Exhibit 10.1
CREDIT AGREEMENT
by and between
OMEGA CABINETS, LTD.,
HOMECREST CORPORATION,
PANTHER TRANSPORT, INC.
and
FIRST BANK NATIONAL ASSOCIATION,
as Agent and as a Bank
Dated as of June 13, 1997
TABLE OF CONTENTS
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Page No.
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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS.............................................. 1
Section 1.1 Defined Terms............................................... 1
Section 1.2 Accounting Terms and Calculations........................... 21
Section 1.3 Computation of Time Periods................................. 21
Section 1.4 Other Definitional Terms.................................... 21
ARTICLE II.
TERMS OF THE CREDIT FACILITIES................................................ 21
Part A -- Terms of Lending.................................................... 21
Section 2.1 Lending Commitments......................................... 21
Section 2.2 Procedure for Loans......................................... 22
Section 2.3 Notes....................................................... 25
Section 2.4 Conversions and Continuations............................... 26
Section 2.5 Interest Rates, Interest Payments and Default Interest...... 27
Section 2.6 Repayment and Mandatory Prepayments......................... 28
Section 2.7 Optional Prepayments........................................ 29
Part B -- Terms of the Letter of Credit Facility.............................. 30
Section 2.8 Letters of Credit........................................... 30
Section 2.9 Procedures for Letters of Credit............................ 30
Section 2.10 Terms of Letters of Credit................................. 31
Section 2.11 Agreement to Repay Letter of Credit Drawings............... 31
Section 2.12 Obligations Absolute....................................... 31
Section 2.13 Increased Cost for Letters of Credit....................... 33
Section 2.14 Loans to Cover Unpaid Drawings............................. 33
Section 2.15 Letter of Credit Fees...................................... 34
Part C -- General............................................................. 35
Section 2.16 Optional Reduction of Revolving Commitment Amounts or
Termination of Revolving Commitments..................................... 35
Section 2.17 Revolving Commitment, Agent's and Arrangement Fees......... 35
Section 2.18 Computation................................................ 36
Section 2.19 Payments................................................... 36
Section 2.20 Use of Loan Proceeds....................................... 36
Section 2.21 Adjusted Eurodollar Rate Not Ascertainable, Etc............ 36
Section 2.22 Increased Cost............................................. 37
Section 2.23 Illegality................................................. ▇▇
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▇▇▇▇▇▇▇ ▇.▇▇ ▇▇▇▇▇▇▇ Adequacy........................................... 39
Section 2.25 Funding Losses; Eurodollar Rate Advances................... 39
Section 2.26 Discretion of Banks as to Manner of Funding................ 39
Section 2.27 Withholding Taxes.......................................... 40
ARTICLE III
CONDITIONS PRECEDENT.......................................................... 42
Section 3.1 Conditions of Initial Transaction........................... 42
Section 3.2 Conditions Precedent to all Loans and Letters of Credit..... 47
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES................................................ 47
Section 4.1 Organization, Standing, Etc................................. 47
Section 4.2 Authorization and Validity.................................. 48
Section 4.3 No Conflict; No Default..................................... 48
Section 4.4 Government Consent.......................................... 49
Section 4.5 Financial Statements and Condition.......................... 49
Section 4.6 Litigation.................................................. 50
Section 4.7 Environmental, Health and Safety Laws....................... 50
Section 4.8 ERISA....................................................... 50
Section 4.9 Federal Reserve Regulations................................. 50
Section 4.10 Title to Property; Leases; Liens; Subordination............ 51
Section 4.11 Taxes...................................................... 51
Section 4.12 Intellectual Property...................................... 51
Section 4.13 Burdensome Restrictions.................................... 52
Section 4.14 Force Majeure.............................................. 52
Section 4.15 Investment Company Act..................................... 52
Section 4.16 Public Utility Holding Company Act......................... 52
Section 4.17 Retirement Benefits........................................ 52
Section 4.18 Full Disclosure............................................ 52
Section 4.19 Subsidiaries............................................... 52
Section 4.20 Perfection of Liens........................................ 53
Section 4.21 Facilities................................................. 53
Section 4.22 Affiliates................................................. 53
Section 4.23 Labor...................................................... 53
Section 4.24 Solvency................................................... 53
Section 4.25 Corporate Names............................................ 54
Section 4.26 Insurance.................................................. 54
ARTICLE V.
AFFIRMATIVE COVENANTS......................................................... 54
Section 5.1 Financial Statements and Reports............................ 54
Section 5.2 Corporate Existence......................................... 57
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Section 5.3 Insurance................................................... 57
Section 5.4 Payment of Taxes and Claims................................. 57
Section 5.5 Inspection.................................................. 58
Section 5.6 Maintenance of Properties, Licenses and Permits............. 58
Section 5.7 Books and Records........................................... 59
Section 5.8 Compliance.................................................. 59
Section 5.9 Notice of Litigation........................................ 59
Section 5.10 ERISA...................................................... 59
Section 5.11 Environmental Matters; Reporting........................... 60
Section 5.12 Reaffirmation of Guaranties................................ 60
Section 5.13 Further Assurances......................................... 60
Section 5.14 Bank Accounts and Lockbox.................................. 61
Section 5.15 Post-Closing Matters....................................... 61
ARTICLE VI.
NEGATIVE COVENANTS............................................................ 61
Section 6.1 Merger...................................................... 61
Section 6.2 Disposition of Assets....................................... 62
Section 6.3 Plans....................................................... 62
Section 6.4 Change in Nature of Business................................ 62
Section 6.5 Subsidiaries; Acquisitions.................................. 63
Section 6.6 Negative Pledges; Subsidiary Restrictions................... 64
Section 6.7 Restricted Payments......................................... 64
Section 6.8 Transactions with Affiliates................................ 65
Section 6.9 Accounting Changes.......................................... 65
Section 6.10 Capital Expenditures....................................... 65
Section 6.11 Subordinated Debt.......................................... 65
Section 6.12 Investments................................................ 66
Section 6.13 Indebtedness............................................... 67
Section 6.14 Liens...................................................... 68
Section 6.15 Contingent Liabilities..................................... 70
Section 6.16 Interest Coverage Ratio.................................... 70
Section 6.17 Fixed Charge Coverage Ratio................................ 70
Section 6.18 Cash Flow Leverage Ratio................................... 70
Section 6.19 Loan Proceeds.............................................. 71
Section 6.20 Operating Leases........................................... 71
Section 6.21 Corporate Documents; Certain Material Contracts............ 71
Section 6.22 Other Indebtedness......................................... 71
ARTICLE VII.
EVENTS OF DEFAULT AND REMEDIES................................................ 72
Section 7.1 Events of Default........................................... 72
Section 7.2 Remedies.................................................... 75
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Section 7.3 Offset....................................................... 75
ARTICLE VIII.
THE AGENT...................................................................... 76
Section 8.1 Appointment and Authorization................................ 76
Section 8.2 Note Holders................................................. 76
Section 8.3 Consultation With Counsel.................................... 76
Section 8.4 Loan Documents............................................... 76
Section 8.5 First Bank and Affiliates.................................... 76
Section 8.6 Action by Agent.............................................. 76
Section 8.7 Credit Analysis.............................................. 77
Section 8.8 Notices of Event of Default, Etc............................. 77
Section 8.9 Indemnification.............................................. 77
Section 8.10 Payments and Collections.................................... 77
Section 8.11 Sharing of Payments......................................... 78
Section 8.12 Advice to Banks............................................. 78
Section 8.13 Resignation................................................. 79
ARTICLE IX.
MISCELLANEOUS.................................................................. 79
Section 9.1 Modifications................................................ 79
Section 9.2 Expenses..................................................... 80
Section 9.3 Waivers, etc................................................. 80
Section 9.4 Notices...................................................... 80
Section 9.5 Taxes........................................................ 81
Section 9.6 Successors and Assigns; Disposition of Loans; Transferees.... 81
Section 9.7 Confidentiality of Information............................... 83
Section 9.8 Governing Law and Construction............................... 83
Section 9.9 Consent to Jurisdiction...................................... 84
Section 9.10 Waiver of Jury Trial........................................ 84
Section 9.11 Survival of Agreement....................................... 84
Section 9.12 Indemnification............................................. 85
Section 9.13 Captions.................................................... 86
Section 9.14 Entire Agreement............................................ 86
Section 9.15 Counterparts................................................ 86
Section 9.16 Borrower Acknowledgements................................... 86
Section 9.17 Relationship Among Borrowers................................ 86
Section 9.18 Waiver of Stock Restriction................................. 90
Section 9.19 Approval of High Yield Subordinated Permanent Loan
Documents................................................... 90
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LIST OF EXHIBITS
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Exhibit 1.1-1 Legal Description of Indiana Facility
Exhibit 1.1-2 Legal Description of Iowa Facility
Exhibit 1.1-3 Revolving Note
Exhibit 1.1-4 Solvency Opinion (American Appraisal)
Exhibit 1.1-5 Certificate of Chief Financial Officer
Exhibit 1.1-6(a) Form of First Chicago Letter of Credit
Exhibit 1.1-6(b) Form of Shareholder Committee Letter of Credit
Exhibit 1.1-7 Legal Description of Tennessee Facility
Exhibit 1.1-8 Form of Term Note
Exhibit 2.2 Form of Request for Loans
Exhibit 2.20 Existing Debt to be paid with transaction proceeds
Exhibit 4.12 Intellectual Property
Exhibit 4.19 Subsidiaries
Exhibit 4.21 Leased Facilities
Exhibit 4.25 Corporate Names
Exhibit 4.26 Insurance
Exhibit 5.1(d) Form of Compliance Certificate
Exhibit 5-1(i) Form of Excess Cash Flow Prepayment Certificate
Exhibit 6.5 Form of New Borrower Agreement
Exhibit 6.8 Permissible Transactions with Affiliates
Exhibit 6.12 Existing Investments
Exhibit 6.13 Existing Indebtedness
Exhibit 6.14 Existing Liens
Exhibit 6.15 Existing Contingent Obligations
Exhibit 9.6 Form of Assignment Agreement
Exhibit 9.19 Form of High Yield Subordinated Permanent Loan Subordination
Provisions
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 13, 1997, is by and between OMEGA
CABINETS, LTD., a Delaware corporation ("Omega"), HOMECREST CORPORATION, a
Delaware corporation ("HomeCrest"), PANTHER TRANSPORT, INC., an Iowa corporation
("Panther" and, collectively with Omega, HomeCrest and any other party that
becomes a party hereto pursuant to Section 6.5, the "Borrowers"), the banks
which are signatories hereto (individually, a "Bank" and, together with any
Persons that become a party hereto pursuant to Section 9.6, the "Banks") and
FIRST BANK NATIONAL ASSOCIATION, a national banking association, one of the
Banks, as agent for the Banks (in such capacity, the "Agent").
ARTICLE I
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DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following
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terms shall have the following respective meanings (and such meanings shall be
equally applicable to both the singular and plural form of the terms defined, as
the context may require):
"Adjusted Eurodollar Rate": With respect to each Interest Period
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applicable to a Eurodollar Rate Advance, the rate (rounded upward, if necessary,
to the next one hundredth of one percent) determined by dividing the Eurodollar
Rate for such Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding Revolving Loans or Term
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Loan by a Bank as to which one of the available interest rate options and, if
pertinent, an Interest Period, is applicable. An Advance may be a Eurodollar
Rate Advance or a Base Rate Advance.
"Affiliate": When used with reference to any Person, (a) each Person
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that, directly or indirectly, controls, is controlled by or is under common
control with, the Person referred to, (b) each Person which beneficially owns or
holds, directly or indirectly, ten percent or more of any class of voting stock
of the Person referred to (or if the Person referred to is not a corporation,
five percent or more of the equity interest), (c) each Person, ten percent or
more of the voting stock (or if such Person is not a corporation, ten percent or
more of the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's officers,
directors, joint venturers and partners. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly,
of the power to direct or cause the direction of the management and policies of
the Person in question.
"Agent": As defined in the opening paragraph hereof.
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"Aggregate Revolving Commitment Amounts": As of any date, the sum of
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the Revolving Commitment Amounts of all the Banks.
"Applicable Lending Office": For each Bank and for each type of
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Advance, the office of such Bank identified as such Bank's Applicable Lending
Office on the signature pages hereof or such other domestic or foreign office of
such Bank (or of an Affiliate of such Bank) as such Bank may specify from time
to time, by notice given pursuant to Section 9.4, to the Agent and the Borrowers
as the office by which its Advances of such type are to be made and maintained.
"Applicable Margin": Subject to the last two sentences of this
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definition, with respect to the period beginning five days after the day the
financial statements and compliance certificate required by Sections 5.1(c) and
(d) with respect to a month are delivered and ending on the date five days after
the date such financial statements and compliance certificate for the next month
are actually delivered (unless such financial statements are not delivered when
required, in which case ending on the date such delivery was required), shall
mean the percentage specified as applicable to Base Rate Advances or Eurodollar
Rate Advances, as appropriate, for the Cash Flow Leverage Ratio calculated for
the twelve months ending as of the end of the month to end immediately prior to
the date of determination:
Cash Flow Eurodollar Base
Leverage Ratio Rate Advances Rate Advances
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Less than or equal to 2.50:1 1.25% 0.25%
Greater than 2.50:1 but less
than or equal to 3.5:1 1.75% 0.75%
Greater than 3.50:1 but less
than 4.5:1 2.25% 1.25%
Greater than or equal to 4.5:1 2.50% 1.50%
During the period beginning on the Closing Date and ending on the date five days
after the first financial statements and compliance certificate are delivered
pursuant to Sections 5.1(c) and (d), and for any subsequent period beginning on
a day the financial statements and compliance certificate required by Sections
5.1(c) and (d) with respect to a month are required to be but are not delivered
and ending five days after the date such financial statements and compliance
certificate are delivered, the Applicable Margin shall be as specified for a
Cash Flow Leverage Ratio greater than or equal to 4.5:1.
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"Assignee": As defined in Section 9.6(c).
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"Bank": As defined in the opening paragraph hereof.
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"Base Rate": As of any date of determination, the greater of: (i) the
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Reference Rate, or (ii) a rate equal to one half of one per cent (0.5%) per
annum above the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for that day by the Board, or if not so published,
as determined for any day by the Agent based on quotations received by the Agent
from federal funds brokers of recognized standing selected by the Agent. For
purposes of determining any interest rate hereunder or under any other Loan
Document which is based on the Base Rate, such interest rate shall change as and
when the Base Rate shall change.
"Base Rate Advance": An Advance with respect to which the interest
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rate is determined by reference to the Base Rate.
"Board": The Board of Governors of the Federal Reserve System or any
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successor thereto.
"Borrower Loan Documents": This Agreement, the Notes and any of the
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Security Documents to be executed by one or more Borrowers.
"Borrowers": As defined in the opening paragraph hereof.
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"Business Day": Any day (other than a Saturday, Sunday or legal
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holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.
"▇▇▇▇▇▇ Subordinated Bridge Loan Documents": Collectively, the Merger
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Financing Agreement dated as of June 13, 1997 between Omega Merger Corp.,
Holdings, Omega and Mezzanine Lending Associates III, L.P., a Subordinated Note
dated as of June 13, 1997 from Omega Merger Corp. to Mezzanine Lending
Associates III, L.P. in the original principal amount of $10,000,000, as assumed
by Holdings and as guaranteed by Omega, each as the same may hereafter be
amended, supplemented, extended, restated or otherwise modified from time to
time, pursuant to which Mezzanine Lending Associates III, L.P. is making a
$10,000,000 subordinated bridge loan to Omega Merger Corp., which loan is being
assumed by Holdings and guaranteed by Omega.
"Capital Expenditures": For any period, the sum of all amounts that
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would, in accordance with GAAP, be included as additions to property, plant and
equipment on a consolidated statement of cash flows for Omega during such
period, in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, (b) to the extent related to and not included
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in (a) above, materials, contract labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP), and (c) other
capital expenditures and other uses recorded as capital expenditures or similar
terms having substantially the same effect.
"Capitalized Lease": A lease of (or other agreement conveying the
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right to use) real or personal property with respect to which at least a portion
of the rent or other amounts thereon constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations": As to any Person, the obligations of
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such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board), and, for purposes
of this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP (including such Statement No.
13).
"Cash Flow Leverage Ratio": For any period of determination, the ratio
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of
(a) the aggregate principal amount of all outstanding Indebtedness of
the Borrowers as of the last day of that period,
to
(b) EBITDA for such period,
in each case determined as to the Borrowers on a consolidated basis in
accordance with GAAP.
"Change of Control": The occurrence, after the Closing Date, of any
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of the following circumstances: (a) Mezzanine Lending Associates III, L.P. and
its Affiliates, collectively, not owning, directly or indirectly, securities of
Holdings representing more than 50% of all securities of Holdings entitled to
vote in the election of directors; or (b) nominees of Mezzanine Lending
Associates III, L.P. and its Affiliates ceasing for any reason to constitute a
majority of the Board of Directors of Holdings (other than by reason of death,
disability or scheduled retirement), or (c) Holdings ceases to own 100% of the
issued and outstanding stock of Omega.
"Closing Date": June 13, 1997.
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"Code": The Internal Revenue Code of 1986, as amended.
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"Collateral Assignments": Collectively, the Omega Collateral
----------------------
Assignment (Trademarks) and the HomeCrest Collateral Assignment (Trademarks).
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"Commitments": The Revolving Commitments and the Term Loan
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Commitments.
"Contingent Obligation": With respect to any Person at the time of any
---------------------
determination, without duplication, any guaranty or other obligation, contingent
or otherwise, of such Person with respect to any Indebtedness of any other
Person (the "primary obligor") in any manner, whether directly or otherwise: (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply funds for the purchase
of) any direct or indirect security therefor, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (c) to maintain working
capital, equity capital or other financial statement condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
otherwise to protect the owner thereof against loss in respect thereof, or (d)
entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner against
loss in respect thereof; provided, that the term "Contingent Obligation" shall
not include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Current Assets": As of any date, the consolidated current assets of
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the Borrowers, determined in accordance with GAAP.
"Current Liabilities": As of any date, the consolidated current
-------------------
liabilities of the Borrowers, determined in accordance with GAAP, but excluding
any current liabilities for borrowed money.
"Default": Any event which, with the giving of notice (whether such
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notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"Default Rate": As defined in Section 2.5(iii).
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"Documentary Letter of Credit": A Letter of Credit which requires
----------------------------
that the drafts thereunder be accompanied by a document of title covering or
securing title to the goods acquired with the proceeds of such drafts.
