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Execution Version
KINRO, INC.
LIPPERT COMPONENTS, INC.
Guaranteed By:
DREW INDUSTRIES INCORPORATED
NOTE PURCHASE AND PRIVATE SHELF
AGREEMENT
FEBRUARY 11, 2005
$60,000,000 PRIVATE SHELF
FACILITY
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Information
Schedule
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Schedule
3A(1)
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Initial
Subsidiary Guarantors and Pledgors
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Schedule
6A
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Transactions
with Affiliates
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Schedule
6C
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Existing
Liens
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Schedule
6D
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Existing
Indebtedness
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Schedule
6F
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Subsidiary
Indebtedness
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Schedule
8B
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Material
Changes
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Schedule
8C
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Litigation
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Schedule
8G
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Debt Agreements
Which Restrict the Incurrence of Indebtedness
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Exhibit
A
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Form of Shelf
Note
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Exhibit
B
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Form of Request
for Purchase
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Exhibit
C
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Form of
Confirmation of Acceptance
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Exhibit
D-1
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Form of Parent
Guaranty
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Exhibit
D-2
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Form of
Subsidiary Guaranty
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Exhibit
E
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Form of
Intercreditor Agreement
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Exhibit
F
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Form of
Subordination Agreement
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Exhibit
G
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Form of Pledge
Agreement
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Exhibit
H-1
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Form of Closing
Opinion for Counsel to Credit Parties
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Exhibit
H-2
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Form of Closing
Opinion for Special Ohio Counsel to Kinro
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Exhibit
H-3
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Form of Shelf
Opinion for Counsel to Credit Parties
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Exhibit
H-4
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Form of Shelf
Opinion for Special Ohio Counsel to Kinro
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Exhibit
I
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Form of
Officer’s Certificate
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Exhibit
J
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Form of
Secretary’s Certificate for the Credit Parties
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Exhibit
K
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Form of Trust
Agreement
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KINRO, INC.
LIPPERT COMPONENTS, INC.
200 Mamaroneck Avenue
White Plains, New York 10601
Guaranteed By:
DREW INDUSTRIES INCORPORATED
As of February 11, 2005
Prudential Investment Management,
Inc.
(herein called “ Prudential ”)
Each Prudential Affiliate (as
hereinafter defined)
which becomes bound by certain provisions of
this Agreement as hereinafter provided (the “
Purchasers ”)
c/o Prudential Capital Group
1114 Avenue of the Americas, 30 th Floor
New York, NY 10036
Ladies and Gentlemen:
KINRO, INC. , an Ohio corporation (“ Kinro
”), LIPPERT COMPONENTS, INC. , a Delaware corporation
(“ Lippert Component s”, and together with
Kinro, collectively, the “ Co-Issuers ”), and
DREW INDUSTRIES INCORPORATED , a Delaware corporation (the
“ Parent ”, and, together with the Co-Issuers,
the “ Obligors ”), each hereby agrees with you
as follows:
1.
AUTHORIZATION OF ISSUE OF SHELF NOTES.
Each
of the Co-Issuers will, jointly and severally with each other
Co-Issuer, authorize the issue of its senior promissory notes (the
“ Shelf Notes ”) in the aggregate principal
amount of up to $60,000,000, to be dated the date of issue thereof,
to mature, in the case of each Shelf Note so issued, no more than 7
years after the date of original issuance thereof, to have an
average life, in the case of each Shelf Note so issued, of no more
than 7 years after the date of original issuance thereof, to bear
interest on the unpaid balance thereof from the date thereof at the
rate per annum, and to have such other particular terms, as shall
be set forth, in the case of each Shelf Note so issued, in the
Confirmation of Acceptance with respect to such Shelf Note
delivered pursuant to paragraph 2E, and to be substantially in the
form of Exhibit A attached hereto. The terms “Shelf
Note” and “Shelf Notes” as used herein shall
include each Shelf Note delivered pursuant to any provision of this
Agreement and each Shelf Note delivered in substitution or exchange
for any such Shelf Note pursuant to any such provision. Shelf Notes
which have (i) the same final
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maturity, (ii) the same principal
prepayment dates, (iii) the same principal prepayment amounts (as a
percentage of the original principal amount of each Shelf Note),
(iv) the same interest rate, (v) the same interest payment periods
and (vi) the same date of issuance (which, in the case of a Shelf
Note issued in exchange for another Shelf Note, shall be deemed for
these purposes the date on which such Shelf Note’s ultimate
predecessor Shelf Note was issued), are herein called a “
Series ” of Shelf Notes.
2.
PURCHASE AND SALE OF SHELF NOTES.
2A.
Facility. Prudential is willing to consider, in its
sole discretion and within limits which may be authorized for
purchase by Prudential Affiliates from time to time, the purchase
of Shelf Notes by Prudential Affiliates pursuant to this Agreement.
The willingness of Prudential to consider such purchase of Shelf
Notes is herein called the “ Facility ”. At any
time, (i) $60,000,000, minus (ii) the aggregate principal
amount of Shelf Notes purchased and sold pursuant to this Agreement
prior to such time, minus (iii) the aggregate principal
amount of Accepted Notes (as hereinafter defined) which have not
yet been purchased and sold hereunder prior to such time, is herein
called the “ Available Facility Amount ” at such
time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER
PURCHASES OF SHELF NOTES BY PRUDENTIAL AFFILIATES, THIS AGREEMENT
IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER
PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE
OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES,
SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF
NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL
AFFILIATE.
2B.
Issuance Period. Shelf Notes may be issued and sold pursuant
to this Agreement until the earlier of (i) the third anniversary of
the date of this Agreement (or if such anniversary is not a
Business Day, the Business Day next preceding such anniversary) and
(ii) the thirtieth day after Prudential shall have given to the
Co-Issuers, or the Co-Issuers shall have given to Prudential,
written notice stating that it elects to terminate the issuance and
sale of Shelf Notes pursuant to this Agreement (or if such
thirtieth day is not a Business Day, the Business Day next
preceding such thirtieth day). The period during which Shelf Notes
may be issued and sold pursuant to this Agreement is herein called
the “ Issuance Period ”.
2C.
