions; Terms. References to this "Agreement" shall be
to this Company Guarantee Agreement as amended, supplemented, or otherwise
modified from time to time. The term "Obligations" shall mean, collectively, (a)
the due and punctual payment of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans when and as due, whether at maturity,
by acceleration, upon one or more dates on which repayment or prepayment is
required, or otherwise, (ii) each payment required to be made by the Borrowers
under the Credit Agreement in respect of the Letter of Credit when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrowers
<PAGE>
to one or more of the Secured Parties under the Credit Agreement or any of the
other Loan Documents or of the Borrowers (or any of them) under or in respect of
any Interest Rate Hedging Agreement now or hereafter in effect, and (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrowers under or pursuant to the Credit Agreement and the
other Loan Documents and under any Interest Rate Hedging Agreement. References
to a "guarantor" shall include the Guarantor hereunder, each "Guarantor" as such
term is defined in the Subsidiary Guarantee Agreement, and any other Person that
is a guarantor of any or all of the Obligations, and references to a "guarantee"
shall include this Agreement, the Subsidiary Guarantee Agreement and any other
guarantee of any or all of the Obligations by any other Person.
Section 2.01. Guarantee.
(a) The Guarantor hereby, unconditionally, absolutely, and
irrevocably guarantees, as a primary obligor and not merely as a surety, the due
and punctual payment and performance in full of the Obligations, in each case
strictly in accordance with the terms thereof. In furtherance of the foregoing
and not in limitation of any other right that any Secured Party may have at law
or in equity against the Guarantor by virtue hereof, the Guarantor agrees that
upon failure of the Borrowers to pay any Obligations when and as the same shall
become due, whether at maturity, by acceleration, on one or more dates on which
prepayment or repayment is required, or otherwise, the Guarantor will, without
any demand or notice whatsoever, forthwith pay or cause to be paid to the
Administrative Agent or such other Secured Party as is designated thereby, in
cash in immediately available funds, an amount equal to the unpaid amount of
such Obligations. The Guarantor further agrees that the Obligations guaranteed
by it hereunder may be increased in amount, extended or renewed, or otherwise
amended or modified in any respect, including, without limitation, as to
principal, scheduled repayment, prepayment, interest, fees, indemnification,
compensation, and in any other respect whatsoever, in whole or in part, without
notice or further assent from it, and that it will remain bound upon this
guarantee in respect of such Obligations as so increased, extended, renewed,
amended or modified. Payments by the Guarantor hereunder may be required on any
number of occasions.
(b) The Guarantor waives presentation to, demand for payment
from and protest to the Borrowers or any other guarantor, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of the Guarantor hereunder shall not be affected by (i) the failure
of any Secured Party to assert any claim or demand or to enforce any right or
remedy against any Credit Party or any other Person under the provisions of any
Loan Document or any other agreement or otherwise; (ii) any rescission, waiver,
forbearance, compromise, acceleration, amendment or modification of, or any
release of any party from any of the terms or provisions of, this Agreement, any
other Loan Document, any Obligation or any other guarantee or any security
interest in respect of the Obligations (including, without limitation, in
respect of any other guarantor, or any Debtor as such term is defined in any
Security Document); (iii) any change in respect of any Credit Party, including,
without limitation, as a result of any merger, consolidation, dissolution,
liquidation, recapitalization, or other change of legal form or status, whether
or not permitted under the Loan Documents; (iv) the release, exchange, waiver or
foreclosure of any security held by any
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Secured Party for any Obligations or the invalidity or nonperfection of any
security interest securing the Obligations or the guarantee hereunder, or any
other defect of any kind pertaining to any Obligations or any guarantee or
collateral security in respect thereof; (v) the failure of any Secured Party to
exercise any right or remedy in respect of any collateral security for any
Obligations or against any Credit Party, or against any other guarantor of any
Obligations; or (vi) the release or substitution of one or both of the Borrowers
or any guarantor; (vii) the failure of any Person to become a guarantor pursuant
to any other Loan Document, whether or not required under the Credit Agreement;
or (viii) any other circumstance that might otherwise, but for this specific
agreement of the Guarantor to the contrary, result in a discharge of or the
exoneration of the Guarantor hereunder, it being the intent of the parties
hereto that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
(c) The Guarantor agrees that this guarantee constitutes a
guarantee of performance and of payment when due and not just of collection,
that it is a primary obligation of the Guarantor, and that the Guarantor waives
any right to require that any resort be had by any Secured Party to any security
held for this guarantee or for payment of any Obligations, or to any balance of
any deposit, account, or credit on the books of any Secured Party in favor of
any Credit Party, or to any other Person or property. To the fullest extent
permitted by law, the Guarantor hereby expressly waives any and all rights or
defenses arising by reason of (i) any "one action" or "anti-deficiency" law that
would otherwise prevent any Secured Party from bringing any action, including
any claim for a deficiency, or exercising any right or remedy (including any
right of set-off) against the Guarantor before or after the commencement or
completion of any foreclosure action or sale of collateral, whether judicially,
by exercise of power of sale or otherwise, or (ii) any other law that in any
other way would otherwise require any election of remedies by any Secured Party.
(d) No demand hereunder or enforcement hereof against the
Guarantor shall require any demand or enforcement against any other Credit
Party.
(e) The Guarantor agrees that it shall not make a payment on
any guaranty securing the Senior Notes unless concurrently therewith it shall
make payment hereunder to the Secured Parties on the Obligations on a pari passu
basis with respect to any such payment on or in respect of any such guaranty
securing the Senior Notes.
Section 2.02. No Impairment of Guarantee. The obligations of the Guarantor
hereunder shall remain absolute and unconditional and 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 set-off, counterclaim,
recoupment or termination whatsoever, by reason of the invalidity, illegality or
unenforceability of the Obligations or of this guarantee (or any portion or
provision thereof or hereof) or otherwise. Without limiting the generality of
the foregoing, the Guarantor specifically agrees that it shall not be discharged
or exonerated, nor shall its obligations hereunder be limited or otherwise
affected by the failure of any Secured Party to exercise any right, remedy,
power, or privilege or to assert any claim or demand or to enforce any remedy
under any Loan Document or applicable law, including, without limitation, any
failure by any Secured Party to setoff or release in whole or in part any
balance of any deposit account or
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<PAGE>
credit on its books in favor of any Credit Party, or by any waiver, consent,
extension, indulgence, modification, or other action or inaction in respect of
any thereof, or by any default, failure or delay, willful or otherwise, in the
performance of any Obligations, or by any other act or thing or omission or
delay to do any other act or thing, by any Person, that might in any manner or
to any extent vary the risk of the Guarantor or that might but for the specific
provisions hereof to the contrary otherwise operate as a discharge or
exoneration of the Guarantor, unless and until the Obligations are fully,
finally and indefeasibly paid in cash.
Section 2.03. Security; Waiver. The Guarantor authorizes the
Administrative Agent, the Collateral Agent, and each of the other Secured
Parties to (i) take and hold security for the payment of this guarantee and/or
the Obligations and exchange, enforce, waive and release any such security, (ii)
apply such security and direct the order or manner of sale thereof as they in
their sole discretion may determine and (iii) release or substitute any one or
more endorsees, other guarantors or other obligors or any collateral. The
Administrative Agent, the Collateral Agent, and the other Secured Parties may,
at their election, foreclose on any security held by one or more of them by one
or more judicial or non-judicial sales, or exercise any other right or remedy
available to them against the Borrowers or any guarantor, or any security,
without affecting or impairing in any way the liability of the Guarantor
hereunder except to the extent that the Obligations have been fully, finally and
indefeasibly paid in cash. The Guarantor waives any defense arising out of any
such election even though such election operates to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of the Guarantor
against the Borrowers or any other guarantor, as the case may be, or any
security.
Section 2.04. Continuation and Reinstatement, etc. The Guarantor agrees
that the guarantee hereunder shall continue to be effective or shall be
reinstated, as the case may be, if at any time payment, or any part thereof, in
respect of any Obligation is rescinded or must otherwise be restored by any
Secured Party upon the bankruptcy or reorganization of any Credit Party, or
otherwise.
Section 2.05. Subrogation. The Guarantor agrees that throughout the period
referred to in clause (ii) of Section 4.02(a) hereof the Guarantor shall not (i)
exercise, and hereby waives, any rights against the Borrowers and any other
guarantor arising as a result of payment by the Guarantor hereunder, by way of
subrogation, reimbursement, restitution, contribution or otherwise, (ii) prove
any claim in competition with any Secured Party in respect of any payment
hereunder in any bankruptcy, insolvency or reorganization case or proceeding of
any nature, or (iii) have any benefit of or any right to participate in any
collateral security that may be held by any Secured Party for the Obligations.
Section 2.06. Subordination. The payment of any amounts due with respect
to any indebtedness of any Credit Party now or hereafter owed to the Guarantor
(including, without limitation, any such indebtedness arising by way of
subrogation, reimbursement, restitution, contribution or otherwise in respect of
performance by the Guarantor hereunder) is hereby
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subordinated to the prior full, final, and indefeasible payment in cash of all
Obligations. If, notwithstanding the foregoing sentence, the Guarantor shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by the Guarantor as trustee
for the Secured Parties and be paid over to the Administrative Agent on account
of and to be applied against the Obligations, without affecting in any manner
the liability of the Guarantor under the other provisions of this Agreement.
Section 2.07. Remedies. The Guarantor agrees that, as between the
Guarantor and the Secured Parties, the obligations of the Borrowers under the
Credit Agreement may be declared to be forthwith due and payable as provided in
Article VII of the Credit Agreement (and shall be deemed to have become
automatically due and payable in the circumstances provided in clause (h) or (i)
of said Article VII) for purposes of the guarantee hereunder notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such
obligations from becoming automatically due and payable) as against the
Borrowers and that, in the event of such declaration (or such obligations' being
deemed to have become automatically due and payable), such obligations (whether
or not due and payable by the Borrowers) shall forthwith become due and payable
by the Guarantor for purposes hereof.
Section 2.08. Payment. The Guarantor hereby agrees that any Secured Party,
at its sole option, in the event of a dispute by the Guarantor in the payment of
any moneys due hereunder, shall have the right to proceed under New York CPLR
Section 3213.
Section 2.09. Continuing Guarantee. The guarantee hereunder is a
continuing guarantee, and shall apply to all Obligations whenever arising.
Section 2.10. Other Guarantors. This Agreement shall remain the
unconditional, absolute, and irrevocable obligation of the Guarantor regardless
of whether any other Person (i) becomes guarantor in respect of the Obligations
(whether or not the Credit Agreement requires that such Person be or become a
guarantor) or (ii) fails to become or ceases to be a guarantor of the
Obligations (whether or not the Credit Agreement requires that such Person be or
become a guarantor).
Section 2.11. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition and assets of the
Borrowers, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that no Secured Party has or will have
any duty to advise the Guarantor of information regarding such circumstances or
risks.
Section 3.01. Representation and Warranties The Guarantor represents and
warrants that all representations and warranties relating to it in the Credit
Agreement are true and correct.
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<PAGE>
Section 4.01. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent with the written consent of the Required Lenders.
Any such waiver, consent or approval shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other or further notice
or demand in the same, similar or other circumstances. No waiver by any Secured
Party of any breach or default of or by the Guarantor under this Agreement shall
be deemed a waiver of any other previous breach or default or any thereafter
occurring.
Section 4.02. Survival; Severability.
(a) All covenants, agreements, representations and warranties
made by the Guarantor herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document (i) shall be considered to have been relied upon by the
Lenders and the other Secured Parties and shall survive the making by the
Lenders of the Loans, and the execution and delivery to the Lenders of any Notes
evidencing such Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and (ii) shall continue in full force and effect as
long as any of the Obligations is outstanding and unpaid or the LC Exposure does
not equal zero and as long as the Revolving Credit Commitments have not been
terminated.
(b) Any provision of this Agreement that is illegal, invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity or enforceability of such provisions in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or to otherwise amend this Agreement to achieve such result.
Section 4.03. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Credit Party that are contained in this Agreement shall
bind and inure to the benefit of each party hereto and their respective
successors and assigns. No Credit Party may assign or transfer any of its rights
or obligations hereunder except as expressly contemplated by this Agreement or
the other Loan Documents (and any such attempted assignment shall be void).
Section 4.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
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Section 4.05. Headings; Interpretation. The Article and Section headings
in this Agreement are for convenience only and shall not affect the construction
hereof. The rules of interpretation of Section 1.03 of the Credit Agreement
shall apply to this Agreement.
Section 4.06. Notices. Notices, consents and other communications provided
for herein shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. Communications
and notices to the Guarantor shall be given to it at 200 Mamaroneck Avenue,
White Plains, New York 10601 Attention: Leigh J. Abrams.
Section 4.07. Counterparts. This Agreement may be executed in separate
counterparts (telecopy of any executed counterpart having the same effect as
manual delivery thereof), each of which shall constitute an original, but all of
which, when taken together, shall constitute but one Agreement.
Section 4.08. Right of Setoff. The Guarantor hereby agrees that if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates 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 obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Guarantor against any of and all the obligations of
the Guarantor now or hereafter existing under this Agreement or any other Loan
Document held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
Section 4.09. Jurisdiction; Consent to Service of Process.
(a) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Collateral Agent, or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement against the Guarantor or its
properties in the courts of any jurisdiction.
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<PAGE>
(b) The Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in the preceding paragraph. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 4.06. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 4.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this Company
Guarantee Agreement to be duly executed and delivered by their respective
officers as of the day and year first above written.
DREW INDUSTRIES INCORPORATED
By: _________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: _________________________
Name:
Title:
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Exhibit 4.01-1
to Credit Agreement
Exhibit 10.176 - Subsidiary Guarantee Agreement
SUBSIDIARY GUARANTEE AGREEMENT dated as of January 28, 1998 made by
each direct and indirect subsidiary of DREW INDUSTRIES INCORPORATED, a Delaware
corporation, (other than KINRO, INC., an Ohio corporation, SHOALS SUPPLY, INC.,
a Delaware corporation, and LIPPERT COMPONENTS, INC., a Delaware corporation
(the "Borrowers")) that becomes a party hereto as a guarantor hereunder (each, a
"Guarantor"), with and in favor of THE CHASE MANHATTAN BANK, a New York banking
corporation as agent (in such capacity, the "Administrative Agent") for the
Lenders (as defined in the Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January
28, 1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among the Borrowers, the financial institutions party thereto as
lenders (the "Lenders") and The Chase Manhattan Bank as administrative agent (in
such capacity the "Administrative Agent"). Terms used herein as defined terms
and not otherwise defined herein shall have the meanings given thereto in the
Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers upon the
terms and subject to the conditions specified in the Credit Agreement. The
obligations of the Lenders to make Loans are conditioned on, among other things,
the execution and delivery by each Guarantor hereunder of a guarantee agreement
in the form hereof.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1.01. Definitions; Terms. References to this "Agreement"
shall be to this Subsidiary Guarantee Agreement as amended, supplemented, or
otherwise modified from time to time. The term "Obligations" shall mean,
collectively, (a) the due and punctual payment of (i) the principal of and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans when and as due, whether
at maturity, by acceleration, upon one or more dates on which repayment or
prepayment is required, or otherwise, (ii) each payment required to be made by
the Borrowers under the Credit Agreement in respect of the Letter of Credit when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrowers to one or more of the Secured
Parties under the Credit Agreement or any of the other Loan
<PAGE>
Documents or of the Borrowers (or either of them) under or in respect of any
Interest Rate Hedging Agreement now or hereafter in effect, and (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrowers under or pursuant to the Credit Agreement and the other Loan
Documents and under any Interest Rate Hedging Agreement now or hereafter in
effect. References to a "guarantor" shall include each Guarantor hereunder, the
Company, and any other Person that is a guarantor of any or all of the
Obligations, and references to a "guarantee" shall include this Agreement, the
Company Guarantee Agreement and any other guarantee of any or all of the
Obligations by any other Person.
Section 2.01. Guarantee.
(a) The Guarantors hereby, jointly and severally,
unconditionally, absolutely, and irrevocably guarantee, each as a primary
obligor and not merely as a surety, the due and punctual payment and performance
in full of the Obligations, in each case strictly in accordance with the terms
thereof. In furtherance of the foregoing and not in limitation of any other
right that any Secured Party may have at law or in equity against any Guarantor
by virtue hereof, the Guarantors jointly and severally agree that upon failure
of the Borrowers to pay any Obligations when and as the same shall become due,
whether at maturity, by acceleration, on one or more dates on which prepayment
or repayment is required, or otherwise, the Guarantors will, without any demand
or notice whatsoever, forthwith pay or cause to be paid to the Administrative
Agent or such other Secured Party as is designated thereby, in cash in
immediately available funds, an amount equal to the unpaid amount of such
Obligations. Each Guarantor further agrees that the Obligations guaranteed by it
hereunder may be increased in amount, extended or renewed, or otherwise amended
or modified in any respect, including, without limitation, as to principal,
scheduled repayment, prepayment, interest, fees, indemnification, compensation,
and in any other respect whatsoever, in whole or in part, without notice or
further assent from it, and that it will remain bound upon this guarantee in
respect of such Obligations as so increased, extended, renewed, amended or
modified. Payments by each Guarantor hereunder may be required on any number of
occasions.
(b) Each Guarantor waives presentation to, demand for payment
from and protest to the Borrowers or any other guarantor, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of each Guarantor hereunder shall not be affected by (i) the failure
of any Secured Party to assert any claim or demand or to enforce any right or
remedy against any Credit Party or any other Person under the provisions of any
Loan Document or any other agreement or otherwise; (ii) any rescission, waiver,
forbearance, compromise, acceleration, amendment or modification of, or any
release of any party from any of the terms or provisions of, this Agreement, any
other Loan Document, any Obligation or any other guarantee or any security
interest in respect of the Obligations (including, without limitation, in
respect of any other guarantor, or any Debtor as such term is defined in any
Security Document); (iii) any change in respect of any Credit Party, including,
without limitation, as a result of any merger, consolidation, dissolution,
liquidation, recapitalization, or other change of legal form or status, whether
or not permitted under the Loan Documents; (iv) the release, exchange, waiver or
foreclosure of any security held by any
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Secured Party for any Obligations or the invalidity or nonperfection of any
security interest securing the Obligations or the guarantee hereunder, or any
other defect of any kind pertaining to any Obligations or any guarantee or
collateral security in respect thereof; (v) the failure of any Secured Party to
exercise any right or remedy in respect of any collateral security for any
Obligations or against any Credit Party, or against any other guarantor of any
Obligations; or (vi) the release or substitution of one or both of the Borrowers
or any guarantor; (vii) the failure of any Person to become a Guarantor
hereunder, whether or not required under the Credit Agreement; or (viii) any
other circumstance that might otherwise, but for this specific agreement of each
Guarantor to the contrary, result in a discharge of or the exoneration of such
Guarantor hereunder, it being the intent of the parties hereto that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances.
(c) Each Guarantor agrees that this guarantee constitutes a
guarantee of performance and of payment when due and not just of collection,
that it is a primary obligation of such Guarantor, and that such Guarantor
waives any right to require that any resort be had by any Secured Party to any
security held for this guarantee or for payment of any Obligations, or to any
balance of any deposit, account, or credit on the books of any Secured Party in
favor of any Credit Party, or to any other Person or property. To the fullest
extent permitted by law, each Guarantor hereby expressly waives any and all
rights or defenses arising by reason of (i) any "one action" or
"anti-deficiency" law that would otherwise prevent any Secured Party from
bringing any action, including any claim for a deficiency, or exercising any
right or remedy (including any right of set-off) against such Guarantor before
or after the commencement or completion of any foreclosure action or sale of
collateral, whether judicially, by exercise of power of sale or otherwise, or
(ii) any other law that in any other way would otherwise require any election of
remedies by any Secured Party.
(d) No demand hereunder or enforcement hereof against any
Guarantor shall require any demand or enforcement against any other Credit
Party.
(e) Each Guarantor agrees that it shall not make any payment
on or in respect of any guaranty securing the Senior Notes unless concurrently
therewith it shall make a payment hereunder to the Secured Parties on the
Obligations on a pari passu basis with respect to any such payment on or in
respect of any such guaranty securing the Senior Notes.