"EBITDA": For any period of determination, the consolidated net
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income of the Borrowers before deductions for income taxes, Interest Expense,
depreciation and amortization, all as determined in accordance with GAAP;
provided, however that: (i) any transactional fees and other expenses incurred
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in connection with this Agreement or the transactions pursuant to the Merger
Agreements, the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents, the West Street
Subordinated Bridge Loan Documents and the High Yield Subordinated Permanent
Loan Documents and deducted from the Borrowers' income, as determined in
accordance with GAAP, with respect to a period of determination shall be added
back in determining EBITDA for that
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period; and (ii) all non-cash compensation expense recorded during a period in
connection with the granting of options shall be added back in determining
EBITDA for that period.
"ERISA": The Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate": Any trade or business (whether or not
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incorporated) that is a member of a group of which a Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Business Day": A Business Day which is also a day for
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trading by and between banks in United States dollar deposits in the interbank
Eurodollar market and a day on which banks are open for business in New York
City.
"Eurodollar Rate": With respect to each Interest Period applicable to
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a Eurodollar Rate Advance, the average offered rate for deposits in United
States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for
delivery of such deposits on the first day of such Interest Period, for the
number of days in such Interest Period, which appears on the Reuters Screen LIBO
page as of 10:00 a.m., London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the rate for such deposits determined by the Agent at such time based
on such other published service of general application as shall be selected by
the Agent for such purpose; provided, that in lieu of determining the rate in
the foregoing manner, the Agent may determine the rate based on rates at which
United States dollar deposits are offered to the Agent in the interbank
Eurodollar market at such time for delivery in Immediately Available Funds on
the first day of such Interest Period in an amount approximately equal to the
Advance by the Agent to which such Interest Period is to apply (rounded upward,
if necessary, to the nearest 1/16 of 1%). "Reuters Screen LIBO page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rate Screen (or
such other page as may replace the LIBO page on such service for the purpose of
displaying London interbank offered rates of major banks for United States
dollar deposits).
"Eurodollar Rate Advance": An Advance with respect to which the
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interest rate is determined by reference to the Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage
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(expressed as a decimal) which is in effect on such day, as prescribed by the
Board for determining the maximum reserve requirement (including any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System, with deposits comparable in amount to those held by the Agent, in
respect of "Eurocurrency Liabilities" as such term is defined in Regulation D of
the Board. The rate of interest applicable to any outstanding Eurodollar Rate
Advances shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Event of Default": Any event described in Section 7.1.
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"Excess Cash Flow": As of each Fiscal Year End, beginning with the
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1997 Fiscal Year End, and all as determined: (i) with respect to the 1997 Fiscal
Year End, for the period beginning on the Closing Date and ending on 1997 Fiscal
Year End, and (ii) with respect to the Fiscal Year End of any other year, for
the period of four consecutive fiscal quarters ending on such Fiscal Year End;
and in any case as determined on a consolidated basis for the Borrowers in
accordance with GAAP, the remainder of
(a) the sum, without duplication, of (i) EBITDA for such period, (ii)
extraordinary cash income, if any, business interruption insurance
proceeds, if any, and cash gains attributable to sales of assets out of the
ordinary course of business (but net of taxes, expenses and reserves for
indemnification), if any, during such period to the extent that any such
extraordinary cash income, such insurance proceeds or such cash gain is not
included in EBITDA for such period, (iii) any payment to Holdings pursuant
to Section 1.8(f) of the Merger Plan during such period, if any, and (iv)
the net reduction, if any, in Working Capital during such period, minus
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(b) the sum, without duplication, of (i) tax expenses paid in cash or
accrued by the Borrowers during such period, (ii) the aggregate amount of
Capital Expenditures, if any (but only to the extent such Capital
Expenditures were permissible under Section 6.10) during such period, (iii)
Interest Expense accrued during such period (whether or not paid during
such period), but excluding any Interest Expense accrued on the
Indebtedness under the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents but not
paid in cash during such period, (iv) the aggregate principal amount of the
Borrowers' consolidated Indebtedness scheduled to mature during the
relevant period that is paid in cash during the relevant period, (v) the
aggregate principal amount of optional prepayments of the Term Loan during
the relevant period, (vi) the amount of any payment by Holdings pursuant to
Section 1.8(f) of the Merger Plan during such period, if any, (vii) the net
increase, if any, in Working Capital during such period, and (viii) the
aggregate amount of Restricted Payments, if any, to Holdings (but only to
the extent such Restricted Payments were permissible under Section 6.7)
during such period.
"Facility": Any and all real property (including, without limitation,
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all buildings or other improvements located thereon) now or hereafter owned,
leased, operated or used by any of the Borrowers.
"First Bank": First Bank National Association in its capacity as one
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of the Banks hereunder.
"First Chicago Letter of Credit": An irrevocable Standby Letter of
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Credit in the form attached hereto as Exhibit 1.1-6(a), as the same may
hereafter be amended, supplemented, extended, restated or otherwise modified
from time to time.
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"Fiscal Year End": With respect to any calendar year, the day in
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December of that year or January of the next year that is the last day of a
fiscal year of Omega.
"Fixed Charge Coverage Ratio": For any period of four fiscal
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quarters, the ratio of
(a) EBITDA for such period minus the sum of (i) the aggregate amount of
Capital Expenditures, if any (but only to the extent such Capital
Expenditures were permissible under Section 6.10) during such period
and (ii) taxes paid in cash by the Borrowers,
to
(b) the sum of Interest Expense (excluding any non-cash amortized deferred
financing charges during such period) and all required principal
payments with respect to the consolidated Indebtedness of the
Borrowers,
in each case determined for said period on a consolidated basis in accordance
with GAAP, except that: (i) the Fixed Charge Coverage Ratio for the period
ending on September 27, 1997 shall be determined using Interest Expense for the
fiscal quarter ending on September 27, 1997 multiplied by a fraction the
numerator of which is 365 and the denominator of which is the actual number of
days in the fiscal quarter ending on September 27, 1997 in lieu of interest
expense for the four quarters ending on September 27, 1997 and principal
payments required under this Agreement during the first year after the Closing
Date in lieu of required principal payments during the four quarters ending on
September 27, 1997; (ii) the Fixed Charge Coverage Ratio for the period ending
on December 27, 1997 shall be determined using Interest Expense for the two
fiscal quarters ending on December 27, 1997 multiplied by a fraction the
numerator of which is 365 and the denominator of which is the actual number of
days in the two fiscal quarters ending on December 27, 1997 in lieu of interest
expense for the four quarters ending on December 27, 1997 and principal payments
required under this Agreement during the first year after the Closing Date in
lieu of required principal payments during the four quarters ending on December
27, 1997; and (iii) the Fixed Charge Coverage Ratio for the period ending on
March 28, 1998 shall be determined using Interest Expense for the three fiscal
quarters ending on March 28, 1998 multiplied by a fraction the numerator of
which is 365 and the denominator of which is the actual number of days in the
three fiscal quarters ending on March 28, 1998 in lieu of interest expense for
the four quarters ending on March 28, 1998 and principal payments required under
this Agreement during the first year after the Closing Date in lieu of required
principal payments during the four quarters ending on March 28, 1998.
"GAAP": Generally accepted accounting principles set forth in the
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opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of
-8-
the accounting profession, which are applicable to the circumstances as of any
date of determination.
"High Yield Subordinated Permanent Loan Documents": Collectively, an
------------------------------------------------
indenture, subordinated notes, guaranties from HomeCrest and Panther, an
offering document and all related documents, as the same may hereafter be
amended, supplemented, extended, restated or otherwise modified from time to
time, pursuant to which the High Yield Subordinated Permanent Debt is issued (if
it is issued) by Omega and placed pursuant to Rule 144A by ▇▇▇▇▇▇▇ Sachs & Co.
and Citicorp Securities, Inc.
"High Yield Subordinated Permanent Debt": Subordinated notes of Omega
--------------------------------------
in the principal amount of up to the remainder of (i) $100,000,000, minus (ii)
-----
the principal amount of any other Subordinated Debt whose proceeds are used to
pay any amount outstanding under the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents
or the West Street Subordinated Bridge Loan Documents.
"Holding Account": A deposit account belonging to the Agent for the
---------------
benefit of the Banks into which the Borrowers may be required to make deposits
pursuant to Section 2.6(a) or 7.2 of this Agreement, such account to be under
the sole dominion and control of the Agent and not subject to withdrawal by the
Borrower, with any amounts therein to be held for application by the Agent
toward payment of any outstanding Letters of Credit when drawn upon. The Holding
Account shall be a money market savings account or substantial equivalent (or
other appropriate investment medium as the Borrower may from time to time
request and to which the Agent in its sole discretion shall have consented) and
shall bear interest in accordance with the terms of similar accounts held by the
Agent for its customers. No Borrower is obligated to make deposits into the
Holding Account except as provided in Section 2.6(a) or 7.2.
"Holdings": Omega Holdings, Inc., a Delaware corporation.
--------
"Holdings Documents": Collectively, the Holdings Guaranty and the
------------------
Holdings Pledge Agreement.
"Holdings Guaranty": A Guaranty, in form and substance satisfactory
-----------------
to the Agent, whereby Holdings guarantees payment of the Obligations, as the
same may hereafter be amended, supplemented, extended, restated or otherwise
modified from time to time.
"Holdings Pledge Agreement": A Pledge Agreement, in form and
-------------------------
substance satisfactory to the Agent, whereby Holdings pledges all of its stock
in the Borrower and any other Subsidiaries of Holdings to the Agent for the
benefit of the Banks, to secure the Obligations and the Holdings Guaranty, as
the same may hereafter be amended, supplemented, extended, restated or otherwise
modified from time to time.
"HomeCrest": As defined in the opening paragraph hereof.
---------
-9-
"HomeCrest Collateral Assignment (Trademarks)": A Collateral
--------------------------------------------
Assignment of Trademarks, in form and substance satisfactory to the Agent, from
HomeCrest to the Agent for the benefit of the Banks, as the same may hereafter
be amended, supplemented, extended, restated or otherwise modified from time to
time.
"HomeCrest Indemnification Agreement": An Environmental and ADA
-----------------------------------
Indemnification Agreement, in form and substance satisfactory to the Agent, from
HomeCrest to the Agent for the benefit of the Banks with respect to each of the
Indiana and Tennessee Facilities.
"Immediately Available Funds": Funds with good value on the day
---------------------------
and in the city in which payment is received.
"Indebtedness": With respect to any Person at the time of any
------------
determination, all obligations which in accordance with GAAP are required to be
classified upon the balance sheet of such Person as liabilities, in any event
including, without duplication: (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid or accrued, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred purchase price of property or services, (f) all
obligations of others secured by any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (g)
all Capitalized Lease Obligations of such Person, (h) all obligations of such
Person in respect of interest rate protection agreements, (i) all obligations of
such Person, actual or contingent, as an account party in respect of letters of
credit or bankers' acceptances, (j) all obligations of any partnership or joint
venture as to which such Person is or may become personally liable, (k) all
obligations of a trust or other entity formed or utilized in connection with the
securitization of assets of such Person and (l) all Contingent Obligations of
such Person.
"Indemnification Agreements": Collectively, the Omega Indemnification
--------------------------
Agreement and the HomeCrest Indemnification Agreement.
"Indiana Facility": The Facility owned by HomeCrest and commonly
----------------
described as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, the legal description
of which is attached hereto as Exhibit 1.1-1.
"Indiana Mortgage": A Mortgage, Security Agreement, Assignment of
----------------
Leases and Rents and Fixture Financing Statement in form and substance
satisfactory to the Agent, whereby HomeCrest grants the Agent, for the benefit
of the Banks, a Lien in the Indiana Facility to secure the Obligations, as the
same may hereafter be amended, supplemented, extended, restated or otherwise
modified from time to time.
-10-
"Initial Term Loans": The portion of the Term Loans to be disbursed
------------------
on the Closing Date, which shall be the remainder of the aggregate Term Loan
Commitment Amounts minus the stated amount of the Stockholders' Committee Letter
-----
of Credit.
"Intellectual Property": As defined in Section 4.12.
---------------------
"Interest Coverage Ratio": For any period of four fiscal quarters,
-----------------------
the ratio of (a) EBITDA, to (b) Interest Expense (excluding any non-cash
amortized deferred financing charges during such period), in each case
determined for said period in accordance with GAAP, except that: (i) the
Interest Coverage Ratio for the period ending on September 27, 1997 shall be
determined using Interest Expense for the quarter ending on September 27, 1997
multiplied by a fraction the numerator of which is 365 and the denominator of
which is the actual number of days in the fiscal quarter ending on September 27,
1997 in lieu of interest expense for the four quarters ending on September 27,
1997; (ii) the Interest Coverage Ratio for the period ending on December 27,
1997 shall be determined using Interest Expense for the two fiscal quarters
ending on December 27, 1997 multiplied by a fraction the numerator of which is
365 and the denominator of which is the actual number of days in the two fiscal
quarters ending on December 27, 1997 in lieu of interest expense for the four
quarters ending on December 27, 1997; and (iii) the Interest Coverage Ratio for
the period ending on March 28, 1998 shall be determined using Interest Expense
for the three fiscal quarters ending on March 28, 1998 multiplied by a fraction
the numerator of which is 365 and the denominator of which is the actual number
of days in the three fiscal quarters ending on March 28, 1998 in lieu of
interest expense for the four quarters ending on March 28, 1998.
"Interest Expense": For any period of determination, the aggregate
----------------
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any consolidated Indebtedness of the Borrowers,
including (a) all but the principal component of payments in respect of
conditional sale contracts, Capitalized Leases and other title retention
agreements, (b) commissions, discounts and other fees and charges with respect
to letters of credit and bankers' acceptance financings and (c) net costs under
interest rate protection agreements, in each case determined in accordance with
GAAP.
"Interest Period": With respect to each Eurodollar Rate Advance, the
---------------
period commencing on the date of such Advance or on the last day of the
immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two, three or six months thereafter, as Omega, on behalf
of the Borrowers, may elect in the applicable notice of borrowing, continuation
or conversion; provided that:
-------------
(a) Any Interest Period that would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Eurodollar Business Day;
-11-
(b) Any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(c) Any Interest Period applicable to an Advance on a Revolving Loan
that would otherwise end after the Revolving Commitment Ending Date shall
end on the Revolving Commitment Ending Date, and any Interest Period
applicable to an Advance on a Term Loan that would otherwise end after the
scheduled maturity of such Term Loan shall end on such maturity.
Interest Periods shall be selected so that the installment payments on the Term
Notes can be paid without having to pay a Eurodollar Rate Advance prior to the
last day of the Interest Period applicable thereto. No more than ten Interest
Periods may exist at any one time.
"Investment": Except as provided in the next sentence, the
----------
acquisition, purchase, making or holding of any stock, or other security, any
loan, advance, contribution to capital, extension of credit, any acquisitions of
real or personal property (other than real and personal property acquired in the
ordinary course of business) and any purchase or commitment or option to
purchase stock or other debt or equity securities of or any interest in another
Person or any integral part of any business or the assets comprising such
business or part thereof. "Investment" shall not include: (i) trade and
customer accounts receivable for property leased, goods furnished, inventory
sold or services rendered in the ordinary course of business and payable in
accordance with customary trade terms; (ii) deposits, advances or prepayments to
suppliers for property leased, goods furnished, inventory sold or services
rendered in the ordinary course of business and payable in accordance with
customary trade terms; (iii) advances to employees, employee drawing accounts
and similar expenditures made in the ordinary course of business and on a basis
consistent with the employer's past practices; (iv) stock or other securities
acquired in connection with the satisfaction of, or to secure, Indebtedness
acquired in the ordinary course of business; or (v) demand deposits in banks or
similar financial institutions. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment.
"Iowa Facility": Collectively, the Facilities owned by Omega and
-------------
commonly described as ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇,
the legal description of which is attached hereto as Exhibit 1.1-2.
"Iowa Mortgage": A Mortgage, Security Agreement, Assignment of Leases
-------------
and Rents and Fixture Financing Statement, in form and substance satisfactory to
the Agent, whereby Omega grants the Agent, for the benefit of the Banks, a Lien
in the Iowa Facility to secure the Obligations, as the same may hereafter be
amended, supplemented, extended, restated or otherwise modified from time to
time.
-12-
"Letter of Credit": An irrevocable letter of credit issued by the
----------------
Agent pursuant to this Agreement for the account of the Borrowers.
"Letter of Credit Fee": As defined in Section 2.15.
--------------------
"Lien": With respect to any Person, any security interest, mortgage,
----
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
Capitalized Lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Loan": A Revolving Loan or a Term Loan.
----
"Loan Documents": This Agreement, the Notes and the Security
--------------
Documents.
"Majority Banks": At any time, Banks holding at least 51% of the
--------------
aggregate unpaid principal amount of the Notes or, if no Loans are at the time
outstanding hereunder, Banks whose Total Percentages aggregate at least 51%.
"Material Adverse Effect": A material adverse effect on the financial
-----------------------
condition, business, operations or prospects of Holdings and the Borrowers,
taken as a whole.
"Merger Agreements": Collectively, the Merger Plan, the Contingent
-----------------
Promissory Note in the amount of $3,000,000 from Holdings to the Stockholders'
Committee as the attorney-in-fact for the former shareholders in Holdings and
any other agreements entered into to effectuate the merger of Omega Merger Corp
with Holdings.
"Merger Plan": That certain Agreement and Plan of Merger dated as of
-----------
April 28, 1997 between Holdings, Omega Merger Corp. and the stockholders in
Holdings, as amended by amendments through sixth amendment dated May 30, 1997.
"Mortgages": Collectively, the Indiana, Iowa and Tennessee Mortgages.
---------
"Multiemployer Plan": A multiemployer plan, as such term is defined
------------------
in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date,
within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of the Borrower or any ERISA Affiliate.
"Note": A Term Note or a Revolving Note.
----
"Obligations": The Borrowers' obligations in respect of the due and
-----------
punctual payment of principal and interest on the Loans, Notes and Unpaid
Drawings when and as due, whether by acceleration or otherwise and all fees
(including Revolving Commitment Fees), expenses, indemnities, reimbursements and
other obligations of the Borrowers under this
-13-
Agreement or any other Borrower Loan Document, in all cases whether now existing
or hereafter arising or incurred.
"Omega": As defined in the opening paragraph hereof.
-----
"Omega Collateral Assignment (Trademarks)": A Collateral Assignment
----------------------------------------
of Trademarks in form and substance satisfactory to the Agent from Omega to the
Agent for the benefit of the Banks, as the same may hereafter be amended,
supplemented, extended, restated or otherwise modified from time to time.
"Omega Indemnification Agreement": An Environmental and ADA
-------------------------------
Indemnification Agreement from Omega to the Agent for the benefit of the Banks
with respect to each of the Iowa Facilities, in form and substance satisfactory
to the Agent.
"Omega Pledge Agreement": A Pledge Agreement in form and substance
----------------------
satisfactory to the Agent, whereby Omega pledges all of its stock in HomeCrest
and Panther to the Agent for the benefit of the Banks to secure the Obligations,
as the same may hereafter be amended, supplemented, extended, restated or
otherwise modified from time to time.