Request for Purchase. The Co-Issuers may from time to
time during the Issuance Period make requests for purchases of
Shelf Notes (each such request being herein called a “
Request for Purchase ”). Each Request for Purchase
shall be made to Prudential by facsimile or overnight delivery
service, and shall (i) specify the aggregate principal amount of
Shelf Notes covered thereby, which shall not be less than
$5,000,000 and not be greater than the Available Facility Amount at
the time such Request for Purchase is made, (ii) specify the
principal amounts, final maturities (which shall be no more than 7
years from the date of issuance), principal prepayment dates and
amounts (which shall result in an average life of no
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more than 7 years) and interest
payment periods (quarterly or semi-annually in arrears) of the
Shelf Notes covered thereby (provided, however, that no more than
$20,000,000 in aggregate principal amount of Shelf Notes
outstanding from time to time may be due in any calendar year),
(iii) specify the use of proceeds of such Shelf Notes, (iv) specify
the proposed day for the closing of the purchase and sale of such
Shelf Notes, which shall be a Business Day during the Issuance
Period not less than 10 days and not more than 30 days after the
making of such Request for Purchase, (v) specify the number of the
account and the name and address of the depository institution to
which the purchase prices of such Shelf Notes are to be transferred
on the Closing Day for such purchase and sale, (vi) certify that
the representations and warranties contained in paragraph 8 are
true on and as of the date of such Request for Purchase, subject to
such changes and exceptions thereto, if any, as may be indicated in
the Request for Purchase and are reasonably acceptable to
Prudential, (vii) certify that there exists on the date of such
Request for Purchase no Event of Default or Default, (viii) specify
the Designated Spread for such Shelf Notes and (ix) be
substantially in the form of Exhibit B attached hereto. Each
Request for Purchase shall be in writing and shall be deemed made
when received by Prudential.
2D.
Rate Quotes. Not later than five Business Days after
the Co-Issuers shall have given Prudential a Request for Purchase
pursuant to paragraph 2C, Prudential may, but shall be under no
obligation to, provide to the Co-Issuers by telephone or facsimile,
in each case between 9:30 A.M. and 1:30 P.M. New York City local
time (or such later time as Prudential may elect) interest rate
quotes for the several principal amounts, maturities, principal
prepayment schedules, Designated Spreads and interest payment
periods of Shelf Notes specified in such Request for Purchase. Each
quote shall represent the interest rate per annum payable on the
outstanding principal balance of such Shelf Notes, until such
balance shall have become due and payable, at which Prudential
or a Prudential Affiliate would be willing to purchase such Shelf
Notes at 100% of the principal amount thereof.
2E.
Acceptance. Within 30 minutes after Prudential shall
have provided any interest rate quotes pursuant to paragraph 2D or
such shorter period as Prudential may specify to the Co-Issuers
(such period herein called the “ Acceptance Window
”), the Co-Issuers may, subject to paragraph 2F, elect to
accept such interest rate quotes as to not less than $5,000,000
aggregate principal amount of the Shelf Notes specified in the
related Request for Purchase. Such election shall be made by an
Authorized Officer of each of the Co-Issuers notifying Prudential
by telephone or facsimile within the Acceptance Window that each of
the Co-Issuers elects to accept such interest rate quotes,
specifying the Shelf Notes (each such Shelf Note being herein
called an “ Accepted Note ”) as to which such
acceptance (herein called an “ Acceptance ”)
relates. The day the Co-Issuers notify Prudential of an Acceptance
with respect to any Accepted Notes is herein called the “
Acceptance Day ” for such Accepted Notes. Any interest
rate quotes as to which Prudential does not receive an Acceptance
within the Acceptance Window shall expire, and no purchase or sale
of Shelf Notes hereunder shall be made based on such expired
interest rate quotes. Subject to paragraphs 2B and 2F and the other
terms and conditions hereof, the Co-Issuers agree jointly and
severally to sell to a Prudential Affiliate, and Prudential agrees
to cause the purchase by a Prudential Affiliate of, the Accepted
Notes at 100% of the principal amount of such Accepted Notes. As
soon as practicable following the Acceptance Day, the Co-Issuers
and each Prudential Affiliate which is to purchase any such
Accepted Notes will execute
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a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto
(herein called a “ Confirmation of Acceptance
”). If the Co-Issuers should fail to execute and return to
Prudential within three Business Days following receipt thereof a
Confirmation of Acceptance with respect to any Accepted Notes,
Prudential or any Prudential Affiliate may at its election at any
time prior to its receipt thereof cancel the closing with respect
to such Accepted Notes by so notifying the Co-Issuers in
writing.
2F.
Market Disruption. Notwithstanding the provisions of
paragraph 2E, if Prudential shall have provided interest rate
quotes pursuant to paragraph 2D and thereafter prior to the time an
Acceptance with respect to such quotes shall have been notified to
Prudential in accordance with paragraph 2E the domestic market for
U.S. Treasury securities or other financial instruments shall have
closed or there shall have occurred a general suspension, material
limitation, or significant disruption of trading in securities
generally on the New York Stock Exchange or in the domestic market
for U.S. Treasury securities or other financial instruments, then
such interest rate quotes shall expire, and no purchase or sale of
Shelf Notes hereunder shall be made based on such expired interest
rate quotes. If the Co-Issuers thereafter notify Prudential of the
Acceptance of any such interest rate quotes, such Acceptance shall
be ineffective for all purposes of this Agreement, and Prudential
shall promptly notify the Co-Issuers that the provisions of this
paragraph 2F are applicable with respect to such
Acceptance.
2G.
Facility Closings. Not later than 11:30 A.M. (New York
City local time) on the Closing Day for any Accepted Notes, the
Co-Issuers will deliver to each Purchaser listed in the
Confirmation of Acceptance relating thereto at the offices of the
Prudential Capital Group, 1114 Avenue of the Americas, 30
th Floor, New York, NY 10036 (or such other address as
Prudential may specify in writing), the Accepted Notes to be
purchased by such Purchaser in the form of one or more Shelf Notes
in authorized denominations as such Purchaser may request for each
Series of Accepted Notes to be purchased on such Closing Day, dated
the Closing Day and registered in such Purchaser’s name (or
in the name of its nominee), against payment of the purchase price
thereof by transfer of immediately available funds for credit to
the Co-Issuers’ account specified in the Request for Purchase
of such Shelf Notes. If the Co-Issuers fail to tender to any
Purchaser the Accepted Notes to be purchased by such Purchaser on
the scheduled Closing Day for such Accepted Notes as provided above
in this paragraph 2G, or any of the conditions specified in
paragraph 3 shall not have been fulfilled by the time required on
such scheduled Closing Day, the Co-Issuers shall, prior to 1:00
P.M. New York City local time, on such scheduled Closing Day notify
Prudential (which notification shall be deemed received by each
Purchaser) in writing whether (i) such closing is to be rescheduled
(such rescheduled date to be a Business Day during the Issuance
Period not less than one Business Day and not more than 10 Business
Days after such scheduled Closing Day (the “ Rescheduled
Closing Day ”)) and certify to Prudential (which
certification shall be for the benefit of each Purchaser) that the
Co-Issuers reasonably believe that they will be able to comply with
the conditions set forth in paragraph 3 on such Rescheduled Closing
Day and that the Co-Issuers will pay the Delayed Delivery Fee in
accordance with paragraph 2H(2) or (ii) such closing is to be
canceled and that the Co-Issuers will pay the Cancellation Fee as
provided in paragraph 2H(3). In the event that the Co-Issuers shall
fail to give such notice referred to in the preceding sentence,
Prudential (on behalf of each Purchaser) may at its election, at
any time after 1:00 P.M., New York City local time, on
such
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scheduled Closing Day, notify the
Co-Issuers in writing that such closing is to be canceled and the
Co-Issuers are obligated to pay the Cancellation Fee as provided in
paragraph 2H(3). Notwithstanding anything to the contrary appearing
in this Agreement, the Co-Issuers may elect to reschedule a closing
with respect to any given Accepted Notes on not more than one (1)
occasion, unless Prudential shall have otherwise consented in
writing.