Section 2.02. No Impairment of Guarantee. The obligations of the
Guarantors hereunder shall remain absolute and unconditional and 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 set-off,
counterclaim, recoupment or termination whatsoever, by reason of the invalidity,
illegality or unenforceability of the Obligations or of this guarantee (or any
portion or provision thereof or hereof) or otherwise. Without limiting the
generality of the foregoing, each Guarantor specifically agrees that it shall
not be discharged or exonerated, nor shall its obligations hereunder be limited
or otherwise affected by the failure of any Secured Party to exercise any right,
remedy, power, or privilege or to assert any claim or demand or to enforce any
remedy under any Loan Document or applicable law, including, without limitation,
any failure by any Secured Party to setoff or release in whole or in part any
balance of any deposit account or credit on its books in favor of any Credit
Party, or by any waiver, consent,
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extension, indulgence, modification, or other action or inaction in respect of
any thereof, or by any default, failure or delay, willful or otherwise, in the
performance of any Obligations, or by any other act or thing or omission or
delay to do any other act or thing, by any Person, that might in any manner or
to any extent vary the risk of such Guarantor or that might but for the specific
provisions hereof to the contrary otherwise operate as a discharge or
exoneration of such Guarantor, unless and until the Obligations are fully,
finally and indefeasibly paid in cash.
Section 2.03. Security; Waiver. Each of the Guarantors authorizes the
Administrative Agent, the Collateral Agent, and each of the other Secured
Parties to (i) take and hold security for the payment of this guarantee and/or
the Obligations and exchange, enforce, waive and release any such security, (ii)
apply such security and direct the order or manner of sale thereof as they in
their sole discretion may determine and (iii) release or substitute any one or
more endorsees, other guarantors or other obligors or any collateral. The
Administrative Agent, the Collateral Agent, and the other Secured Parties may,
at their election, foreclose on any security held by one or more of them by one
or more judicial or non-judicial sales, or exercise any other right or remedy
available to them against the Borrowers or any Guarantor, or any security,
without affecting or impairing in any way the liability of the Guarantors
hereunder except to the extent that the Obligations have been fully, finally and
indefeasibly paid in cash. Each of the Guarantors waives any defense arising out
of any such election even though such election operates to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrowers or any other Guarantor, as the case may be,
or any security.
Section 2.04. Continuation and Reinstatement, etc. The Guarantors jointly
and severally agree that the guarantee hereunder shall continue to be effective
or shall be reinstated, as the case may be, if at any time payment, or any part
thereof, in respect of any Obligation is rescinded or must otherwise be restored
by any Secured Party upon the bankruptcy or reorganization of any Credit Party,
or otherwise.
Section 2.05. Subrogation. The Guarantors jointly and severally agree that
throughout the period referred to in clause (ii) of Section 4.02(a) hereof no
Guarantor shall (i) exercise, and each hereby waives, any rights against the
Borrowers and any other guarantor arising as a result of payment by such
Guarantor hereunder, by way of subrogation, reimbursement, restitution,
contribution or otherwise, (ii) prove any claim in competition with any Secured
Party in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceeding of any nature, or (iii) have any benefit of or
any right to participate in any collateral security that may be held by any
Secured Party for the Obligations.
Section 2.06. Subordination. The payment of any amounts due with respect
to any indebtedness of any Credit Party now or hereafter owed to any Guarantor
(including, without limitation, any such indebtedness arising by way of
subrogation, reimbursement, restitution, contribution or otherwise in respect of
performance by such Guarantor hereunder) is hereby subordinated to the prior
full, final, and indefeasible payment in cash of all Obligations. If,
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<PAGE>
notwithstanding the foregoing sentence, any Guarantor shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the Secured
Parties and be paid over to the Administrative Agent on account of and to be
applied against the Obligations, without affecting in any manner the liability
of such Guarantor under the other provisions of this Agreement.
Section 2.07. Remedies. The Guarantors jointly and severally agree that,
as between the Guarantors and the Secured Parties, the obligations of the
Borrowers under the Credit Agreement may be declared to be forthwith due and
payable as provided in Article VII of the Credit Agreement (and shall be deemed
to have become automatically due and payable in the circumstances provided in
clause (h) or (i) of said Article VII) for purposes of the guarantee hereunder
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrowers and that, in the event of such declaration (or such
obligations' being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrowers) shall forthwith
become due and payable by the Guarantors for purposes hereof.
Section 2.08. Payment. Each Guarantor hereby agrees that any Secured
Party, at its sole option, in the event of a dispute by such Guarantor in the
payment of any moneys due hereunder, shall have the right to proceed under New
York CPLR Section 3213.
Section 2.09. Continuing Guarantee. The guarantee hereunder is a
continuing guarantee, and shall apply to all Obligations whenever arising.
Section 2.10. Rights of Contribution. The Guarantors hereby agree, as
among themselves, that if any Guarantor shall become an Excess Funding Guarantor
(as defined below) by reason of the payment by such Guarantor of any
Obligations, each other Guarantor shall, on demand of such Excess Funding
Guarantor, pay to such Excess Funding Guarantor an amount equal to such
Guarantor's Pro Rata Share (as defined below and determined, for this purpose,
without reference to the properties, debts and liabilities of such Excess
Funding Guarantor) of the Excess Payment (as defined below) in respect of such
Obligations; provided, however, that the payment obligation of a Guarantor to
any Excess Funding Guarantor under this Section 2.10 shall be subordinate and
subject in right of payment to the Obligations in accordance with Section 2.06
hereof. For purposes of this section 2.10, (i) "Excess Funding Guarantor" shall
mean, in respect of any Obligations, a Guarantor that has paid an amount in
excess of its Pro Rata Share of such Obligations, (ii) "Excess Payment" shall
mean, in respect of any Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Obligations and (iii) "Pro
Rata Share" shall mean, for any Guarantor, the fraction the numerator of which
is (x) the amount by which the aggregate fair saleable value of all properties
of such Guarantor (excluding any shares of stock of any other Guarantor) exceeds
the amount of all the debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder and any obligations of any other
Guarantor that have been Guaranteed by
-5-
<PAGE>
such Guarantor) and the denominator of which is (y) the amount by which the
aggregate fair saleable value of all properties of all of the Guarantors exceeds
the amount of all the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Guarantors hereunder) of all the Guarantors, determined (A) with respect to any
Guarantor that is a party hereto on the date hereof, as of the date hereof, and
(B) with respect to any other Guarantor, as of the date such Guarantor becomes a
Guarantor.
Section 2.11. General Limitation on Guarantee. In any action or proceeding
involving any state corporate law, or any state or Federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor under Section 2.01 hereof would
otherwise, taking into account the provisions of Section 2.10 hereof, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under said
Section 2.01, then, notwithstanding any other provision hereof to the contrary,
the amount of such liability shall, without any further action by such
Guarantor, any Secured Party, or any other Person, be automatically limited and
reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.
Section 2.12. Other Guarantors. This Agreement shall remain the
unconditional, absolute, and irrevocable obligation of each Guarantor signatory
hereto regardless of whether any other Person (i) becomes a party hereto
obligated as a Guarantor hereunder or otherwise as a guarantor in respect of the
Obligations (whether or not the Credit Agreement requires that such Person be or
become a Guarantor) or (ii) fails to become or ceases to be a party hereto or
otherwise fails to become or ceases to be a Guarantor of the Obligations
(whether or not the Credit Agreement requires that such Person be or become a
Guarantor).
Section 2.13. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition and assets of the
Borrowers, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that no Secured Party has or
will have any duty to advise any of the Guarantors of information regarding such
circumstances or risks.
Section 3.01. Representation and Warranties Each Guarantor represents and
warrants that all representations and warranties relating to it in the Credit
Agreement are true and correct.
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<PAGE>
Section 4.01. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by any Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent with the written consent of the Required Lenders.
Any such waiver, consent or approval shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Guarantor in any case shall entitle any Guarantor to any other or further notice
or demand in the same, similar or other circumstances. No waiver by any Secured
Party of any breach or default of or by any Guarantor under this Agreement shall
be deemed a waiver of any other previous breach or default or any thereafter
occurring.
Section 4.02. Survival; Severability.
(a) All covenants, agreements, representations and warranties
made by the Guarantors herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document (i) shall be considered to have been relied upon by the
Lenders and the other Secured Parties and shall survive the making by the
Lenders of the Loans, and the execution and delivery to the Lenders of any Notes
evidencing such Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and (ii) shall continue in full force and effect as
long as any of the Obligations is outstanding and unpaid or the LC Exposure does
not equal zero and as long as the Revolving Credit Commitments have not been
terminated.
(b) Any provision of this Agreement that is illegal, invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity or enforceability of such provisions in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or to otherwise amend this Agreement to achieve such result.
Section 4.03. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Credit Party that are contained in this Agreement shall
bind and inure to the benefit of each party hereto and their respective
successors and assigns. No Credit Party may assign or transfer any of its rights
or obligations hereunder except as expressly contemplated by this Agreement or
the other Loan Documents (and any such attempted assignment shall be void).
Section 4.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
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<PAGE>
Section 4.05. Headings; Interpretation. The Article and Section headings
in this Agreement are for convenience only and shall not affect the construction
hereof. The rules of interpretation of Section 1.03 of the Credit Agreement
shall apply to this Agreement.
Section 4.06. Notices. Notices, consents and other communications provided
for herein shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. Communications
and notices to any Guarantor shall be given to it at its address set forth in
Schedule A hereto.
Section 4.07. Counterparts; Additional Guarantors. (a) This Agreement may
be executed in separate counterparts (telecopy of any executed counterpart
having the same effect as manual delivery thereof), each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one Agreement.
(b) Upon execution and delivery after the date hereof by the
Administrative Agent and a Subsidiary of the Company of an instrument in the
form of Exhibit 4.07(b) hereto, such Subsidiary shall become a Guarantor
hereunder with the same force and effect as if originally named as a Guarantor
herein. The execution and delivery of such instrument shall not require the
consent of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of,
or the failure to add, any new Guarantor as a party hereto, in each case whether
or not required under the Credit Agreement.
Section 4.08. Right of Setoff. Each Guarantor hereby agrees that if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates 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 obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of any Guarantor against any of and all the obligations of
such Guarantor now or hereafter existing under this Agreement or any other Loan
Document held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
Section 4.09. Jurisdiction; Consent to Service of Process.
(a) Each Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in
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<PAGE>
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Collateral Agent, or any
other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement against any Guarantor or its properties in the courts
of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in the preceding paragraph. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 4.06. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 4.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Subsidiary
Guarantee Agreement to be duly executed and delivered by their respective
officers or representatives as of the day and year first above written.
KINRO HOLDING, INC.
By: _________________________________
Name:
Title:
SHOALS HOLDING, INC.
By: _________________________________
Name:
Title:
KINRO MANUFACTURING, INC.
By: _________________________________
Name:
Title:
KINRO TEXAS LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By: _________________________________
Name:
Title:
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<PAGE>
KINRO TENNESSEE LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By: ________________________________________
Name:
Title:
SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By: ________________________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By: ________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: ________________________________________
Name:
Title:
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<PAGE>
Schedule A
to
Subsidiary Guarantee Agreement
Addresses for Notice
- --------------------------------------------------------------------------------
Party Mailing Address County
- --------------------------------------------------------------------------------
Kinro Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
- --------------------------------------------------------------------------------
Shoals Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
- --------------------------------------------------------------------------------
Kinro Manufacturing, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Kinro Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
- --------------------------------------------------------------------------------
Kinro Tennessee Limited 311 Greenway Boulevard Rhea
Partnership Dayton, TN 37321
- --------------------------------------------------------------------------------
Shoals Supply Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
- --------------------------------------------------------------------------------
Shoals Supply Tennessee 190 Durham Road
Limited Partnership Maynardville, TN 37807 Union
- --------------------------------------------------------------------------------
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<PAGE>
Exhibit 4.07(b)
to
Subsidiary Guarantee Agreement
SUPPLEMENT dated as of _______ to the Subsidiary Guarantee Agreement (as
amended, supplemented, or modified from time to time, the "Subsidiary Guarantee
Agreement") made by each direct and indirect subsidiary of DREW INDUSTRIES
INCORPORATED, a Delaware corporation (the "Company") (other than its
Subsidiaries KINRO, INC., an Ohio corporation, SHOALS SUPPLY, INC., a Delaware
corporation, and LIPPERT COMPONENTS, INC., a Delaware corporation (each, a
"Borrower")), party thereto (each, a "Guarantor") and THE CHASE MANHATTAN BANK
as Agent (the "Administrative Agent") for the Secured Parties (as such term is
defined in the Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January ___,
1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among the Borrowers, the financial institutions party thereto as
lenders (the "Lenders") and THE CHASE MANHATTAN BANK as administrative agent (in
such capacity, the "Administrative Agent").
Terms used herein as defined terms and not otherwise defined herein shall
have the meanings given thereto in the Credit Agreement.
The Guarantors have entered into the Subsidiary Guarantee Agreement to
induce the Lenders to make the Loans. Pursuant to (and as more particularly set
forth in) Section 5.09 of the Credit Agreement, the undersigned Subsidiary of
the Company (the "New Guarantor") is required to become a Guarantor pursuant to
an instrument in form, scope and substance satisfactory to the Administrative
Agent. Section 4.07(b) of the Subsidiary Guarantee Agreement provides that the
New Guarantor may become a party to the Subsidiary Guarantee Agreement by
entering into an agreement in the form of this Supplement.
Accordingly, and for other good and lawful consideration the receipt and
sufficiency of which are hereby acknowledged, the Administrative Agent and the
New Guarantor agree as follows:
Section 1. In accordance with Section 4.07(b) of the Subsidiary Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Subsidiary Guarantee Agreement with the same force and effect as if
originally named therein as a Guarantor, and the New Guarantor hereby agrees (a)
to all the terms and provisions of the Subsidiary Guarantee Agreement applicable
to it as a Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Guarantor thereunder are true and
correct on and as of the date hereof. Each reference to a "Guarantor" in the
Subsidiary
<PAGE>
Guarantee Agreement shall be deemed to include the New Guarantor. The Subsidiary
Guarantee Agreement is hereby incorporated herein by reference.
Section 2. The New Guarantor represents and warrants to the Administrative
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity (regardless of whether considered in a proceeding at law or in equity).
Section 3. This Supplement 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 Supplement shall become
effective when the Administrative Agent shall have received counterparts of this
Supplement that bear the signatures of the New Guarantor and the Administrative
Agent.
Section 4. The New Guarantor agrees to furnish (including herewith) to the
Administrative Agent such information, including any information that the
Administrative Agent or any Lender shall reasonably request in connection with
the New Guarantor.
Section 5. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in any other Loan Document shall not in any way be affected or
impaired. The parties hereto shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
Section 8. All communications and notices hereunder shall be in writing
and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature hereto.
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<PAGE>
Section 9. The New Guarantor agrees to reimburse the Administrative Agent
for its expenses incurred in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel.
-3-
<PAGE>
IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have
duly executed this Supplement as of the day and year first above written.
[NAME OF NEW GUARANTOR]
By __________________________
Name:
Title:
Address:
_____________________________
_____________________________
_____________________________
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By: _________________________
Name:
Title:
-4-
Exhibit 4.01-3
to the
Credit Agreement
Exhibit 10.177 - Subordination Agreement
SUBORDINATION AGREEMENT dated as of January 28, 1998 made by DREW
INDUSTRIES INCORPORATED, a Delaware corporation (the "Company") and each direct
and indirect Subsidiary of the Company (each, together with the Company, a
"Credit Party"), with and in favor of THE CHASE MANHATTAN BANK, as agent (in
such capacity, the "Administrative Agent") for the Lenders (as defined in the
Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January
28, 1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among Kinro, Inc., an Ohio corporation, Shoals Supply, Inc., a
Delaware corporation, and Lippert Components, Inc., a Delaware corporation, as
Borrowers (the "Borrowers"), the financial institutions party thereto as lenders
(the "Lenders") and The Chase Manhattan Bank as administrative agent (in such
capacity the "Administrative Agent"). Terms used herein as defined terms and not
otherwise defined herein shall have the meanings given thereto in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrowers upon the
terms and subject to the conditions specified in the Credit Agreement. Each
Borrower is a direct Subsidiary of the Company. The Credit Parties may make
loans and advances to other Credit Parties upon the terms and conditions thereto
contained in the Credit Agreement, including, without limitation, the
subordination of such obligations to the obligations of the Credit Parties under
the Loan Documents. The obligations of the Lenders to make Loans are conditioned
on, among other things, the execution and delivery by each Credit Party of a
Subordination Agreement in the form hereof.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1.01. Definitions; Terms. References to this "Agreement" shall be
to this Subordination Agreement as amended, supplemented, or otherwise modified
from time to time. The term "Senior Obligations" shall mean, collectively, the
due and punctual payment of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans when and as due, whether at maturity,
by acceleration, upon one or more dates on which repayment or prepayment is
required, or otherwise, (ii) each payment required to be made by the Borrowers
under the Credit Agreement in respect of the Letter of Credit when and as due,
including payments in respect of
<PAGE>
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), (x) of the Borrowers to one or
more of the Secured Parties under the Credit Agreement, (y) of the Guarantors
under the Guarantee Agreements, (z) of the Borrowers and of the other Credit
Parties under any other Loan Documents to which the Borrowers or such other
Credit Parties are or are to be parties, and (aa) of the Borrowers (or either of
them) to any Lender as an Interest Rate Protection Merchant under or in respect
of any Interest Rate Hedging Agreement now or hereafter in effect. The term
"Subordinated Debt" shall mean any and all Indebtedness, obligations and
liabilities that is or was at any time owed by any Credit Party to any other
Credit Party (including all interest accrued or to accrue thereon up to the date
of such full payment thereof) of every kind and nature whatsoever, whether
represented by negotiable instruments or other writings, whether direct or
indirect, absolute or contingent, due or not due, secured or unsecured,
original, renewed, modified or extended, now in existence or hereafter incurred,
originally contracted with the Credit Party or with another Person, and whether
contracted alone or jointly and/or severally with another or others.
Section 2.01. Subordination. Each Credit Party hereby agrees that all
claims and demands, and all interest accrued or that may hereafter accrue
thereon, in respect of any Subordinated Debt are subject and subordinate to the
prior indefeasible payment and satisfaction in full in cash of all Senior
Obligations. In furtherance of and not in limitation of the foregoing:
(i) no payment or prepayment of any principal or
interest on account of, and no repurchase, redemption or other retirement
(whether at the option of the holder or otherwise) of Subordinated Debt
shall be made, if at the time of such payment, prepayment, repurchase,
redemption or retirement or immediately after giving effect thereto there
shall exist a Default or Event of Default;
(ii) in the event of any insolvency or bankruptcy
proceedings, and any receivership, liquidation, reorganization or other
similar proceedings in connection therewith, relating to any Credit Party
or to its creditors, as such, or to its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of
any Credit Party, whether or not involving insolvency or bankruptcy, then
the holders of Senior Obligations shall be entitled to receive final,
indefeasible payment in full in cash of all Senior Obligations (including
interest thereon accruing after the commencement of any such proceedings,
whether or not allowed or allowable as a claim in such proceedings) (and
the LC Exposure shall have been reduced to zero and the Revolving Credit
Commitments shall have terminated), before the holders of the Subordinated
Debt (including any other Credit Party) shall be entitled to receive any
payment or other distribution on account of the Subordinated Debt, and to
that end the holders of Senior Obligations shall be entitled to receive
distributions of any kind or character, whether in cash or property or
securities, which may be payable or deliverable in any such proceedings in
respect of the Subordinated Debt;
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<PAGE>
(iii) in the event that any Subordinated Debt is
declared due and payable before its expressed maturity because of the
occurrence of an event of default (under circumstances when the provisions
of the foregoing paragraphs (i) or (ii) are not applicable), the holders
of the Senior Obligations outstanding at the time such Subordinated Debt
so becomes due and payable because of such occurrence of such an event of
default shall be entitled to receive final, indefeasible payment in full
in cash of all Senior Obligations (and the LC Exposure shall have been
reduced to zero and the Commitments shall have terminated) before the
holders of the Subordinated Debt (including any Credit Party) are entitled
to receive any payment or other distribution on account of the
Subordinated Debt;
(iv) in the event that, notwithstanding the occurrence
of any of the events described in paragraphs (i), (ii) and (iii), any such
payment or distribution of assets of any Credit Party of any kind or
character, whether in cash, property or securities, shall be received by
the holders of Subordinated Debt (including any Credit Party) before all
Senior Obligations are finally and indefeasibly paid in full in cash (and
the LC Exposure shall have been reduced to zero and the Commitments shall
have terminated) such payment or distribution shall be held in trust for
the benefit of, and shall be promptly paid over or delivered to the
holders of such Senior Obligations or their representative or
representatives, including the Administrative Agent, or as their
respective interests may appear, for application to the payment of all
Senior Obligations remaining unpaid to the extent necessary to pay such
Senior Obligations in full in cash, in accordance with the terms thereof,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Obligations;
(v) no holder of Senior Obligations shall be prejudiced
in its right to enforce subordination of the Subordinated Debt by any act
or failure to act on the part of any Credit Party; and
(vi) no payment on any Subordinated Debt shall be made
to or for the benefit of any holders of the Senior Notes unless
concurrently therewith payment shall be made in respect thereof on the
Senior Obligations to the Administrative Agent for the benefit of the
Lenders on a pari passu basis; nor shall assignment or other transfer of
any instrument evidencing any Subordinated Debt be made to or for the
benefit of the holders of the Senior Notes unless the Administrative Agent
(or the Collateral Agent, as appropriate) shall concurrently therewith
receive an assignment or transfer of equal priority on a parri passu
basis.