"Operating Lease": Any lease of real or personal property other than
---------------
a Capitalized Lease.
"Panther": As defined in the opening paragraph hereof.
-------
"PBGC": The Pension Benefit Guaranty Corporation, established
----
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Person": Any natural person, corporation, partnership, limited
------
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Plan": Each employee benefit plan (whether in existence on the
----
Closing Date or thereafter instituted), as such term is defined in Section 3 of
ERISA, maintained for the benefit of employees, officers or directors of the
Borrower or of any ERISA Affiliate.
"Prohibited Transaction": The respective meanings assigned to such
----------------------
term in Section 4975 of the Code and Section 406 of ERISA.
"Progressive Allowance": After HomeCrest receives a release of a
---------------------
$200,000 account receivable claimed by Progressive Systems, Inc. and a payment
of $300,000 from Progressive Systems, Inc., an amount equal to the remainder of
(i) $500,000, minus (ii) the
-14-
aggregate amount by which Capital Expenditures during each prior fiscal year of
the Borrowers exceeded $4,500,000 during such fiscal year.
"Reference Rate": The rate of interest from time to time publicly
--------------
announced by the Agent as its "reference rate." The Agent may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate hereunder or under any other Loan Document
which is based on the Reference Rate, such interest rate shall change as and
when the Reference Rate shall change.
"Regulatory Change": Any change after the Closing Date in federal,
-----------------
state or foreign laws or regulations or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including any Bank under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section 4043 of
----------------
ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
--------
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any waiver in accordance with
Section 412(d) of the Code.
"Responsible Officer": Any of the President, the Chief Financial
-------------------
Officer or the Controller of Omega.
"Restricted Payments": With respect to any Borrower, collectively,
-------------------
all dividends or other distributions of any nature (including cash, securities
other than common stock of such Borrower, assets or otherwise), and all
payments, on or in respect of any class of equity securities (including
warrants, options or rights therefor) issued by such Borrower, whether such
securities are authorized or outstanding on the Closing Date or at any time
thereafter, and any redemption or purchase of, or other distribution in respect
of, any of the foregoing, whether directly or indirectly.
"Revolving Commitment": With respect to a Bank, the agreement of such
--------------------
Bank to make Revolving Loans to, and purchase risk participations in Letters of
Credit issued by the Agent for the account of, the Borrowers in an aggregate
principal amount outstanding at any time not to exceed such Bank's Revolving
Commitment Amount upon the terms and subject to the conditions and limitations
of this Agreement.
"Revolving Commitment Amount": With respect to a Bank, initially the
---------------------------
amount set opposite such Bank's name on the signature page hereof as its
Revolving Commitment
-15-
Amount, but as the same may be reduced or modified from time to time pursuant to
Section 2.16 or Section 9.6.
"Revolving Commitment Ending Date": June 13, 2002.
--------------------------------
"Revolving Commitment Fees": As defined in Section 2.17.
-------------------------
"Revolving Commitment Letters of Credit": All Letters of Credit
--------------------------------------
(including but not limited to the First Chicago Letter of Credit) other than the
Stockholders' Committee Letter of Credit.
"Revolving Commitment Unpaid Drawings": All Unpaid Drawings except
------------------------------------
Unpaid Drawings with respect to the Stockholders' Committee Letter of Credit.
"Revolving Loan": As defined in Section 2.1.
--------------
"Revolving Loan Date": The date of the making of any Revolving
-------------------
Loans hereunder.
"Revolving Note": A promissory note of the Borrowers in the form of
--------------
Exhibit 1.1-3 hereto, as the same may hereafter be amended, supplemented,
extended, restated or otherwise modified from time to time.
"Revolving Percentage": With respect to any Bank, the percentage
--------------------
equivalent of a fraction, the numerator of which is the Revolving Commitment
Amount of such Bank and the denominator of which is the Aggregate Revolving
Commitment Amounts.
"Security Agreements": A separate Security Agreement from each
-------------------
Borrower to the Agent, in form and substance satisfactory to the Agent, whereby
such Borrower grants the Agent, for the benefit of the Banks, a security
interest in the personal property described therein to secure the Obligations,
as the same may hereafter be amended, supplemented, extended, restated or
otherwise modified from time to time.
"Security Documents": The Security Agreements, the Omega Pledge
------------------
Agreement, the Collateral Assignments, the Holdings Documents, the
Indemnification Agreements and the Mortgages.
"Solvency Opinion": An opinion in the form of Exhibit 1.1-4 attached
----------------
hereto from American Appraisal Associates, Inc., regarding the solvency of the
Borrowers on a consolidated basis immediately before and immediately after the
Closing Date, after giving effect to the transactions contemplated by this
Agreement and the dividend payable on the Closing Date described in Section
6.7(i).
-16-
"Standby Letter of Credit": A Letter of Credit that is not a
------------------------
Documentary Letter of Credit.
"Stock": All shares, interests, participation or other equivalents,
-----
however designated, of or in a corporation, whether or not voting, including but
not limited to common stock, warrants, preferred stock, convertible debentures,
and all agreements, instruments and documents convertible, in whole or in part,
into any one or more or all of the foregoing.
"Stockholders' Committee Letter of Credit": An irrevocable Standby
----------------------------------------
Letter of Credit in the form attached hereto as Exhibit 1.1-6(b), as the same
may hereafter be amended, supplemented, extended, restated or otherwise modified
from time to time.
"Subordinated Debt": Any Indebtedness of the Holdings or Omega under
-----------------
the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents, any Indebtedness of Holdings or
any Borrower under the West Street Subordinated Bridge Loan Documents, and all
other indebtedness of the Borrowers, now existing or hereafter created, incurred
or arising, which is subordinated in right of payment to the payment of the
Obligations in a manner and to an extent that the Agent and the Majority Banks
have approved in writing prior to the creation of such Indebtedness (including
the High Yield Subordinated Permanent Loan Documents after approval by the Agent
and the Banks as provided in Section 9.19 and any subordinated notes in form
acceptable to the Agent and the Majority Banks delivered to members of
management or employees by Holdings in connection with its Stock put and call
rights).
"Subsidiary": With respect to any Person, any corporation or other
----------
entity of which securities or other ownership interests having ordinary voting
power for the election of a majority of the board of directors or other Persons
performing similar functions are owned by the first Person, either directly or
through one or more Subsidiaries.
"Tennessee Facility": The Facility owned by HomeCrest and commonly
-------------------
described as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇), ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, the legal description of which is attached hereto as Exhibit 1.1-7.
"Tennessee Mortgage": A Deed of Trust, Security Agreement and
------------------
Assignment of Leases and Rents, and including a Fixture Filing under the Uniform
Commercial Code, in form and substance satisfactory to the Agent, whereby
HomeCrest grants the Agent, for the benefit of the Banks, a Lien in the
Tennessee Facility to secure the Obligations, as the same may hereafter be
amended, supplemented, extended, restated or otherwise modified from time to
time.
"Term Loan": As defined in Section 2.1.
---------
"Term Loan Commitment": With respect to a Bank, the agreement of such
--------------------
Bank to make a Term Loan to the Borrowers in an amount equal to such Bank's Term
Loan Commitment Amount upon the terms and subject to the conditions of this
Agreement.
-17-
"Term Loan Commitment Amount": With respect to a Bank, the amount set
---------------------------
opposite such Bank's name on the signature pages hereof as its Term Loan
Commitment Amount.
"Term Loan Percentage": With respect to any Bank, the percentage
--------------------
equivalent of a fraction, the numerator of which is the amount of the Term Loan
Commitment of such Bank and the denominator of which is the sum of the Term Loan
Commitments of all the Banks.
"Term Note": A promissory note of the Borrowers in the form of
----------
Exhibit 1.1-8 hereto, as the same may hereafter be amended, supplemented,
extended, restated or otherwise modified from time to time.
"Termination Date": The earliest of (a) the Revolving Commitment
----------------
Ending Date, (b) the date on which the Revolving Commitments are terminated
pursuant to Section 7.2 hereof or (c) the date on which the Revolving Commitment
Amounts are reduced to zero pursuant to Section 2.16 hereof.
"Total Percentage": With respect to any Bank, the percentage
----------------
equivalent of a fraction, the numerator of which is the sum of the Revolving
Commitment Amount of such Bank and the Term Loan Commitment Amount of such Bank
and the denominator of which is the sum of the Revolving Commitment Amounts and
Term Loan Commitment Amounts of all the Banks.
"Total Revolving Outstandings": As of any date of determination, the
----------------------------
sum of (a) the aggregate unpaid principal balance of Revolving Loans outstanding
on such date, (b) the aggregate maximum amount available to be drawn under
Revolving Commitment Letters of Credit outstanding on such date and (c) the
aggregate amount of Revolving Commitment Unpaid Drawings on such date.
"Unpaid Drawing": As defined in Section 2.11.
--------------
"Unused Revolving Commitment": With respect to any Bank as of any
---------------------------
date of determination, the amount by which such Bank's Revolving Commitment
Amount exceeds such Bank's Revolving Percentage of the Total Revolving
Outstandings on such date.
"West Street Subordinated Bridge Loan Documents": Collectively, the
----------------------------------------------
Senior Subordinated Bridge Loan Agreement dated as of June 13, 1997 among Omega,
HomeCrest and Panther, as borrowers, Holdings, as a guarantor, and West Street
Fund I, L.L.C. and Citicorp (USA), Inc., as lenders, the "Interim Notes," the
"Exchange Notes" and the "Exchange Note Indenture" (as those terms are defined
in such Senior Subordinated Bridge Loan Agreement) and all exhibits thereto and
other related documents, as the same may hereafter be amended, supplemented,
extended, restated or otherwise modified from time to time, pursuant to which
West Street Fund I, L.L.C. and Citicorp (USA), Inc. are making a $90,000,000
subordinated bridge loan to Omega, HomeCrest and Panther (provided, however that
-----------------
the Exchange Note
-18-
Indenture and Exchange Notes shall not be deemed to be West Street Subordinated
Bridge Loan Documents unless (i) the subordination provisions of the final
version of the Exchange Note Indenture and all defined terms used therein are
identical to the subordination provisions attached hereto as Exhibit 9.19,
mutatis mutandis to account for the different obligors and guarantors
----------------
contemplated by the Exchange Note Indenture and Exhibit 9.19, and with such
changes as may be acceptable to the Agent and the Majority Banks, in their sole
and unlimited discretion, (ii) all covenants and events of default in the final
version of the Exchange Note Indenture are, in the reasonable judgment of the
Agent and the Majority Banks, at least as favorable to both the Borrowers and
the Banks as those contained in the Senior Subordinated Bridge Loan Agreement,
and (iii) the final version of the Exchange Note Indenture is otherwise
reasonably acceptable to the Agent and the Majority Banks).
"Working Capital": As of any date of determination, the excess, if
---------------
any, of: (i) Current Assets minus the sum of cash and cash equivalents over (ii)
Current Liabilities minus the sum of interest payable and taxes payable.
Section 1.2 Accounting Terms and Calculations. Except as may be
---------------------------------
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless Omega on behalf of the Borrowers and Majority Banks agree in
writing on an adjustment to such computation or determination to account for
such change in GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
---------------------------
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
Section 1.4 Other Definitional Terms. The words "hereof", "herein"
------------------------
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or".
-19-
ARTICLE II
----------
TERMS OF THE CREDIT FACILITIES
Part A -- Terms of Lending
--------------------------
Section 2.1 Lending Commitments. On the terms and subject to the
-------------------
conditions hereof, each Bank severally agrees to make the following lending
facilities available to the Borrowers:
2.1(a) Revolving Credit. A revolving credit facility available
----------------
as loans (each, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrowers on a revolving basis at any time and from time to
time from the Closing Date to the Termination Date, during which period the
Borrowers may borrow, repay and reborrow in accordance with the provisions
hereof, provided, that no Revolving Loan will be made in any amount which,
after giving effect thereto, would cause the Total Revolving Outstandings
to exceed the Aggregate Revolving Commitment Amounts. Revolving Loans
hereunder shall be made by the several Banks ratably in the proportion of
their respective Revolving Commitments Amounts. Revolving Loans and any
portion of the balance thereof (in minimum amounts of $250,000, if Base
Rate Advances, $1,000,000, if Eurodollar Rate Advances, or, in either case,
if more, in integral multiples of $50,000 in excess thereof) may be
obtained and maintained, at the election of the Borrowers but subject to
the limitations hereof, as Base Rate Advances or Eurodollar Rate Advances
or any combination thereof.
2.1(b) Term Loans. A term loan from each Bank (each being a
----------
"Term Loan" and, collectively, the "Term Loans") to the Borrowers, which
may be made in multiple Advances, (i) one on the Closing Date, and (ii) one
or more Advances after the Closing Date with respect to Unpaid Drawings
under the Stockholders' Committee Letter of Credit; provided, however that
-----------------
the aggregate amount of Advances under clauses (i) and (ii) by each Bank
shall not exceed that Bank's Term Loan Commitment Amount. The Term Loans
and any portion of the balance thereof (in minimum amounts of $250,000, if
Base Rate Advances, $1,000,000, if Eurodollar Rate Advances, or, in either
case, if more, in integral multiples of $50,000 in excess thereof) may be
made, maintained, continued and converted to Base Rate Advances or
Eurodollar Rate Advances as the Borrowers may elect in their notice of
borrowing, continuation or conversion.
Section 2.2 Procedure for Loans.
-------------------
2.2(a) Procedure for Revolving Loans. Any request by the
-----------------------------
Borrowers for Revolving Loans hereunder shall be made on behalf of the
Borrowers by Omega and shall be in writing or by telephone and must be
given so as to be received by the Agent
-20-
not later than 12:00 noon (Minneapolis time) two Eurodollar Business Days
prior to the requested Revolving Loan Date if the Revolving Loans (or any
portion thereof) are requested as Eurodollar Rate Advances and not later
than 12:00 noon (Minneapolis time) on the requested Revolving Loan Date if
the Revolving Loans are requested as Base Rate Advances. Any written
request for Revolving Loans shall be in the form of Exhibit 2.2 and shall
be signed by a Responsible Officer or a person designated as authorized to
make such requests in a writing signed by a Responsible Officer. Any oral
request for Revolving Loans shall be made by a Responsible Officer or a
person designated as authorized to make such requests in a writing signed
by a Responsible Officer and shall be confirmed by a writing in the form of
Exhibit 2.2 signed by a Responsible Officer or a person designated as
authorized to make such requests in a writing signed by a Responsible
Officer, which written confirmation shall be delivered to the Agent not
later than five Business Days after the date the Revolving Loans in
question are made. The Revolving Commitments of the Banks shall be
suspended from the fifth Business Day after the date the Agent notifies
Omega on behalf of the Borrowers that such written confirmation is past due
until any such past due written confirmation has been delivered. Each
request for Revolving Loans hereunder shall be irrevocable and shall be
deemed a representation by the Borrowers that on the requested Revolving
Loan Date and after giving effect to the requested Revolving Loans the
applicable conditions specified in Article III (as to the initial Revolving
Loans) or Section 3.2 (as to Revolving Loans made after the Closing Date)
have been and will be satisfied. Each request for Revolving Loans
hereunder shall specify (i) the requested Revolving Loan Date, (ii) the
aggregate amount of Revolving Loans to be made on such date which shall be
in a minimum amount of $250,000, if Base Rate Advances, $1,000,000, if
Eurodollar Rate Advances, or, in either case, if more, in integral
multiples of $50,000 in excess thereof, (iii) whether such Revolving Loans
are to be funded as Base Rate Advances or Eurodollar Rate Advances (and, if
such Revolving Loans are to be made with more than one applicable interest
rate choice, specifying the amount to which each interest rate choice is
applicable) and (iv) in the case of Eurodollar Rate Advances, the duration
of the initial Interest Period applicable thereto. The Agent may rely on
any telephone request for Revolving Loans hereunder which it believes in
good faith to be genuine; and the Borrowers hereby waive the right to
dispute the Agent's record of the terms of such telephone request (unless
the Agent receives written notice from Omega on behalf of the Borrowers,
containing terms that vary from the terms of such telephone request, before
the Revolving Loans requested by such telephone request are disbursed to
the Borrowers). The Agent shall promptly notify each other Bank of the
receipt of such request, the matters specified therein, and of such Bank's
ratable share of the requested Revolving Loans. On the date of the
requested Revolving Loans, each Bank shall provide its share of the
requested Revolving Loans to the Agent in Immediately Available Funds not
later than 3:00 p.m., Minneapolis time. Unless the Agent determines that
any applicable condition specified in Article III has not been satisfied,
the Agent will make available to Omega, on behalf of the Borrowers, at the
Agent's principal office in Minneapolis, Minnesota in Immediately Available
Funds not later than 4:00 p.m.
-21-
(Minneapolis time) on the requested Revolving Loan Date the amount of the
requested Revolving Loans. Each Borrower shall be deemed to have
requested, and the Banks shall fund, Revolving Loans to pay Revolving
Commitment Unpaid Drawings on the terms described in Section 2.14, but,
notwithstanding anything to the contrary contained in this Section 2.2(a),
the Borrowers shall not be deemed to have made any representation regarding
compliance with, nor be required to comply with, the conditions precedent
contained in Article III with respect to any such Revolving Loans pursuant
to Section 2.14. If the Agent has made a Revolving Loan to the Borrowers on
behalf of a Bank but has not received the amount of such Revolving Loan
from such Bank by the time herein required, such Bank shall pay interest to
the Agent on the amount so advanced at the overnight Federal Funds rate
from the date of such Revolving Loan to the date funds are received by the
Agent from such Bank, such interest to be payable with such remittance from
such Bank of the principal amount of such Revolving Loan (provided,
however, that the Agent shall not make any Revolving Loan on behalf of a
Bank if the Agent has received prior notice from such Bank that it will not
make such Revolving Loan). If the Agent does not receive payment from such
Bank by the next Business Day after the date of any Revolving Loan, the
Agent shall be entitled to recover such Revolving Loan, with interest
thereon at the rate (or rates) then applicable to such Revolving Loan, from
the Borrowers, which shall pay such amounts to the Agent within three
Business Days after the Agent makes demand therefor, without prejudice to
the Agent's and the Borrower's rights against such Bank. If such Bank pays
the Agent the amount herein required with interest at the overnight Federal
Funds rate before the Agent has recovered from the Borrowers, such Bank
shall be entitled to the interest payable by the Borrowers with respect to
the Revolving Loan in question accruing from the date the Agent made such
Revolving Loan.