2H.
Fees.
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2H(1)
Issuance Fee. The Co-Issuers will pay to each
Purchaser in immediately available funds a fee (herein called the
“Issuance Fee” ) on each Closing Day in an
amount equal to 0.10% of the aggregate principal amount of Shelf
Notes sold to such Purchaser on such Closing Day.
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2H(2)
Delayed Delivery Fee. If the closing of the purchase
and sale of any Accepted Note is delayed for any reason beyond the
original Closing Day for such Accepted Note, the Co-Issuers will
pay to the Purchaser of such Accepted Note (a) on the Cancellation
Date or actual closing date of such purchase and sale and (b) if
earlier, the next Business Day following 90 days after the
Acceptance Day for such Accepted Note and on the Business Day
following the end of each 90-day period ending thereafter, a fee
(herein called the “ Delayed Delivery Fee ”)
calculated as follows:
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(BEY - MMY) X DTS/360 X PA
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where “
BEY ” means Bond Equivalent Yield, i.e. , the
bond equivalent yield per annum of such Accepted Note; “
MMY ” means Money Market Yield, i.e. , the
yield per annum on a commercial paper investment of the highest
quality selected by Prudential on the date Prudential receives
notice of the delay in the closing for such Accepted Note having a
maturity date or dates the same as, or closest to, the Rescheduled
Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is
delayed); “ DTS ” means Days to Settlement,
i.e. , the number of actual days elapsed from and including
the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note)
or from and including the date of the next preceding payment (in
the case of any subsequent delayed delivery fee payment with
respect to such Accepted Note) to but excluding the date of such
payment; and “ PA ” means Principal Amount,
i.e. , the principal amount of the Accepted Note for which
such calculation is being made. In no case shall the Delayed
Delivery Fee be less than zero. Nothing contained herein shall
obligate any Purchaser to purchase any Accepted Note on any day
other than the Closing Day for such Accepted Note, as the same may
be rescheduled from time to time in compliance with paragraph
2G.
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2H(3)
Cancellation Fee. If the Co-Issuers at any time notify
Prudential in writing that they are canceling the closing of the
purchase and sale of any Accepted Note, or if Prudential or any
Prudential Affiliate notifies the Co-Issuers in writing under the
circumstances set forth in the last sentence of paragraph 2E or
the
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penultimate
sentence of paragraph 2G that the closing of the purchase and sale
of such Accepted Note is to be canceled, or if the closing of the
purchase and sale of such Accepted Note is not consummated on or
prior to the last day of the Issuance Period (the date of any such
notification, or the last day of the Issuance Period, as the case
may be, being herein called the “ Cancellation Date
”), the Co-Issuers will pay the Purchasers in immediately
available funds an amount (the “ Cancellation Fee
”) calculated as follows:
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where “
PI ” means Price Increase, i.e. , the quotient
(expressed in decimals) obtained by dividing (a) the excess of the
ask price (as determined by Prudential) of the Hedge Treasury
Note(s) on the Cancellation Date over the bid price (as determined
by Prudential) of the Hedge Treasury Notes(s) on the Acceptance Day
for such Accepted Note by (b) such bid price; and “ PA
” has the meaning ascribed to it in paragraph 2H(2). The
foregoing bid and ask prices shall be as reported by TradeWeb LLC
(or, if such data for any reason ceases to be available through
TradeWeb LLC, any publicly available source of similar market data
as is then customarily used by Prudential). Each price shall be
rounded to the second decimal place. In no case shall the
Cancellation Fee be less than zero.
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3.
CONDITIONS OF CLOSING.
3A.
Conditions to Effectiveness. Prudential’s obligation
to enter into this Agreement and to make the Facility available to
the Co-Issuers is subject to the satisfaction, on or before the
Effective Date, of the following conditions:
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3A(1)
Prudential shall have received the following documents, each duly
executed and delivered by the party or parties thereto and in form
and substance satisfactory to Prudential:
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(i)
the Parent Guarantee Agreement, dated as of the date hereof,
executed by the Parent in favor of Prudential and the holders from
time to time of the Shelf Notes, in the form of
Exhibit D-1 hereto (as amended, restated, supplemented
or otherwise modified from time to time, the “ Parent
Guaranty ”);
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(ii)
the Subsidiary Guarantee Agreement, dated as of the date hereof,
executed by each of the Subsidiary Guarantors in favor of
Prudential and the holders from time to time of the Shelf Notes, in
the form of Exhibit D-2 hereto (as amended, restated,
supplemented or otherwise modified from time to time, the “
Subsidiary Guaranty ”);
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(iii)
the Intercreditor Agreement, dated as of the date hereof, by and
among the Bank Lenders, JPMorgan Chase Bank, N.A., in its capacity
as administrative agent for the Bank Lenders and as Collateral
Agent, Prudential, each of the other holders from time to time of
the Shelf Notes and the Security
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Trustee, in the
form of Exhibit E hereto (as amended, restated,
supplemented or otherwise modified from time to time, the “
Intercreditor Agreement ”);
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(iv)
the Subordination Agreement, dated as of the date hereof, by and
among the Credit Parties, Prudential and each of the other holders
from time to time of the Shelf Notes, in the form of
Exhibit F hereto (as amended, restated, supplemented or
otherwise modified from time to time, the “ Subordination
Agreement ”);
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(v)
the Pledge and Security Agreement, dated as of the date hereof,
executed by the Obligors and the Subsidiary Guarantors (other than
any Subsidiary Guarantors that are limited liability companies or
limited partnerships) in favor of the Security Trustee, as secured
party, for the benefit of the holders from time to time of Shelf
Notes, in the form of Exhibit G hereto (as amended,
supplemented or otherwise modified from time to time, the “
Pledge Agreement ”), and the relevant Credit Parties
shall have delivered to the Collateral Agent to be held on behalf
of the Security Trustee in accordance with the terms of the Pledge
Agreement and the Intercreditor Agreement (x) certificates
representing the Capital Stock pledged by such Credit Parties
thereunder together with related undated stock powers (or other
similar instruments) endorsed in blank, (y) Form UCC-1 financing
statements in respect of all partnership interests and limited
liability company interests in which a Lien is granted thereunder,
and (z) instruments of consent, waiver, and recognition in the form
of Exhibit B to the Pledge Agreement duly executed by each Credit
Party that is (A) a partnership and by each partner therein and (B)
a limited liability company and by each member thereof;
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(vi)
the Collateralized Trust Agreement, dated as of the date hereof, by
and between Prudential, each of the holders of the Shelf Notes from
time to time and the Security Trustee, in the form of Exhibit
K hereto (as amended, supplemented or otherwise modified from
time to time, the “ Trust Agreement
”);
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(vii)
such other certificates, documents and agreements as Prudential may
request (including those referenced in paragraph 3B);
and
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3A(2)
Opinions of Counsel. Prudential shall have
received:
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(i)
from Bingham McCutchen LLP, a favorable opinion satisfactory to
Prudential as to such matters incident to the matters herein
contemplated as it may reasonably request.