Section 2.02. No Payment or Security. Each Credit Party agrees not to make
payment (except if permitted under Section 2.01 hereof) of, or give any security
for, any Subordinated Debt.
Section 2.03. Waiver; No Limitations. (a) Each Credit Party waives any and
all notice of the acceptance of the subordination hereunder and of the creation
or accrual of any of the Senior Obligations or of any renewals, extensions,
increases, or other modifications thereof from time to time, or of the reliance
of any Lender or any other Secured Party upon this Agreement.
-3-
<PAGE>
(b) Nothing contained herein shall constitute or be deemed to be a
waiver or to limit any rights in any insolvency proceeding or under applicable
law of any Lender or any other Secured Party as a creditor of any Credit Party,
including in respect of any claim that any payment in respect of Subordinated
Debt, whether or not permitted under Section 2.01 hereof, is a preferential
transfer or otherwise should be set aside or recovered for the benefit of
creditors of any Credit Party.
Section 2.04. No Impairment of Subordination. Each holder of Subordinated
Debt hereby consents that the liability of each Credit Party or of any other
party for or upon the Senior Obligations may from time to time, in whole or in
part, be renewed, increased, extended, or modified, in any and all respects, or
accelerated, compromised, settled or released, and that any collateral security
and Liens for the Senior Obligations, or any guarantee or other accommodation in
respect thereof may, from time to time, in whole or in part, be exchanged, sold,
released or surrendered by the Administrative Agent, the Collateral Agent, the
Issuing Bank, or any Lender, as it may deem advisable, or that any security
interest may be unperfected, and that the financial condition, legal status,
corporate structure or identity, entity classification, affiliation, or any
other characteristic affecting any Credit Party, or affecting any Senior
Obligation, may change in any respect whatsoever, and any other fact or
circumstance may occur that would, but for this specific provision to the
contrary, relieve such holder of Subordinated Debt from the provisions of this
Agreement, all without impairing the subordination contained in this Agreement
and without any notice to or assent from such holder of Subordinated Debt.
Section 2.05. Proof of Claim; Past Default. (a) Each holder of
Subordinated Debt hereby irrevocably authorizes the Administrative Agent, and
irrevocably constitutes and appoints it as its attorney in fact with full power
(coupled with an interest, and with power of substitution) for the benefit of
the Lenders, in the name, place and stead of such holder of Subordinated Debt
and whether or not a default exists with respect to the Subordinated Debt, to
file proofs of claim for the full amount of the Subordinated Debt held by it
against any obligor in respect thereof or such obligor's property in any
statutory or non-statutory proceeding affecting such obligor or the Subordinated
Debt or any other proceeding and to vote the full amount of the Subordinated
Debt (i) for or against any proposal or resolution; (ii) for a trustee or
trustees or for a committee of creditors; or (iii) for the acceptance or
rejection of any proposed arrangement, plan of reorganization, composition,
settlement or extension and in connection with any such proceeding.
(b) After the occurrence and during the continuation of a
Default or Event of Default, should any payment or distribution or collateral
security or proceeds of any collateral security be received or collected by the
holder of any Subordinated Debt for or on account of any Subordinated Debt,
prior to the time that all Senior Obligations have been fully, finally, and
indefeasibly paid in cash (and the LC Exposure reduced to zero and the Revolving
Credit Commitments terminated), such holder of Subordinated Debt shall forthwith
deliver the same to the Administrative Agent, in precisely the form received
(with the endorsement of such holder of Subordinated Debt where necessary), for
application on account of the Senior Obligations (or, in the case of collateral
security, delivery to the Collateral Agent for such application thereby) and
such holder of Subordinated Debt agrees that, until so delivered, the same shall
be deemed received by such holder of Subordinated Debt as trustee
-4-
<PAGE>
for the Secured Parties in trust for the Secured Parties; and in the event of
the failure of such holder of Subordinated Debt to endorse any instrument for
the payment of money so received payable to its order, the Administrative Agent
or any officer or employee thereof is hereby irrevocably constituted and
appointed attorney in fact for such holder of Subordinated Debt, with full power
(coupled with an interest and with full power of substitution) to make any such
endorsement. In the event that such holder of Subordinated Debt fails to make
such delivery, such holder of Subordinated Debt agrees to immediately pay to the
Administrative Agent for the ratable benefit of the Lenders an amount equivalent
to any such payment or the value of such security received.
Section 2.06. No Transfer. Each Credit Party represents and warrants to
the Secured Parties that such Credit Party has not (except for the benefit of
the Secured Parties) granted any security interest in or made any other transfer
or assignment of any Subordinated Debt (except to (x) the Collateral Agent, in
each case for the ratable benefit of the Secured Parties and (y) concurrently
herewith, and on a pari passu basis to the holders of the Senior Notes pursuant
to the subordination agreement contemplated by the Senior Note Placement
Agreement) and agrees that such Credit Party will not grant a security interest
therein or make any other transfer or assignment thereof (except to or as
designated by the Administrative Agent).
Section 2.07. Instruments. Each Credit Party represents and warrants to
the Secured Parties that as of the date hereof the Subordinated Debt is not
represented by any instruments or other writings. Each Credit Party agrees that
at no time hereafter will any part of the Subordinated Debt be represented by
any instruments or other writings, except such instruments or other writings, if
any, (i) that in each case bear a legend clearly referring to this Agreement and
setting forth that the obligations represented by such instruments or writings
are subject to the subordination hereunder, and (ii) true copies of which shall
have been delivered to the Administrative Agent promptly after execution
thereof. Subordinated Debt not evidenced by an instrument or document shall
nevertheless be deemed subordinated by virtue of this Agreement.
Section 2.08. Statements of Account; Books and Records. Each holder of
Subordinated Debt further hereby agrees that it will render to the
Administrative Agent or any Lender upon demand, from time to time, a statement
of the account of each Credit Party with it. Each holder of Subordinated Debt
agrees that its respective books and records, and financial statements, will
appropriately show that the Subordinated Debt is subject to this Agreement.
Section 2.09. Other Subordination Provisions. The subordination hereunder
shall be in addition to, and shall not limit or be limited by, any subordination
provisions contained in any Guarantee Agreement or other Loan Document.
Section 3.01. Representation and Warranties. Each Credit Party represents
and warrants to the Secured Parties that all representations and warranties
relating to it in the Credit Agreement are true and correct.
-5-
<PAGE>
Section 4.01. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by any Credit Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent with the written consent of the Required Lenders.
Any such waiver, consent or approval shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in the same, similar or other circumstances. No waiver of any
breach or default of or by any Credit Party under this Agreement shall be deemed
a waiver of any other previous breach or default or any thereafter occurring.
Section 4.02. Survival; Severability.
(a) All covenants, agreements, representations and warranties
made by the Credit Parties herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document (i) 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 any Notes evidencing such Loans,
regardless of any investigation made by the Administrative Agent, the Collateral
Agent, the Issuing Bank, or any Lender or on their behalf, and (ii) shall
continue in full force and effect as long as any of the Obligations is
outstanding and unpaid, the LC Exposure does not equal zero, and the Revolving
Credit Commitments have not been terminated.
(b) Any provision of this Agreement that is illegal, invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity or enforceability of such provisions in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or to otherwise amend this Agreement to achieve such result.
Section 4.03. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Credit Party that are contained in this Agreement shall
bind and inure to the benefit of each party hereto and their respective
successors and assigns. No Credit Party may assign or transfer any of its rights
or obligations hereunder except as expressly contemplated by this Agreement or
the other Loan Documents (and any such attempted assignment shall be void).
Section 4.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
Section 4.05. Headings; Interpretation. The Article and Section headings
in this Agreement are for convenience only and shall not affect the construction
hereof. The rules of interpretation of Section 1.03 of the Credit Agreement
shall apply to this Agreement.
-6-
<PAGE>
Section 4.06. Notices. Notices, consents and other communications provided
for herein shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. Communications
and notices to any Credit Party shall be given to it at its address set forth in
Schedule A hereto.
Section 4.07. Counterparts; Additional Parties. (a) This Agreement may be
executed in separate counterparts (telecopy of any executed counterpart having
the same effect as manual delivery thereof), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
Agreement.
(b) Upon execution and delivery after the date hereof by the
Administrative Agent and a Subsidiary of the Company of an instrument in the
form of Exhibit 4.07(b) hereto, such Subsidiary shall become a party hereto with
the same force and effect as if originally named herein. The execution and
delivery of such instrument shall not require the consent of any Credit Party.
The rights and obligations of each Credit Party and each other holder of
Subordinated Debt hereunder shall remain in full force and effect
notwithstanding the addition of, or the failure to add, any Person as a party
hereto, in each case whether or not required under the Credit Agreement.
Section 4.08. Jurisdiction; Consent to Service of Process.
(a) Each Credit Party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, the Issuing Bank, or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Credit Party or its properties in the courts
of any jurisdiction.
(b) Each Credit Party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in the preceding paragraph. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 4.06. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
-7-
<PAGE>
Section 4.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed and delivered by their respective
officers or representatives as of the day and year first above written.
DREW INDUSTRIES INCORPORATED
By: ____________________________________
Name:
Title:
KINRO, INC.
By: ____________________________________
Name:
Title:
SHOALS SUPPLY, INC.
By: ____________________________________
Name:
Title:
LIPPERT COMPONENTS, INC.
-8-
<PAGE>
By:_____________________________________
KINRO HOLDING, INC.
By: ____________________________________
Name:
Title:
SHOALS HOLDING, INC.
By: ____________________________________
Name:
Title:
KINRO MANUFACTURING, INC.
By: ____________________________________
Name:
Title:
KINRO TEXAS LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By: ____________________________________
Name:
Title:
KINRO TENNESSEE LIMITED PARTNERSHIP
By: KINRO MANUFACTURING, INC.,
its general partner
By: ____________________________________
Name:
Title:
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<PAGE>
SHOALS SUPPLY TEXAS LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By: ____________________________________
Name:
Title:
SHOALS SUPPLY TENNESSEE LIMITED PARTNERSHIP
By: SHOALS SUPPLY, INC., its general partner
By: ____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: ____________________________________
Name:
Title:
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<PAGE>
Schedule A
to
Subordination Agreement
Addresses for Notice
- --------------------------------------------------------------------------------
Party Mailing Address County
- --------------------------------------------------------------------------------
Drew Industries Incorporated 200 Mamaroneck Avenue Westchester
White Plains, NY 10601
- --------------------------------------------------------------------------------
Kinro, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Shoals Supply, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Lippert Components, Inc. 608 Wright Avenue Gratiot
Alma, Michigan 48801
- --------------------------------------------------------------------------------
Kinro Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
- --------------------------------------------------------------------------------
Shoals Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
White Plains, NY 10601
- --------------------------------------------------------------------------------
Kinro Manufacturing, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Kinro Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
- --------------------------------------------------------------------------------
Kinro Tennessee Limited 311 Greenway Boulevard Rhea
Partnership Dayton, TN 37321
- --------------------------------------------------------------------------------
Shoals Supply Texas Limited 4381 Green Oaks Boulevard West Tarrant
Partnership Arlington, TX 76016
- --------------------------------------------------------------------------------
Shoals Supply Tennessee 190 Durham Road
Limited Partnership Maynardville, TN 37807 Union
- --------------------------------------------------------------------------------
The Chase Manhattan Bank Loan and Agency Bank Services New York
Group
The Chase Manhattan Bank
One Chase Manhattan Tower
New YUork, NY 10081
- --------------------------------------------------------------------------------
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<PAGE>
Exhibit 4.07(b)
to
Subordination Agreement
SUPPLEMENT dated as of ______ to the Subordination Agreement (as amended,
supplemented, or modified from time to time, the "Subordination Agreement") made
by DREW INDUSTRIES INCORPORATED, a Delaware corporation (the "Company") and each
direct and indirect subsidiary thereof party thereto (collectively, together
with the Company, the "Credit Parties") and THE CHASE MANHATTAN BANK as Agent
(the "Administrative Agent") for the Secured Parties (as such term is defined in
the Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January ___,
1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among KINRO INC., an Ohio corporation, SHOALS SUPPLY, INC., a
Delaware corporation, LIPPERT COMPONENTS, INC., a Delaware corporation, the
financial institutions party thereto as lenders (the "Lenders") and THE CHASE
MANHATTAN BANK as administrative agent (in such capacity, the "Administrative
Agent").
Terms used herein as defined terms and not otherwise defined herein shall
have the meanings given thereto in the Credit Agreement.
The Credit Parties have entered into the Subordination Agreement to induce
the Lenders to make the Loans. Pursuant to (and as more particularly set forth
in) Section 5.09 of the Credit Agreement, the undersigned Subsidiary of the
Company (the "New Credit Party") is required to become a party to the
Subordination Agreement pursuant to an instrument in form, scope and substance
satisfactory to the Administrative Agent. Section 4.07(b) of the Subordination
Agreement provides that the New Credit Party may become a party to the
Subordination Agreement by entering into an agreement in the form of this
Supplement.
Accordingly, and for other good and lawful consideration the receipt and
sufficiency of which are hereby acknowledged, the Administrative Agent and the
New Credit Party agree as follows:
Section 1. In accordance with Section 4.07(b) of the Subordination
Agreement, the New Credit Party by its signature below becomes a party to the
Subordination Agreement with the same force and effect as if originally a
signatory thereto, and the New Credit Party hereby agrees (a) to all the terms
and provisions of the Subordination Agreement
<PAGE>
applicable to it as a Credit Party thereunder and (b) represents and warrants
that the representations and warranties made by it as a Credit Party thereunder
are true and correct on and as of the date hereof. Each reference to a "Credit
Party" in the Subordination Agreement shall be deemed to include the New Credit
Party. The Subordination Agreement is hereby incorporated herein by reference.
Section 2. The New Credit Party represents and warrants to the
Administrative Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
Section 3. This Supplement 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 Supplement shall become
effective when the Administrative Agent shall have received counterparts of this
Supplement that bear the signatures of the New Credit Party and the
Administrative Agent.
Section 4. The New Credit Party agrees to furnish (including herewith) to
the Administrative Agent such information, including any information that the
Administrative Agent or any Lender shall reasonably request in connection with
the New Credit Party.
Section 5. Except as expressly supplemented hereby, the Subordination
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in any other Loan Document shall not in any way be affected or
impaired. The parties hereto shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
-2-
<PAGE>
Section 8. All communications and notices hereunder shall be in writing
and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the New Credit Party shall be given to
it at the address set forth under its signature hereto.
Section 9. The New Credit Party agrees to reimburse the Administrative
Agent for its expenses incurred in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel.
IN WITNESS WHEREOF, the New Credit Party and the Administrative Agent have
duly executed this Supplement as of the day and year first above written.
[NAME OF NEW CREDIT PARTY]
By ____________________________________
Name:
Title:
Address:
_________________________________
_________________________________
_________________________________
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By ____________________________________
Name:
Title:
-3-
Exhibit 4.01-4
to the
Credit Agreement
Exhibit 10.178 - Pledge and Security Agreement
PLEDGE AND SECURITY AGREEMENT dated as of January 28, 1998, made by
DREW INDUSTRIES INCORPORATED, a Delaware corporation (the "Company"), KINRO,
INC., an Ohio corporation ("Kinro"), SHOALS SUPPLY, INC., a Delaware corpo
ration ("Shoals"; together with Kinro, the "Borrowers" (which term shall also
include, where the context requires, Lippert Components, Inc., a Delaware
corporation ("Lippert"), the Company together with the Borrowers, the "Stock
Pledgors"), KINRO HOLDING, INC., a New York corporation ("KHI"), SHOALS HOLDING,
INC., a New York corporation ("SHI"; together with KHI, the "Partnership
Pledgors") (each of the Company, Kinro, Shoals, KHI and SHI being referred to
herein as a "Pledgor") in favor of The Chase Manhattan Bank as collateral agent
(in such capacity, the "Collateral Agent") for the Secured Parties (as defined
in the Credit Agreement referred to below).
Reference is hereby made to the Credit Agreement dated as of January
28, 1998 (as amended, supplemented, or modified from time to time, the "Credit
Agreement") among Kinro, Shoals and Lippert (as Borrowers), the financial
institutions party thereto as lenders (the "Lenders") and The Chase Manhattan
Bank as agent (in such capacity, the "Administrative Agent"). Terms used herein
as defined terms and not otherwise defined herein shall have the meanings given
thereto in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers upon the
terms and subject to the conditions specified in the Credit Agreement. Each
Pledgor other than the Borrowers has guaranteed the Obligations of the
Borrowers. The obligations of the Lenders to make Loans are conditioned on,
among other things, the execution and delivery by the Pledgors of an agreement
in the form hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I.
Section 1.01. Definitions.In addition to the terms defined above, the
following words and terms shall have the respective meanings, and it is hereby
agreed with respect thereto, as follows:
"Agreement" shall mean this Pledge and Security Agreement, as it
shall be amended, supplemented or otherwise modified from time to time.
"Obligations" shall mean, collectively, (a) the due and punctual
payment of (i) the principal of, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans when and as due, whether at maturity, by acceleration, upon one or
more dates set for repayment or prepayment or otherwise, (ii) each payment
required to be made by the Borrowers under the Credit Agreement in respect of
<PAGE>
the Letter of Credit when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), (x) of the Borrowers under the
Credit Agreement, (y) of the Guarantors under the Guarantee Agreements, (z) of
the Borrowers and of the other Credit Parties under any other Loan Documents
(including this Agreement) to which the Borrowers or such other Credit Parties
are or are to be parties, and (aa) of the Borrowers (or either of them) to any
Lender as an Interest Rate Protection Merchant under or in respect of any
Interest Rate Hedging Agreement now or hereafter in effect, and (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrowers under or pursuant to the Credit Agreement and of the Borrowers
and of the other Credit Parties under the other Loan Documents (including the
Guarantee Agreements and this Agreement) and or under any Interest Rate Hedging
Agreement now or hereafter in effect.
"Partner" shall mean any partner in a Partnership.
"Partnership" shall have the meaning given thereto in Schedule II
hereto.
"Partnership Documents" shall have the meaning given thereto in
Schedule II hereto.
ARTICLE II.
Section 2.01. Pledge and Grant of Security Interest (a) As security for
the payment and performance in full of its Obligations, each Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets over
and delivers unto the Collateral Agent, and grants to the Collateral Agent for
the ratable benefit of the Secured Parties, a first priority security interest
in (i) the shares of capital stock listed below the name of such Pledgor on
Schedule I and any shares of stock of any Subsidiary obtained in the future by
such Pledgor and the certificates representing all such shares (the "Pledged
Stock"), (ii) all of such Pledgor's respective partnership interests and related
rights described in Schedule II and any partnership interests or other equity
interests in any Subsidiary obtained in the future by such Pledgor (the "Pledged
Interests"), (iii) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms hereof, (iv) subject to Section 2.05, all
payments of dividends and distributions, including, without limitation, all
cash, instruments and other property (including, without limitation, any
security entitlements or investment property), from time to time received,
receivable or otherwise paid or distributed, in respect of, or in exchange for
or upon the conversion of the securities and other property referred to in
clauses (i), (ii), or (iii) above, (v) subject to Section 2.05, all rights and
privileges of such Pledgor with respect to the securities (including, without
limitation, any securities entitlements) and other property referred to in
clauses (i), (ii), (iii) and (iv) above, (vi) any and all custodial accounts,
securities accounts or other safekeeping accounts in which any of the foregoing
property (and any property described in the following clauses (vii) and (viii))
may be deposited or held in, and any security
-2-
<PAGE>
entitlements or other rights relating thereto, (vii) any securities (as defined
in the Uniform Commercial Code) constituted by any of the foregoing, and (viii)
all proceeds of any of the foregoing (the items referred to in clauses (i)
through (vii) above being collectively referred to as the "Collateral"). The
Collateral Agent acknowledges that the security interest in the Collateral
granted herein ranks equally with and shall be pari passu with the security
interest in the Collateral granted to the Trustee pursuant to the pledge
agreement referred to in the Senior Note Purchase Agreement and that the
respective rights of the Trustee and the Collateral Agent with respect to the
Collateral shall be subject to the terms and conditions of the Intercreditor
Agreement.
