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.
"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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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
11
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
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:
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:
EXHIBIT B
Intentionally Omitted
15
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:
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%
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.
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
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.
"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
"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
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
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
5
(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
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
7
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
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
9
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
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
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
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:
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:
EXHIBIT B
Intentionally Omitted
15
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:
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%
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.
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
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.
"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
"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
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
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
5
(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
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
7
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
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
9
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
10
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
11
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
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:
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:
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
15
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.
16
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
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:
18
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:
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
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.
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
Kinro Texas L.P.
Kinro Tennessee L.P.
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
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.
"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
"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
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
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
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
(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.
7
(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
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
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
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
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
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:
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:
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
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
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
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
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:
SCHEDULE I
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
DESCRIPTION OF PLEDGED STOCK
Issuer No. of Shares Percentage
- ------ ------------- ----------
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.
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
Shoals Supply Texas
Limited Partnership
Shoals Supply Tennessee
Limited Partnership
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S
Limited Partnership Debtor Locations
- ------------------- ------ ---------
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
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.
"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
"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
3
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
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
5
(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
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
7
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
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
9
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
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.
11
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
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:
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:
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
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
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
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
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:
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%
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.
Annex 1 to Schedule II
to
Pledge Agreement
Partnerships
- ------------
SCHEDULE III
TO
PLEDGE AGREEMENT
DATED AS OF JANUARY 28, 1998
LOCATIONS FOR FILING UCC-1S