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(ii)
from (a) Phillips Nizer LLP, special counsel to the Credit Parties
and (b) Squire, Sanders & Dempsey LLP, special Ohio counsel to
Kinro, favorable opinions satisfactory to Prudential and
substantially in the forms of Exhibit H-1 and Exhibit
H-2 , respectively, attached hereto. The Obligors hereby direct
each such counsel to deliver such opinion and understand and agree
that
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Prudential and
each Purchaser will and is hereby authorized to rely on such
opinion.
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3A(3)
Representations and Warranties; No Default. The
representations and warranties contained in this Agreement and each
of the other Transaction Documents shall be true on and as of the
Effective Date; there shall exist on the Effective Date no Event of
Default or Default; and each of the Obligors shall have delivered
to such Purchaser an Officer’s Certificate, dated the
Effective Date, to both such effects substantially in the form
attached hereto as Exhibit I .
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3A(4)
Constitutive and Authorization Documents . Prudential
shall have received from each Credit Party a certificate
substantially in the form of Exhibit J attached hereto,
certifying as to the incumbency of the Persons executing the
Transaction Documents and other documents in connection therewith
on behalf of such Credit Party and attaching copies of such Credit
Party’s constitutive documents, as in effect on the Effective
Date, good standing certificates, and the resolutions authorizing
its execution and delivery of the Transaction Documents to which it
is a party, and certifying as to such other matters as Prudential
may reasonably request.
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3A(5)
[Intentionally Omitted]
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3A(6)
Payment of Existing Indebtedness. The Obligors
shall have paid in full all amounts outstanding under the Existing
Note Agreement and each other document, instrument and agreement
relating thereto, and Prudential shall have received documentation
or other evidence satisfactory to it that such amounts have been
paid and such documents, instruments and agreements have been
terminated.
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3A(7)
Perfection of Liens. Prudential shall have
received (a) copies of each certificate representing Capital Stock
of the Co-Issuers and their Subsidiaries pledged pursuant to the
Pledge Agreement, together with copies of appropriate instruments
of transfer thereof, in each case in form and substance
satisfactory to Prudential and certified by a senior financial
officer of the Parent as being true, correct and complete copies
thereof, (b) evidence satisfactory to Prudential that the Security
Trustee (or any agent or designee thereof) is in possession of such
certificates and instruments of transfer and (c) evidence
satisfactory to Prudential of the perfection of its Liens in any
uncertificated Capital Stock of the Co-Issuers and their
Subsidiaries pledged pursuant to the Pledge Agreement (it being
understood that delivery to Prudential of copies of the filed UCC-1
financing statements with the appropriate secretaries’ of
state, naming the Security Trustee as secured party for the benefit
of the holders from time to time of the Shelf Notes shall
constitute satisfactory evidence). The Liens of the Security
Trustee on the Capital Stock pledged by the Credit Parties pursuant
to the Pledge Agreement shall be valid and enforceable and shall
not be subject to any other Liens (other than Liens in favor of the
Collateral Agent permitted by clause (viii) of the definition of
Permitted Liens).
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3A(8)
UCC Searches. Prudential shall have received copies of
Requests for Information or Copies (Form UCC-11) or equivalent
reports listing all effective financing statements which name the
Credit Parties or any of their respective Subsidiaries (under any
present name and previous name) as debtor and which are filed in
the offices of their respective jurisdictions of organization and
any other states as reasonably requested by such Purchaser,
together with copies of such financing statements.
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3A(9)
Payment of Closing Expenses. The Obligors shall have paid at
the closing the fees, charges and disbursements of the special
counsel to Prudential and the Purchasers as presented by such
counsel in a statement on the Effective Date and for which the
Obligors are responsible in accordance with paragraph
13B.
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3A(10)
Proceedings. All proceedings taken or to be taken in
connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and
substance to Prudential, and Prudential shall have received all
such counterpart originals or certified or other copies of such
documents as it may reasonably request.
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3B.
Conditions to Closing Each Purchase of Shelf Notes. The
obligation of any Purchaser to purchase and pay for any Shelf Notes
is subject to the satisfaction, on or before the Closing Day for
such Shelf Notes, of the following conditions:
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3B(1)
Shelf Notes. Such Purchaser shall have received the
Shelf Note(s) to be purchased by such Purchaser, dated the
applicable Closing Day with respect to such Shelf Notes.
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3B(2)
Private Placement Number. Such Purchaser shall have received
a Private Placement Number issued by Standard & Poor’s
CUSIP Service Bureau (in connection with the Securities Valuation
Office of the National Association of Insurance Commissioners) for
the Shelf Notes to be purchased by it.
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3B(3)
Opinions of Counsel. Such Purchaser shall have
received from (a) Phillips Nizer LLP, special counsel to the Credit
Parties (or such other counsel designated by the Credit Parties and
acceptable to the Purchaser(s)) and (b) Squire, Sanders &
Dempsey LLP, special Ohio counsel to Kinro (or such other counsel
designated by Kinro and acceptable to the Purchaser(s)), favorable
opinions satisfactory to Prudential and substantially in the forms
of Exhibit H-3 and Exhibit H-4 , respectively,
attached hereto. The Obligors hereby direct each such counsel to
deliver such opinion, agree that the issuance and sale of any Shelf
Notes will constitute a reconfirmation of such direction, and
understand and agree that each Purchaser receiving such an opinion
will and is hereby authorized to rely on such opinion.
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3B(4)
Representations and Warranties; No Default. The
representations and warranties contained in this Agreement and each
of the other
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Transaction
Documents shall be true on and as of such Closing Day, except to
the extent of (a) changes caused by the transactions herein
contemplated, and (b) such changes or exceptions thereto as may be
indicated in the Request for Purchase and are reasonably acceptable
to Prudential. In addition, there shall exist on such Closing Day
no Event of Default or Default; and each of the Obligors shall have
delivered to such Purchaser an Officer’s Certificate, dated
such Closing Day, to both such effects substantially in the form
attached hereto as Exhibit I .
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3B(5)
Constitutive and Authorization Documents . Such Purchaser
shall have received from each Credit Party a certificate
substantially in the form of Exhibit J attached hereto,
certifying as to the incumbency of the Persons executing the Shelf
Notes and other documents, agreements and certificates in
connection therewith on behalf of such Credit Party and attaching
copies of such Credit Party’s constitutive documents, as in
effect on such Closing Day, good standing certificates, and, where
applicable, the resolutions authorizing its execution of and
issuance of the Shelf Notes, and certifying as to such other
matters as the Purchasers may reasonably request.