(b) Upon delivery to the Collateral Agent, any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by undated stock
powers duly executed in blank or other instruments of transfer satisfactory to
the Collateral Agent and by such other instruments and documents as the
Collateral Agent may request. Without limiting Section 2.02(b), (i) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Collateral Agent may request, and (ii) upon the
grant of a security interest in partnership interests or other equity interests
in any Person now or hereafter included in the Collateral, there shall be
executed and delivered to the Collateral Agent such instruments of consent,
waiver, and recognition, from the issuer and other equity holders thereof
(having provisions comparable to the Consent, Waiver and Recognition Agreement
in the form of Exhibit 2.01 hereto) and such other instruments and documents
(including Uniform Commercial Code financing statements duly executed in proper
form for filing in such offices as the Collateral Agent shall require) as the
Collateral Agent may request. Each delivery of Pledged Securities and each such
grant of a security interest shall be accompanied by a schedule describing the
securities, securities entitlements, investment property and equity interests
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule I or Schedule II, as applicable, and made a part hereof
(provided that the failure to deliver any such schedule shall not impair the
security interest hereunder of the Collateral Agent in any Pledged Securities or
Pledged Interests). Each schedule so delivered (except to the extent in error)
shall supersede any prior schedules so delivered.
Section 2.02. Deliveries. (a) Each Pledgor agrees promptly to deliver or
cause to be delivered to the Collateral Agent any and all Pledged Securities,
and any and all certificates or other instruments or documents representing
Collateral, and any other instruments referred to in Section 2.01(b)(i) endorsed
to the Collateral Agent or in blank by an effective endorsement, or (ii) causing
the certificate to be registered in the name of the Collateral Agent, upon
original issue or registration of transfer by the issuer thereof.
(b) Upon execution and delivery hereof there shall be
delivered to the Collateral Agent a duly executed Consent, Waiver, and
Recognition Agreement in the form of Exhibit 2.01 hereto in respect of each
Partnership.
(c) With respect to such of the Collateral as constitutes an
uncertificated security, (i) the Pledgor agrees to cause the issuer to register
the Collateral Agent as the registered owner thereof, upon original issue or
registration of transfer or (ii) the issuer
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agrees that it will comply with instructions with respect to such uncertificated
security originated by the Collateral Agent without further consent of the
registered owner.
(d) With respect to such of the Collateral as constitutes a
"security entitlement" as defined in Article 8 of the Uniform Commercial Code of
New York, the Pledgor agrees to cause the securities intermediary to indicate by
book entry that such security entitlement has been credited to a securities
account of the Collateral Agent.
Section 2.03. Representations; Warranties; Covenants. Each Pledgor hereby
represents, warrants and covenants, to and with the Collateral Agent that:
(a) (i) the Pledged Stock has been delivered to the Collateral
Agent in pledge hereunder, and represents that percentage as set forth on
Schedule I of the issued and outstanding shares of each class of the capital
stock of the issuer with respect thereto; and (ii) a first priority security
interest in the Pledged Interests has been granted to the Collateral Agent
hereunder, and the Pledged Interests represent the interests in the Partnerships
as set forth in Schedule II;
(b) each Pledgor (i) is and will at all times continue to be
the direct owner, beneficially and of record, of the Collateral indicated on
Schedule I or Schedule II to be owned by such Pledgor, (ii) holds the same free
and clear of all Liens, except for the security interest granted in the
Collateral hereunder and except for the security interest which the Pledgor has
concurrently herewith granted to the Trustee for the Senior Notes for the
benefit thereof on an equal priority and pari passu basis with the security
interest created hereunder, (iii) will make no assignment, pledge, hypothecation
or transfer of or create or suffer to exist any security interest in or other
Lien on, the Collateral, other than pursuant hereto, and (iv) subject to Section
2.05, will cause any and all Collateral to be forthwith deposited with the
Collateral Agent and pledged or otherwise subject to the security interest
created hereunder;
(c) each Pledgor (i) has the power and authority to pledge or
grant a security interest in the Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein and
the Lien of the Collateral Agent for the ratable benefit of the Secured Parties
against any and all other Liens, however arising, of all persons whomsoever.
(d) no consent or approval (i) of any Governmental Authority
or any securities exchange or (ii) of any other Person except any such Person
whose consent has been obtained in writing and delivered to the Collateral
Agent, was or is necessary to the validity of the pledge or grant of a Security
Interest effected hereby;
(e) (i) when the Pledged Securities, certificates, instruments
or other documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the Collateral Agent
will have a valid and perfected first Lien upon and security interest in such
Pledged Securities as security for the payment and performance of the
Obligations; and (ii) when Uniform Commercial Code Financing Statements in the
form of Exhibit 2.03 hereto naming the appropriate Pledgor in accordance with
Schedule II as debtor and the Collateral Agent as secured party are filed in the
respective offices as set
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forth in Schedule 2.03 hereto, the Collateral Agent will have a valid and
perfected first Lien upon and security interest in such Pledged Interests as
security for the payment and performance of the Obligations;
(f) the pledge and the grant of a security interest effected
hereby are effective to vest in the Collateral Agent, on behalf of the Secured
Parties, the rights of the Collateral Agent in the Collateral as set forth
herein.
Section 2.04. Registration in Nominee Name, Denominations; Further
Assurances. (a) The Collateral Agent, on behalf of the Secured Parties, shall
have the right (in its sole and absolute discretion) to hold the Pledged
Securities and Pledged Interests in its own name, the name of its nominee or the
name of the applicable Pledgor, endorsed or assigned in blank or in favor of the
Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies
of any notices or other communications received by it with respect to Pledged
Securities or Pledged Interests. The Collateral 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 (and the surrender of any certificates to the issuer or any agent
thereof for such purpose shall not constitute a release of the security interest
of the Collateral Agent in any such Pledged Securities represented thereby). If
at any time the Pledged Interests are represented or evidenced by any
certificates, the same shall promptly be delivered to the Collateral Agent in
pledge hereunder together with any instruments of transfer requested by the
Collateral Agent.
(b) Each Pledgor 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 Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect the pledge
and the security interest and the rights and remedies created hereby, including
the payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the pledge, and the granting of the security
interest hereunder and the filing of any financing statements or other documents
in connection herewith.
Section 2.05. Voting Rights; Dividends. (a) Unless and until an Event of
Default shall have occurred and be continuing;
(i) The Pledgors shall be entitled to exercise any and all
voting and/or other consensual rights and powers accruing to them as owners of
Pledged Securities and Pledged Interests for any purpose consistent with the
terms of this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such action would not adversely affect the rights
inuring to a holder of the Pledged Securities and Pledged Interests or the
rights and remedies of any of the Secured Parties under this Agreement or any
other Loan Document or the ability of the Secured Parties to exercise the same.
(ii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends and distributions paid on the Pledged Securities and cash
distributions in respect of the Pledged Interests to the extent and only to the
extent that such cash dividends and cash distributions are permitted by, and
otherwise paid in accordance with, the terms and conditions of the Credit
Agreement, the other Loan Documents and applicable laws. All
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noncash dividends and distributions, and all dividends and distributions
(whether in cash or otherwise) in connection with a partial or total liquidation
or dissolution, return of capital, capital surplus or paid-in surplus, and all
other payments, dividends, and distributions made on or in respect of the
Pledged Securities or Pledged Interests, 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 any
amendment of any Partnership Document or the admission or withdrawal of any
Partner, or received in exchange for Pledged Securities or Pledged Interests or
any part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer or
Partnership may be a party or otherwise, shall (except as otherwise provided in
the preceding sentence) be and become part of the Collateral, and, if received
by a Pledgor, shall not be commingled by such Pledgor 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 Collateral Agent and shall be forthwith
delivered to the Collateral Agent in the same form as so received (with any
necessary endorsement)(any such cash to be applied in accordance with Section
2.07).
(b) Upon the occurrence and during the continuation of an
Event of Default, all rights of the Pledgors to exercise the voting and
consensual rights and powers they are entitled to exercise pursuant to paragraph
(a)(i) of this Section 2.05, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers.
(c) Upon the occurrence and during the continuation of an
Event of Default, all rights of each Pledgor to dividends and other
distributions that such Pledgor is authorized to received pursuant to the first
sentence of paragraph (a)(ii) above shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to receive and retain such dividends and other
distributions. All dividends and other distributions received by any Pledgor
contrary to the provisions of this Section 2.05 shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement) and
shall be applied in accordance with the provisions of Section 2.07.
Section 2.06. Possession, Sale of Collateral, Etc.
(a) Upon the occurrence and during the continuation of an
Event of Default, the Collateral Agent may sell or cause to be sold, whenever it
shall decide, in one or more sales or parcels, at such prices as it may deem
best, and for cash, on credit or for future delivery, without assumption of any
credit risk, all or any portion of the Collateral, at any broker's board or at
public or private sale, without demand of performance or notice of intention to
sell or of time or place of sale (except ten (10) days' written notice to the
Pledgor thereof of the time and place of such sale, which each Pledgor hereby
agrees to be commercially reasonable, and such other notices as may be required
by applicable statute and cannot be waived), and any Person may be the purchaser
of all or any portion of the Collateral so sold and thereafter hold the same
absolutely, free from any claim or right of whatever kind, including any equity
of redemption, of any Pledgor, any such demand, notice, claim, right or equity
being hereby expressly waived and released. The Collateral Agent shall be
authorized at
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any such sale (if it deems it advisable to do so) to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing the Collateral for their own account for investment and not with a
view to the distribution or sale thereof. At any sale or sales made pursuant to
this Agreement, any Secured Party may bid for or purchase, free from any claim
or right of whatever kind, including any equity of redemption of any Pledgor,
any such demand, notice, claim, right or equity being hereby expressly waived
and released, all or any portion of the Collateral offered for sale, and may
make any payment on account thereof by using any claim for money then due and
payable to such Secured Party by any Pledgor as a credit against the purchase
price. 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 Collateral Agent
may (in its sole and absolute discretion) determine. The Collateral 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 Collateral 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
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral 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. For purposes hereof, (a) a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof, (b)
the Collateral Agent shall be free to carry out such sale pursuant to such
agreement and (c) no Pledgor shall be entitled to the return of the Collateral
or any portion thereof subject thereof, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. The Secured Parties
shall in any such sale make no representations or warranties with respect to the
Collateral or any part thereof, and shall not be chargeable with any of the
obligations or liabilities of any Pledgor. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the Collateral 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. Any sale pursuant to the provisions of this Section
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions.
(b) Each Pledgor hereby agrees that it will indemnify and hold
the Collateral Agent and the Secured Parties, and their respective officers,
directors, employees, agents, and representatives harmless (except for their own
wilful misconduct or gross negligence) from and against any and all claims with
respect to the Collateral asserted both before and after the taking of actual
possession or control of the Collateral by the Collateral Agent pursuant to this
Agreement, or arising out of any act or omission of any party other than the
Collateral Agent prior to such taking of actual possession or control by the
Collateral Agent, or arising out of any act or omission of such Pledgor, or any
agents thereof, before or after the commencement of such actual possession or
control by the Collateral Agent. In any action hereunder the Collateral Agent
shall be entitled to the appointment, without notice, of a
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receiver to take possession of all or any portion of the Collateral and to
exercise such powers as the court shall confer upon such receiver.
Notwithstanding the foregoing, upon the occurrence of an Event of Default, and
during the continuation of such Event of Default, the Collateral Agent shall be
entitled to apply, without prior notice to any Pledgor, any cash or cash items
constituting Collateral in the possession of the Collateral Agent to payment of
the Obligations.
Section 2.07. Application of Proceeds.
(a) Each Pledgor hereby agrees that it shall upon the
occurrence and during the continuation of an Event of Default, (i) immediately
turn over to the Collateral Agent any instruments (with appropriate
endorsements) or other items constituting Collateral not then in the possession
of the Collateral Agent, the possession of which is required for the perfection
of the Collateral Agent's security interest for the ratable benefit of the
Secured Parties, all of which shall be held in trust for the benefit of the
Collateral Agent for the ratable benefit of the Secured Parties and not
commingled prior to its coming into the Collateral Agent's possession, and (ii)
take all steps necessary to cause all sums, monies, royalties, fees,
commissions, charges, payments, advances, income, profits, and other amounts
constituting Proceeds of any Collateral to be deposited directly in an account
of the Pledgor (or any of them) with the Collateral Agent and to cause such sums
to be applied to the satisfaction of the Obligations.
(b) All proceeds from any collection or sale of the Collateral
pursuant hereto, all Collateral consisting of cash, and all deposits in accounts
of any Pledgor with any Secured Party shall be applied (i) first, to the payment
of the fees and expenses of the Collateral Agent incurred pursuant to this
Agreement or any other Loan Document, including costs and expenses of collection
or sale, reimbursement of any advances, and any other costs or expenses in
connection with the exercise of any rights or remedies hereunder or thereunder
(including, without limitation, reasonable fees and disbursements of counsel),
(ii) second, to the payment in full of the Obligations owed to the Lenders and
the Issuing Bank in respect of the Loans, LC Disbursements and any Interest Rate
Hedging Agreements, pro rata as among the Lenders (including, but not limited
to, any of them as an Interest Rate Protection Merchant) in accordance with the
amounts of such Obligations owed to them, and (iii) third, to the payment of the
Obligations (other than those referred to above) pro rata as among the Secured
Parties in accordance with the amounts of such Obligations owed to them. Any
amounts remaining after such applications shall be remitted to the Pledgors or
as a court of competent jurisdiction may otherwise direct. The Collateral Agent
shall have absolute discretion as to the time of application of any such
proceeds, cash, or balances in accordance with this Agreement.
Section 2.08. Power of Attorney.
(a) Each Pledgor does hereby irrevocably make, constitute and
appoint the Collateral Agent or any officer or designee thereof its true and
lawful attorney-in-fact with full power in the name of the Collateral Agent, and
of such Pledgor, with power of substitution, to, upon the occurrence and during
the continuation of an Event of Default, receive, open and dispose of all mail
addressed to such Pledgor, to endorse any note, check, draft, money order, or
other evidence of payment relating to the Collateral that may come into the
possession of the Collateral Agent, with full power and right to cause the mail
of such
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Pledgor to be transferred to the Collateral Agent's own offices or otherwise; to
communicate with any issuer of Pledged Securities or any Partnership; to
commence or prosecute any suits, actions or proceedings to collect or otherwise
realize upon any Collateral or enforce any rights in respect thereof; to settle,
compromise, adjust or defend any claims in respect of any Collateral; to notify
any issuer of Pledged Securities or any Partnership, or otherwise require them
to make payment directly to the Collateral Agent; to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do any and all other acts necessary or proper
to carry out the intent of this Agreement and each other Loan Document and the
grant, confirmation and continuation of the security interests hereunder and
thereunder. Such power of attorney is coupled with an interest and is
irrevocable, and shall survive the bankruptcy, insolvency or dissolution of any
or all of the Pledgors. Nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any other Secured Party, 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
property covered thereby. The Collateral Agent and the Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to any Pledgor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct. The provisions of this Section shall in no event relieve any Pledgor
of any of its obligations hereunder or under the other Loan Documents with
respect to the Collateral or any part thereof or impose any obligation on the
Collateral Agent to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by any Secured
Party of any other or further right that it may have on the date of this
Agreement or hereafter, whether hereunder, under any other Loan Document, by law
or otherwise. Any sale of Collateral pursuant to the provisions of this Section
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions.
(b) Without limiting the preceding paragraph, each Pledgor
does hereby further irrevocably make, constitute and appoint the Collateral
Agent or any officer or designee thereof its true and lawful attorney-in-fact
with full power in the name of the Collateral Agent, and of such Pledgor, with
power of substitution, (i) to enforce all of such Pledgor's rights under and
pursuant to all agreements with respect to the Collateral, all for the sole
benefit of the Collateral Agent and the Secured Parties, (ii) to enter into and
perform such agreements as may be reasonably necessary in order to carry out the
terms, covenants and conditions of this Agreement that are required to be
observed or performed by such Pledgor, (iii) to execute such other and further
mortgages, pledges and assignments of the Collateral and filings or recordations
in respect thereof as the Collateral Agent may require for the purpose of
protecting, maintaining or enforcing the security interest of the Collateral
Agent hereunder for the ratable benefit of the Secured Parties, (iv) to act as
authorized in the following Section hereof, and (v) to do any and all other
things reasonably necessary or proper to carry out the intention of this
Agreement and the grant, confirmation, continuation and perfection of the
security interests hereunder. Such power of attorney is coupled with an interest
and is irrevocable, and shall survive the insolvency, bankruptcy, or dissolution
of any or all of the Pledgors.
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Section 2.09. Financing Statements, Direct Payments, Confirmation . Each
Pledgor hereby authorizes the Collateral Agent to file Uniform Commercial Code
financing statements (and any other filings) required in connection with the
perfection or preservation of the security interest hereunder in respect of all
or any part of the Collateral, and amendments thereto and continuations thereof
with regard to such Collateral, without such Pledgor's signature, or, in the
alternative, to execute such items on behalf of such Pledgor pursuant to the
powers of attorney granted in the preceding Section. Each Pledgor further
authorizes the Collateral Agent to confirm with any issuer of Pledged Securities
or any Partnership the amounts payable to such Pledgor with regard to the
Collateral. Each Pledgor hereby further authorizes the Collateral Agent upon the
occurrence and during the continuation of an Event of Default to notify any
issuer of Pledged Securities or any Partnership that all sums payable to such
Pledgor relating to the Collateral shall be paid directly to the Collateral
Agent.
Section 2.10. Termination. The security interest granted hereunder shall
terminate when all the Obligations have been fully, finally and indefeasibly
paid and performed, the Revolving Credit Exposure of each Lender shall be zero,
and when the Revolving Credit Commitment of each Lender shall have terminated.
Thereupon, the Collateral Agent will return to the Pledgors the Pledged
Securities and execute and deliver, at each Pledgor's expense, Uniform
Commercial Code termination statements reasonably requested by such Pledgor
evidencing the release of the security interest hereunder, all without recourse
to or warranty by the Collateral Agent.
Section 2.11. Remedies Not Exclusive. The remedies conferred upon or
reserved to the Collateral Agent and the other Secured Parties in this Article
and elsewhere in this Agreement are intended to be in addition to, and not in
limitation of any other remedy available to the Collateral Agent and the other
Secured Parties.
Section 2.12. Securities Laws, etc. In view of the position of the
Pledgors in relation to the Pledged Securities and Pledged Interests, or because
of other current or future circumstances, issues may arise under the Securities
Act of 1933, as now or hereafter in effect, or any similar statute hereafter
enacted analogous in purpose or effect (such Act and any such similar statue as
from time to time in effect being called the "Federal Securities Laws") with
respect to any disposition of the Pledged Securities or Pledged Interests
permitted hereunder. The Pledgors understand that compliance with the Federal
Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Pledged Securities or Pledged Interests, and might also limit
the extent to which or the manner in which any subsequent transferee of any
Pledged Securities or Pledged Interests could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Securities or
Pledged Interests under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. The Pledgors recognize that in
light of the foregoing restrictions and limitations the Collateral Agent may,
with respect to any sale of the Pledged Securities or Pledged Interests, limit
the purchasers to those who will agree, among other things, to acquire such
Pledged Securities or Pledged Interests for their own account, for investment,
and not with a view to the distribution or resale thereof. The Pledgors
acknowledge and agree that in light of the foregoing restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may
proceed to make such a sale whether or not a
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registration statement for the purpose of registering such Pledged Securities or
Pledged Interests or part thereof shall have been filed under the Federal
Securities Laws and (b) may approach and negotiate with a single potential
purchaser (including without limitation, any Partner) to effect such sale. The
Pledgors acknowledge and agree that any such sale might result in prices and
other terms less favorable to the seller than if such sale were a public sale
without such restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability for selling all or any part of the
Pledged Securities or Pledged Interests at a price that the Collateral Agent, in
its sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
Section 2.13. No Assumption of Liability. The pledge and security interest
hereunder is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of any Pledgor with respect to or arising out of any of the
Collateral. Each Pledgor shall remain liable to, at its own cost and expense,
duly and punctually observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, including, without limitation, the Partnership
Documents, all in accordance with the terms and conditions thereof, and each
Pledgor agrees to indemnify and hold harmless the Collateral Agent and the other
Secured Parties from and against any and all liability for such performance.