2.2(b) Procedure for Term Loans. Not later than 12:00 noon
------------------------
(Minneapolis time) two Eurodollar Business Days prior to the requested
Closing Date if the Initial Term Loans are requested as Eurodollar Rate
Advances and not later than 12:00 noon (Minneapolis time) one Business Day
prior to the requested Closing Date if the Initial Term Loans are requested
as Base Rate Advances, Omega on behalf of the Borrowers shall request the
Initial Term Loans by telephone, confirmed by a writing in the form of
Exhibit 2.2 signed by a Responsible Officer or a person designated as
authorized to make such requests in a writing signed by a Responsible
Officer, which written confirmation shall be delivered to the Agent not
later than the Closing Date. Such notice of borrowing shall be irrevocable
and shall be deemed a representation by the Borrowers that on the Closing
Date and after giving effect to the Initial Term Loans the applicable
conditions specified in Article III have been and will be satisfied. Such
notice of borrowing shall specify (i) the requested Closing Date, (ii)
whether the Initial Term Loans are to be funded as Eurodollar Rate Advances
or Base Rate Advances, and (iii) in the case of Eurodollar Rate Advances,
the duration of the initial Interest Period applicable thereto. The Agent
shall promptly notify each Bank of the receipt of such notice and the
matters specified therein. On the requested Closing Date, each Bank shall
provide to the
-22-
Agent the amount of such Bank's Term Loan Percentage of the Initial Term
Loans in Immediately Available Funds not later than 11:00 a.m., Minneapolis
time. Unless the Agent determines that any applicable condition specified
in Article III has not been satisfied, the Agent will make the proceeds of
the Initial Term Loans available to Omega on behalf of the Borrowers at the
Agent's main office on the Closing Date. Each Borrower shall be deemed to
have requested, and the Banks shall fund, Term Loans to pay Unpaid Drawings
with respect to the Stockholders' Committee Letter of Credit on the terms
described in Section 2.14, but, notwithstanding anything to the contrary
contained in this Section 2.2(a) the Borrowers shall not be deemed to have
made any representation regarding compliance with, nor be required to
comply with, the conditions precedent contained in Article III with respect
to any such Term Loans pursuant to Section 2.14. If the Agent has disbursed
a portion of a Term Loan to the Borrowers on behalf of a Bank but has not
received the amount of such disbursement from such Bank by the time herein
required, such Bank shall pay interest to the Agent on the amount so
advanced at the overnight Federal Funds rate from the date of such
disbursement to the date funds are received by the Agent from such Bank,
such interest to be payable with such remittance from such Bank of the
principal amount of such disbursement (provided, however, that the Agent
shall not disburse any portion of a Term Loan on behalf of a Bank if the
Agent has received prior notice from such Bank that it will not fund such
portion). If the Agent does not receive payment from such Bank by the next
Business Day after the date of any disbursement of any portion of a Term
Loan, the Agent shall be entitled to recover such disbursement, with
interest thereon at the rate (or rates) then applicable to the such Term
Loan, from the Borrowers, which shall pay such amounts to the Agent within
three Business Days after the Agent makes demand therefor, without
prejudice to the Agent's and the Borrowers' rights against such Bank. If
such Bank pays the Agent the amount herein required with interest at the
overnight Federal Funds rate before the Agent has recovered from the
Borrowers, such Bank shall be entitled to the interest payable by the
Borrowers with respect to the disbursement in question accruing from the
date the Agent made such disbursement.
Section 2.3 Notes. The Revolving Loans of each Bank shall be
-----
evidenced by a single Revolving Note payable to the order of such Bank in a
principal amount equal to such Bank's Revolving Commitment Amount originally in
effect. The Term Loan of each Bank shall be evidenced by a Term Note payable to
the order of such Bank in the principal amount equal to such Bank's Term Loan
Commitment Amount. Upon receipt of each Bank's Notes from the Borrowers, the
Agent shall mail such Notes to such Bank. Each Bank shall enter in its ledgers
and records the amount of its Term Loan and each Revolving Loan, the various
Advances made, converted or continued and the payments made thereon, and each
Bank is authorized by the Borrowers to enter on a schedule attached to its Term
Note or Revolving Note, as appropriate, a record of such Term Loan, Revolving
Loans, Advances and payments; provided, however that the failure by any Bank to
make any such entry or any error in making such entry shall not limit or
otherwise affect the obligations of the Borrowers hereunder and on the Notes,
and, in all events, the principal amounts owing by the Borrowers in respect of
the Revolving Notes shall be
-23-
the aggregate amount of all Revolving Loans made by the Banks less all payments
of principal thereof made by the Borrowers and the principal amount owing by the
Borrowers in respect of the Term Notes shall be the aggregate amount of all Term
Loans made by the Banks less all payments of principal thereof made by the
Borrowers.
Section 2.4 Conversions and Continuations. On the terms and subject
-----------------------------
to the limitations hereof, the Borrowers shall have the option at any time and
from time to time to convert all or any portion of the Advances into Base Rate
Advances or Eurodollar Rate Advances, or to continue a Eurodollar Rate Advance
as such; provided, however that a Eurodollar Rate Advance may be converted or
continued only on the last day of the Interest Period applicable thereto and no
Advance may be converted to or continued as a Eurodollar Rate Advance if a
Default or Event of Default has occurred and is continuing on the proposed date
of continuation or conversion. Advances may be converted to, or continued as,
Eurodollar Rate Advances only in aggregate amount of the Advances of all Banks
so converted or continued of $250,000, if Base Rate Advances, $1,000,000, if
Eurodollar Rate Advances, or, in either case, if more, in integral multiples of
$50,000 in excess thereof Omega, on behalf of the Borrowers, shall give the
Agent written notice of any continuation or conversion of any Advances and such
notice must be given so as to be received by the Agent not later than 12:00 noon
(Minneapolis time) two Eurodollar Business Days prior to requested date of
conversion or continuation in the case of the continuation of, or conversion to,
Eurodollar Rate Advances and on the date of the requested continuation of or
conversion to Base Rate Advances. Each such notice shall specify (a) the amount
to be continued or converted, (b) the date for the continuation or conversion
(which must be (i) the last day of the preceding Interest Period for any
continuation or conversion of Eurodollar Rate Advances, and (ii) a Eurodollar
Business Day in the case of continuations as or conversions to Eurodollar Rate
Advances and a Business Day in the case of conversions to Base Rate Advances),
and (c) in the case of conversions to or continuations as Eurodollar Rate
Advances, the Interest Period applicable thereto. Any notice given by Omega
under this Section shall be irrevocable. If Omega shall fail to notify the
Agent of the continuation of any Eurodollar Rate Advances within the time
required by this Section, such Advances shall, on the last day of the Interest
Period applicable thereto, automatically be converted into Base Rate Advances of
the same principal amount. Except to the extent provided in Sections 2.21 and
2.23, all conversions and continuation of Advances must be made uniformly and
ratably among the Banks. (E.g., when continuing a two-month Eurodollar Rate
Advance of one Bank to a three-month Eurodollar Rate Advance, the Borrower must
simultaneously continue all two-month Eurodollar Rate Advances of all Banks
having Interest Periods ending on the date of continuation as three-month
Eurodollar Rate Advances.)
Section 2.5 Interest Rates, Interest Payments and Default Interest.
------------------------------------------------------
Interest shall accrue and be payable on the Loans as follows:
(i) Subject to paragraph (iii) below, each Eurodollar Rate Advance
shall bear interest on the unpaid principal amount thereof during the
Interest Period applicable
-24-
thereto at a rate per annum equal to the sum of (A) the Adjusted Eurodollar
Rate for such Interest Period, plus (B) the Applicable Margin.
(ii) Subject to paragraph (iii) below, each Base Rate Advance shall
bear interest on the unpaid principal amount thereof at a varying rate per
annum equal to the sum of (A) the Base Rate, plus (B) the Applicable
Margin.
(iii) Upon the occurrence and during the continuation of any Event of
Default, each Advance shall, at the option of the Majority Banks, bear
interest at the "Default Rate," which shall be (A) during the balance of
any Interest Period applicable to such Advance, at a rate per annum equal
to the sum of the rate applicable to such Advance during such Interest
Period plus 2.0%, and (B) otherwise, at a rate per annum equal to the sum
of (1) the Base Rate, plus (2) the Applicable Margin for Base Rate
Advances, plus (3) 2.0%.
(iv) Interest shall be payable (A) with respect to each Eurodollar
Rate Advance having an Interest Period of three months or less, on the last
day of the Interest Period applicable thereto; (B) with respect to any
Eurodollar Rate Advance having an Interest Period greater than three
months, on the last day of the Interest Period applicable thereto and on
each day that would have been the last day of the Interest Period for such
Advance had successive Interest Periods of three months duration been
applicable to such Advance; (C) with respect to any Base Rate Advance, on
the last day of each month; (D) with respect to all Advances, upon any
permitted prepayment (on the amount prepaid); and (E) with respect to all
Advances, on the Termination Date; provided that interest under Section 2.5
(a) (iii) shall be payable upon written demand by the Agent.
Section 2.6 Repayment and Mandatory Prepayments.
-----------------------------------
2.6(a) The Revolving Loans. The unpaid principal balance of all
-------------------
Revolving Notes, together with all accrued and unpaid interest thereon,
shall be due and payable on the Termination Date. If at any time Total
Revolving Outstandings exceed the Aggregate Revolving Commitment Amounts,
the Borrowers shall immediately repay to the Agent for the account of the
Banks the amount of such excess. Any such payments shall be applied first
against Base Rate Advances and then to Eurodollar Rate Advances in order
starting with the Eurodollar Rate Advances having the shortest time to the
end of the applicable Interest Period. If, after payment of all
outstanding Advances, the Total Revolving Outstandings still exceed the
Aggregate Revolving Commitment Amounts, the remaining amount paid by the
Borrowers shall be placed in the Holding Account.
2.6(b) The Term Loans. The principal of the Term Loans shall be
--------------
payable in 28 installments, payable as follows:
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(i) on each of September 26, 1997, December 26, 1997, March 27, 1998 and
June 26,1998, $625,000;
(ii) on each of September 25, 1998, December 31, 1998, April 3, 1999 and
July 2, 1999, $1,000,000;
(iii) on each of October 1, 1999, December 31, 1999, March 31, 2000 and
June 30, 2000, $1,375,000;
(iv) on each of September 29, 2000, December 29, 2000, March 30, 2001 and
June 29, 2001, $1,500,000;
(v) on each of September 28, 2001, December 28, 2001, March 29, 2002 and
June 28,2002, $1,875,000;
(vi) on each of September 25, 2002, December 27, 2002, March 28, 2003 and
June 27, 2003, $2,250,000; and
(vii) on each of September 26, 2003 and December 26, 2003, $2,750,000,
and, on December 26, 2003, any other amount then remaining unpaid with
respect to the Term Loans;
provided, however that if the aggregate principal amount outstanding under the
-----------------
term Loans as of the date any principal payment is due is less than the amount
specified for such date in the table above, then the principal amount payable on
such date shall be such amount outstanding.
2.6(c) Excess Cash Flow. On or before the 90th day after each
----------------
Fiscal Year End, beginning 90 days after the 1997 Fiscal Year End, the
Borrowers shall prepay the Loans by an amount equal to 75% of the Excess
Cash Flow for the four consecutive fiscal quarters ending on such Fiscal
Year End.
2.6(d) Proceeds of Equity or Debt. Within one Business Day
--------------------------
following the receipt thereof, the Borrowers shall prepay the Loans by an
amount equal to 100% of the sum of (i) all proceeds of any issuance of debt
or equity securities (except debt or equity securities issued to fund an
acquisition that is permitted under this Agreement, or issued to management
employees and directors, up to a maximum amount of $500,000 in the
aggregate), and (ii) all proceeds of the incurrence of any other
Indebtedness (excluding Indebtedness secured by a Lien permissible under
Section 6.14(i)), by Holdings, any Borrower or any Subsidiary of any of
them, in any case net of the actual cash expenses paid by Holdings, any
Borrower or any Subsidiary of any of them in connection with such issuance
or incurrence; provided, however that this Section 2.6(d) shall not be
-------- -------
deemed to authorize any Indebtedness that would otherwise be prohibited by
Section 6.13; and provided, further that the net proceeds of the High Yield
-----------------
Subordinated Permanent Debt, any other Subordinated Debt or any equity
securities may be applied first to pay all amounts outstanding under the
▇▇▇▇▇▇ Subordinated Bridge Loan Documents and the West Street Subordinated
Bridge Loan Documents, and if so applied, the Borrowers shall prepay the
Loans in an amount equal to 100% of the excess (if any) of the aggregate
net proceeds of the High Yield Subordinated Permanent Debt, such other
Subordinated Debt or such equity securities over all amounts outstanding
under the
-26-
▇▇▇▇▇▇ Subordinated Bridge Loan Documents and the West Street Subordinated
Bridge Loan Documents.
2.6(e) Proceeds of Asset Sales. Within one Business Day
-----------------------
following the receipt thereof, the Borrowers shall prepay the Loans by an
amount equal to 100% of all proceeds of any sale of assets (including but
not limited to Stock in Subsidiaries, but excluding any sale of assets
permitted by clauses (a), (b) or (c) of Section 6.2), by Holdings, any
Borrower or any Subsidiary of any of them, net of the actual cash expenses
and taxes paid or incurred by Holdings, any Borrower or any Subsidiary of
any of them in connection with such sale; provided, however that this
-----------------
Section 2.6(e) shall not be deemed to authorize any sale or other transfer
that would otherwise be prohibited by Section 6.2.
2.6(f) Application of Prepayments. Any mandatory prepayments
--------------------------
pursuant to this Section 2.6 shall be applied to the Term Loans until the
Term Loans are paid in full and then to the Revolving Loans. Any mandatory
prepayments of the Term Loans shall be applied to the installments due
thereunder pro rata to the amount of each such installment. Any
prepayments under Sections 2.6(c), (d) or (e) that are applied to Revolving
Loans shall reduce the Revolving Commitments by the same amount. Amounts
prepaid on the Term Loans under this Section 2.6, or prepaid under the
Revolving Loans and resulting in a reduction of the Revolving Commitments
under this Section 2.6, may not be reborrowed.
2.6(g) Allocation of Payments. Amounts paid or prepaid on the
-----------------------
Revolving Loans under this Section 2.6 shall be made to the Agent for the
account of each Bank in proportion to its share of outstanding Revolving
Loans. Amounts paid or prepaid on the Term Loans under this Section 2.6
shall be made to the Agent for the account of each Bank in proportion to
its share of outstanding Term Loans.
Section 2.7 Optional Prepayments. No optional prepayment of the Term
--------------------
Loans can be made unless Omega, on behalf of the Borrowers, gives the Agent
three Business Days prior written notice of such prepayment. No optional
prepayment of the Revolving Loans can be made unless Omega gives the Agent
written notice of such prepayment no later than 12:00 noon (Minneapolis time) on
the date of the prepayment. Subject to the foregoing notice requirement, the
Borrowers may prepay Base Rate Advances, in whole or in part, at any time,
without premium or penalty. Except upon an acceleration following an Event of
Default or upon termination of the Revolving Commitments in whole, the Borrowers
may pay Eurodollar Rate Advances only: (i) on the last day of the Interest
Period applicable thereto, or (ii) if such prepayment is accompanied by all
amounts payable under Section 2.25 as a result of such prepayment. Any optional
prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment of the Revolving Loans shall be in an
aggregate amount for all the Banks of $100,000 or an integral multiple of
$50,000 in excess thereof. Each partial prepayment of the Term Loans shall be
in an aggregate amount for all the Banks of $1,000,000 or an integral multiple
of $50,000 in excess thereof. Amounts paid (unless following
-27-
an acceleration or upon termination of the Revolving Commitments in whole) or
prepaid on Advances on the Revolving Loans under this Section 2.7 may be
reborrowed upon the terms and subject to the conditions and limitations of this
Agreement. Amounts prepaid in the Term Loans may not be reborrowed. Amounts
paid or prepaid on the Revolving Loans under this Section 2.7 shall be for the
account of each Bank in proportion to its share of outstanding Revolving Loans.
Amounts paid or prepaid on the Term Loans under this Section 2.7 shall be for
the account of each Bank in proportion to its share of outstanding Term Loans.
Optional prepayments of the Term Loans shall be applied to the installments due
thereunder in the inverse order of their maturity.
Part B -- Terms of the Letter of Credit Facility
------------------------------------------------
Section 2.8 Letters of Credit. The Borrowers hereby request the
-----------------
Agent, and the Agent agrees, to issue the Stockholders' Committee Letter of
Credit and the First Chicago Letter of Credit on the Closing Date (although such
Letters of Credit may be dated prior to the Closing Date). Upon the terms and
subject to the conditions of this Agreement, the Agent agrees to issue Revolving
Commitment Letters of Credit for the account of the Borrowers from time to time
between the Closing Date and the Termination Date in such amounts as Omega, on
behalf of the Borrowers, shall request up to an aggregate amount at any time
outstanding not exceeding $2,000,000; provided that no Revolving Commitment
Letter of Credit will be issued in any amount which, after giving effect to such
issuance, would cause Total Revolving Outstandings to exceed the Aggregate
Revolving Commitment Amounts.
Section 2.9 Procedures for Letters of Credit. Each request for a
--------------------------------
Revolving Commitment Letter of Credit (other than the First Chicago Letter of
Credit) shall be made by Omega on behalf of the Borrowers in writing, by telex,
facsimile transmission or electronic conveyance received by the Agent by 2:00
p.m., Minneapolis time, on a Business Day which is not less than two Business
Days prior to the requested date of issuance (which shall also be a Business
Day). Each request for a Letter of Credit shall be deemed a representation by
the Borrowers that on the date of issuance of such Letter of Credit and after
giving effect thereto the applicable conditions specified in Article III (with
respect to any Letter of Credit issued on the Closing Date) or Section 3.2 (with
respect to any Letter of Credit issued after the Closing Date) have been and
will be satisfied. The Agent may require that such request be made on such
letter of credit application and reimbursement agreement form as the Agent may
from time to time specify, along with satisfactory evidence of the authority and
incumbency of the officials of Omega making such request. The Agent shall
promptly notify the other Banks of the receipt of the request and the matters
specified therein. On the date of each issuance of a Revolving Commitment
Letter of Credit the Agent shall send notice to the other Banks of such
issuance.
Section 2.10 Terms of Letters of Credit. Revolving Commitment
--------------------------
Letters of Credit shall be issued in support of obligations of any Borrower
incurred in the ordinary course of their respective businesses. All Letters of
Credit must expire not later than the Business Day
-28-
preceding the Revolving Commitment Ending Date. No Letter of Credit may have a
term longer than 12 months.