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3B(6)
[Intentionally Omitted]
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3B(7)
Purchase Permitted by Applicable Laws. The purchase of and
payment for the Shelf Notes to be purchased by such Purchaser on
the applicable Closing Day (including the use of the proceeds of
such Shelf Notes by the Co-Issuers) shall not violate any
applicable law or governmental regulation (including, without
limitation, Section 5 of the Securities Act or Regulation T, U or X
of the Board of Governors of the Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty or liability under
or pursuant to any applicable law or governmental regulation, and
such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this
condition.
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3B(8)
Payment of Certain Fees. The Co-Issuers shall have
paid to Prudential or any Purchaser, as applicable, any fees due it
pursuant to or in connection with this Agreement, including any
Issuance Fee due pursuant to paragraph 2H(1) and any Delayed
Delivery Fee due pursuant to paragraph 2H(2).
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3B(9)
Payment of Closing Expenses. The Obligors shall have paid at
the closing the fees and disbursements of the special counsel to
Prudential and the Purchasers as presented by such counsel in a
statement on the Closing Day and for which the Co-Issuers are
responsible in accordance with paragraph 13B.
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3B(10)
Proceedings. All proceedings taken or to be taken in
connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and
substance to such Purchaser, and such Purchaser shall have received
all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
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4.
PREPAYMENTS. The Shelf Notes shall be subject to
required prepayment as and to the extent provided in paragraph 4A.
The Shelf Notes shall also be subject to prepayment under the
circumstances set forth in paragraph 4B and paragraph 4C. Any
prepayment made by the Co-Issuers pursuant to any other provision
of this paragraph 4 shall not reduce or otherwise affect its
obligation to make any required prepayment as specified in
paragraph 4A.
4A.
Required Prepayments of Shelf Notes. Each Series of
Shelf Notes shall be subject to required prepayments, if any, set
forth in the Shelf Notes of such Series.
4B.
Optional Prepayment With Yield-Maintenance Amount. The
Shelf Notes shall be subject to prepayment, in whole at any time or
from time to time in part (in integral multiples of $100,000 and in
a minimum amount of $1,000,000), at the option of the Co-Issuers,
at 100% of the principal amount so prepaid plus interest thereon to
the prepayment date and the Yield-Maintenance Amount, if any, with
respect to each such Shelf Note. Any partial prepayment of the
Shelf Notes pursuant to this paragraph 4B shall be applied in
satisfaction of remaining required payments of principal in inverse
order of their scheduled due dates.
4C.
Prepayment with Yield-Maintenance Amount Pursuant to
Intercreditor Agreement. The Shelf Notes prepaid with a
distribution made pursuant to the terms of the Intercreditor
Agreement shall be made at 100% of the principal amount so prepaid,
plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each such Shelf
Note. Any partial prepayment of the Shelf Notes pursuant to this
paragraph 4(C) shall be applied in satisfaction of remaining
required payments of principal in inverse order of their scheduled
due dates.
4D.
Notice of Optional Prepayment. The Co-Issuers shall
give the holder of each Shelf Note to be prepaid pursuant to
paragraph 4B irrevocable written notice of such prepayment not less
than 10 Business Days prior to the prepayment date, specifying such
prepayment date, the aggregate principal amount of the Shelf Notes
to be prepaid on such date, the principal amount of the Shelf Notes
held by such holder to be prepaid on that date and that such
prepayment is to be made pursuant to paragraph 4B. Notice of
prepayment having been given as aforesaid, the principal amount of
the Shelf Notes specified in such notice, together with interest
thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due
and payable on such prepayment date. The Co-Issuers shall, on or
before the day on which they give written notice of any prepayment
pursuant to paragraph 4B, give telephonic notice of the principal
amount of the Shelf Notes to be prepaid and the prepayment date to
each Significant Holder which shall have designated a recipient for
such notices in the Purchaser Schedule attached to the applicable
Confirmation of Acceptance for such Significant Holder or by notice
in writing to the Co-Issuers.
4E.
Application of Prepayments. In the case of each
prepayment of less than the entire unpaid principal amount of all
outstanding Shelf Notes of any Series pursuant to paragraph 4A, the
amount to be prepaid shall be applied pro rata to all outstanding
Shelf Notes of such Series according to the respective unpaid
principal amounts thereof. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Shelf
Notes
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pursuant to paragraphs 4B or 4C,
the amount to be prepaid shall be applied pro rata to all
outstanding Shelf Notes of all Series according to the respective
unpaid principal amounts thereof.
4F.
No Acquisition of Shelf Notes. The Obligors shall not,
and shall not permit any of their Subsidiaries or Affiliates to,
prepay or otherwise retire in whole or in part prior to their
stated final maturity (other than by prepayment pursuant to
paragraphs 4A, 4B or 4C or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire,
directly or indirectly, Shelf Notes held by any holder.
5. AFFIRMATIVE
COVENANTS. During the Issuance Period and so long
thereafter as any Shelf Note or other amount owing under this
Agreement or any other Transaction Document shall remain unpaid,
the Obligors covenant as follows:
5A.
Financial Statements; Notice of Defaults. The Obligors
will deliver to each holder of any Shelf Notes in
triplicate:
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(i)
within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Parent, (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 statements of
stockholders’ equity and 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 authorized financial
officers as presenting fairly in all material respects the
financial condition and results of operations of the Parent 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 Parent and of each Co-Issuer setting forth
such information separately for the Parent and for each Co-Issuer
and related consolidating statements of operations of the Parent
and of each Co-Issuer setting forth such information separately for
the Parent and each Co-Issuer 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 Parent 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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(ii)
within 90 days after the end of each fiscal year of the Parent, (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 LLP or other independent public accountants of recognized
national standing (without a “going concern” or like
qualification or exception and without any qualification
or
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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 Parent 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 Parent and
for each Co-Issuer as of the end of such fiscal year and
consolidating statements of operations setting forth such
information separately for the Parent and for each Co-Issuer for
such fiscal year, such consolidating balance sheet and
consolidating statements of operations to be certified by the chief
financial officer of the Parent as fairly presenting the financial
condition and results of operations of the Parent and each
Co-Issuer as of the end of, and for, such fiscal period in
accordance with GAAP;
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(iii)
concurrently with any delivery of financial statements under clause
(i) or (ii) above, an Officer’s Certificate of the Parent (i)
certifying as to whether a Default or Event of Default has occurred
and, if a Default or Event of 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 paragraphs 6C, 6D, 6F,
6H, 6I, 6J, 6K and 6L and (iii) stating whether
any change in the application of GAAP in respect of the audited
financial statements referred to in paragraph 8B has occurred and,
if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such
certificate;
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(iv)
concurrently with any delivery of financial statements under clause
(ii) 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 or Event of Default (which certificate may be
limited to the extent required by accounting rules or guidelines),
and promptly after receipt by the Parent, a copy of each management
letter (if prepared) of such accounting firm (together with any
response thereto prepared by the Parent);
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(v)
promptly (a) after the same become publicly available, copies of
all periodic and other reports, proxy statements and other
materials filed by the Parent or any Subsidiary thereof with the
Securities and Exchange Commission (or any governmental body or
agency succeeding to any or all of the functions of said
Commission) or with any national securities exchange, or
distributed by the Parent to its shareholders generally, as the
case may be; and (b) 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;
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(vi)
promptly, a copy of any amendment or waiver of any provision of any
agreement or instrument referred to in paragraph 6O;
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(vii)
not later than the time furnished to such Person, a copy of any
certificate or notice given by any Credit Party to the
Administrative Agent (as such term is defined in the Bank Credit
Agreement) and/or the Bank Lenders, or received by any
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Credit Party
from the Administrative Agent or any Bank Lender in connection with
the Bank Credit Agreement; and
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(viii)
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, the Shelf Notes or the other
Transactions Documents, as Prudential or any holder of Shelf Notes
may reasonably request.