ARTICLE III.
MISCELLANEOUS
Section 3.01. No Discharge. All rights of the Collateral Agent hereunder,
the security interest granted hereunder, and the obligations of each Pledgor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, discharged
or in any way diminished by (i) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document (including this Agreement and each
Guarantee Agreement), any agreement with respect to any of the 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 Obligations or any other amendment or waiver of or any consent to
any departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument relating to the foregoing, (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
Obligations, (iv) any exercise or nonexercise by the Collateral Agent or any
Secured Party of any right, remedy, power or privilege under or in respect of
this Agreement, any other Loan Document or applicable law, including, without
limitation, any failure by the Collateral Agent or any Secured Party to setoff
or release in whole or in part any balance of any deposit account or
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credit on its books in favor of any Credit Party or any waiver, consent,
extension, indulgence or other action or inaction in respect of any thereof, or
(v) any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any Credit
Party or would otherwise, but for this specific provision to the contrary,
operate as a discharge of or exonerate any Pledgor as a matter of law.
Section 3.02. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by any Pledgor therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Collateral Agent with the written consent of the Required Lenders. Any such
waiver, consent or approval shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any Pledgor in any
case shall entitle any Pledgor to any other or further notice or demand in the
same, similar or other circumstances. No waiver by any Secured Party of any
breach or default of or by any Pledgor under this Agreement shall be deemed a
waiver of any other previous breach or default or any thereafter occurring.
Section 3.03. Survival; Severability.
(a) All covenants, agreements, representations and warranties
made by the Pledgors herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the
Collateral Agent and the other Secured Parties and shall survive the making by
the Lenders of the Loans, and the execution and delivery to the Lenders of any
Notes evidencing such Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any other fee or
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or the LC Exposure does not equal zero and as long as the Commitments
have not been terminated.
(b) Any provision of this Agreement that is illegal, invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without invalidating the remaining provisions hereof or affecting the legality,
validity or enforceability of such provisions in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any illegal, invalid
or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or to otherwise amend this Agreement to achieve such result.
Section 3.04. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Pledgor, or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. No Pledgor may assign or transfer any of its rights or
obligations hereunder or any interest herein or in the Collateral except as
expressly contemplated by this Agreement or the other Loan Documents (and any
such attempted assignment shall be void).
-12-
<PAGE>
Section 3.05. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
Section 3.06. Headings. The Article and Section headings in this Agreement
are for convenience only and shall not affect the construction hereof.
Section 3.07. Notices. Notices, consents and other communications provided
for herein shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. Communications
and notices to any Pledgor shall be given to it at its address set forth in
Schedule 3.07 hereto.
Section 3.08. Reimbursement of the Collateral Agent.
(a) The Pledgors jointly and severally agree to pay upon
demand to the Collateral Agent the amount of any and all reasonable and
documented expenses, including the reasonable and documented fees and expenses
of its counsel and of any experts or agents, that the Collateral 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
Collateral Agent hereunder, or (iv) the failure by any Pledgor to perform or
observe any of the provisions hereof. If the Pledgors shall fail to do any act
or thing that they have covenanted to do hereunder or any representation or
warranty of the Pledgors hereunder shall be breached, the Collateral Agent may
(but shall not be obligated to) do the same or cause it to be done or remedy any
such breach and there shall be added to the Obligations the cost or expense
incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification obligations
under the other Loan Documents, the Pledgors jointly and severally agree to
indemnify the Collateral Agent and the Secured Parties and their respective
officers, directors, employees, agents, attorneys, and representatives
("Indemnitees") against, and hold each of them harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against any of them arising
out of, in any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any Indemnitee
is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the Collateral
Agent or any other Secured Party. All amounts due under this Section shall be
payable on written
-13-
<PAGE>
demand therefor and shall bear interest at the default rate (as provided in the
Credit Agreement).
Section 3.09. Counterparts; Additional Pledgors. (a) This Agreement may be
executed in separate counterparts (telecopy of any executed counterpart having
the same effect as manual delivery thereof), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
Agreement.
(b) Upon execution and delivery after the date hereof by the
Collateral Agent and a Subsidiary of the Company of an instrument in the form of
Exhibit 3.09(b) hereto, such Subsidiary shall become a Pledgor hereunder with
the same force and effect as if originally named as a Pledgor herein. The
execution and delivery of such instrument shall not require the consent of any
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of, or the failure
to add, any new Pledgor as a party hereto, in each case whether or not required
under the Credit Agreement.
Section 3.10. Entire Agreement; Jurisdiction; Consent to Service of
Process.
(a) Except as expressly herein provided, this Agreement and
the other Loan Documents constitute the entire agreement among the parties
relating to the subject matter hereof. Any previous agreement among the parties
with respect to the transactions contemplated hereunder is superseded by this
Agreement and the other Loan Documents. Except as expressly provided herein or
in the other Loan Documents, nothing in this Agreement or in any other Loan
Document, 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 or such other Loan Documents.
(b) Each Pledgor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement against any Pledgor or its properties in the courts
of any jurisdiction.
(c) Each Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in the preceding paragraph. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
-14-
<PAGE>
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 3.07. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 3.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers or representatives
as of the day and year first above written.
THE CHASE MANHATTAN BANK, DREW INDUSTRIES INCORPORATED
as Collateral Agent
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
KINRO, INC.
By:_______________________________
Name:
Title:
SHOALS SUPPLY, INC.
By:_______________________________
Name:
Title:
KINRO HOLDING, INC.
By:_______________________________
Name:
Title:
SHOALS HOLDING, INC.
By:_______________________________
Name:
Title:
KINRO MANUFACTURING, INC.
By:_______________________________
Name:
Title:
-16-
<PAGE>
Exhibit 2.03
to
Pledge and Security Agreement
Form of Form UCC-1
<PAGE>
Schedule 2.03
to
Pledge and Security Agreement
Locations for Filing Forms UCC-1
================================================================================
Limited Partnership Debtor Locations
- --------------------------------------------------------------------------------
A. Kinro Texas Kinro Holding, Inc. 1. NY S/S
Limited Partnership 2. NY-Westchester County
3. TX S/S
4. TX-Tarrant County
5. TX-Johnson County
- --------------------------------------------------------------------------------
B. Shoals Supply Texas Shoals Holding, Inc. 1. NY S/S
Limited Partnership 2. NY-Westchester County
3. TX S/S
4. TX-Tarrant County
5. TX-McLennan County
- --------------------------------------------------------------------------------
C. Kinro Tennessee Kinro Holding, Inc. 1. NY S/S
Limited Partnership 2. NY-Westchester County
- --------------------------------------------------------------------------------
D. Shoals Supply Shoals Holding, Inc. 1. NY S/S
Tennessee Limited 2. NY-Westchester County
Partnership
================================================================================
<PAGE>
Schedule 3.07
to
Pledge and Security Agreement
Addresses for Notice
- --------------------------------------------------------------------------------
Party Mailing Address County
- --------------------------------------------------------------------------------
Drew Industries 200 Mamaroneck Avenue Westchester
Incorporated Westchester, NY 10601
- --------------------------------------------------------------------------------
Kinro, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Shoals Supply, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
Kinro Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
Westchester, NY 10601
- --------------------------------------------------------------------------------
Shoals Holding, Inc. c/o Drew Industries Incorporated Westchester
200 Mamaroneck Avenue
Westchester, NY 10601
- --------------------------------------------------------------------------------
Kinro Manufacturing, Inc. 4381 Green Oaks Boulevard West Tarrant
Arlington, TX 76016
- --------------------------------------------------------------------------------
<PAGE>
Schedule I
to
Pledge and Security Agreement
Pledged Stock
================================================================================
Pledgor Issuer Number of Shares Percentage
- --------------------------------------------------------------------------------
Drew Industries Kinro, Inc. 140 100%
Incorporated
- --------------------------------------------------------------------------------
Shoals Supply, Inc. 10 100%
- --------------------------------------------------------------------------------
Lippert Components, 10 100%
Inc.
- --------------------------------------------------------------------------------
Kinro, Inc. Kinro Manufacturing, 10 100%
Inc.
- --------------------------------------------------------------------------------
Kinro Holding, Inc. 10 100%
- --------------------------------------------------------------------------------
Shoals Supply, Inc. Shoals Holding, Inc. 10 100%
================================================================================
<PAGE>
Schedule II
to
Pledge and Security Agreement
Partnership Interests
(a) All of the present and future right, title and interest as
a limited partner in each limited partnership listed in Annex 1 hereto and any
successor(s) thereto or assignee(s) thereof (each, a "Partnership"), of each
Partnership Pledgor and the rights, interest, and benefits in respect thereof of
such Partnership Pledgor arising under the respective agreements, documents
and/or certificates (including, without limitation, any publicly filed
documents) constituting or governing each such Partnership (the "Partnership
Documents"), and all other benefits pertaining thereto and any and all general
intangibles and accounts now owned or hereafter arising or acquired relating to
such Partnership Pledgor's interest in any Partnership and/or any of the
foregoing rights, interest, or benefits; including, without limitation, (i) all
distributions by, and any other payments from each Partnership, and all present
and future rights to receive any distributions or other payments from each
Partnership, whether the same constitute distributions of capital, surplus, or
profits, or derive from any other source including, without limitation, any such
distribution or payment derived from, representing, based upon, measured by, or
otherwise in respect of, (x) the operating revenues of any Partnership, or (y)
any sale, assignment, transfer, or other disposition (or transaction having
comparable effect) of any assets of any Partnership, any mortgaging,
encumbering, or other financing or refinancing of any assets of any Partnership,
any insurance proceeds or condemnation awards in respect of any assets of any
Partnership, any merger, consolidation, or recapitalization of any Partnership,
any redemption or liquidation of the interest of any Partnership Pledgor in any
Partnership, or any contribution of any property to any Partnership by any
partner therein; (ii) without limiting clause (i), any other payments or
distributions, and any rights to receive the same, from any Partnership, from
any partner or partners therein, or from any other party, in respect of (A) any
sale, assignment, transfer, encumbrance or other disposition (or transaction
having comparable effect) of any partner's interest in any Partnership or any
rights in respect thereof, and (B) any payments of principal, interest, or of
any other character in respect of any debt owed by any Partnership or any
partner therein to any Partnership Pledgor, and (iii) without limiting clauses
(i) and (ii) all securities (as defined in the Uniform Commercial Code)
constituted by any of the foregoing (all of which property and rights referred
to in one or more of clauses (i), (ii) or (iii) are referred to collectively as
the "Pledged Interests"); and
(b) the proceeds, products, rents, issues and profits of the
Pledged Interests.
<PAGE>
Annex 1 to Schedule II
to
Pledge and Security Agreement
Limited Partnerships
- --------------------
Kinro Texas Limited Partnership, a Texas limited partnership
Kinro Tennessee Limited Partnership, a Tennessee limited partnership
Shoals Supply Texas Limited Partnership, a Texas limited partnership
Shoals Supply Tennessee Limited Partnership, a Tennessee limited partnership
Drew Industries Incorporated
----------------------------------------------
1997 Annual Report
[GRAPHIC OMITTED]
DREW
<PAGE>
Company Profile
----------------------------------------------
Drew Industries Incorporated
"During 1997, Drew established the foundation for future growth and
profitability. Through strategic acquisitions and internal growth we have
expanded both our product lines and market territory. Future results should
benefit from this expansion, as well as from our recently completed refinancing
and plant additions."
Drew, through its wholly-owned subsidiaries, Kinro, Lippert and Shoals, supplies
a broad array of components for manufactured homes and recreational vehicles.
Manufactured products include windows, doors, chassis, chassis parts, galvanized
roofing and new and refurbished axles. The Company also distributes new and
refurbished tires. Approximately 85 percent of the Company's sales are for
manufactured homes and 15 percent are for recreational vehicles.
Our operating management is led by David L. Webster, President and Chief
Executive Officer of both Kinro and Shoals, who has more than 30 years of
experience in the manufactured housing industry. David, as CEO of Kinro, has
been the driving force behind Drew's growth and profitability over the past 18
years. Under David's leadership, Kinro and Shoals have built one of the finest
management teams in our industries.
With the October 1997 acquisition of Lippert Components, our superb
management group now has the additional talent and support of L. Douglas
Lippert, President and Chief Executive Officer of Lippert Components and his
experienced staff. Because of our "all star" management team, we have good
reason to be extremely confident about Drew's future performance.
The Company's common stock is traded on the American Stock Exchange
(Symbol: DW).
[GRAPHIC OMITTED]
KEY LOCATIONS
The Company's 35 manufacturing and warehouse facilities are concentrated in the
south east, south central and north central United States, as are the facilities
of our customers in the manufactured housing and recreational vehicle
industries. Our facilities are generally located within 250 miles of our major
customers in order to minimize freight costs and delivery times. In 1998, we
expect to close five older facilities and open two factories.
<PAGE>
Financial Highlights
-----------------------------------------
Drew Industries Incorporated
(In thousands, except per share amounts) 1997 1996 1995
- -------------------------------------------------------------------------------
Net Sales $208,365 $168,151 $100,084
Net Income(a) $ 11,994 $ 12,572 $ 8,123
Net Income Per Basic Common Share(a),(b) $ 1.22 $ 1.18 $ .82
Net Income Per Diluted Common Share(a),(b) $ 1.19 $ 1.15 $ .81
Working Capital(a) $ 24,009 $ 16,138 $ 9,648
Stockholders' Equity(a) $ 51,953 $ 34,779 $ 16,830
Book Value Per Common Share(a),(b) $ 4.67 $ 3.24 $ 1.70
- -------------------------------------------------------------------------------
(a) Years prior to 1997 have been restated to retroactively reflect the
adoption of the FIFO method to value that portion of the inventories for
which the LIFO method had previously been utilized for determining cost.
(b) Adjusted retroactively to give effect to two-for-one stock split effective
March 21, 1997.
1
<PAGE>
[GRAPHIC OMITTED]
Letter to Stockholders
Drew Industries Incorporated
"Our primary goal is to continue to achieve outstanding returns for our
shareholders. Through incentive compensation, stock options and stock ownership,
all our key executives and managers participate in Drew's performance and are
highly motivated to achieve this goal."
Drew had another outstanding year in 1997. We established the foundation for
greater future growth and profitability, despite a temporary industry slowdown.
Today, Drew's $300 million annualized sales of windows, doors, chassis, chassis
parts, galvanized roofing, axles and tires to the manufactured housing industry
(85 percent of total sales) and to the RV industry are produced in 35 factories
in 16 states, by 2,250 employees.
- --------------------------------------------------------------------------------
We are pleased to report:
o Record net sales of $208 million for 1997, an increase of 24 percent from
$168 million in 1996, were attained primarily as a result of three
acquisitions consummated in 1997.
o Earnings per share increased to $1.22 ($1.19 diluted) in 1997 from $1.18
($1.15 diluted) in 1996. Net income for 1997 of $12.0 million was lower
than last year's net income of $12.6 million, due to the interest expense
($850,000 net of taxes) applicable to the Company's purchase of 1.6
million shares from its Chairman in February 1997, which transaction was
below market and accretive to earnings per share.
o During 1997, Drew acquired Lippert Components, our largest acquisition
ever, with annual sales of $99 million and two additional companies with
annual sales of more than $13 million, for an aggregate purchase price of
$60 million, including 1.9 million shares of common stock. These three new
operations, with combined annual sales of more than $110 million, are
expected to be accretive to both net income and earnings per share in
1998, and have expanded both our product lines and market territory,
adding 19 factories and 700 employees.
2
<PAGE>
o In March 1997, Drew effected a two-for-one stock split.
o In January 1998, Drew refinanced its debt, reducing its credit line from
$65 million to $25 million and sold $40 million of seven-year Senior Notes
at a favorable fixed interest rate of 6.95 percent.
Although total homes shipped by the manufactured housing industry during
1997 decreased 3 percent, a greater percentage of these homes were multi-
section homes (two or more sections combined into one unit). Accordingly, the
number of sections produced was equal to 1996 production. This trend toward a
larger, more traditional size home is a positive development for the industry
and increased the demand for Drew's products.
Our 1997 sales were further bolstered by the industry-wide trend to higher
quality homes, which increased demand for our higher quality vinyl windows. To
meet increased demand, we constructed and commenced operations at two new
factories, and added a product line to our California facility, all of which are
expected to be profitable in 1998.
We anticipate that manufactured housing will continue to gain market share
over the next several years, due to the affordability and improved quality of
these homes, as well as the innovative marketing efforts by the premiere
manufactured home builders in the industry.
It is our operating and acquisition strategy to continue to expand the
geographic territory and increase the market share of each of our product
categories. We have successfully accomplished this goal in the past and will
seek to do so in the future.
Since the acquisition of Lippert in October 1997, we have consolidated its
operations with similar operations of our Shoals subsidiary. Lippert's axle and
tire business was transferred to Shoals' facilities (except in Florida, where
Shoals has no facility), and Shoals transferred to Lippert its manufactured
housing chassis parts business. These consolidations should result in freight
and overhead savings and improved production efficiencies during 1998. Due to
the benefits of these consolidations, as well as improvements in our factories,
five older factories will be closed during 1998, and two will be opened. The
cost of vacating these factories is not material.
Although the RV industry represents only 15 percent of consolidated sales,
we were buoyed by the resurgence of sales of RV products in late 1997. This
strong sales trend has continued into early 1998.
During the first quarter of 1998, the Company will complete the
integration of the operations of the recently acquired Lippert business and the
start-up of newly constructed facilities. Costs associated with these actions,
and the continuing impact of competitive pressures which began in the second
quarter of 1997, will likely result in lower profits in the first quarter of
1998 as compared to last year's first quarter which benefited from very
favorable material costs and lower start-up costs.
The Company anticipates that full year 1998 results will benefit from
growth in the manufactured housing and RV industries, as well as from our
recently completed acquisitions, refinancing and plant expansions. As a result,
we look forward to continued strength in earnings and cash flow in 1998.
As always, our excellent results were attained because of the dedicated
efforts of our talented managerial team and thousands of hard working employees.
Sincerely,
/s/ Edward W. Rose, III
----------------------------
Edward W. Rose, III
Chairman of the Board
[GRAPHIC]
/s/ Leigh J. Abrams
----------------------------
Leigh J. Abrams
President and Chief Executive Officer
3
<PAGE>
[GRAPHIC OMITTED]
Our Business
Drew Industries Incorporated
MANUFACTURED HOUSING INDUSTRY
(85% of sales)
- -- Aluminum and vinyl windows and screens
- -- Chassis and chassis parts
- -- Axles and tires
- -- Galvanized steel roofing
RECREATIONAL VEHICLE INDUSTRY
(15% of sales)
- -- Windows and doors
- -- Chassis and chassis parts
STRATEGY TO CONTINUE
GROWTH AND PROFITABILITY
- -- Low cost producer
- -- "Quick response" manufacturing
- -- Reasonable prices
- -- Quality products
- -- Superior customer service
- -- Product line extensions and increased
market share
- -- Strategic acquisitions
What is a Manufactured Home?
- --------------------------------------------------------------------------------
o Affordable single family housing
o Superior quality home
-- Built in a factory in one or more sections
-- Built to a national building code
o Typical prices, excluding land, range from under $14,000 to $100,000
o Homes may have cathedral ceilings, two to four bedrooms, walk-in closets,
custom cabinets and brand name appliances
o Delivered on a chassis to a homesite, often in a planned community, and
typically placed on a permanent foundation
---------------------------
SINGLE SECTION
---------------------------
Average Price: $28,200
---------------------------
Average Sq. Ft.: 1,100
---------------------------
---------------------------
MULTI-SECTION
---------------------------
Average Price: $47,300
---------------------------
Average Sq. Ft.: 1,600
---------------------------
Industry Shipments--Manufactured Homes
(in thousands)
[BAR GRAPH OMITTED]
4
<PAGE>
Strong Manufactured Housing
Growth Prospects
- -------------------------------------------------------------------------------
o Affordability
-- 52% cost advantage over site built homes
o Financing readily available
o Improved quality leads to home value appreciation
o Easing of zoning restrictions
o Job growth in target market
--Median family incomes of $26,000 to $40,000
o Lower apartment starts and low vacancy rates
o Demographics--those over 50 years old and first-time home buyers
What is a Recreational Vehicle?