Section 2.11 Agreement to Repay Letter of Credit Drawings. If the
--------------------------------------------
Agent has received documents purporting to draw under a Letter of Credit that
the Agent believes conform to the requirements of the Letter of Credit, or if
the Agent has decided that it will comply with Omega's written or oral request
or authorization on behalf of the Borrowers to pay a drawing on any Letter of
Credit that the Agent does not believe conforms to the requirements of the
Letter of Credit, it will notify Omega of that fact. The Borrowers shall
reimburse the Agent by 10:00 a.m. (Minneapolis time) on the day on which such
drawing is to be paid in Immediately Available Funds in an amount equal to the
amount of such drawing. Any amount by which the Borrowers have failed to
reimburse the Agent for the full amount of such drawing by 11:00 a.m. on the
date on which the Agent in its notice indicated that it would pay such drawing,
until reimbursed from the proceeds of Loans pursuant to Section 2.14 or out of
funds available in the Holding Account, is an "Unpaid Drawing."
Section 2.12 Obligations Absolute. The obligations of the Borrowers
--------------------
under Section 2.11 to repay the Agent for any amount drawn on any Letter of
Credit and to repay the Banks for any Revolving Loans or Term Loans made under
Section 2.14 to cover Unpaid Drawings shall be absolute, unconditional and
irrevocable, shall continue for so long as any Letter of Credit is outstanding
notwithstanding any termination of this Agreement, and shall be paid strictly in
accordance with the terms of this Agreement, under all circumstances whatsoever,
including without limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, setoff, defense or other right which
any Borrower may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom any
such beneficiary, transferee or holder may be acting), the Agent or any
Bank or any other Person, whether in connection with a Letter of Credit,
this Agreement, the transactions contemplated hereby, or any unrelated
transaction; or
(c) Any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever.
Neither the Agent nor any Bank nor officers, directors or employees of any
thereof shall be liable or responsible for, and the obligations of the Borrowers
to the Agent and the Banks shall not be impaired by:
(i) The use which may be made of any Letter of Credit or for any acts
or omissions of any beneficiary, transferee or holder thereof in connection
therewith;
-29-
(ii) The validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents or endorsements should, in
fact, prove to be in any or all respects invalid, insufficient, fraudulent
or forged;
(iii) The acceptance by the Agent of documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; or
(iv) Any other action of the Agent in making or failing to make
payment under any Letter of Credit if in good faith and in conformity with
U.S. or foreign laws, regulations or customs applicable thereto.
Notwithstanding the foregoing, each Borrower shall have a claim against the
Agent, and the Agent shall be liable to such Borrower, to the extent, but only
to the extent, of any direct, as opposed to consequential, damages suffered by
such Borrower which such Borrower proves were caused by the Agent's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms thereof.
Section 2.13 Increased Cost for Letters of Credit. If any Regulatory
------------------------------------
Change shall either (a) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by the
Agent or any Bank's obligation to make Advances to cover Unpaid Drawings, or (b)
shall impose on any Bank any other conditions affecting this Agreement or any
Letter of Credit; and the result of any of the foregoing is to increase the cost
to the Agent or any Bank of issuing or maintaining any Letter of Credit or such
Bank's obligation to make Advances to cover Unpaid Drawings, or reduce the
amount of any sum received or receivable by the Agent or any Bank hereunder,
then, upon demand (which demand shall be given by the Agent or Bank affected by
such increased cost or reduction promptly after it determines such increased
cost or reduction) to Omega, on behalf of the Borrowers, by the Agent or such
Bank, the Borrowers shall pay to the Agent or such Bank the additional amount or
amounts as will compensate the Agent or such Bank for such increased cost or
reduction. A certificate of the Agent or a Bank claiming compensation under
this Section, setting forth the additional amount or amounts to be paid to it
hereunder and stating in reasonable detail the basis for the charge and the
method of computation, shall be conclusive in the absence of manifest error. In
determining such amount, the Agent or Bank shall use reasonable averaging and
attribution methods. Failure on the part of the Agent or a Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable with respect to any period shall not constitute a waiver of the
Agent's or that Bank's rights to demand compensation for any increased costs or
reduction in amounts received or receivable in any subsequent period (subject to
the limitation contained in the third preceding sentence). No Bank shall be
entitled to compensation otherwise payable under this Section 2.13 for any
period more than six months prior to the date on which the Bank first notifies
Omega of the change resulting in the increased cost.
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Section 2.14 Loans to Cover Unpaid Drawings. Whenever any Unpaid
------------------------------
Drawing exists for which there are not then funds in the Holding Account to
cover the same, the Agent shall give the other Banks notice to that effect,
specifying the amount thereof, in which event: (i) in the case of a Revolving
Commitment Unpaid Drawing, each Bank is authorized (and the Borrowers do hereby
so authorize each Bank) to, and shall, make a Revolving Loan (as a Base Rate
Advance) to the Borrowers in an amount equal to such Bank's Revolving Percentage
of the amount of the Revolving Commitment Unpaid Drawing; and (ii) in the case
of an Unpaid Drawing under the Stockholders' Committee Letter of Credit, each
Bank is authorized (and the Borrowers do hereby so authorize each Bank) to, and
shall, make an Advance under its Term Loan (as a Base Rate Advance) to the
Borrowers in an amount equal to such Bank's Term Loan Percentage of the amount
of the Unpaid Drawing under the Stockholders' Committee Letter of Credit. The
Agent shall notify each Bank by 11:00 a.m. (Minneapolis time) on the date an
Unpaid Drawing occurs of the amount of the Revolving Loan or the Advance under
the Term Loan to be made by such Bank. Notices received after such time shall
be deemed to have been received on the next Business Day. Each Bank shall then
make such Revolving Loan or Advance under the Term Loan (regardless of
noncompliance with the applicable conditions precedent specified in Article III
hereof and regardless of whether an Event of Default then exists) and each Bank
shall provide the Agent with the proceeds of such Revolving Loan or Advance
under the Term Loan in Immediately Available Funds, at the office of the Agent,
not later than 2:00 p.m. (Minneapolis time) on the day on which such Bank
received such notice (or, in the case of notices received after 11:00 a.m.,
Minneapolis time, is deemed to have received such notice). The Agent shall
apply the proceeds of such Revolving Loans or Advances under the Term Loans
directly to reimburse itself for such Unpaid Drawing. If any portion of any
such amount paid to the Agent should be recovered by or on behalf of any
Borrower from the Agent in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared between and among the Banks in the manner contemplated by Section 8.11
hereof. If at the time the Banks make funds available to the Agent pursuant to
the provisions of this Section, a Default or Event of Default shall exist, the
Borrowers shall pay to the Agent for the account of the Banks interest on the
funds so advanced at the Default Rate. If for any reason any Bank is unable to
make a Revolving Loan or an Advance under its Term Loan to the Borrowers to
reimburse the Agent for an Unpaid Drawing, then such Bank shall immediately
purchase from the Agent a risk participation in such Unpaid Drawing, at par, in
an amount equal to: (x) such Bank's Revolving Percentage of the Unpaid Drawing
if it is a Revolving Commitment Unpaid Drawing; or (y) such Bank's Term Loan
Percentage of the Unpaid Drawing if it was under the Stockholders' Committee
Letter of Credit. In consideration of and in furtherance of the foregoing, each
Bank hereby unconditionally and absolutely agrees to pay to the Agent, for the
Agent's own account, such Bank's Revolving Percentage or Term Loan Percentage,
as appropriate, of each Unpaid Drawing (before deducting the amount of any
Revolving Loans or Advances under the Term Loans made by other Banks to
reimburse the Agent for such Unpaid Drawing). The Agent shall promptly notify
each Bank that is unable to make a Revolving Loan or an Advance under the Term
Loan to reimburse the Agent for an Unpaid Drawing of that Bank's Revolving
Percentage or Term Loan Percentage, as appropriate,
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of such Unpaid Drawing. Each Bank shall pay to the Agent, not later than 2:00
P.M. (Minneapolis time) on the date it receives such notice, such Bank's
Revolving Percentage or Term Loan Percentage, as appropriate, of such Unpaid
Drawing.
Section 2.15 Letter of Credit Fees. For each Letter of Credit
---------------------
issued, the Borrowers shall pay to the Agent for the account of the Banks, in
advance payable on the date of issuance, a fee (a "Letter of Credit Fee") in an
amount: (x) determined by applying a per annum rate equal to the Applicable
Margin for Eurodollar Rate Advances as of the date of issuance to the original
face amount of any Standby Letter of Credit for the period from the date of
issuance to the scheduled expiration date of such Standby Letter of Credit, and
(y) determined by applying a per annum rate equal to the standard and customary
rates charged by the Agent for similar letters of credit to the original face
amount of any Documentary Letter of Credit for the period from the date of
issuance to the scheduled expiration date of such Documentary Letter of Credit.
In addition to the Letter of Credit Fee, the Borrowers shall pay to the Agent,
for its own account on demand, all issuance, amendment, drawing and other fees
regularly charged by the Agent to its letter of credit customers and all out-of-
pocket expenses incurred by the Agent in connection with the issuance,
amendment, administration or payment of any Letter of Credit.
Part C - General
----------------
Section 2.16 Optional Reduction of Revolving Commitment Amounts or
-----------------------------------------------------
Termination of Revolving Commitments. The Borrowers may, at any time, upon not
------------------------------------
less than five Business Days prior written notice from Omega, on behalf of the
Borrowers, to the Agent, reduce the Revolving Commitment Amounts, ratably, with
any such reduction in a minimum aggregate amount for all the Banks of
$1,000,000, or, if more, in an integral multiple of $250,000 in excess thereof;
provided, however, that the Borrowers may not at any time reduce the Aggregate
-------- -------
Revolving Commitment Amounts below the Total Revolving Outstandings. The
Borrowers may, at any time when no Letters of Credit are outstanding, upon not
less than five Business Days prior written notice from Omega, on behalf of the
Borrowers, to the Agent, terminate the Revolving Commitments in their entirety.
Upon termination of the Revolving Commitments pursuant to this Section, the
Borrowers shall pay to the Agent for the account of the Banks the full amount of
all outstanding Advances, all accrued and unpaid interest thereon, all unpaid
Revolving Commitment Fees accrued to the date of such termination, any
indemnities payable with respect to Advances pursuant to Section 2.25 and all
other unpaid obligations of the Borrowers to the Agent and the Banks hereunder.
Section 2.17 Revolving Commitment, Agent's and Arrangement Fees.
--------------------------------------------------
(a) The Borrowers shall pay to the Agent for the account of each Bank
fees (the "Revolving Commitment Fees") in an amount determined by applying
a rate of one half of one percent (0.5%) per annum to the average daily
Unused Revolving Commitment of such Bank for the period from the Closing
Date to the Termination Date. Such
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Revolving Commitment Fees are payable quarterly in arrears, on the days
principal payments are scheduled on the Term Loans, and on the Termination
Date.
(b) Commencing on the first anniversary of the Closing Date, the
Borrowers shall pay to the Agent, for the Agent's own account, a yearly
agent's fee in the amount provided in a side letter dated April 28, 1997
from the Agent to Omega Merger Corp. The agent's fee shall be payable
quarterly in advance, on days principal payments are scheduled on the Term
Loans. No Bank (other than the Agent) shall be entitled to any portion of
such agent's fee.
(c) On the Closing Date, the Borrowers shall pay to the Agent, for
the Agent's own account, an arrangement fee in the amounts provided in a
side letter dated April 28, 1997 from the Agent to Omega Merger Corp. No
Bank (other than the Agent) shall be entitled to any portion of those fees,
except as provided by separate written agreement between such Bank and the
Agent.
Section 2.18 Computation. Revolving Commitment Fees and Letter of
-----------
Credit Fees and interest on Revolving Loans and Term Loans shall be computed on
the basis of actual days elapsed (or, in the case of Letter of Credit Fees which
are paid in advance, actual days to elapse) and a year of 360 days.
Section 2.19 Payments. Payments and prepayments of principal of, and
--------
interest on, the Notes and all fees, expenses and other obligations under this
Agreement payable to the Agent or the Banks shall be made without setoff or
counterclaim in Immediately Available Funds not later than 12:00 noon
(Minneapolis time) on the dates called for under this Agreement and the Notes to
the Agent at its main office in Minneapolis, Minnesota. Funds received after
such time shall be deemed to have been received on the next Business Day. The
Agent will promptly distribute in like funds to each Bank its ratable share of
each such payment of principal, interest, Revolving Commitment Fees and Letter
of Credit Fees received, by the Agent for the account of the Banks. Whenever
any payment to be made hereunder or on the Notes shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time, in the case of a payment of
principal, shall be included in the computation of any interest on such
principal payment.
Section 2.20 Use of Loan Proceeds. The proceeds of the Initial Term
--------------------
Loans and the initial Revolving Loans shall be used to pay certain existing
Indebtedness of the Borrowers, as described on Exhibit 2.20, Section 1. The
proceeds of the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents, the West Street
Subordinated Bridge Loan Documents and certain equity contributions shall be
used to pay, or to pay dividends to Holdings to enable it to pay, the remaining
Indebtedness described on Exhibit 2.20, Section 2 and to pay the "Estimated
Closing Payment" (as defined in the Merger Plan) and certain related transaction
fees and expenses. The payments described in the two preceding sentences shall
be made on the Closing Date. The
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proceeds of any subsequent Revolving Loans shall be used for the Borrowers'
general business purposes in a manner not in conflict with any of the Borrowers'
covenants in this Agreement.
Section 2.21 Adjusted Eurodollar Rate Not Ascertainable, Etc. If, on
-----------------------------------------------
or prior to the date for determining the Adjusted Eurodollar Rate in respect of
the Interest Period for any Eurodollar Rate Advance, any Bank determines (which
determination shall be conclusive and binding, absent error) that:
(a) deposits in dollars (in the applicable amount) are not being made
available to such Bank in the relevant market for such Interest Period, or
(b) the Adjusted Eurodollar Rate will not adequately and fairly
reflect the cost to such Bank of funding or maintaining Eurodollar Rate
Advances for such Interest Period,
such Bank shall forthwith give written notice to Omega, on behalf of the
Borrowers, and the other Banks specifying the facts giving rise to such
determination, whereupon the obligation of such Bank to make or continue, or to
convert any Advances to, Eurodollar Rate Advances shall be suspended until such
Bank notifies Omega, on behalf of the Borrowers, and the Agent that the
circumstances giving rise to such suspension no longer exist. While any such
suspension continues, all further Advances by such Bank shall be made as Base
Rate Advances. No such suspension shall affect the interest rate then in effect
during the applicable Interest Period for any Eurodollar Rate Advance
Outstanding at the time such suspension is imposed.
Section 2.22 Increased Cost. If any Regulatory Change:
--------------
(a) shall subject any Bank (or its Applicable Lending Office) to any
tax, duty or other charge with respect to its Eurodollar Rate Advances, its
Notes or its obligation to make Eurodollar Rate Advances or shall change
the basis of taxation of payment to any Bank (or its Applicable Lending
Office) of the principal of or interest on its Eurodollar Rate Advances or
any other amounts due under this Agreement in respect of its Eurodollar
Rate Advances or its obligation to make Eurodollar Rate Advances (except
for changes in the rate of tax on the overall net income of such Bank or
its Applicable Lending Office imposed by the jurisdiction in which such
Bank's principal office or Applicable Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board, but excluding with respect to any
Eurodollar Rate Advance any such requirement to the extent included in
calculating the applicable Adjusted Eurodollar Rate) against assets of,
deposits with or for the account of, or credit extended by, any Bank's
Applicable Lending Office or shall impose on any Bank (or its Applicable
Lending Office) or the interbank Eurodollar market any other condition
affecting its Eurodollar Rate Advances, its Notes or its obligation to make
Eurodollar Rate Advances;
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and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Eurodollar Rate
Advance, or to reduce the amount of any sum received or receivable by such Bank
(or its Applicable Lending Office) under this Agreement or under its Notes,
then, within 30 days after written demand by such Bank (with a copy to the
Agent), the Borrowers shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or reduction. Each Bank
will promptly notify Omega, on behalf of the Borrowers, and the Agent in writing
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section, setting forth the
additional amount or amounts to be paid to it hereunder and stating in
reasonable detail the basis for the charge and the method of computation, shall
be conclusive in the absence of error. In determining such amount, any Bank may
use any reasonable averaging and attribution methods. Failure on the part of
any Bank to demand compensation for any increased costs or reduction in amounts
received or receivable with respect to any Interest Period shall not constitute
a waiver of such Bank's rights to demand compensation for any increased costs or
reduction in amounts received or receivable in any subsequent Interest Period.
No Bank shall be entitled to compensation otherwise payable under this Section
2.22 for any period more than six months prior to the date on which the Bank
first notifies Omega, on behalf of the Borrowers, of the change resulting in the
increased cost.
Section 2.23 Illegality. If any Regulatory Change shall make it
----------
unlawful or impossible for any Bank to make, maintain or fund any Eurodollar
Rate Advances, such Bank shall notify Omega, on behalf of the Borrowers, and the
Agent in writing, whereupon the obligation of such Bank to make or continue, or
to convert any Advances to, Eurodollar Rate Advances shall be suspended until
such Bank notifies Omega, on behalf of the Borrowers, and the Agent that the
circumstances giving rise to such suspension no longer exist. Before giving any
such notice, such Bank shall designate a different Applicable Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank
determines that it may not lawfully continue to maintain any Eurodollar Rate
Advances to the end of the applicable Interest Periods, all of the affected
Advances shall be automatically converted to Base Rate Advances as of the date
of such Bank's notice, and upon such conversion the Borrowers shall indemnify
such Bank in accordance with Section 2.23.
Section 2.24 Capital Adequacy. In the event that any Regulatory
----------------
Change reduces or shall have the effect of reducing the rate of return on any
Bank's capital or the capital of its parent corporation (by an amount such Bank
deems material) as a consequence of its Commitments and/or its Loans and/or any
Letters of Credit or any Bank's obligations to make Advances to cover Letters of
Credit to a level below that which such Bank or its parent corporation could
have achieved but for such Regulatory Change (taking into account such
-35-
Bank's policies and the policies of its parent corporation with respect to
capital adequacy), then the Borrowers shall, within 30 days after written notice
and demand to Omega, on behalf of the Borrowers, from such Bank (with a copy to
the Agent), pay to such Bank additional amounts sufficient to compensate such
Bank or its parent corporation for such reduction. Any determination by such
Bank under this Section and any certificate as to the amount of such reduction
that states in reasonable detail the basis for the amount requested and the
method of computation of such amount that is given to Omega, on behalf of the
Borrowers, by such Bank shall be final, conclusive and binding for all purposes,
absent error. No Bank shall be entitled to compensation otherwise payable under
this Section 2.24 for any period more than six months prior to the date on which
the Bank first notifies Omega, on behalf of the Borrowers, of the change
resulting in the reduced rate of return.