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5B.
Information Required by Rule 144A. The Parent
covenants that it will, upon the request of the holder of any Shelf
Note, provide such holder, and any qualified institutional buyer
designated by such holder, such financial and other information as
such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A
under the Securities Act in connection with the resale of Shelf
Notes, except at such times as the Parent is subject to and in
compliance with the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term
“ qualified institutional buyer ” shall have the
meaning specified in Rule 144A under the Securities Act.
5C.
Other Information. Each Obligor covenants that it will
deliver to each Significant Holder:
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5C(1)
Notice of Default or Event of Default — promptly
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 described in paragraph
7A(iii) of this Agreement, a written notice specifying the nature
and period of existence thereof and what actions the Obligors are
taking or propose to take with respect thereto;
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5C(2)
ERISA — 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
$250,000;
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5C(3)
Actions, Proceedings — promptly after the
commencement thereof, written notice of the filing or
commencement of any action, suit or proceeding by or before any
Governmental Authority or arbitration board or tribunal 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; and
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5C(4)
Material Adverse Effect — prompt written notice
of any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
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Each notice
delivered under this Section shall be accompanied by a statement of
a Responsible Officer or other executive officer of a Co-Issuer or
the Parent setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken
with respect thereto.
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5D.
[Intentionally Omitted]
5E.
Compliance with Law .
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(i)
Without limiting paragraph 6P, the Obligors 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 (including, without limitation, the USA Patriot
Act), except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
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(ii)
Without limiting the preceding paragraph, each Obligor will, and
will cause each of its Subsidiaries to (a) 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 (b) 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.
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5F.
Insurance and Maintenance of Properties . Each Obligor will,
and will cause each of its Subsidiaries to, (i) keep and maintain
all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and
(ii) 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.
5G.
[Intentionally Omitted]
5H.
Payment of Taxes and Claims . Each Obligor 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 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
Obligor 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
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reasonably be expected to result
in a Material Adverse Effect, 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 Obligor or
Subsidiary.
5I.
Corporate Existence, Etc . Each Obligor 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 paragraph
6B.
5J.
Books and Records; Inspection . Each Obligor 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 Obligor will, and will cause each of its
Subsidiaries to, permit any representatives designated by the
Security Trustee and any holder of Notes, 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.
5K.
Subsidiary Guaranty; Security Documents. If any Person
(a) after the Effective Date becomes (whether upon its formation,
by acquisition of stock or other interests therein, or otherwise) a
Subsidiary of any Credit Party (a “ New Subsidiary
”), (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, or (c) any Person becomes directly or
indirectly liable for (whether by way of becoming a co-borrower,
guarantor or otherwise) all or any part of the Indebtedness under,
or in respect of, the Bank Credit Agreement, the Obligors shall
promptly (i) cause such New Subsidiary, formerly Inactive
Subsidiary or other Person to become a Subsidiary Guarantor
pursuant to an instrument in form, scope, and substance
satisfactory to the Required Holders, (ii) deliver or cause to be
delivered, or assign, to the Security Trustee (x) subject to the
Lien in favor of the Security Trustee under the Pledge Agreement,
the certificates representing shares of stock or other interests of
the New Subsidiary, formerly Inactive Subsidiary or other Person
owned by an Obligor (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, formerly Inactive
Subsidiary or other Person to become a party to the Pledge
Agreement (and any other documents required to be executed in
connection therewith) pursuant to one or more instruments or
agreements satisfactory in form and substance to the Security
Trustee, the effect of which shall be to secure all amounts owing
hereunder and in respect of the Shelf Notes 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 on behalf of the Bank
Lenders) the Capital Stock of such New Subsidiary, formerly
Inactive Subsidiary or other Person, provided ,
however , that in any event, prior to the time that any New
Subsidiary, formerly Inactive Subsidiary or other Person 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 Obligor or Subsidiary
thereof, the
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Obligors shall (A) cause to be
taken, in respect of any such obligor, the actions 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 Required
Holders. Notwithstanding the foregoing, LCC shall not be required
to become a Subsidiary Guarantor and not more than sixty percent
(60%) of its stock shall be required to be pledged to the Security
Trustee as Collateral so long as (i) (x) LCC shall not be a
guarantor of any of the Indebtedness owing in respect of the Bank
Credit Agreement or of any other obligation of another Credit Party
and (y) not more than sixty percent (60%) of its Capital Stock
shall have been pledged as collateral for any of the Indebtedness
owing in respect of the Bank Credit Agreement or any other
obligation of any other Credit Party, and (ii) Treas. Reg. Sec.
1.956-2(c) would require inclusion of the earnings and profits of
LCC in the earnings of Lippert Components for United States income
tax purposes if LCC were a Subsidiary Guarantor or if a percentage
equal to or greater than 66-2/3 percent (66-2/3%) of its
outstanding Capital Stock were pledged as collateral for any
obligation of the Obligors.
5L.
Further Assurances. Each Obligor 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
Holders or the Security Trustee may request, in order to effectuate
the transactions contemplated by the Transaction 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 Pledge Agreement, it being understood that it is the
intent of the parties that the Indebtedness owing hereunder and
under the Shelf Notes shall be secured by, among other things, all
the interests of each Obligor in each Subsidiary or Affiliate and
of each Subsidiary Guarantor 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
Pledge Agreement and other security agreements, and other
instruments and documents in form and substance satisfactory to the
Required Holders, and the Obligors shall deliver or cause to be
delivered to the holders of the Shelf Notes all such instruments
and documents (including legal opinions in substantially the forms
of Exhibit H-1 and Exhibit H-2, respectively, and lien searches) as
the Required Holders shall reasonably request to evidence
compliance with this paragraph 5L. The Obligors agree to provide
such evidence as the Required Holders 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 in favor of the Collateral Agent for
the benefit of the Bank Lenders).