- -------------------------------------------------------------------------------
Traveling home which may provide kitchen, sleeping and bathroom facilities
o Towables--80% of industry units
o Motor Homes--20% of industry units
Strong RV Growth Prospects
- -------------------------------------------------------------------------------
o Positive demographic trends
--Largest market--
those over 50 years old
o Increasing demand for leisure time activities should result in sales
growth of RV's
o National advertising campaign targeting younger generation
o Low interest rates continue to spur sales growth
Industry Shipments--Recreational Vehicles
(in thousands)
[BAR GRAPH OMITTED]
"Manufactured homes represent over 25% of all single family housing starts. The
quality, affordability, financing and appearance of today's manufactured home
should enable the industry's market share to grow faster"
5
<PAGE>
[GRAPHIC OMITTED]
Operations
Drew Industries Incorporated
Drew's broad array of products are produced and distributed by its wholly-owned
subsidiaries Kinro, Lippert and Shoals. The Company's 35 facilities are
strategically located in 16 states to meet the needs of our customers.
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE GRAPH IN THE PRINTED MATERIAL]
Sales by Product Line
Product Line Sales
------------------------------------ -----
Mfg. Housing Galvanized Roofing 1%
Mfg. Housing Windows and Screens 40%
Mfg. Housing Chassis and Parts 16%
Mfg. Housing Axles and Tires 26%
RV Windows, Doors, Chassis and Parts 17%
Kinro is one of the largest producers of vinyl and aluminum windows for
manufactured homes. Kinro supplies primary and storm windows, as well as
screens, patio doors and windows in a variety of architectural sizes and shapes.
Kinro is also a leading supplier of windows and doors for recreational vehicles.
In 1996 Kinro inaugurated a glass tempering operation to supply its own glass
requirements as well as those of customers.
Lippert is one of the largest suppliers of chassis, chassis parts and
galvanized roofing for manufactured homes. In addition, Lippert is becoming a
significant supplier of chassis for recreational vehicles.
Shoals manufactures new and refurbished axles, and distributes new and
used tires for manufactured homes. Shoals is one of the largest suppliers of
such products.
Drew's growth in recent years has resulted primarily from the acquisitions
of Lippert, Pritt and Shoals, which expanded our product lines and broadened our
geographic territory. Internal growth has also been a key factor to our success.
Due to the rapid increase in demand for these new products, Drew recently
completed new facilities in Indiana (2), Texas and Tennessee. New facilities
will be completed in 1998 in West Virginia and Georgia. These facilities are
equipped with the most efficient production equipment available today. In 1998,
five older facilities will be closed reducing freight and production costs,
while maintaining customer service. The recently completed acquisitions and new
factories will also enable us to improve operating efficiencies.
Growth in the manufactured housing industry stems largely from the quality
of the homes produced. Drew has committed its resources to supplying the leading
producers of manufactured homes with the high quality, cost effective components
they demand.
Our significant market share for many products and numerous awards of
excellence from our customers, testify to the expertise of our operating
management, the efforts of our employees, and our dedication to continual
product improvement and customer service. Strong cash flow generated by our
highly efficient factories has enabled Drew to commit the resources necessary to
support this dedication.
6
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
Drew Industries Incorporated
The Company, through its wholly-owned subsidiaries Kinro, Inc. ("Kinro"),
Lippert Components, Inc. ("Lippert") and Shoals Supply, Inc. ("Shoals") is a
leading supplier of a broad array of components for manufactured homes and
recreational vehicles. Manufactured products include windows, doors, chassis,
chassis parts, galvanized roofing and new and refurbished axles. The Company
also distributes new and refurbished tires. Approximately 85 percent of the
Company's sales are for manufactured homes and 15 percent are for recreational
vehicles ("RV's"). Many of the producers of manufactured homes, to whom the
Company sells windows, also manufacture RV's. At December 31, 1997, the Company
operated 34 plants in 15 states.
On May 5, 1997 Shoals acquired the assets and business of Pritt Tire and
Axle, Inc. ("Pritt") which is being operated as an additional branch of Shoals.
Pritt had 1996 sales of $10.7 million.
Lippert, which was acquired by the Company on October 7, 1997,
manufactures products for the manufactured housing and recreational vehicle
industry, consisting primarily of chassis and chassis parts, refurbished axles
and tires, and galvanized roofing. At December 31, 1997, Lippert had 17 plants
in 12 states east of the Rocky Mountains. Lippert's sales for its fiscal year
ended September 30, 1997 were $99 million, on which they achieved earnings
before interest, taxes and goodwill amortization, of approximately $8.2 million,
excluding shareholder compensation, benefits and related items which did not
continue subsequent to the acquisition. These earnings are net of other
nonrecurring compensation and startup costs of approximately $.5 million.
RESULTS OF OPERATIONS
Net sales, gross profit and operating profit are (in thousands):
Year Ended December 31,
----------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Net sales $208,365 $168,151 $100,084
Gross profit $ 46,281 $ 41,420 $ 27,980
Operating profit $ 21,761 $ 20,990 $ 13,289
- --------------------------------------------------------------------------------
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Net sales for the year ended December 31, 1997 increased 24% over last
year. Net sales for the current year include Lippert's net sales of $21.1
million from October 7, 1997, the date that Lippert was acquired by the Company.
Also included are Pritt's net sales of $8.2 million from May 5, 1997, the date
that Pritt was acquired by the Company. Excluding net sales of operations
acquired in 1997, and adjusting for the 1 1/2 months prior to the Shoals
acquisition in 1996, the Company's net sales increased 2% for the year. The
increase in net sales resulted both from sales of manufactured housing products
and sales of RV products, which both reflected modest increases for the year.
Such increases compare to a 3% industry-wide decline in shipments of
manufactured homes and a 3% increase in sales of RV's. The decline in industry
shipments of manufactured homes is partially offset by the continuing growth of
multi-section homes resulting in year-to-date industry floor shipments being 1%
ahead of last year.
Operating profit increased 4% to $21.8 million for 1997. Included in the
current year's operating profit are the results of Lippert and Pritt since the
dates that they were acquired by the Company. Lippert's contribution to the
Company's operating profit was $1.0 million on net sales of $21.1 million for
the three months since its acquisition. Pritt's contribution to the Company's
operating profit was $.5 million on net sales of $8.2 million for the eight
months since its acquisition. Excluding the operations acquired in 1997,
operating profit decreased approximately 6% for 1997, and gross profit
percentage decreased 1% because of competitive pressures, as well as $400,000 of
startup costs relating to three new plants opened by Kinro in 1997. Selling,
general and administrative expenses, again excluding the operations acquired in
1997, decreased 3% as a result of lower incentive compensation due to reduced
profits.
During the first quarter of 1998, the Company will continue the
integration of the operations of the recently acquired Lippert business, while
completing the start-up of several newly constructed facilities. Costs
associated with these actions and the continuing impact of competitive pressures
which began in the second quarter of 1997, will likely result in lower profits
in the first quarter of 1998, as compared to last year's first quarter which
benefitted from very favorable material costs. However, the Company anticipates
that full year 1998 will benefit from growth in the manufactured housing
industry, as well as from recently completed acquisitions, refinancing and plant
expansions. As a result, improved earnings and cash flow are expected in 1998.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net sales for the year ended December 31, 1996 increased 68% over 1995.
Sales for 1996 include Shoals' sales from February 15, 1996, the date that
Shoals was acquired by the Company. Excluding Shoals, the Company's
7
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
---------------------------------------------------------
Drew Industries Incorporated
sales (consisting of Kinro's sales) increased 11% for the year. The increase in
Kinro's net sales resulted both from the sales of manufactured housing products,
which increased 14%, and sales of RV products which increased 5% for the year.
Such increases, which exceed the industry-wide increases in shipments of
manufactured homes and RV's, are volume related. 1996 industry-wide shipments of
manufactured homes were 7% higher than 1995 and shipments of RV's of the types
supplied by Kinro were 1% higher than 1995.
Operating profit increased 58% to $21.0 million for 1996. Included in the
1996 operating profit are the results of Shoals since February 15, 1996, the
date that Shoals was acquired by the Company. Excluding Shoals, operating profit
increased approximately 25% for 1996 as a result of the 11% increase in net
sales and an improvement in gross profit as a percent of sales. The increase in
gross profit percentage resulted from lower aluminum prices which had been
volatile and, to a lesser extent, a reduction in labor and overhead costs. The
Company purchases aluminum futures on the London Metal Exchange to hedge against
potential price increases. Selling, general and administrative expenses, again
excluding Shoals, increased 20% for 1996 as a result of the increased sales as
well as increased profits upon which incentive compensation is based. Shoals'
contribution to the Company's operating profit was $4.4 million on net sales of
$57 million for the 10 1/2 months since its acquisition.
Shared Services Agreement
Pursuant to a Shared Services Agreement, following the Spin-off by the
Company of Leslie Building Products, Inc. on July 29, 1994, the Company and
Leslie Building Products have shared certain administrative functions and
employee services, such as management overview and planning, tax preparation,
financial reporting, coordination of independent audit, stockholder relations,
and regulatory matters. The Company has been reimbursed by Leslie Building
Products for the fair market value of such services. This Agreement has been
extended and now expires on December 31, 1998 and may be further extended. The
Company charged fees to Leslie Building Products of $526,000 during 1997,
$509,000 during 1996, and $588,000 during 1995. These fees are recorded as a
reduction of selling, general and administrative expenses.
Interest (Expense) Income Net
Interest expense, net, increased to $2.5 million in 1997 from $.3 million
in 1996 primarily as a result of debt incurred for the purchase of 1.6 million
shares of treasury stock from the Company's Chairman for $20.8 million, as well
as $31.8 million for acquisitions.
Net interest expense increased by $460,000 for 1996 from 1995 primarily as
a result of debt incurred for the acquisition of Shoals and the $2.8 million
purchase of treasury stock, partially offset by cash flow from operations.
Accounting Changes
During the first quarter of 1997, the Company adopted the FIFO method to
value that portion of inventories for which the LIFO method had previously been
utilized for determining cost. The FIFO method will better measure the current
value of such inventories, provide a more appropriate matching of revenues and
expenses, and conform all inventories of the Company to the same accounting
method. Additionally, the change will enhance the comparability of the Company's
financial statements by changing to the predominant method utilized in its
industry. The Company applied this change retroactively which resulted in an
increase in retained earnings of $527,000 at January 1, 1995. The impact on net
income for the years ended December 31, 1996 and 1995 was a reduction of
$814,000 ($.07 per share) and an increase of $301,000 ($.03 per share),
respectively.
New Accounting Standards
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No. 128
establishes standards for computing and presenting both basic and diluted
earnings per share ("EPS"). Basic EPS represents the earnings available to each
common share outstanding during the reporting period. Diluted EPS reflect the
earnings available to each common share after the effect of all potentially
dilutive common shares, such as stock options and warrants. All prior period
income per share data have been restated to conform with SFAS No. 128.
In 1996, the Company adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," which permits companies
either to adopt a new method of accounting for employee stock options and
similar equity instruments or to continue following the historical accounting
method with supplemental pro forma disclosures. The Company is continuing its
historical practice, and provides the necessary additional information in
footnote disclosure.
8
<PAGE>
In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income," and SFAS 131, "Disclosure about Segments of an
Enterprise and Related Information," for fiscal years beginning after December
15, 1997. These statements address presentation and disclosure matters and will
have no impact on the Company's financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Statements of Cash Flows reflect the following:
Year Ended December 31,
---------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Net cash flows provided by
operating activities $ 11,009 $ 11,927 $ 9,593
Net cash flows (used for)
investment activities $(42,032) $(14,948) $ (1,941)
Net cash flows provided
by (used for) financing
activities $ 30,506 $ 538 $ (4,093)
- --------------------------------------------------------------------------------
Net cash provided by operating activities for 1997, which does not include
the balance of the assets and liabilities of the acquired operations on the date
of the acquisition of such operations, primarily resulted from net income. The
$1.2 million increase in depreciation and amortization was offset by changes in
working capital.
Cash flows used for investing activities in 1997 was primarily the $31.8
million cash portion of the cost of acquisitions and, in 1996 was primarily the
$10 million cost of the Shoals acquisition. Capital expenditures for 1997 of
$10.4 million include three plants for Kinro and the purchase of related
equipment, as well as two new factories being constructed by Lippert. Capital
expenditures for 1996 of $5.8 million were primarily for the construction of two
new plants and the purchase of related machinery and equipment. Capital
expenditures for 1998 are expected to approximate $6 to $8 million. Such capital
expenditures will be funded from Industrial Revenue Bonds as well as cash flow
from operations.
Cash flows provided by financing activities in 1997 includes increases in
debt of approximately $51 million, of which $20.8 million was used for the
acquisition of treasury stock and $31.8 million was used for acquisitions. Cash
flows provided by financing activities in 1996 included the borrowing of $6
million for the acquisition of Shoals, and $2.8 million used to acquire 400,000
shares of treasury stock.
On January 28, 1998, the Company completed a private placement of $40
million of 6.95 percent, seven year Senior Notes. Amortization of the seven year
Senior Notes is $8 million annually beginning at the end of year three.
Proceeds of the Senior Notes were used to reduce borrowings under Drew's
$65 million credit facility with The Chase Manhattan Bank, as agent.
Simultaneously, such credit facility was replaced with a $25 million revolving
credit facility which expires on May 15, 2002.
Effective July 29, 1994, the Company spun off to its stockholders Leslie
Building Products, Inc. and its subsidiary, Leslie-Locke, Inc. ("Leslie-Locke"),
the Company's former home improvement building products segment.
On September 30, 1994, White Metal Rolling and Stamping Corp. ("White
Metal"), Leslie-Locke's discontinued ladder manufacturing subsidiary, filed a
voluntary petition seeking liquidation under the provisions of chapter 7 of the
United States Bankruptcy Code. The liabilities of White Metal are primarily
product liability costs. While Drew was named as a defendant in certain actions
commenced in connection with these claims, Drew has not been held responsible,
and Drew disclaims any liability for the obligations of White Metal.
On May 7, 1996, the Company and its subsidiary, Kinro, Inc., and Leslie
Building Products, Inc. and its subsidiary, Leslie-Locke, were served with a
summons and complaint in an adversary proceeding commenced by the chapter 7
trustee of White Metal. The complaint, which appears to allege several duplicate
claims, seeks damages in the aggregate amount of $10.6 million plus attorneys
fees, of which up to approximately $7.5 million is sought, jointly and
severally, from the Company, Kinro, Leslie Building Products and Leslie-Locke.
The proceeding is based principally upon the trustee's allegations that the
Company and its affiliated companies obtained tax benefits attributable to the
use of White Metal's net operating losses. The trustee seeks to recover the
purported value of the tax savings achieved. Management believes that the
trustee's allegations are without merit and have no basis in fact. In addition,
the trustee alleges that White Metal made certain payments to the Company which
were preferential and are recoverable by White Metal, in the approximate amount
of $900,000. The Company denies liability for any such amount and is vigorously
defending against the allegations. However, an estimate of potential loss, if
any, cannot be made at this time. The Company believes that it has sufficient
accruals for the defense of this proceeding and that such defense will not have
a material adverse impact on the Company's financial condition or results of
operations.
9
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
---------------------------------------------------------
Drew Industries Incorporated
INFLATION
The prices of raw materials, consisting primarily of aluminum, steel,
glass and tires, are influenced by demand and other factors specific to these
commodities rather than being directly affected by inflationary pressures.
Prices of certain commodities have historically been volatile. In order to hedge
the impact of future prices fluctuations on a portion of its future aluminum raw
material requirements, the Company periodically purchases aluminum futures
contracts on the London Metal Exchange. At December 31, 1997, the Company
currently had futures contracts for 3.3 million pounds at an aggregate cost of
$2.4 million, which was approximately current market value.
YEAR 2000
The Company recognizes the need to ensure its operations will not be
adversely impacted by year 2000 software failures. Software failures due to
processing errors potentially arising from calculations using the Year 2000 date
are a known risk. The Company has addressed this risk to the availability and
integrity of financial systems and the reliability of operational systems. The
Company had previously decided to upgrade its computer systems. These upgrades
will allow the Company to achieve Year 2000 compliance. The cost of these
upgrades, which are currently in progress and expected to be completed during
1998, are not material to the Company's results of operations or financial
position. Remaining expenditures, primarily capital in nature, are expected to
be less than $.5 million. No significant expenditures were required to
specifically achieve Year 2000 compliance.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This report contains certain statements, including the Company's plans
regarding its operating strategy, its products and performance and its views of
industry prospects, which could be construed to be forward looking statements
within the meaning of the Securities and Exchange Act of 1934. These statements
reflect the Company's current views with respect to future plans, events and
financial performance. The Company has identified certain risk factors which
could cause actual plans and results to differ substantially from those included
in the forward looking statements. These factors include pricing pressures due
to competition, raw material costs (particularly aluminum, steel and glass),
adverse weather conditions impacting retail sales, inventory adjustments by
retailers and interest rates. In addition, general economic conditions may
affect the retail sale of manufactured homes and RV's.
10
<PAGE>
Selected Financial Data
---------------------------------------------
Drew Industries Incorporated
The following selected financial data should be read in conjunction with
the consolidated financial statements and related notes thereto included herein
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1997 1996(a) 1995(a) 1994(a) 1993(a)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Data
Net sales $ 208,365 $ 168,151 $ 100,084 $ 82,965 $ 67,065
=======================================================================================================================
Operating profit $ 21,761 $ 20,990 $ 13,289 $ 10,258 $ 8,006
=======================================================================================================================
Income from continuing operations before income taxes $ 19,256 $ 20,664 $ 13,423 $ 10,245 $ 8,645 (b)
Provision for income taxes 7,262 8,092 5,300 3,999 2,183 (b)
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing operations 11,994 12,572 8,123 6,246 6,462
Discontinued operations, net (c) (111) (726)
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 11,994 $ 12,572 $ 8,123 $ 6,135 $ 5,736
=======================================================================================================================
Income per basic common share (d):
Income from continuing operations $ 1.22 $ 1.18 $ .82 $ .64 $ .68
Discontinued operations, net (.01) (.08)
- -----------------------------------------------------------------------------------------------------------------------
Net income per common share (basic) $ 1.22 $ 1.18 $ .82 $ .63 $ .60
=======================================================================================================================
Income per diluted common share (d):
Income from continuing operations $ 1.19 $ 1.15 $ .81 $ .62 $ .64
Discontinued operations, net (.01) (.07)
- -----------------------------------------------------------------------------------------------------------------------
Net income per common share (diluted) $ 1.19 $ 1.15 $ .81 $ .61 $ .57
=======================================================================================================================
Financial Data
Working capital $ 24,009 $ 16,138 $ 9,648 $ 6,544 $ 17,457
Total assets $ 130,349 $ 55,283 $ 29,593 $ 22,946 $ 31,319
Long-term obligations (e) $ 56,130 $ 4,938 $ 311 $ 3,939 $ 2,513
Stockholders' equity (f) $ 51,953 $ 34,779 $ 16,830 $ 8,599 $ 22,127
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Years prior to 1997 have been restated to retroactively reflect the adoption
of the FIFO method to value that portion of the inventories for which the
LIFO method had previously been utilized for determining cost. The impact on
net income was a reduction of $814,000 ($.07 per share) for 1996, an
increase of $301,000 ($.03 per share) for 1995, a reduction of $676,000
($.07 per share) for 1994 and a reduction of $94,000 ($.01 per share) for
1993.
(b) In 1993 the Company received Federal income tax refunds of $1,142,000, as
well as interest thereon of $745,000.
(c) Operating results of Leslie Building Products prior to Spin-off on July 29,
1994.
(d) Adjusted to give effect to two-for-one stock split effective March 21, 1997.
(e) Includes long-term indebtedness, as well as long-term portion of deferred
income taxes, obligations under capital leases and postretirement
obligations.