Section 2.25 Funding Losses; Eurodollar Rate Advances. The Borrowers
-------------- ------------------------
shall compensate each Bank, upon its written request to Omega, on behalf of the
Borrowers, for all losses, expenses and liabilities (including any interest paid
by such Bank to lenders of funds borrowed by it to make or carry Eurodollar Rate
Advances to the extent not recovered by such Bank in connection with the re-
employment of such funds and including loss of anticipated profits) which such
Bank may sustain: (i) if for any reason, other than a default by such Bank, a
funding of a Eurodollar Rate Advance does not occur on the date specified
therefor in Omega's request or notice as to such Advance under Section 2.2 or
2.4, or (ii) if, for whatever reason (including, but not limited to,
acceleration of the maturity of Advances following an Event of Default), any
repayment of a Eurodollar Rate Advance, or a conversion pursuant to Section
2.23, occurs on any day other than the last day of the Interest Period
applicable thereto. A Bank's written request for compensation shall set forth
the basis for the amount requested and the method of computation and shall be
final, conclusive and binding, absent error.
Section 2.26 Discretion of Banks as to Manner of Funding. Each Bank
-------------------------------------------
shall be entitled to fund and maintain its funding of Eurodollar Rate Advances
in any manner it may elect, it being understood, however, that for the purposes
of this Agreement all determinations hereunder (including, but not limited to,
determinations under Section 2.25) shall be made as if such Bank had actually
funded and maintained each Eurodollar Rate Advances during the Interest Period
for such Advance through the purchase of deposits having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period.
Section 2.27 Withholding Taxes.
-----------------
(a) Banks to Submit Forms. Each Bank represents to the Borrowers and
---------------------
the Agent that, as of the date it becomes a Bank and at all times
thereafter, it is either (i) a corporation organized under the laws of the
United States or any State thereof or (ii) entitled to complete exemption
from United States withholding tax imposed on or with respect to any
payments, including fees, to be made pursuant to this Agreement (x) under
an applicable provision of a tax convention to which the United States is a
party or (y)
-36-
because it is acting through a branch, agency or office in the United
States and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States. Each Bank that is
not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) shall submit to the Borrowers and the Agent, on or before the
later of the Closing Date or the day on which such Bank becomes a Bank,
duly completed and signed copies of either Form 1001 (relating to such Bank
and entitling it to a complete exemption from withholding on all payments
to be received by such Bank hereunder) or Form 4224 (relating to all
payments to be received by such Bank hereunder) of the United States
Internal Revenue Service. Thereafter and from time to time, each such Bank
shall submit to the Borrowers and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor
Forms as shall be adopted from time to time by the relevant United States
taxing authorities) as may be (i) reasonably requested by the Borrowers or
the Agent and (ii) required and permitted under then-current United States
law or regulations to avoid United States withholding taxes on payments in
respect of all payments to be received by such Bank hereunder. Upon the
request of the Borrowers or the Agent, each Bank that is a United States
person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrowers and the Agent a certificate in such form as is
reasonably satisfactory to the Borrowers and the Agent to the effect that
it is such a United States person.
(b) Inability of a Bank. If any Bank that is not a United States
-------------------
person (as such term is defined in Section 7701(a)(30) of the Code)
determines that, as a result of any Regulatory Change, the Borrowers are
required by law or regulation to make any deduction, withholding or backup
withholding of any taxes, levies, imposts, duties, fees, liabilities or
similar charges of the United States of America, any possession or
territory of the United States of America (including the Commonwealth of
Puerto Rico) or any area subject to the jurisdiction of the United States
of America ("U.S. Taxes") from any payments to a Bank pursuant to any Loan
----------
Document in respect of the Obligations payable to such Bank then or
thereafter outstanding, the amount payable will be increased to the amount
which, after deduction from such increased amount of all U.S. Taxes
required to be withheld or deducted therefrom, will yield the amount
required under any Loan Document to be paid with respect thereto; provided,
--------
that the Borrowers shall not be required to pay any additional amount
pursuant to this Section 2.27(b) to any Bank (i) that is not, either on the
date this Agreement is executed by such Bank or on the date such Bank
becomes such under Section 9.6(c), either (x) entitled to submit Form 1001
(relating to such Bank and entitling it to a complete exemption from
withholding on all payments to be received by such Bank hereunder) or Form
4224 (relating to all payments to be received by such Bank hereunder) or
(y) a United States person (as such term is defined in Section 7701(a)(30)
of the Code), or (ii) that has failed to submit any form or certificate
that it was required to file pursuant to subsection (a) and entitled to
file under applicable law or (iii) arising from such Bank's failure to
comply with any certification, identification or other similar requirement
under United States income tax laws or regulations (including backup
withholding) to establish entitlement to exemption from
-37-
such U.S. Taxes; and provided, further, that if a Bank, as a result of any
-------- -------
amount paid by the Borrowers to such Bank pursuant to this Section 2.27,
shall realize a tax credit or refund, which tax credit or refund would not
have been realized but for the Borrowers' payment of such amount, such Bank
shall pay to the Borrowers an amount equal to such tax credit or refund.
Each Bank may determine the portion, if any, of any tax credit or refund
attributable to the Borrowers' payments using such attribution and
accounting methods as such Bank reasonably selects, and such Bank's
determination of the portion of any tax credit or refund attributable to
the Borrowers' payments shall be conclusive in the absence of manifest
error. The obligation of the Borrowers under this Section 2.27(b) shall
survive the payment in full of the Obligations and the termination of the
Commitments of such Bank.
(c) Substitution of Bank. In the event the Borrowers are required
--------------------
pursuant to this Section 2.27 to pay any additional amount to any Bank,
such Bank shall, if no Event of Default has occurred and is continuing,
upon the request of the Borrowers to such Bank and the Agent, assign,
pursuant to and in accordance with the provisions of Section 9.6, all of
its rights and obligations under this Agreement and under the Notes to
another Bank or an Assignee selected by the Borrowers and reasonably
satisfactory to the Agent, in consideration for (i) the payment by such
assignee to the assigning Bank of the principal of, and interest accrued
and unpaid to the date of such assignment on, the Note or Notes of such
Bank, (ii) the payment by the Borrowers to the assigning Bank of any and
all other amounts owing to such Bank under any provision of this Agreement
accrued and unpaid to the date of such assignment and (iii) the Borrowers'
release of the assigning Bank from any further obligation or liability
under this Agreement. Notwithstanding anything to the contrary in this
Section 2.27(c), in no event shall the replacement of any Bank result in a
decrease in the aggregate Commitments without the written consent of the
Majority Banks.
ARTICLE III
-----------
CONDITIONS PRECEDENT
Section 3.1 Conditions of Initial Transaction. The making of the
---------------------------------
Initial Term Loans and the initial Revolving Loans and the issuance of the
initial Letter of Credit shall be subject to the prior or simultaneous
fulfillment of the following conditions:
3.1(a) Documents. The Agent shall have received the following
---------
in sufficient counterparts (except for the Notes) for each Bank:
(i) A Revolving Note and a Term Note drawn to the order of each
Bank executed by a duly authorized officer (or officers) of each Borrower
and dated the Closing Date.
-38-
(ii) A Security Agreement, the Omega Pledge Agreement, the Omega
Collateral Assignment, the Omega Indemnification Agreement and the Iowa
Mortgage, each executed by a duly authorized officer (or officers) of Omega
and dated the Closing Date, together with the certificates evidencing the
stock of Omega's Subsidiaries to be pledged under the Omega Pledge
Agreement and executed stock powers with respect thereto.
(iii) The Holdings Guaranty and the Holdings Pledge Agreement, each
executed by a duly authorized officer (or officers) of Holdings and dated
the Closing Date, together with the certificates evidencing the stock of
the Borrower to be pledged under the Holdings Pledge Agreement and executed
stock powers with respect thereto.
(iv) A Security Agreement from each of HomeCrest and Panther, each
executed by a duly authorized officer (or officers) of HomeCrest or
Panther, as appropriate, and the HomeCrest Collateral Assignment, the
HomeCrest Indemnification Agreement, the Indiana Mortgage and the Tennessee
Mortgage, each executed by a duly authorized officer (or officers) of
HomeCrest.
(v) Copies of the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents, the
Merger Agreements and the West Street Subordinated Bridge Loan Documents,
each in form and substance satisfactory to the Agent and the Majority Banks
and certified as true and correct copies and in full force and effect by a
duly authorized officer of each of Holdings and Omega, together with such
evidence as the Agent or the Majority Banks may request that all
conditions precedent to the effectiveness of such agreements and documents
have been satisfied or waived or will be satisfied on the Closing Date, and
that the transactions contemplated thereby will be consummated
contemporaneously with or before the making of the first Loans.
(vi) The Solvency Opinion, executed by a duly authorized officer of
American Appraisal Associates, Inc. and dated the Closing Date.
(vii) A marked up, initialed commitment for a current ALTA form loan
title insurance policy from First American Title Insurance Company: (1) in
the amount of $7,500,000, dated the Closing Date, in form and substance
reasonably acceptable to the Agent and the Majority Banks, covering the
Indiana Facility, (2) in the amount of $12,000,000, dated the Closing Date,
in form and substance reasonably acceptable to the Agent and the Majority
Banks, covering the Iowa Facility, and (3) in the amount of $4,500,000,
dated the Closing Date, in form and substance reasonably acceptable to the
Agent and the Majority Banks, covering the Tennessee Facility, each of
which must include future advances and comprehensive endorsements (to the
extent available in the relevant state), among others, and delete all
standard exceptions, including but not limited to the survey exception
(except that the commitment for the Iowa Facility may contain an exception
for mechanics' liens in connection with certain pending construction at the
Iowa Facility).
-39-
(viii) A current, certified "as built" ALTA/ACSM survey of each of
the Indiana, Iowa and Tennessee Facilities, in form and substance, and by
surveyors, reasonably acceptable to the Agent and the Majority Banks.
(ix) A written environmental review, audit, assessment or report
("Environmental Audit"), in form and substance reasonably acceptable to the
Banks, by ICF-▇▇▇▇▇▇ Engineers, Inc, setting forth the results of an
investigation of each of the Indiana, Iowa and Tennessee Facilities
according to a scope of work previously provided to counsel for the Agent.
(x) A letter from an appropriate municipal officer regarding zoning
and building code compliance with respect to each of the Indiana, Iowa and
Tennessee Facilities.
(xi) Certificates demonstrating the existence of policies: (x) of
all-risk property insurance with respect to each of the Indiana, Iowa and
Tennessee Facilities, in the amount of the full replacement cost of each of
the Indiana, Iowa and Tennessee Facilities, naming the Agent, for the
benefit of the Banks, as mortgagee; (y) of public liability insurance with
respect to occurrences at each of the Indiana, Iowa and Tennessee
Facilities, providing coverage of at least $5,000,000 per occurrence,
naming the Banks as additional insureds; each such policy to be in form and
substance and issued by an insurance company acceptable to the Agent and
the Majority Banks; and (z) providing all coverage required by Section 5.3
hereof.
(xii) Evidence satisfactory to the Agent and the Majority Banks that
each of the Indiana, Iowa and Tennessee Facilities is not in a flood plain,
or flood insurance.
(xiii) A copy of the corporate resolution of Omega authorizing the
execution, delivery and performance of the Borrower Loan Documents to be
executed by Omega and the West Street Subordinated Bridge Loan Documents,
certified as of the Closing Date by the Secretary or an Assistant Secretary
of the Borrower.
(xiv) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of Omega authorized to execute the
Borrower Loan Documents to be executed by Omega, to request Loans, Letters
of Credit and conversions and continuations of Advances hereunder, and to
execute the West Street Subordinated Bridge Loan Documents, certified as of
the Closing Date by the Secretary or an Assistant Secretary of Omega.
(xv) A copy of the Certificate or Articles of Incorporation for each
Borrower and Holdings, with all amendments thereto, certified by the
appropriate governmental official of the jurisdiction of its incorporation
as of a date not more than 20 days prior to the Closing Date.
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(xvi) A copy of the bylaws of each Borrower and Holdings, certified
as of the Closing Date by the Secretary or an Assistant Secretary of the
relevant Borrower or Holdings.
(xvii) A copy of the corporate resolution of Holdings authorizing
the execution, delivery and performance of the Holdings Documents, the
▇▇▇▇▇▇ Subordinated Bridge Loan Documents and the Merger Agreements,
certified as of the Closing Date by the Secretary or an Assistant Secretary
of Holdings.
(xviii) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of Holdings authorized to execute
the Holdings Documents, the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents and
the Merger Agreements, certified as of the Closing Date by the Secretary or
an Assistant Secretary of Holdings.
(xix) A copy of the corporate resolutions of each of HomeCrest and
Panther authorizing the execution, delivery and performance of the Borrower
Loan Documents to be executed by that Borrower certified as of the Closing
Date by the Secretary or an Assistant Secretary of that Borrower.
(xx) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of each of HomeCrest and Panther
authorized to execute the Borrower Loan Documents to be executed by that
Borrower, certified as of the Closing Date by the Secretary or an Assistant
Secretary of that Borrower.
(xxi) A certificate of good standing for Omega in the States of
Delaware and Iowa, certified by the appropriate governmental officials as
of a date not more than 20 days prior to the Closing Date.
(xxii) A certificate of good standing for Holdings in the State of
Delaware, certified by the appropriate governmental officials as of a date
not more than 20 days prior to the Closing Date.
(xxiii) A certificate of good standing for HomeCrest in the States of
Delaware, Indiana, New Jersey, North Carolina and Tennessee, certified by
the appropriate governmental officials as of a date not more than 20 days
prior to the Closing Date.
(xxiv) A certificate of good standing for Panther in the States of
Iowa, California, Illinois, Minnesota, Ohio and Pennsylvania, certified by
the appropriate governmental officials as of a date not more than 20 days
prior to the Closing Date.
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(xxv) A certificate dated the Closing Date of the chief executive
officer or chief financial officer of each Borrower certifying as to the
matters set forth in Sections 3.2(a) and 3.2(b) below.
(xxvi) A payoff letter, duly executed by each lender listed on
Exhibit 2.20, stating that upon receipt of a specified amount, all
Indebtedness outstanding under the documents between such lender and the
Borrower or Borrowers that are obligated to such lender shall be paid in
full and such documents shall be terminated, together with the documents
necessary to terminate all Liens in favor of such lender and instructions
from the Borrowers to transfer an amount of Loan proceeds and proceeds of
the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents and West Street Subordinated
Bridge Loan Documents in an amount equal to the amount specified in each
such payoff letter to each such lender, together with evidence satisfactory
to the Agent that such transfers are being paid.
(xxvii) A certificate of the Chief Financial Officer of Omega in the
form of Exhibit 1.1-5 attached hereto (the "Officer's Certificate").
(xxviii) A copy of Omega's employment contract with its chief
executive officer, certified as true, correct and complete by Omega's
secretary or assistant secretary.
(xxix) Copies of the Stockholders' Agreement and those Put
Agreements dated as of the Closing Date between Holdings and Messrs. ▇▇▇▇▇
and Key, as executed, certified as true, correct and complete by an officer
of Holdings.
3.1(b) Opinion. The Borrowers shall have: (i) requested each of
-------
Ropes & ▇▇▇▇, special counsel to the Borrowers and Holdings, Nyemaster,
Goode, McLaughlin, special Iowa counsel to the Banks, Voigts, West, Hansel
& O'Brien, Tuke, ▇▇▇▇ & ▇▇▇▇▇▇▇ and Wooden & ▇▇▇▇▇▇▇▇▇▇ to prepare a
written opinion, each addressed to the Banks and dated the Closing Date, in
form and substance satisfactory to the Agent, and each such opinion shall
have been delivered to the Agent in sufficient counterparts for each Bank;
and (ii) delivered a written opinion, in form and substance and from
counsel satisfactory to the Majority Banks, addressed to the Banks and
dated the Closing Date, to the effect that the ▇▇▇▇▇▇ Subordinated Bridge
Loan Documents and the West Street Subordinated Bridge Loan Documents are
each duly authorized by, and constitute the legal, valid and binding
obligations of, each holder of Indebtedness evidenced thereby, enforceable
against such holders in accordance with their terms, and such opinions
shall have been delivered to the Agent in sufficient counterparts for each
Bank.
3.1(c) Compliance. The Borrowers shall have performed and
----------
complied with all agreements, terms and conditions contained in this
Agreement required to be performed or complied with by the Borrowers prior
to or simultaneously with the Closing Date.
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3.1(d) Security Documents. All Security Documents (or financing
------------------
statements with respect thereto) shall have been appropriately filed or
recorded to the satisfaction of the Agent; any pledged collateral and
certificates of title shall have been duly delivered to the Agent; any
title insurance required by the Agent (with endorsements required by the
Agent) shall have been obtained and be satisfactory to the Agent; and the
priority and perfection of the Liens created by the Security Documents
shall have been established to the satisfaction of the Agent and its
counsel.
3.1(e) Other Matters. All corporate and legal proceedings
-------------
relating to the Borrowers and Holdings and all instruments and agreements
in connection with the transactions contemplated by this Agreement shall be
satisfactory in scope, form and substance to the Agent, the Banks and the
Agent's special counsel, and the Agent shall have received all information
and copies of all documents, including records of corporate proceedings, as
any Bank or such special counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by
proper corporate or governmental authorities.
3.1(f) Fees and Expenses. The Agent shall have received for
-----------------
itself and for the account of the Banks all fees and other amounts due and
payable by the Borrowers on or prior to the Closing Date, including the
fees payable on the Closing Date pursuant to Section 2.17, the fees payable
under Section 2.15 with respect to each Letter of Credit to be issued on
the Closing Date, and the reasonable fees and expenses of counsel to the
Agent payable pursuant to Section 9.2.
Section 3.2 Conditions Precedent to all Loans and Letters of Credit.
-------------------------------------------------------
The obligation of the Banks to make any Loans hereunder (including the Initial
Term Loans and the initial Revolving Loans, but excluding any Loans to pay
Unpaid Drawings pursuant to Section 2.14) and of the Agent to issue each Letter
of Credit (including the initial Letter of Credit) shall be subject to the
fulfillment of the following conditions:
3.2(a) Representations and Warranties. The representations and
------------------------------
warranties contained in Article IV shall be true and correct in all
material respects on and as of the Closing Date and on the date of each
Revolving Loan or Term Loan or the date of issuance of each Letter of
Credit, with the same force and effect as if made on such date.
3.2(b) No Default. No Default or Event of Default shall have
----------
occurred and be continuing on the Closing Date, on the date of each
Revolving Loan or Term Loan or on the date of issuance of each Letter of
Credit or will exist after giving effect to the Loans made on such date or
the Letter of Credit so issued.