5M.
Succession Plan . The Parent shall at all times have
and keep in effect a succession plan for its principal officers
which has been approved by its board of directors (the “
Succession Plan ”) and shall furnish to each
Significant Holder upon request from time to time a copy of the
same, provided that such plan shall be kept confidential by each
such Significant Holder.
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6.
NEGATIVE COVENANTS. During the Issuance Period and so
long thereafter as any Shelf Note or other amount due hereunder is
outstanding and unpaid, each Obligor covenants as
follows:
6A.
Transactions with Affiliates . Except as set forth on
Schedule 6A hereto, each Obligor will not, and will not permit any
of its Subsidiaries to, enter into, directly or indirectly, any
transaction or Material group of related transactions (including
the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than a
Credit Party or a Wholly-Owned Subsidiary), except in the ordinary
course and pursuant to the reasonable requirements of such
Obligor’s or such Subsidiary’s business and upon fair
and reasonable terms no less favorable to such Obligor or such
Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an
Affiliate.
6B.
Merger, Consolidation, Etc . No Obligor will, nor will
it permit 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:
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(i) (a)
such merger, consolidation, conveyance, transfer or lease is with
or to another Credit Party, provided that no Obligor may
sell, convey, lease or otherwise transfer substantially all of its
assets to any Person or fail to survive any such merger or
consolidation related to it except as permitted by clause (b) of
this paragraph 6B(i); or (b) 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 Obligor or any Subsidiary of any Obligor, as the case
may be (the “ Successor Corporation ”), shall be
a solvent corporation organized and existing under the laws of the
United States of America or any State thereof (including the
District of Columbia), and if such transaction involves any Credit
Party and such Credit Party is not the Successor Corporation (x)
such Successor Corporation shall have executed and delivered to
each holder of Shelf Notes its assumption of the due and punctual
performance and observance of each covenant and condition of each
Transaction Document to which such Credit Party is a party, and (y)
shall have caused to be delivered to each holder of Shelf 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;
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(ii) immediately
prior to such transaction and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing;
and
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(iii) immediately
prior to such transaction and after giving effect thereto, each
Co-Issuer (or any Successor Corporation pursuant to paragraph
6B(i)(b)) would be permitted by the provisions of paragraph 6D(vii)
hereof to incur at least $1.00 of additional
Indebtedness.
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No such conveyance, transfer or
lease of substantially all of the assets of any Obligor or any
Subsidiary thereof shall have the effect of releasing such Obligor
or such Subsidiary or any Successor Corporation that shall
theretofore have become such in the manner prescribed in this
paragraph 6B from its liability under this Agreement, the Shelf
Notes or the other Transaction Documents to which it is a
party.
6C.
Liens . The Obligors will not, and will not permit any
of their respective 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 paragraph 6C, the Obligors will make or
cause to be made provision whereby the Shelf Notes will be secured
equally and ratably with all obligations secured by such Lien, and
in any case the Shelf Notes shall have the benefit, to the full
extent that, and with such priority as the holders of Shelf Notes
may be entitled under applicable law, of an equitable Lien on such
assets; provided , however , that any Lien created,
incurred or suffered to exist in violation of this paragraph 6C
shall constitute an Event of Default hereunder, whether or not any
such provision is made for an equal and ratable Lien pursuant to
this paragraph 6C. In no event shall a Lien be granted by any
Obligor or any of their respective Subsidiaries in respect of any
of its property to or for the benefit of any of the Bank Lenders,
unless concurrently therewith a Lien of equal priority (and on the
same property) is granted to, or for the benefit of, the holders of
the Shelf Notes.
6D.
Limitations on Indebtedness . The Obligors will not,
and will not permit any of their respective Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist
any Indebtedness, except:
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(i) Indebtedness
created hereunder or under the other Transaction
Documents;
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(ii) Indebtedness
of a Credit Party in respect of amounts outstanding (including all
amounts due, contingently or otherwise, in respect of reimbursement
obligations under letters of credit or similar instruments and all
related reimbursement agreements) under the Bank Credit Documents,
not in excess of the result of (x) $60,000,000 (subject to further
increase of up to $30,000,000 pursuant to Section 2.06A of the
Credit Agreement so long as no Event of Default is continuing at
the time of any such increase), minus (y) the aggregate amount of
any permanent reductions in the principal amount of the commitments
under the revolving credit facility established
thereunder;
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(iii) Indebtedness
existing on the Effective Date and set forth in
Schedule 6D ;
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(iv) All
renewals, extensions, substitutions, refinancings, or replacements
of any Indebtedness described in clause (iii) above, in an amount
not to exceed the amount so refinanced, provided that the
terms, covenants and restrictions in respect of such renewals,
extensions, substitutions, refundings or replacements are
not
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more materially
onerous than the existing terms, covenants and restrictions of such
Indebtedness;
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(v) the
Interest Rate Hedging Exposure Amount, provided such amount
does not at any time exceed $2,000,000 in the aggregate;
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(vi) Indebtedness
of one Credit Party to another Credit Party (other than the
Parent); provided that (a) there is adequate consideration
for such Indebtedness and there is evidence of such Indebtedness on
each Credit Party’s books, (b) all of the outstanding Capital
Stock of each such Credit Party shall be owned 100% directly or
indirectly by the Parent and a Co-Issuer, (c) each such Credit
Party to or by whom such Indebtedness is owned, or who owns
(directly or indirectly) any such Capital Stock, shall be a party
to (1) the Subordination Agreement, (2) if such Credit Party is a
Pledgor, the Pledge Agreement, and (3) if such Credit Party is a
Subsidiary, the Subsidiary Guaranty, (d) 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 (e) such Indebtedness shall not be
assigned or transferred by the obligee thereof to any Person other
than another Credit Party (and only so long as, after giving effect
to such assignment or transfer all the conditions of this proviso
are met); and
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(vii) to
the extent not included above in this paragraph 6D, other
Indebtedness incurred by any Obligor or any of their respective
Subsidiaries; provided that, at the time of the incurrence
thereof and after giving effect thereto and to the application of
the proceeds thereof, Consolidated Indebtedness shall not exceed
55% of Consolidated Total Capitalization.
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6E.
Restrictive Agreements . The Obligors will not, and
will not permit any of their respective 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 such Obligor or any such Subsidiary,
(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 any Obligor
with respect to any shares of its Capital Stock, (iii) to pay any
Indebtedness owed to any Obligor, (iv) to make or permit to exist
loans or advances to any Obligor, or (v) to sell transfer, lease or
otherwise dispose of any of its properties or assets to any
Obligor; provided that (x) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement or
the Bank Credit Agreement, and (y) such Obligor 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
Permitted Lien.
6F.
Limitation on Subsidiary Indebtedness and Issuance of Preferred
Stock.