(f) On July 29, 1994, the date of the Spin-off of Leslie Building Products,
Inc., the net assets of Leslie Building Products were $20.3 million.
Accordingly, upon the Spin-off the Company's equity was reduced by $20.3
million.
11
<PAGE>
Consolidated Statements of Income
---------------------------------------------
Drew Industries Incorporated
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
(In thousands, except per share amounts) 1997 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales (Note 11) $ 208,365 $ 168,151 $ 100,084
Cost of sales 162,084 126,731 72,104
- ----------------------------------------------------------------------------------
Gross profit 46,281 41,420 27,980
Selling, general and administrative expenses 24,520 20,430 14,691
- ----------------------------------------------------------------------------------
Operating profit 21,761 20,990 13,289
Interest (expense) income, net (2,505) (326) 134
- ----------------------------------------------------------------------------------
Income before income taxes 19,256 20,664 13,423
Provision for income taxes (Note 8) 7,262 8,092 5,300
- ----------------------------------------------------------------------------------
Net income $ 11,994 $ 12,572 $ 8,123
==================================================================================
Income per common share (Note 10):
Net income per common share (basic) $ 1.22 $ 1.18 $ .82
==================================================================================
Net income per common share (diluted) $ 1.19 $ 1.15 $ .81
==================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE>
Consolidated Statements of Income
---------------------------------------------
Drew Industries Incorporated
<TABLE>
<CAPTION>
December 31,
----------------------
(In thousands, except shares and per share amounts) 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $ 1,028 $ 1,545
Accounts receivable, trade, less allowances of
$528 in 1997 and $308 in 1996 9,181 4,924
Inventories (Note 3) 29,456 22,686
Prepaid expenses and other current assets (Note 8) 6,610 2,549
- ----------------------------------------------------------------------------------
Total current assets 46,275 31,704
Fixed assets, net (Note 4) 38,096 10,865
Goodwill, net (Note 2) 44,215 11,582
Other assets 1,763 1,132
- ----------------------------------------------------------------------------------
Total assets $ 130,349 $ 55,283
==================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable, including current maturities of
long-term indebtedness and obligations under
capital leases (Notes 7 and 9) $ 643 $ 276
Accounts payable, trade 6,372 3,958
Accrued expenses and other current liabilities (Note 5) 15,251 11,332
- ----------------------------------------------------------------------------------
Total current liabilities 22,266 15,566
Long-term indebtedness (Note 7) 54,760 3,652
Other long-term liabilities (Note 8) 1,370 1,286
- ----------------------------------------------------------------------------------
Total liabilities 78,396 20,504
- ----------------------------------------------------------------------------------
Commitments and contingencies (Note 9)
Stockholders' equity (Note 10)
Common stock, par value $.01 per share: authorized
20,000,000 shares; issued 11,363,166 shares in
1997 and 11,202,946 shares in 1996 113 112
Paid-in capital 19,249 17,218
Retained earnings 32,591 20,597
- ----------------------------------------------------------------------------------
51,953 37,927
Treasury stock, at cost--479,770 shares in 1996 (3,148)
- ----------------------------------------------------------------------------------
Total stockholders' equity 51,953 34,779
- ----------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 130,349 $ 55,283
==================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE>
Consolidated Statements of Cash Flows
---------------------------------------------
Drew Industries Incorporated
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
(In thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 11,994 $ 12,572 $ 8,123
Adjustments to reconcile net income to cash flows
provided by operating activities:
Depreciation and amortization 2,972 1,712 797
Deferred taxes 325 (297) (259)
Gain on disposal of fixed assets (34) (37) (3)
Changes in assets and liabilities:
Accounts receivable, net 2,170 2,188 (1,069)
Inventories (86) (3,284) (1,013)
Prepaid expenses and other assets (3,414) (74) 400
Accounts payable, accrued expenses and other current liabilities (2,918) (853) 2,617
- -------------------------------------------------------------------------------------------------------------
Net cash flows provided by operating activities 11,009 11,927 9,593
- -------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (10,377) (5,841) (1,944)
Acquisitions of companies' net assets and businesses (31,804) (9,941)
Proceeds from sales of fixed assets 149 834 3
- -------------------------------------------------------------------------------------------------------------
Net cash flows used for investing activities (42,032) (14,948) (1,941)
- -------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Acquisition loan 5,982
Equipment loan 1,560
Proceeds under line of credit and other borrowings 118,150 23,737 9,450
Repayments under line of credit and other borrowings (69,050) (27,228) (13,651)
Acquisition of treasury stock (20,800) (2,800) (333)
Exercise of stock options and other 646 847 441
- -------------------------------------------------------------------------------------------------------------
Net cash flows provided by (used for) financing activities 30,506 538 (4,093)
- -------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash (517) (2,483) 3,559
Cash and short term investments at beginning of year 1,545 4,028 469
- -------------------------------------------------------------------------------------------------------------
Cash and short term investments at end of year $ 1,028 $ 1,545 $ 4,028
=============================================================================================================
Supplemental disclosure of cash flows information:
Cash paid during the year for:
Interest on debt $ 1,981 $ 285 $ 132
Income taxes $ 8,433 $ 7,986 $ 4,856
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE>
Consolidated Statements of Stockholders' Equity
---------------------------------------------------
Drew Industries Incorporated
<TABLE>
<CAPTION>
Retained Total
Common Treasury Paid-in Earnings Stockholders'
(In thousands, except shares) Stock Stock Capital (Deficit) Equity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance--December 31, 1994 $ 99 $ (15) $ 8,613 $ (98) $ 8,599
Net income 8,123 8,123
Issuance of 114,536 shares of common
stock pursuant to stock option plan 1 289 290
Income tax benefit relating to issuance of
common stock pursuant to stock option plan 151 151
Acquisition of 59,750 shares of treasury stock (333) (333)
- ------------------------------------------------------------------------------------------------------------------------
Balance--December 31, 1995 100 (348) 9,053 8,025 16,830
Net income 12,572 12,572
Issuance of 113,740 shares of common
stock pursuant to stock option plan 1 427 428
Income tax benefit relating to issuance of
common stock pursuant to stock option plan 249 249
Issuance of 1,089,918 shares of common stock
in connection with the acquisition of the
assets and business of Shoals Supply, Inc. 11 7,489 7,500
Purchase of 400,020 shares of treasury stock (2,800) (2,800)
- ------------------------------------------------------------------------------------------------------------------------
Balance--December 31, 1996 112 (3,148) 17,218 20,597 34,779
Net income 11,994 11,994
Issuance of 85,990 shares of common
stock pursuant to stock option plan 1 383 384
Income tax benefit relating to issuance of
common stock pursuant to stock option plan 267 267
Issuance of 2,154,000 shares of common stock in connection
with the acquisition of Lippert Components, Inc. 23,948 1,399 25,347
Purchase of 1,600,000 shares of treasury stock (20,800) (20,800)
Costs of two-for-one split of common stock (18) (18)
- ------------------------------------------------------------------------------------------------------------------------
Balance--December 31, 1997 $ 113 $ -- $ 19,249 $ 32,591 $ 51,953
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE>
Notes to Consolidated Financial Statements
----------------------------------------------
Drew Industries Incorporated
1. Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of Drew
Industries Incorporated and its subsidiaries. Drew's wholly-owned active
subsidiaries are Kinro, Inc. and its subsidiaries ("Kinro"), Shoals Supply, Inc.
and its subsidiaries ("Shoals"), and Lippert Components, Inc. ("Lippert"). Drew,
through its wholly-owned subsidiaries, supplies a broad array of components for
manufactured homes and recreational vehicles. Manufactured products include
windows, doors, chassis, chassis parts, roofs and new and refurbished axles. The
Company also distributes new and refurbished tires. Approximately 85 percent of
the Company's sales are for manufactured homes and 15 percent are for
recreational vehicles. At December 31, 1997 the Company operated 34 plants in 15
states. All significant intercompany balances and transactions have been
eliminated. On February 13, 1997 the Board of Directors declared a two-for-one
split of its Common Stock, payable in the form of a 100 percent stock dividend
on March 21, 1997 to stockholders of record on March 4, 1997. Where appropriate,
all share and per share amounts included in the consolidated financial
statements and notes thereto have been adjusted retroactively to give effect to
the stock split.
Inventories
Inventories are stated at the lower of cost (using the first-in, first-out
method) or market. Cost includes material, labor and overhead; market is
replacement cost or realizable value after allowance for costs of distribution.
During the first quarter of 1997, the Company adopted the FIFO method to
value that portion of the inventories for which the LIFO method had previously
been utilized for determining cost. The FIFO method will better measure the
current value of such inventories, provide a more appropriate matching of
revenues and expenses, and conform all inventories of the Company to the same
accounting method. Additionally, the change will enhance the comparability of
the Company's financial statements by changing to the predominant method
utilized in its industry. The Company applied this change retroactively which
resulted in an increase in retained earnings of $527,000 at January 1, 1995. The
impact on net income for the years ended December 31, 1996 and 1995 was a
reduction of $814,000 ($.07 per share) and an increase of $301,000 ($.03 per
share), respectively.
The Company periodically purchases commodity futures to hedge the impact
of future price fluctuations on a portion of its aluminum raw material
requirements. Gains and losses on such futures contracts are deferred until
recognized in income as a component of cost of sales when the finished products
are sold. Cash flows from such futures contracts are included in operating
activities in the Consolidated Statements of Cash Flows.
Fixed Assets
Fixed assets are depreciated principally on a straight-line basis over the
estimated useful lives of properties and equipment. Leasehold improvements and
leased equipment are amortized over the shorter of the lives of the leases or
the underlying assets. Amortization of assets recorded under capital leases is
included in depreciation expense. Maintenance and repairs are charged to
operations as incurred; significant betterments are capitalized.
Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax
return. The Company's subsidiaries generally file separate state income tax
returns on the same basis as the Federal income tax return.
New Accounting Standards
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No. 128
establishes standards for computing and presenting both basic and diluted
earnings per share ("EPS"). Basic EPS represents the earnings available to each
common share outstanding during the reporting period. Diluted EPS reflect the
earnings available to each common share after the effect of all potentially
dilutive common shares, such as stock options and warrants.
In 1996, the Company adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," which permits companies
either to adopt a new method of accounting for employee stock options and
similar equity instruments or to continue following the historical accounting
method with supplemental pro forma disclosures. The Company is continuing its
historical practice, and provides the necessary additional information in
footnote disclosure.
Goodwill
Goodwill is the excess of cost over the fair value of net tangible assets
acquired and is amortized on a straight-line basis primarily over thirty years.
The balance of goodwill of $44.2 million at December 31, 1997 primarily relates
to the acquisitions of Lippert on October 7, 1997, Pritt on May 5, 1997 and
Shoals on February 15, 1996.
16
<PAGE>
The Company periodically reviews the value of its goodwill to determine if
an impairment has occurred. The Company measures the potential impairment of
recorded goodwill by the undiscounted value of expected future operating cash
flows in relation to its net capital investment in the subsidiary. Based on its
review, the Company does not believe that an impairment of its goodwill has
occurred.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
2. Acquisitions
Lippert Components, Inc.
On October 7, 1997, the Company acquired Lippert for $27 million in cash
and 1,923,231 shares of Drew common stock having a value of approximately $25.3
million. In addition, 230,769 shares are held in escrow pending the results of
an earnout. All 2,154,000 shares are restricted and are subject to a
registration rights agreement. The cash portion of the transaction has been
financed by Drew's then existing credit facility.
Lippert, which has 17 plants in 12 states east of the Rocky Mountains,
manufactures products for the manufactured housing and recreational vehicle
industry, consisting primarily of chassis and chassis parts, refurbished axles
and tires, and galvanized roofing. The refurbishing of axles and tires, except
for the Florida operation, has now been transferred to Shoals, while Shoals has
transferred to Lippert all of its chassis parts business.
The acquisition has been accounted for as a purchase. The aggregate
purchase price has been allocated to the underlying assets and liabilities based
upon their respective estimated fair values at the date of acquisition. The
excess of purchase price over the fair value of the net assets acquired
("goodwill") was $30.1 million, which is being amortized over 30 years.
The results of the acquired business have been included in the Company's
consolidated statements of income beginning October 7, 1997. Lippert's sales for
its fiscal year ended September 30, 1997 were $99 million, on which they
achieved earnings before interest, taxes and goodwill amortization of
approximately $8.2 million, excluding shareholder compensation, benefits and
related items which will not continue subsequent to the acquisition. These
earnings are net of other nonrecurring compensation and startup costs of
approximately $.5 million.
Pritt Tire and Axle, Inc.
On May 5, 1997 the Company's subsidiary, Shoals acquired the assets and
business of Pritt Tire and Axle, Inc. ("Pritt") of Bristol, Indiana. Pritt
refurbishes axles and tires used in the transportation of manufactured homes.
The purchase price consisted of cash of $4.4 million and a three-year
warrant to purchase 40,000 shares of the common stock of Drew at $11.00 per
share. As part of this transaction, in the third quarter of 1997, Shoals
acquired, from the former owner of Pritt, the manufacturing facility utilized by
Pritt for approximately $1 million.
The acquisition has been accounted for as a purchase. The aggregate
purchase price has been allocated to the underlying assets and liabilities based
upon their respective estimated fair values at the date of acquisition. The
excess of purchase price over the fair value of the net assets acquired
("goodwill") is $2.9 million, which is being amortized over 30 years.
The results of the acquired business have been included in the Company's
consolidated statements of income beginning May 5, 1997. Pritt had 1996 net
sales of $10.7 million.
Shoals Supply, Inc.
On February 15, 1996, the Company acquired the assets and business of
Shoals, a supplier of products used to transport manufactured homes. Shoals
manufactures new axles and chassis parts, refurbishes used axles, and
distributes new and refurbished tires. The manufacture of chassis parts has
since been transferred to Lippert, while Lippert has transferred to Shoals the
refurbishing of axles and tires, except for the Florida operation.
The consideration for the acquisition was 1,089,918 shares of common stock
of the Company having a value of $7.5 million, cash of $1.6 million and a note
for $.8 million payable over 5 years. In addition, the Company assumed $7.5
million of Shoals' bank debt and certain operating liabilities.
The acquisition has been accounted for as a purchase. The aggregate
purchase price has been allocated to the underlying assets and liabilities based
upon their respective estimated fair values at the date of acquisition. The
goodwill of $11.8 million is being amortized over 30 years.
The results of the acquired business have been included in the Company's
consolidated statements of income beginning February 16, 1996. Shoals had 1996
net sales of $65 million, of which $57 million was for the 10 1/2 months since
Shoals was acquired by the Company.
The following pro forma condensed consolidated results of operations
assumes that the acquisitions had occurred at the beginning of 1996. The
unaudited pro forma data below is not necessarily indicative of the
17
<PAGE>
Notes to Consolidated Financial Statements (continued)
--------------------------------------------------------
Drew Industries Incorporated
future results of operations of the combined operations (in thousands, except
per share amounts):
Pro Forma Year End
December 31,
------------------------
(unaudited) 1997 1996
- --------------------------------------------------------------------------------
Net sales $288,671 $293,640
================================================================================
Net income $ 13,955 $ 17,374
================================================================================
Net income per common share:
Basic $ 1.23 $ 1.36
================================================================================
Diluted $ 1.21 $ 1.34
================================================================================
Average common shares outstanding:
Basic 11,325 12,779
Diluted 11,575 13,012
Goodwill of $44,215,000 at December 31, 1997, is net of accumulated
amortization of $1,223,000. Amortization of goodwill was $765,000, $494,000 and
$23,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
3. Inventories
Inventories consist of the following (in thousands):
December 31,
---------------------------
1997 1996
- --------------------------------------------------------------------------------
Finished goods $ 8,989 $ 6,045
Work in process 1,746 1,810
Raw materials 18,721 14,831
- --------------------------------------------------------------------------------
Total $29,456 $22,686
================================================================================
4. Fixed Assets
Fixed assets, at cost, consist of the following (in thousands):
Estimated
December 31,
---------------- Useful Life
1997 1996 In Years
- -------------------------------------------------------------------------------
Land $ 3,252 $ 479
Buildings and improvements 16,140 2,964 8 to 45
Leasehold improvements 779 745 5 to 25
Machinery and equipment 17,490 7,943 5 to 8
Automotive equipment 1,523 420 2 to 3
Furniture and fixtures 2,294 1,019 3 to 8
Capitalized real estate leases 925 925 15
Construction in progress 4,391 3,078
- -------------------------------------------------------------------
46,794 17,573
Less accumulated depreciation
and amortization 8,698 6,708
- -------------------------------------------------------------------
Fixed assets, net $38,096 $10,865
===================================================================
Depreciation and amortization of fixed assets consists of (in thousands):
Year Ended December 31,
----------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Charges to cost of sales $1,674 $ 908 $ 554
Charges to selling, general
and administrative expenses 376 203 116
- --------------------------------------------------------------------------------
$2,050 $1,111 $ 670
================================================================================
5. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following
(in thousands):
December 31,
-----------------------
1997 1996
- --------------------------------------------------------------------------------
Accrued employee compensation $ 3,384 $ 3,063
Accrued employee benefits 3,244 2,291
Accrued workmen's compensation
and other insurance 3,353 2,128
Income taxes 690 1,628
Accrued expenses and other 4,580 2,222
- --------------------------------------------------------------------------------
Total $15,251 $11,332
================================================================================
6. Retirement and Other Benefit Plans
The Company has discretionary defined contribution profit sharing plans
covering substantially all eligible employees. The Company contributed $336,000,
$206,000, and $92,000 to this Plan during the years ended December 31, 1997,
1996 and 1995, respectively.
7. Long-term Indebtedness
On May 15, 1997, the Company entered into a $60 million syndicated credit
agreement with The Chase Manhattan Bank as lead bank. The credit facility was
subsequently amended to $65 million on October 7, 1997 in connection with the
Lippert acquisition. Borrowings were secured by substantially all of the assets
of the Company, except real estate. At December 31, 1997, there were outstanding
borrowings of $52,600,000 under the credit facility.
18
<PAGE>
Interest on borrowings under the $65 million credit facility was payable
at .25% over the prime rate. In addition, the Company had the option to either
fix the rate or convert a portion of the loan to a Eurodollar loan at 1.5% over
the LIBO rate. Furthermore, the Company was required to pay a commitment fee,
accrued at the rate of 3/8 of 1% per annum, on the daily unused amount of the
revolving line of credit. Pursuant to the agreement, the Company was required to
maintain minimum net worth and income levels, and meet certain other financial
requirements typical to secured borrowing arrangements. In addition, the Company
was prohibited from declaring or paying dividends without the prior written
consent of the lender.
On January 28, 1998, the Company completed a private placement of $40
million of 6.95 percent, seven year Senior Notes. Amortization of the seven year
Senior Notes is $8 million annually beginning at the end of year three.
Proceeds of the Senior Notes were used to reduce borrowings under Drew's
$65 million credit facility with The Chase Manhattan Bank, as agent.
Simultaneously, such credit facility was replaced with a $25 million revolving
credit facility which expires on May 15, 2002.
Interest on borrowings under the new credit facility is payable at the
prime rate. In addition, the Company has the option to convert a portion of the
loan to a Eurodollar loan at 1% over the LIBO rate. Furthermore, the Company is
required to pay a commitment fee, accrued at the rate of 3/8 of 1% per annum, on
the daily unused amount of the revolving line of credit.
Pursuant to both the Senior Notes and the new credit facility, the Company
is required to maintain minimum net worth and interest and fixed charge
coverages and meet certain other financial requirements. Borrowings under both
facilities are secured only by capital stock of the Company's subsidiaries.
The Company has entered into interest rate hedge agreements to effectively
convert variable rate debt to fixed rate debt in order to reduce the risk of
incurring higher interest costs due to rising interest rates. At December 31,
1997, the Company had entered into contracts that expire in May 1998 and May
1999 which hedge interest related to $5 million and $10 million of debt,
respectively. Both of these contracts had an effective rate of 7.94%. Such rate
was revised to 7.44% as a result of the new credit agreement.