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3.2(c) Notices and Requests. The Agent shall have received
--------------------
Omega's request for such Loans as required under Section 2.2 or its
application for such Letters of Credit specified under Section 2.9.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make Loans
hereunder and to induce the Agent to issue Letters of Credit, the Borrowers
represent and warrant to the Banks:
Section 4.1 Organization, Standing, Etc. Each Borrower is a
---------------------------
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to issue the Notes and to perform its obligations
under the Borrower Loan Documents to be executed by it. Holdings is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted and to
perform its obligations under the Holdings Documents. Each of Holdings and the
Borrowers (a) holds all certificates of authority, licenses and permits
necessary to carry on its business as presently conducted in each jurisdiction
in which it is carrying on such business, except where the failure to hold such
certificates, licenses or permits would not have a Material Adverse Effect, and
(b) is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned, leased or operated
by it or the business conducted by it makes such qualification necessary and the
failure so to qualify would permanently preclude Holdings or such Borrower from
enforcing its rights with respect to any assets or expose Holdings or such
Borrower to any liability, which in any case would have a Material Adverse
Effect.
Section 4.2 Authorization and Validity. The execution, delivery and
--------------------------
performance by each Borrower of the Borrower Loan Documents to be executed by it
have been duly authorized by all necessary corporate action by that Borrower,
and this Agreement constitutes, and the Notes and other Borrower Loan Documents
to be executed by that Borrower when executed will constitute, the legal, valid
and binding obligations of that Borrower, enforceable against that Borrower in
accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and subject to
limitations on the availability of equitable remedies. The execution, delivery
and performance by Holdings of the Holdings Documents have been duly authorized
by all necessary corporate action by Holdings, and the Holdings Documents when
executed will constitute the legal, valid and binding obligations of Holdings,
enforceable against Holdings in accordance with their respective terms, subject
to limitations as to enforceability which might result from bankruptcy,
insolvency, moratorium and other similar
-44-
laws affecting creditors' rights generally and subject to limitations on the
availability of equitable remedies.
Section 4.3 No Conflict; No Default. The execution, delivery and
-----------------------
performance by each Borrower of the Borrower Loan Documents to be executed by it
will not (a) violate any provision of any law, statute, rule or regulation or
any order, writ, judgment, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to that Borrower, (b) violate or contravene any provision of the
Certificate or Articles of Incorporation or bylaws of that Borrower, or (c)
result in a breach of or constitute a default under any indenture, loan or
credit agreement or any other agreement, lease or instrument to which that
Borrower is a party or by which it or any of its properties may be bound or
result in the creation of any Lien thereunder (other than Liens securing the
Obligations). The execution, delivery and performance by Holdings of the
Holdings Documents will not (a) violate any provision of any law, statute, rule
or regulation or any order, writ, judgment, injunction, decree, determination or
award of any court, governmental agency or arbitrator presently in effect having
applicability to Holdings, (b) violate or contravene any provision of the
Certificate of Incorporation or bylaws of Holdings, or (c) result in a breach of
or constitute a default under any indenture, loan or credit agreement or any
other agreement, lease or instrument to which Holdings is a party or by which it
or any of its properties may be bound or result in the creation of any Lien
thereunder (other than Liens securing the Obligations). Neither Holdings nor
any Borrower is in default under or in violation of any such law, statute, rule
or regulation, order, writ, judgment, injunction, decree, determination or award
or any such indenture, loan or credit agreement or other agreement, lease or
instrument in any case in which the consequences of such default or violation
could have a Material Adverse Effect.
Section 4.4 Government Consent. No order, consent, approval,
------------------
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is required
on the part of Holdings or any Borrower to authorize, or is required in
connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, the Holdings Documents or the
Borrower Loan Documents, except for any necessary filing or recordation of or
with respect to any of the Security Documents.
Section 4.5 Financial Statements and Condition. Omega's audited
----------------------------------
consolidated financial statements as at December 28, 1996 and its unaudited
financial statements as at April 26, 1997, and Holdings' unaudited financial
statements as at April 26, 1997, as heretofore furnished to the Banks, have been
prepared in accordance with GAAP on a consistent basis (except for the absence
of footnotes and subject to year-end audit adjustments as to the interim
statements) and fairly present the financial condition of Holdings and the
Borrowers as at such dates and the results of their operations and changes in
financial position for the respective periods then ended. As of the dates of
such financial statements, neither Holdings nor any Borrower had any material
obligation, contingent liability, liability for taxes or long-term lease
obligation which is not reflected in such financial statements or in the notes
thereto. Since
-45-
December 28, 1996, there has been no Material Adverse Change. The projections
dated May 28, 1997 provided to the Banks are the Borrowers' good faith estimate,
as of the date on which they were prepared, of future performance of the
Borrowers, were prepared in good faith by the Borrowers and are based on good
faith estimates and assumptions of management of the Borrowers as of the date on
which they were prepared, which the Borrowers believe to have been reasonable at
the time such projections were prepared and as of the Closing Date, it being
recognized by the Agent and the Banks that such projections are not to be viewed
as facts and that actual results during the period covered by such projections
may differ from projected results.
Section 4.6 Litigation. There are no actions, suits or proceedings
----------
pending or, to the knowledge of the Borrowers, threatened against or affecting
Holdings or any Borrower or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which is reasonably likely to be determined adversely to
Holdings or a Borrower in a manner that would have a Material Adverse Effect or
a material adverse effect on the ability of Holdings or any Borrower to perform
its obligations under the Loan Documents.
Section 4.7 Environmental, Health and Safety Laws. There does not
-------------------------------------
exist any violation by Holdings or any Borrower of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on Holdings or a Borrower or which would require a material
expenditure by Holdings or a Borrower to cure. Neither Holdings nor any
Borrower has received any notice to the effect that any part of its operations
or properties is not in material compliance with any such law, rule, regulation
or order or notice that it or its property is the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to any
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
Section 4.8 ERISA. Each Plan is in substantial compliance with all
-----
applicable requirements of ERISA and the Code and with all material applicable
rulings and regulations issued under the provisions of ERISA and the Code
setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA. With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan and previously furnished in
writing to the Banks) of such Plan's projected benefit obligations did not
exceed the fair market value of such Plan's assets.
-46-
Section 4.9 Federal Reserve Regulations. Neither Holdings nor any
---------------------------
Borrower is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined in Regulation U of the Board). The value of all margin stock
owned by each Borrower does not constitute more than 25% of the value of the
assets of that Borrower.
Section 4.10 Title to Property; Leases; Liens; Subordination. Each
-----------------------------------------------
of Holdings and the Borrowers has (a) insurable title to its real properties and
(b) good and sufficient title to, or valid, subsisting and enforceable leasehold
interest in, its other material properties, including all material real
properties, other properties and assets, referred to as owned by Holdings and
the Borrowers in the most recent financial statements referred to in Section 4.5
(other than property disposed of since the date of such financial statements in
the ordinary course of business). None of such properties is subject to a Lien,
except as allowed under Section 6.14. No Borrower has subordinated any of its
rights under any obligation owing to it to the rights of any other person.
Holdings does not own any properties or assets, tangible or intangible, other
than the Stock of Omega and rights under contracts to which Holdings is a party
that are listed on Exhibit 6.8.
Section 4.11 Taxes. Each of Holdings and the Borrowers has filed all
-----
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrowers). No tax Liens have been filed (except for Liens
arising in the ordinary course of business with respect to real property taxes
that are not past due) and no material claims are being asserted with respect to
any such taxes, fees or charges. The charges, accruals and reserves on the
books of the Borrowers in respect of taxes and other governmental charges have
been determined in accordance with GAAP and except as reflected in such accruals
no Borrower knows of any proposed material tax assessment against it or
Holdings.
Section 4.12 Intellectual Property. Holdings and each of the
---------------------
Borrower owns, has the right to use, or otherwise has the rights to, their data
bases, all patents, trademarks, trade names, copyrights, technology, know-how
and processes used in or necessary for the conduct of its business as currently
conducted that are material to the financial condition, business or operations
of Holdings and the Borrowers, taken as a whole (collectively, "Intellectual
Property"), and, as of the Closing Date, all patented or registered Intellectual
Property and patent applications and applications for registration of any
Intellectual Property are identified on Exhibit 4.12. As of the Closing Date,
all patented or registered Intellectual Property is duly and properly
registered, filed or issued in the appropriate office and jurisdictions and for
such registrations, filing or issuances. Except as disclosed in Exhibit 4.12,
to the best of the Borrowers' knowledge, no material claim has been asserted by
any Person challenging or questioning the use, validity or effectiveness of any
Intellectual Property. Except as disclosed in Exhibit 4.12, to the best of the
-47-
Borrowers' knowledge, the use of such Intellectual Property by Holdings and the
Borrowers does not infringe the rights of any Person except to the extent such
infringement (including, but not limited to, any damages that may be payable to
the opposing party of Holdings or a Borrower in an infringement action) is not
reasonably expected to have a Material Adverse Effect.
Section 4.13 Burdensome Restrictions. Neither Holdings nor any
-----------------------
Borrower is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which would foreseeably have a
Material Adverse Effect or a material adverse effect on the ability of Holdings
or any Borrower to carry out its obligations under any Loan Document.
Section 4.14 Force Majeure. Since the date of the most recent
-------------
financial statement referred to in Section 4.5, there has been no Material
Adverse Effect as the result of any fire or other casualty, strike, lockout, or
other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil
disturbance, activity of armed forces or act of God.
Section 4.15 Investment Company Act. Neither Holdings nor any
----------------------
Borrower is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.16 Public Utility Holding Company Act. Neither Holdings
----------------------------------
nor any Borrower is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 4.17 Retirement Benefits. Except as required under Section
-------------------
4980B of the Code, Section 601 of ERISA or applicable state law, neither
Holdings nor any Borrower is obligated to provide post-retirement medical or
insurance benefits with respect to employees or former employees.
Section 4.18 Full Disclosure. Neither this Agreement nor any other
---------------
Loan Document, report, instrument or certificate delivered by any Borrower or
Holdings pursuant to this Agreement contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements contained therein not misleading.
Section 4.19 Subsidiaries. Exhibit 4.19 sets forth as of the date of
------------
this Agreement a list of all Subsidiaries of the Borrower and the number and
percentage of the shares of each class of capital stock owned beneficially or of
record by the Borrower or any Subsidiary therein, and the jurisdiction of
incorporation of each Subsidiary.
Section 4.20 Perfection of Liens. Each Security Document creates the
-------------------
Lien it purports to create upon the properties and interests specifically
described therein. The descriptions of properties and interests in the Security
Documents and any related financing
-48-
statements are adequate for the purpose of such instruments and for perfection
of the Liens of the Banks. As to any Security Documents which are Security
Agreements, the filing of the Uniform Commercial Code financing statements
delivered by Holdings and the Borrowers to the Banks in the filing offices
listed thereon will perfect the Liens created under such Security Agreements to
the extent such Liens are capable of being perfected by filing financing
statements under the Uniform Commercial Code as in effect in the state in which
the collateral subject to such Liens is located. The filing of the Mortgages in
the filing offices listed thereon will perfect the Liens created thereby. The
filing of the Collateral Assignments in the United States Office of Patents and
Trademarks will perfect the Liens created under such documents.
Section 4.21 Facilities. As of the Closing Date, Holdings and the
----------
Borrowers do not have any Facilities other than the Indiana, Iowa and Tennessee
Facilities and the leased Facilities described on Exhibit 4.21.
Section 4.22 Affiliates. Except for Holdings, the Subsidiaries,
----------
▇▇▇▇▇▇ Capital Corporation, certain Affiliates of ▇▇▇▇▇▇ Capital Corporation and
the officers and directors of Holdings and the Borrower, Omega has no
Affiliates.
Section 4.23 Labor. None of the employees of Holdings or the
-----
Borrowers is subject to any collective bargaining agreement, and there are no
strikes, work stoppages, election or decertification petitions or proceedings,
unfair labor charges, equal employment opportunity proceedings, wage payment or
material unemployment compensation proceedings, material workmen's compensation
proceedings or other material labor or employee-related controversies pending or
threatened involving Holdings or any Borrower and any of its employees, except
for any of the foregoing which would not in the aggregate have a Material
Adverse Effect.
Section 4.24 Solvency. As of the Closing Date, each Borrower has
--------
capital sufficient to carry on its business and transactions and all businesses
and transactions in which it is about to engage and is solvent and able to pay
its debts as they mature and each Borrower owns property the fair saleable value
of which is greater than the amount required to pay that Borrower's
Indebtedness. No transfer of property is being made and no Indebtedness is
being incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either present or future
creditors of any Borrower or any Affiliate. On the Closing Date, after giving
effect to the dividend authorized by Section 6.7(i) and the financing
transactions contemplated hereunder, the conclusions set out in the Solvency
Opinion are true and correct.
Section 4.25 Corporate Names. Except as disclosed on Exhibit 4.25,
---------------
as of the Closing Date, Holdings and the Borrowers have no assumed corporate
names and the Borrowers are not doing business under any corporate name other
than those set out in the first paragraph hereof.
-49-
Section 4.26 Insurance. Exhibit 4.26 sets forth a complete and
---------
accurate description of all policies of insurance that will be in effect as of
the Closing Date for the Borrower and its Subsidiaries. As of the Closing Date,
the Borrower and its Subsidiaries are adequately insured under such policies, no
notice of cancellation has been received with respect to such policies and the
Borrower and its Subsidiaries are in compliance with all conditions contained in
such policies.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Term Loans and
Revolving Loans and of the Agent to issue Letters of Credit shall have expired
or been terminated and the Notes and all of the other Obligations (except for
contingent indemnity and other contingent Obligations not yet due and payable)
have been paid in full and all outstanding Letters of Credit shall have expired
or the liability of the Agent thereon shall have otherwise been discharged,
unless the Majority Banks shall otherwise consent in writing:
Section 5.1 Financial Statements and Reports. The Borrowers will
--------------------------------
furnish to the Banks:
5.1(a) As soon as available and in any event within 90 days
after the end of each fiscal year of Omega, the consolidated financial
statements of Omega and its Subsidiaries consisting of at least statements
of income, cash flow and changes in stockholders' equity, and a
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by Ernst & Young LLP or other
independent certified public accountants of recognized national standing
selected by the Borrowers and acceptable to the Agent, together with (i)
any management letters, management reports or other supplementary comments
or reports to Omega or its board of directors furnished by such accountants
and (ii) a letter from such accountants addressed to the Banks
acknowledging that the Banks are extending credit in reliance on such
financial statements and authorizing such reliance.
5.1(b) Together with the audited financial statements required
under Section 5.1(a), a statement by the accounting firm performing such
audit to the effect that it has reviewed this Agreement and that in the
course of performing its examination no facts have come to its attention
that caused it to believe that any Default or Event of Default exists, or,
if such Default or Event of Default exists, describing its nature.
5.1(c) As soon as available and in any event within 30 days
after the end of each month, unaudited consolidated statements of income,
cash flow and changes in
-50-
stockholders' equity for Omega and its Subsidiaries for such month and for
the period from the beginning of such fiscal year to the end of such month,
and a consolidated balance sheet of Omega as at the end of such month,
setting forth in comparative form figures for the corresponding period for
the preceding fiscal year and for the budget for such period for the
current year, accompanied by a certificate signed by the chief financial
officer of Omega stating that such financial statements present fairly the
financial condition of Omega and its Subsidiaries and that the same have
been prepared in accordance with GAAP (except for the absence of footnotes
and subject to year-end audit adjustments as to the interim statements).
5.1(d) As soon as practicable and in any event within 30 days
after the end of each month, a Compliance Certificate in the form attached
hereto as Exhibit 5.1(d) signed by the chief financial officer of Omega
demonstrating in reasonable detail compliance (or noncompliance, as the
case may be) with the Section 6.18 and, with respect to any month that
happens to be the end of a fiscal quarter, Sections 6.16 and 6.17, as at
the end of the month immediately preceding the month in which such
certificate is due and stating that as at the end of such immediately
preceding month there did not exist any Default or Event of Default or, if
such Default or Event of Default existed, specifying the nature and period
of existence thereof and what action the Borrowers propose to take with
respect thereto.
5.1(e) As soon as practicable and in any event within 60 days
after the beginning of each fiscal year of Omega, statements of forecasted
consolidated income, cash flow and changes in stockholders' equity for
Omega and its Subsidiaries for each fiscal month in such fiscal year and a
forecasted consolidated balance sheet of Omega and its Subsidiaries,
together with supporting assumptions, as at the end of each fiscal month in
such fiscal year, all in reasonable detail and reasonably satisfactory in
scope to Majority Banks.
5.1(f) Promptly upon any Responsible Officer of Omega becoming
aware of any Default or Event of Default, a notice describing the nature
thereof and what action the Borrowers propose to take with respect thereto.
5.1(g) Promptly upon any Responsible Officer of Omega becoming
aware of the occurrence, with respect to any Plan, of any Reportable Event
or any Prohibited Transaction, a notice specifying the nature thereof and
what action the Borrowers propose to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have
a trustee appointed for any Plan.
5.1(h) Promptly upon the mailing or filing thereof, copies of
all financial statements, reports and proxy statements mailed to the
Borrower's shareholders, and copies of all registration statements,
periodic reports and other documents filed with the
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Securities and Exchange Commission (or any successor thereto) or any
national securities exchange.
5.1(i) As soon as practicable following each Fiscal Year End,
and in any event within 90 days of such Fiscal Year End, a certificate in
the form attached hereto as Exhibit 5.1(i) signed by the chief financial
officer of the Borrower, containing a calculation of the Excess Cash Flow
for the fiscal year ended on such Fiscal Year End.
5.1(j) As soon as available and in any event within 90 days
after the end of each fiscal year of Holdings, the consolidated financial
statements of Holdings and the Borrowers consisting of at least statements
of income, cash flow and changes in stockholders' equity, and a
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by Ernst & Young LLP or other
independent certified public accountants of recognized national standing
selected by Holdings and acceptable to the Agent, together with (i) any
management letters, management reports or other supplementary comments or
reports to Holdings or its board of directors furnished by such accountants
and (ii) a letter from such accountants addressed to the Banks
acknowledging that the Banks are extending credit in reliance on such
financial statements and authorizing such reliance.
5.1(k) As soon as available and in any event within 30 days
after the end of each fiscal quarter of Holdings, unaudited consolidated
statements of income, cash flow and changes in stockholders' equity for
Holdings and the Borrowers for such fiscal quarter and for the period from
the beginning of such fiscal year to the end of such fiscal quarter, and a
consolidated balance sheet of Holdings as at the end of such fiscal
quarter, setting forth in comparative form figures for the corresponding
period for the preceding fiscal year, accompanied by a certificate signed
by the chief financial officer of Holdings stating that such financial
statements present fairly the financial condition of Holdings and the
Borrowers and that the same have been prepared in accordance with GAAP
(except for the absence of footnotes and subject to year-end audit
adjustments as to the interim statements).