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No
Obligor will permit any of its Subsidiaries (other than the
Co-Issuers) 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 any such Subsidiary outstanding on the Effective Date and set
forth on Schedule 6F or any refinancing, extension, renewal
or refunding of any such Indebtedness in an amount not to exceed
the amount of such Indebtedness immediately prior to the
effectiveness of such refinancing, extension, renewal or refunding;
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;
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(ii) Indebtedness
of any such Subsidiary in respect of Guarantees delivered pursuant
to the Bank Credit Agreement; provided that such Subsidiary
has executed the Subsidiary Guaranty on the Effective Date or in
accordance with the terms of paragraph 5K;
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(iii) Preferred
Stock of any such Subsidiary issued on or prior to the Effective
Date;
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(iv) Indebtedness
of, or Preferred Stock issued by, any such Subsidiary to (or in
favor of) a Co-Issuer or a Subsidiary of a Co-Issuer, so long as
such Indebtedness is permitted pursuant to paragraph 6D(vi)
hereof;
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(v) other
Indebtedness or Preferred Stock of any 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 6F (other
than Indebtedness incurred under clause (ii) hereof), does not at
any time exceed 25% of Consolidated Net Worth determined as of the
end of the fiscal quarter of the Parent then most recently ended;
and provided , further , that the aggregate
Indebtedness of all Subsidiaries of the Obligors not secured by
Liens does not at any time exceed 15% of Consolidated Net Worth
determined as of the end of the fiscal quarter of the Parent then
most recently ended.
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6G.
Limitation on Restricted Payments . No Obligor 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, unless immediately
before and after giving effect to such Restricted Payment the
following conditions are satisfied:
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(i) no
Default of Event of Default has occurred and is continuing;
and
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(ii) the
Parent could incur at least $1.00 of additional Indebtedness
pursuant to paragraph 6D(vii) hereof.
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6H.
Sale of Assets . Subject to the provisions of paragraph 6B
hereof, no Obligor will, nor will it permit any of its Subsidiaries
to, directly or indirectly, in a single transaction or a series of
transactions, sell, lease, transfer, abandon or otherwise dispose
of, or suffer to be sold, leased, transferred, abandoned or
otherwise disposed of (collectively, “ Transfer
”), assets (i) aggregating in excess of 10% of Consolidated
Total Assets (determined as of the end of the fiscal quarter most
recently ended as of the date of such Transfer) in any fiscal year,
or (ii) aggregating in excess of 40% of Consolidated Total Assets
(determined as of the Effective Date) when combined with all other
Transfers of assets since the Effective Date, 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 of any
Obligor;
(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; and
(iii) any
Credit Party or any of its Subsidiaries may Transfer its assets in
the ordinary course of business (including the disposal of obsolete
assets not used or useful in such Credit Party’s
business).
6I.
Limitation on Priority Debt. Notwithstanding anything
set forth in the definition of Permitted Liens or paragraph 6F,
the Obligors will not permit Priority Debt to exceed (a)
at any time on or prior to December 31, 2005, 33% of Consolidated
Net Worth determined as of the last day of the most recently ended
fiscal quarter of the Parent, and (b) at any time after
December 31, 2005, 30% of Consolidated Net Worth determined as of
the last day of the most recently ended fiscal quarter of the
Parent.
6J.
Minimum Consolidated Tangible Net Worth. The Obligors
will not permit Consolidated Tangible Net Worth at the end of any
fiscal quarter of the Parent commencing with the fiscal quarter
ended December 31, 2004 to be less than Ninety Million Dollars
($90,000,000), plus fifty (50%) percent of the Consolidated
Net Income for each fiscal quarter of the Parent (but taking into
account the Consolidated Net Income for a fiscal quarter only if it
is a positive number) ending after December 31, 2004 through and
including the then most recently ended fiscal quarter for which
Consolidated Tangible Net Worth is to be calculated.
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6K.
Leverage Ratio. The Obligors will not permit the
Leverage Ratio, calculated as of the end of each fiscal quarter of
the Parent ending on or after the Effective Date, to be greater
than 2.50:1.00.
6L.
Minimum Debt Service Ratio . The Obligors will not
permit the Minimum Debt Service Ratio, calculated as of the end of
each fiscal quarter of the Parent ending on or after the Effective
Date, to be less than (i) for each fiscal quarter of the Parent
ending on or before December 31, 2005, 1.50:1.00, and (ii) for each
fiscal quarter of the Parent ending thereafter,
1.75:1.00.
6M.
Limitation on Investments. No Obligor 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 this
Agreement or the Bank Credit 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.
6N.
Hedging Agreements . No Obligor will, nor will 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 Obligor or Subsidiary,
as the case may be.
6O.
Amendment of Certain Documents . No Obligor will, nor
will it permit any of its Subsidiaries to:
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(i)
terminate, amend, waive or modify its Certificate of Incorporation
or By-Laws, or Certificate of Limited Partnership, Certificate of
Formation, Agreement of Limited Partnership, or Operating Agreement
as the case may be, except for amendments, modifications or waivers
that are not adverse in any respect to the holders of the Shelf
Notes, or
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(ii)
amend in any material respect the Bank Credit Agreement or any of
the other Bank Credit Documents entered into in connection
therewith without the prior written consent of the Required Holders
(it being understood that, without limiting the generality of the
foregoing, any increase in the aggregate amount of the commitments
under the Bank Credit Agreement (including, without limitation, any
increase in such commitments pursuant to Section 2.06A thereof) at
any time when an Event of Default has occurred and is continuing
shall be deemed to be a material amendment).
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6P.
Terrorism Sanctions Regulations. The Obligors will not
and will not permit any Subsidiary to (a) become a Person described
or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section
1 of the
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Anti-Terrorism Order or (b)
knowingly engage in any dealings or transactions with any such
Person.
7.
EVENTS OF DEFAULT.
7A.
Acceleration. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
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(i) the
Co-Issuers default in the payment of any principal of, or Yield-
Maintenance Amount payable with respect to, any Shelf Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
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(ii) the
Co-Issuers default in the payment of any interest on any Shelf Note
or any other amount due under this Agreement when the same shall
become due; or
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(iii) any
Credit Party or any Subsidiary of any Credit Party defaults
(whether as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other Indebtedness
beyond any period of grace provided with respect thereto, or any
Credit Party or any Subsidiary of any Credit Party fails to perform
or observe any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and
be continuing) and the effect of such failure or other event is to
cause, or to permit the holder or holders of such obligation (or a
trustee on behalf of such holder or holders) to cause, such
obligation to become due (or to be repurchased by any Credit Party
or any Subsidiary of any Credit Party) prior to any stated
maturity, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration (or resale to any Credit Party or any Subsidiary of
any Credit Party) shall occur and be continuing exceeds at least
$3,000,000 individually or $5,000,000 in the aggregate,
provided , further , that for purposes of this
paragraph 7A(iii), the principal amo
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