Long-term indebtedness consists of the following (in thousands):
December 31,
---------------------
1997 1996
- --------------------------------------------------------------------------------
Notes payable pursuant to a $65,000
credit agreement expiring May 15, 2002
consisting of:
Term loan payable in quarterly
installments of $2,000 commencing
March 31, 1998 $32,000
Revolving loan, not to exceed $33,000 20,600
Notes payable pursuant to a credit
agreement expiring January 31, 1999
consisting of revolving loan, not to
exceed $6,000 $3,150
Equipment note payable in 84 monthly
payments of $24 commencing
February 1, 1998 with interest at
7.25% per annum 1,560
Other 1,148 632
- --------------------------------------------------------------------------------
55,308 3,782
Less current portion (reflecting terms of
new credit agreement and Senior Notes) 548 130
- --------------------------------------------------------------------------------
Total long-term indebtedness $54,760 $ 3,652
================================================================================
8. Income Taxes
The income tax provision (benefit) in the Consolidated Statements of
Income is as follows (in thousands):
Year Ended December 31,
-----------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Current:
Federal $ 6,312 $ 6,988 $ 4,625
State 625 1,401 934
Deferred:
Federal 200 (200) (245)
State 125 (97) (14)
- --------------------------------------------------------------------------------
Total income tax provision $ 7,262 $ 8,092 $ 5,300
================================================================================
19
<PAGE>
Notes to Consolidated Financial Statements (continued)
--------------------------------------------------------
Drew Industries Incorporated
The provision for income taxes differs from the amount computed by
applying the Federal statutory rate to income before income taxes for the
following reasons (in thousands):
Year Ended December 31,
-----------------------------
1997 1996 1995
- --------------------------------------------------------------------------------
Income tax at Federal
statutory rate $ 6,740 $ 7,232 $ 4,698
State income taxes, net of
Federal income tax benefit 487 861 626
Other 35 (1) (24)
- --------------------------------------------------------------------------------
Provision for income taxes $ 7,262 $ 8,092 $ 5,300
================================================================================
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996 are as follows (in thousands):
December 31,
----------------
1997 1996
- --------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 179 $ 115
Inventories 438 371
Capital leases 22 61
Other asset valuation allowances 1,114 139
Employee benefits other than pensions 101 28
Vacation and holiday pay 268 264
Other accruals 2,138 1,196
- --------------------------------------------------------------------------------
Total deferred tax assets 4,260 2,174
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Fixed assets 2,368 309
Long-term obligations 16 64
- --------------------------------------------------------------------------------
Total deferred tax liabilities 2,384 373
- --------------------------------------------------------------------------------
Net deferred tax asset $1,876 $1,801
================================================================================
The Company concluded that it is more likely than not that the deferred
tax assets at December 31, 1997 will be realized in the ordinary course of
operations based on scheduling of deferred tax liabilities and income from
operating activities.
Net deferred income tax assets of $3,023,000 and $1,946,000 are included
in prepaid expenses and other current assets, and net deferred tax liabilities
of $1,147,000 and $145,000 are included in other long-term liabilities, in the
Consolidated Balance Sheets at December 31, 1997 and 1996, respectively.
9. Commitments and Contingencies
Leases
The Company's lease commitments are primarily for real estate and
vehicles. The significant real estate leases provide for renewal options and
periodic rental adjustments to reflect price index changes and require the
Company to pay for property taxes and all other costs associated with the leased
property. The interest rate on the capital leases is 13.5%. Most vehicle leases
provide for contingent payments based upon miles driven and other factors.
Future minimum lease payments under capital and operating leases at
December 31, 1997 are summarized as follows (in thousands):
Years Capital Operating
- --------------------------------------------------------------------------------
1998 $99 $2,715
1999 2,340
2000 2,093
2001 1,642
2002 943
Thereafter 443
- --------------------------------------------------------------------------------
Total lease obligations 99 $10,176
========
Less amount representing interest 4
- ------------------------------------------------------------------
Present value of net minimum lease
payments (payable within one year) $95
==================================================================
Rent expense was $3,087,000, $2,522,000, and $1,760,000 for the years
ended December 31, 1997, 1996 and 1995, respectively.
Other
Effective July 29, 1994, the Company spun off to its stockholders Leslie
Building Products, Inc. and its subsidiary, Leslie-Locke, Inc. ("Leslie-Locke"),
the Company's former home improvement building products segment.
On September 30, 1994, White Metal Rolling and Stamping Corp. ("White
Metal"), Leslie-Locke's discontinued ladder manufacturing subsidiary, filed a
voluntary petition seeking liquidation under the provisions of chapter 7 of the
United States Bankruptcy Code. The liabilities of White Metal are primarily
product liability costs. While Drew was named as a defendant in certain actions
commenced in connection with these claims, Drew has not been held responsible,
and Drew disclaims any liability for the obligations of White Metal.
20
<PAGE>
On May 7, 1996, the Company and its subsidiary, Kinro, Inc., and Leslie
Building Products, Inc. and its subsidiary, Leslie-Locke, were served with a
summons and complaint in an adversary proceeding commenced by the chapter 7
trustee of White Metal. The complaint, which appears to allege several duplicate
claims, seeks damages in the aggregate amount of $10.6 million plus attorneys
fees, of which up to approximately $7.5 million is sought, jointly and
severally, from the Company, Kinro, Leslie Building Products and Leslie-Locke.
The proceeding is based principally upon the trustee's allegations that the
Company and its affiliated companies obtained tax benefits attributable to the
use of White Metal's net operating losses. The trustee seeks to recover the
purported value of the tax savings achieved. Management believes that the
trustee's allegations are without merit and have no basis in fact. In addition,
the trustee alleges that White Metal made certain payments to the Company which
were preferential and are recoverable by White Metal, in the approximate amount
of $900,000. The Company denies liability for any such amount and is vigorously
defending against the allegations. However, an estimate of potential loss, if
any, cannot be made at this time. The Company believes that it has sufficient
accruals for the defense of this proceeding and that such defense will not have
a material adverse impact on the Company's financial condition or results of
operations.
In order to hedge the impact of future price fluctuations on a portion of
its aluminum raw material requirements, the Company periodically purchases
aluminum futures contracts on the London Metal Exchange. At December 31, 1997,
the Company had futures contracts outstanding for 3.3 million pounds of aluminum
at a cost of $2.6 million which approximates market value.
The Company has employment contracts with five of its employees which
expire on various dates through July 2002. The minimum commitments under these
contracts are $1,180,000 in 1998, $978,000 in 1999, $896,000 in 2000, $608,000
in 2001 and $89,000 in 2002. In addition, an arrangement with another employee
of the Company provides for incentives to be paid, based on a percentage of
profits as defined.
10. Stockholders' Equity
Stock Options and Warrants
Pursuant to the Drew Industries Incorporated Stock Option Plan (the
"Plan"), the Company may grant its directors and/or key employees options to
purchase Drew Common Stock. The Plan provides for the grant of stock options
that qualify as incentive stock options ("ISO") under Section 422 of the Code
and non-qualified stock options ("NQSOs").
Under the Plan, the Committee determines the period for which each stock
option may be exercisable, but in no event may a stock option be exercisable
more than 10 years from the date of grant thereof. The number of shares
available under the Plan, and the exercise price of options granted under the
Plan, are subject to adjustments that may be made by the Committee to reflect
stock splits, stock dividends, recapitalization, mergers, or other major
corporate action. Under the terms of the Plan, the number of shares that each
holder of options was entitled to purchase as well as the option price was
adjusted to reflect the two-for-one stock split effective March 21, 1997.
The exercise price for options granted under the Plan shall be at least
equal to 100% of the fair market value of the shares subject to such option on
the date of grant. The exercise price may be paid in cash or in shares of Drew
Common Stock. Options granted under the Plan become exercisable in annual
installments as determined by the Committee.
Transactions in stock options under this plan are summarized as follows:
Number of
Option Shares Option Price
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994 707,734 $ 1.24-$ 4.94
Granted 10,000 $ 7.35
Exercised (114,536) $ 1.24-$ 4.27
- ----------------------------------------------------------
Outstanding at December 31, 1995 603,198 $ 1.24-$ 7.35
Granted 169,140 $ 6.94-$10.75
Exercised (113,740) $ 1.24-$ 4.27
Canceled (15,442) $ 3.03-$ 6.94
- ----------------------------------------------------------
Outstanding at December 31, 1996 643,156
Granted 326,000 $12.13-$12.48
Exercised (85,990) $ 1.24-$ 6.94
Canceled (24,054) $ 6.94-$12.13
- ----------------------------------------------------------
Outstanding at December 31, 1997 859,112
==========================================================
Exercisable at December 31, 1997 464,176 $ 3.62-$12.48
==========================================================
21
<PAGE>
Notes to Consolidated Financial Statements (continued)
--------------------------------------------------------
Drew Industries Incorporated
The Company adopted the disclosure-only option under SFAS No.123,
Accounting for Stock-Based Compensation ("FAS 123"), as of December 31, 1996.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. The weighted average assumptions used for
grants included no dividend yields, risk-free interest rates of 5.0%, 5.9% and
5.4%; assumed expected volatilities of 40.2%, 30.3% and 29.8%; and expected
lives of 5, 5, and 5 years; for 1997, 1996 and 1995, respectively. The
respective number of shares available for granting options were 275,378, 177,324
and 331,022 at December 31, 1997, 1996 and 1995, respectively.
If compensation cost for the Company's stock option plan had been
recognized in the income statement based upon the fair market method, net income
would have been reduced to $11,806,000, $12,498,000 and $8,107,000 and earnings
per basic share would have been reduced to $1.20 ($1.17 diluted ), $1.17 ($1.14
diluted) and $.82 ($.81 diluted) in 1997, 1996 and 1995, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1997:
Average
Option Remaining Option
Exercise Shares Life Shares
Price Outstanding (Years) Exercisable
- --------------------------------------------------------------------------------
$ 3.62 23,160 1.0 23,160
$ 3.67 69,480 1.1 69,480
$ 4.26 329,374 1.3 329,374
$ 6.94 87,098 3.1 2,162
$ 7.35 10,000 3.0 10,000
$10.75 15,000 4.0 15,000
$12.13 310,000 5.9 0
$12.48 15,000 5.0 15,000
- --------------------------------------------------------------------------------
859,112 464,176
================================================================================
Outstanding stock options expire in five to six years from the date they
are granted; options vest over service periods that range from zero to five
years.
In connection with the acquisition of Pritt on May 5, 1997, the Company
issued a warrant to purchase 40,000 shares of its common stock at $11 per share.
The warrant expires May 5, 2000.
Treasury Stock
On February 14, 1997, the Company purchased 1.6 million shares from its
chairman for $13 per share, which was below the market price at that time. These
treasury shares were included in the shares issued in connection with the
acquisition of Lippert.
Weighted Average Common Shares Outstanding
Net income per basic common share is based on 9,845,138 shares, 10,688,552
shares and 9,894,810 shares for the years ended December 31, 1997, 1996 and
1995, respectively, the weighted average of common shares outstanding after
giving effect to the stock split effective March 21, 1997. Net income per
diluted common share is based on 10,090,106 shares, 10,916,608 shares and
10,047,612 shares for the years ended December 31, 1997, 1996 and 1995,
respectively. The increase in diluted average shares outstanding results from
the assumed issuance of common stock pertaining to stock options and warrants.
The numerator, which is equal to net income, is constant for both the basic and
diluted earnings per share calculations.
In connection with the acquisition of Lippert on October 7, 1997, the
Company issued 230,769 shares of common stock to the sellers which are being
held in escrow pending the results of an earnout. Such shares are not considered
outstanding for the calculation of weighted average common shares outstanding
until the contingency is resolved.
11. Significant Customers
One customer accounted for 16%, 17% and 10%, of the Company's net sales in
the years ended December 31, 1997, 1996 and 1995, respectively. Another customer
accounted for 10% of the Company's net sales in 1997.
22
<PAGE>
12. Quarterly Results of Operations (Unaudited)
Interim unaudited financial information follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1997 (a)
Net sales $41,628 $50,201 $50,182 $66,354 $208,365
Gross profit 10,163 11,082 11,088 13,948 46,281
Net income 2,946 3,081 2,939 3,028 11,994
Net income per common share (basic) $ .30 $ .34 $ .32 $ .29 $ 1.22
Net income per common share (diluted) .29 .33 .31 .28 1.19
Year Ended December 31, 1996 (b)
Net sales $34,114 $48,330 $44,815 $40,892 $168,151
Gross profit 8,538 11,599 10,860 10,423 41,420
Net income 2,517 3,614 3,518 2,923 12,572
Net income per common share (basic) $ .24 $ .33 $ .33 $ .27 $ 1.18
Net income per common share (diluted) .24 .32 .32 .27 1.15
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes results of operations of Pritt and Lippert since their acquisitions
by the Company on May 5, and October 7, 1997, respectively.
(b) Includes results of operations of Shoals since its acquisition by the
Company on February 15, 1996.
Independent Auditors' Report
-------------------------------------------
Drew Industries Incorporated
The Board of Directors and Stockholders
Drew Industries Incorporated:
We have audited the accompanying consolidated balance sheets of Drew
Industries Incorporated and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Drew
Industries Incorporated and subsidiaries at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally accepted
accounting principles.
As discussed in Note 1 of the consolidated financial statements, the
Company changed its method of accounting for inventories in 1997.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
February 11, 1998
23
<PAGE>
Management's Responsibility
for Financial Statements
---------------------------------------------
Drew Industries Incorporated
The management of the Company has prepared and is responsible for the
consolidated financial statements and related financial information included in
this report. These consolidated financial statements were prepared in accordance
with generally accepted accounting principles which are consistently applied and
appropriate in the circumstances. These consolidated financial statements
necessarily include amounts determined using management's best judgements and
estimates.
The Company maintains accounting and other control systems which provide
reasonable assurance that assets are safeguarded and that the books and records
reflect the authorized transactions of the Company. Although accounting controls
are designed to achieve this objective, it must be recognized that errors or
irregularities may occur. In addition, it is necessary to assess and consider
the relative costs and the expected benefits of the internal accounting
controls.
The Company's independent auditors, KPMG Peat Marwick LLP, provide an
independent audit of the consolidated financial statements and underlying
transactions. They perform such tests and other procedures as they deem
necessary to express an opinion on the financial statements. The report of KPMG
Peat Marwick LLP accompanies the consolidated financial statements.
The Audit Committee of the Board of Directors consists solely of
non-employee directors. The Committee meets periodically with management and the
independent auditors to review audit results, financial reporting, internal
accounting controls and other financial matters. The independent auditors have
free access to the Committee.
/s/ Leigh J. Abrams
Leigh J. Abrams
President and Chief Executive Officer
/s/ Fredric M. Zinn
Fredric M. Zinn
Chief Financial Officer
Per Share Market Price Range (1)
-----------------------------------------------------
Drew Industries Incorporated
A summary of the high and low closing prices of the Company's common stock
on the American Stock Exchange is as follows:
1997 1996
- --------------------------------------------------------------------------------
High Low High Low
- --------------------------------------------------------------------------------
Quarter Ended March 31 $13.81 $10.75 $ 8.00 $ 6.75
Quarter Ended June 30 $13.00 $10.63 $ 9.25 $ 7.32
Quarter Ended September 30 $14.38 $11.75 $12.32 $ 8.38
Quarter Ended December 31 $14.13 $11.06 $13.62 $10.62
- --------------------------------------------------------------------------------
(1) Adjusted retroactively to give effect to a two-for-one stock split effective
March 21, 1997 to holders of record on March 4, 1997.
The closing price per share for the common stock on March 9, 1998 was
$12.75 and there were 2,302 holders of Drew Common Stock, not including
beneficial owners of shares held in broker and nominee names.
Dividend Information
Drew has not paid any cash dividends on its outstanding shares of Common
Stock. On February 13, 1997, Drew declared a two-for-one stock split by means of
a 100 percent stock dividend, payable on March 21, 1997 to stockholders of
record on March 4, 1997.
24
<PAGE>
Corporate Information
----------------------------------------------------
Drew Industries Incorporated
Board of Directors
EDWARD W. ROSE, III(a)
Chairman of the Board of
Drew Industries Incorporated
President of Cardinal Investment Company
JAMES F. GERO(a)
Chairman and Chief Executive Officer of
Sierra Technologies, Inc.
GENE BISHOP(a)
Retired Bank Executive
LEIGH J. ABRAMS
President and Chief Executive Officer of
Drew Industries Incorporated
DAVID L. WEBSTER
President and Chief Executive Officer of
Kinro, Inc. and Shoals Supply, Inc.
L. DOUGLAS LIPPERT
President and Chief Executive Officer of
Lippert Components, Inc.
(a) Members of Audit Committee and Compensation Committee of the Board of
Directors
Corporate Officers
LEIGH J. ABRAMS
President and Chief Executive Officer
FREDRIC M. ZINN
Chief Financial Officer
HARVEY J. KAPLAN
Treasurer and Secretary
JOHN F. CUPAK
Controller
Form 10-K
A copy of the Annual Report on Form 10-K as filed by the Corporation with the
Securities and Exchange Commission is available upon request, without charge, by
writing to:
Treasurer
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
General Counsel
Harvey F. Milman, Esq.
Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022-3592
Independent Certified Public Accountants
KPMG Peat Marwick LLP
Stamford Square
3001 Summer Street
Stamford, CT 06905
Transfer Agent and Registrar
ChaseMellon Shareholder Services
85 Challenger Road
Ridgefield, NJ 07660
Executive Offices
200 Mamaroneck Avenue
White Plains, NY 10601
(914) 428-9098
Kinro, Inc.
Shoals Supply, Inc.
DAVID L. WEBSTER
President and Chief Executive Officer
Corporate Headquarters
4381 Green Oaks Boulevard West
Arlington, TX 76016
(817) 483-7791
Lippert Components, Inc.
L. DOUGLAS LIPPERT
President and Chief Executive Officer
Corporate Headquarters
608 Wright Avenue
Alma, MI 48801
(517) 463-8341
Forward Looking Statements and Risk Factors
This Report contains certain statements, including the Company's plans regarding
its operating strategy, its products and performance and its views of industry
prospects, which could be construed to be forward looking statements within the
meaning of the Securities and Exchange Act of 1934. These statements reflect the
Company's current views with respect to future plans, events and financial
performance. The Company has identified certain risk factors which could cause
actual plans and results to differ substantially from those included in the
forward looking statements. These factors include pricing pressures due to
competition, raw material costs (particularly aluminum, steel and glass),
adverse weather conditions impacting retail sales, inventory adjustments by
retailers and interest rates. In addition, general economic conditions may
affect the retail sale of manufactured homes and RV's.
<PAGE>
DREW
DREW INDUSTRIES INCORPORATED
200 Mamaroneck Avenue
White Plains, NY 10601
Designed by Curran & Connors, Inc.
EXHIBIT 21 - Active Subsidiaries of Registrant
State of
Name Incorporation
---- -------------
Kinro, Inc. Ohio
Kinro Manufacturing, Inc. Delaware
Kinro Holding, Inc. New York
Shoals Supply, Inc. Delaware
Shoals Supply Holding, Inc. New York
Lippert Components, Inc. Delaware
Kinro Texas Limited Partnership Texas Partnership
Kinro Tennessee Limited Partnership Tennessee Partnership
Shoals Supply Texas
Limited Partnership Texas Partnership
Shoals Supply Tennessee
Limited Partnership Tennessee Partnership
Consent of Independent Auditors
The Board of Directors
Drew Industries Incorporated:
We consent to incorporation by reference in the registration statement (No.
33-88582) on Form S-8 of Drew Industries Incorporated of our reports dated
February 11, 1998 relating to the consolidated balance sheets of Drew Industries
Incorporated and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1997, which report
refers to a change to the FIFO method of valuing inventory and our report dated
February 11, 1998 relating to the financial statement schedule, which reports
appear in or are incorporated by reference in the December 31, 1997, annual
report on Form 10-K of Drew Industries Incorporated.
KPMG Peat Marwick LLP
Stamford, Connecticut
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,028
<SECURITIES> 0
<RECEIVABLES> 9,709
<ALLOWANCES> 528
<INVENTORY> 29,456
<CURRENT-ASSETS> 46,275
<PP&E> 46,794
<DEPRECIATION> 8,698
<TOTAL-ASSETS> 130,349
<CURRENT-LIABILITIES> 22,266
<BONDS> 0
0
0
<COMMON> 113
<OTHER-SE> 51,840
<TOTAL-LIABILITY-AND-EQUITY> 130,349
<SALES> 208,365
<TOTAL-REVENUES> 208,365
<CGS> 162,084
<TOTAL-COSTS> 186,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,505
<INCOME-PRETAX> 19,256
<INCOME-TAX> 7,262
<INCOME-CONTINUING> 11,994
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,994
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.19
</TABLE>