5.1(l) Promptly upon the transmission or receipt thereof by any
of the Borrowers or Holdings, copies of all notices, certificates and
reports sent by or to any of the Borrowers or Holdings under any of the
▇▇▇▇▇▇ Subordinated Bridge Loan Documents, the West Street Subordinated
Bridge Loan Documents, the High Yield Subordinated Permanent Loan Documents
(specifically including but not limited to any selection of an interest
rate based on LIBOR or a LIBOR interest period), or under any other
agreement relating to Indebtedness for money borrowed or any Capitalized
Lease if the aggregate unpaid principal amount with respect to such
Indebtedness or Capitalized Lease is equal to or greater than $750,000.
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5.1(m) From time to time, such other information regarding the
business, operation and financial condition of the Borrowers and Holdings
as any Bank may reasonably request.
Section 5.2 Corporate Existence. Each Borrower will maintain, and
-------------------
cause Holdings and each Subsidiary of Omega to maintain: (a) its corporate
existence in good standing under the laws of its jurisdiction of incorporation,
and (b) its qualification to transact business in each jurisdiction where
failure so to qualify would permanently preclude that Borrower, Holdings or that
Subsidiary from enforcing its rights with respect to any material asset or would
expose that Borrower, Holdings or that Subsidiary to any material liability;
provided, however, that nothing herein shall prohibit the merger or liquidation
of any Subsidiary allowed under Section 6.1.
Section 5.3 Insurance. Each Borrower shall maintain, and shall cause
Holdings and each Subsidiary of Omega to maintain, with financially sound and
reputable insurance companies such insurance as may be required by law, by any
Mortgage executed by such Borrower, and such other insurance in such amounts and
against such hazards as is customary in the case of reputable firms engaged in
the same or similar business and similarly situated.
Section 5.4 Payment of Taxes and Claims. Each Borrower shall file,
---------------------------
and cause Holdings and each Subsidiary of Omega to file, all tax returns and
reports which are required by law to be filed by it and will pay, and cause
Holdings and each Subsidiary of Omega to pay, before they become delinquent all
taxes, assessments and governmental charges and levies imposed upon it or its
property and all claims or demands of any kind (including but not limited to
those of suppliers, mechanics, carriers, warehouses, landlords and other like
Persons) which, if unpaid, might result in the creation of a Lien upon its
property; provided that the foregoing items need not be paid if they are being
contested in good faith by appropriate proceedings, and as long as the relevant
Borrower's, Holdings' or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with, adequate reserves with
respect thereto have been set aside on the relevant Borrower's, Holdings' or
such Subsidiary's books in accordance with GAAP, and the relevant Borrower,
Holdings or such Subsidiary pays any of the foregoing items before the claimant
with respect thereto forecloses on or otherwise enforces any such Lien on the
relevant Borrower's, Holdings' or such Subsidiary's property.
Section 5.5 Inspection. Each Borrower shall permit, and shall cause
----------
Holdings and each Subsidiary of Omega to permit, any Person designated by the
Agent or the Majority Banks to visit and inspect any of the properties,
corporate books and financial records of the Borrowers, Holdings and each
Subsidiary of Omega, to examine and to make copies of the books of accounts and
other financial records of the Borrowers, Holdings and each Subsidiary of Omega,
and to discuss the affairs, finances and accounts of the Borrowers, Holdings and
each Subsidiary of Omega with, and to be advised as to the same by, the officers
of the Borrowers, Holdings and each Subsidiary of Omega at such reasonable times
and intervals as the Agent or
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the Majority Banks may designate. The first visit, inspection or examination by
the Agent during each calendar year shall be at the Borrowers' expense. Except
as provided in the previous sentence, so long as no Event of Default exists, the
expenses of the Agent or the Banks for such visits, inspections and examinations
shall be at the expense of the Agent and the Banks, but any such visits,
inspections and examinations made while any Event of Default is continuing shall
be at the expense of the Borrowers.
Section 5.6 Maintenance of Properties, Licenses and Permits. Each
-----------------------------------------------
Borrower will maintain, and cause Holdings and each Subsidiary of Omega to
maintain, its properties used or useful in the conduct of its business in good
condition, repair and working order, and supplied with all necessary equipment
(except for property that is no longer useful or becomes obsolete or is disposed
of in the ordinary course of business in accordance with Section 6.2(a)), make,
and cause Holdings and each Subsidiary of Omega to make, all necessary repairs,
renewals, replacements, betterments and improvements thereto, and maintain, and
cause Holdings and each Subsidiary of Omega to maintain, all licenses and
permits with respect to such properties or the activities such properties are
used for, all as may be necessary so that the business carried on in connection
therewith may be properly conducted at all times.
Section 5.7 Books and Records. Each Borrower will keep, and will
-----------------
cause Holdings and each Subsidiary of Omega to keep, adequate and proper records
and books of account as to its dealings, business and affairs.
Section 5.8 Compliance. Each Borrower will comply, and will cause
----------
Holdings and each Subsidiary of Omega to comply, in all material respects with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, and all material leases, material contracts
or other material agreements to which it is a party (including but not limited
to the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents, the Merger Agreements, the
West Street Subordinated Bridge Loan Documents and the High Yield Subordinated
Permanent Loan Documents); provided, however, that failure so to comply shall
not be a breach of this covenant if such failure does not have, or is not
reasonably expected to have, a Material Adverse Effect and the relevant
Borrower, Holdings or such Subsidiary is acting in good faith and with
reasonable dispatch to cure such noncompliance.
Section 5.9 Notice of Litigation. The Borrowers will give prompt
--------------------
written notice to the Agent of the commencement of any action, suit or
proceeding before any court or arbitrator or any governmental department, board,
agency or other instrumentality affecting a Borrower, Holdings or any Subsidiary
of Omega or any property of the Borrower, Holdings or such Subsidiary or to
which a Borrower, Holdings or such Subsidiary is a party in which an adverse
determination or result could have a Material Adverse Effect or a material
adverse effect on the ability of any Borrower or Holdings to perform its
obligations under this Agreement and the other Loan Documents, stating the
nature and status of such action, suit or proceeding.
-54-
Section 5.10 ERISA. Each Borrower will maintain, and cause Holdings
-----
and each Subsidiary of Omega to maintain, each Plan in material compliance with
all material applicable requirements of ERISA and of the Code and with all
applicable rulings and regulations issued under the provisions of ERISA and of
the Code and will not and not permit any of the ERISA Affiliates to (a) engage
in any transaction in connection with which any Borrower or any of the ERISA
Affiliates would be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in either
case in an amount exceeding $100,000, (b) fail to make full payment when due of
all amounts which, under the provisions of any Plan, any Borrower or any ERISA
Affiliate is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect to any Plan in
an aggregate amount exceeding $100,000 or (c) fail to make any payments in an
aggregate amount exceeding $100,000 to any Multiemployer Plan that any Borrower
or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
Section 5.11 Environmental Matters: Reporting. Each Borrower will
--------------------------------
observe and comply with, and cause Holdings and each Subsidiary of Omega to
observe and comply with, all laws, rules, regulations and orders of any
government or government agency relating to health, safety, pollution, hazardous
materials or other environmental matters to the extent non-compliance could
result in a material liability or otherwise have a Material Adverse Effect. The
Borrowers will give the Agent prompt written notice of any violation as to any
environmental matter by any Borrower, Holdings or any Subsidiary of Omega and of
the commencement of any judicial or administrative proceeding relating to
health, safety or environmental matters (a) in which an adverse determination or
result could result in the revocation of or have a material adverse effect on
any operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by a Borrower, Holdings or any Subsidiary of
Omega which are material to the operations of a Borrower, Holdings or any
Subsidiary of Omega, or (b) which will or threatens to impose a material
liability on a Borrower, Holdings or any Subsidiary of Omega to any Person or
which will require a material expenditure by the Borrower Holdings or any such
Subsidiary to cure any alleged problem or violation.
Section 5.12 Reaffirmation of Guaranties. When so requested by the
---------------------------
Agent from time to time, the Borrower will promptly cause Holdings, and any
other Person who may hereafter guaranty the Obligations or any part thereof, to
execute and deliver to the Agent reaffirmations of their respective Guaranties
in such form as the Agent may require.
Section 5.13 Further Assurances. Promptly upon request by the Agent
------------------
or the Majority Banks, each Borrower shall promptly correct, and cause Holdings
to correct, any defect or error that may be discovered in any Loan Document or
in the execution, acknowledgment or recordation thereof. Promptly upon request
by the Agent or the Majority Banks, each Borrower also shall do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-
register, any and all deeds, conveyances, mortgages, deeds of trust, trust
deeds, assignments,
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estoppel certificates, financing statements and continuations thereof, notices
of assignment, transfers, certificates, assurances and other instruments, and
cause Holdings to do any of the foregoing, as the Agent or the Majority Banks
may reasonably require from time to time in order: (a) to perfect and maintain
the validity, effectiveness and priority of any security interests intended to
be created by the Loan Documents including, without Imitation, the delivery of a
landlord waiver from any landlord required by the Agent or the Majority Banks;
and (b) to assure, convey, grant, assign, transfer, preserve, protect and
confirm unto the Banks the rights granted now or hereafter intended to be
granted to the Banks under any Loan Document or under any other instrument
executed in connection with any Loan Document or that the any Borrower or
Holdings may be or become bound to convey, mortgage or assign to the Agent for
the benefit of the Banks in order to carry out the intention or facilitate the
performance of the provisions of any Loan Document. Each Borrower shall furnish
to the Banks evidence satisfactory to the Majority Banks of every such
recording, filing or registration.
Section 5.14 Bank Accounts and Lockboxes. The Borrowers agree to
---------------------------
maintain, and to cause each of Holdings and each Subsidiary of Omega to
maintain, at all times on and after the 180th day after the Closing Date, (i)
lockbox accounts (to which the Borrowers,' Holdings' and such Subsidiaries'
account debtors will be instructed to make payment, and from which funds will be
transferred as collected to the Borrowers' or such Subsidiary's cash
concentration or operations account) with the Agent or one or more banks
acceptable to the Agent that have signed an acknowledgment (in form and
substance satisfactory to the Agent) of the assignment of such accounts to the
Agent, and (ii) all of its other bank accounts, including but not limited to its
primary operational accounts and cash concentration accounts, with the Agent.
Service charges for any accounts maintained at the Agent shall be payable as
provided in separate agreements between the Borrower and the Agent.
Section 5.15 Post-Closing Matters. On or before the 120th day after
--------------------
the Closing Date, the Borrowers shall deliver to the Agent appraisal reports
with respect to each of the Indiana, Iowa and Tennessee Facilities, in form and
substance, and by appraisers, acceptable to the Agent and the Majority Banks,
addressed or assigned to the Banks. Omega will not incur liability to any
contractors or other Persons for any construction or other work at the Iowa
Facility that might result in a mechanics' or other Lien that exceeds $200,000
in the aggregate until after March 15, 1998. Omega will promptly pay when due
all amounts payable to such contractors or other Persons. Omega shall not allow
any of such contractors or other Persons to perform any work at the Iowa
Facility during the period between December 15, 1997 and March 15, 1998. Upon
completion of all construction work at the Iowa Facility that is pending, as of
the Closing Date, Omega will cooperate with the Agent in its efforts, and itself
use commercially reasonable efforts, to cause First American Title Insurance
Company to delete the mechanic's lien exception from the title policy issued
with respect to the Iowa Facility.
ARTICLE VI
----------
NEGATIVE COVENANTS
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Until any obligation of the Banks hereunder to make the Term Loans and
Revolving Loans and of the Agent to issue Letters of Credit shall have expired
or been terminated and the Notes and all of the other Obligations (except for
contingent indemnity and other contingent Obligations not yet due and payable)
have been paid in full and all outstanding Letters of Credit shall have expired
or the liability of the Agent thereon shall have otherwise been discharged,
unless the Majority Banks shall otherwise consent in writing:
Section 6.1 Merger. No Borrower will merge or consolidate or enter
------
into any analogous reorganization or transaction with any Person or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution) or (except
for the merger of Holdings with Omega Merger Corp. on the Closing Date and for
any merger permitted under Section 6.5) permit Holdings or any Subsidiary of
Omega to do any of the foregoing; provided, however, that any Subsidiary of
-------- -------
Omega (including HomeCrest or Panther) may be merged with or liquidated into
Omega or any wholly-owned Subsidiary of Omega (if Omega or such wholly-owned
Subsidiary of Omega is the surviving corporation).
Section 6.2 Disposition of Assets. The Borrowers will not, and will
---------------------
not permit Holdings or any Subsidiary of Omega to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one
transaction or a series of transactions) any property (including accounts and
notes receivable, with or without recourse) or enter into any agreement to do
any of the foregoing, including but not limited to any sale-leaseback
transaction, except:
6.2(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
6.2(b) the sale of equipment or other tangible assets to the
extent that such assets are exchanged for credit against the purchase price
of similar replacement assets, or the proceeds of such sale are applied
with reasonable promptness to the purchase price of such replacement
assets; and
6.2(c) dispositions of property (other than those authorized by
subsections 6.2(a) and (b)) during the term of this Agreement whose net
book value as of the time of each such disposition does not exceed $500,000
in the aggregate.
Section 6.3 Plans. The Borrowers will not permit, and will not allow
-----
Holdings or any Subsidiary of Omega to permit, any event to occur or condition
to exist which would permit any Plan to terminate under any circumstances which
would cause the Lien provided for in Section 4068 of ERISA to attach to any
assets of any Borrower, Holdings or any such Subsidiary; and the Borrowers will
not permit, as of the most recent valuation date for any Plan subject to Title
IV of ERISA, the present value (determined on the basis of reasonable
assumptions employed by the independent actuary for such Plan and previously
furnished in
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writing to the Banks) of such Plan's projected benefit obligations to exceed the
fair market value of such Plan's assets.
Section 6.4 Change in Nature of Business. The Borrowers will not,
----------------------------
and will not permit Holdings or any Subsidiary of Omega to, engage in any
business other than the manufacture, sale and delivery of kitchen, bath and
other home cabinetry and related products, and other activities incidental
thereto.
Section 6.5 Subsidiaries; Acquisitions. After the date of this
--------------------------
Agreement, the Borrowers will not, and will not permit Holdings or any
Subsidiary of Omega to: (a) form or acquire any corporation or other entity
which would thereby become a Subsidiary of Holdings or Omega; (b) sell, transfer
or otherwise convey any interest in a Subsidiary (except for transfers to the
Borrower or a wholly-owned Subsidiary thereof); or (c) acquire all or a material
portion of the assets of another Person; provided, however that any Borrower or
-----------------
any Subsidiary thereof:
(x) may form a new Subsidiary and transfer assets thereto so long as such
new Subsidiary (i) is a wholly-owned Subsidiary of such Borrower, (ii)
prior to the transfer of any assets thereto, executes and delivers to the
Agent an agreement in the form attached hereto as Exhibit 6.5 whereby such
Subsidiary becomes a Borrower hereunder and a Security Agreement in
substantially the form delivered on the Closing Date by HomeCrest and
Panther, together with documents similar to those required with respect to
the HomeCrest and Panther pursuant to Sections 3.1(a)(xv) through
3.1(a)(xxiv), as appropriate, and 3.1(b) and (iii) does not acquire all or
a material portion of the assets of any Person other than Omega and its
wholly-owned Subsidiaries, or if it does acquire the assets of another
Person, it complies with clause (y) below; and
(y) may acquire all or a material portion of the Stock, assets or
liabilities of another Person (collectively, "Acquisitions"), if and only
if each of the following conditions is satisfied: (i) the aggregate
borrowings under the Revolving Notes by the Borrowers and their
Subsidiaries in connection with all Acquisitions does not exceed
$5,000,000; (ii) after giving effect to any proposed Acquisition, the
Borrowers shall be in compliance with all covenants on a pro forma basis
--- -----
and no Default or Event of Default exists at the time of, or shall exist as
a result of, such Acquisition; (iii) Omega, on behalf of the Borrowers,
executes and delivers to the Agent pro forma calculations demonstrating in
---------
reasonable detail that the Borrowers would have complied with Sections 6.16
through 6.18 had the Acquisition been consummated prior to the end of the
most recently ended fiscal quarter, and that based on the Borrowers'
projections, the Borrowers will comply with Sections 6.16 through 6.18 at
the end of the current fiscal quarter, after giving effect to the
Acquisition; (iv) if the Acquisition involves the formation or acquisition
of a new Subsidiary, the new Subsidiary complies with clause (x) above; (v)
the Acquisition is undertaken in accordance with all applicable laws,
rules, regulations, orders, writs, judgments, injunctions, decrees and
awards to which any party to the Acquisition may be subject; and (vi) if
the Acquisition involves the acquisition of an existing corporation or
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partnership, the written consent to or approval of such Acquisition is
obtained from the board of directors or equivalent governing body of the
acquiree prior to any tender or other offer for the capital stock or
equivalent equity interest in such acquiree.
Section 6.6 Negative Pledges; Subsidiary Restrictions. The Borrowers
-----------------------------------------
will not, and will not permit Holdings or any Subsidiary of Omega to, enter into
any agreement, bond, note or other instrument with or for the benefit of any
Person other than the Banks which would (i) prohibit a Borrower, Holdings or
such Subsidiary from granting, or otherwise limit the ability of a Borrower,
Holdings or such Subsidiary to grant, to the Banks any Lien on any assets or
properties of a Borrower, Holdings or such Subsidiary, or (ii) require a
Borrower, Holdings or such Subsidiary to ▇▇▇▇▇ ▇ ▇▇▇▇ to any other Person if the
Borrower, Holdings or such Subsidiary grants any Lien to the Banks. The
Borrowers will not permit Holdings or any Subsidiary of Omega to place or allow
any restriction, directly or indirectly, on the ability of such Subsidiary to
(a) pay to Omega dividends or any distributions on or with respect to such
Subsidiary's capital stock or (b) make loans or other cash payments to the
Borrowers.
Section 6.7 Restricted Payments. The Borrowers will not make any
-------------------
Restricted Payments, except that: (i) HomeCrest and Panther may make Restricted
Payments to Omega; (ii) Omega may make the Restricted Payments described in
clause (ii) below at any time prior to the first anniversary of the Closing
Date, whether or not a Default or Event of Default exists or would be caused
thereby (subject to the limit described in such clause (ii), and on the
condition that such Restricted Payments are promptly used by Holdings for the
purpose described in such clause (ii)); and (iii) if and only if no Default or
Event of Default exists or would be caused thereby, Omega may make the following
Restricted Payments (subject to the limitations described below, and on the
condition that such Restricted Payments are promptly used by Holdings for the
purpose described below):
(i) a dividend to Holdings in an amount equal to the sum of the
merger consideration to be paid on the Closing Date pursuant to the Merger
Plan, the "Funded Debt" (as defined in the Merger Plan) of Holdings to be
prepaid on the Closing Date, and certain related transaction expenses, to
fund payment of such amounts;
(ii) a dividend to Holdings in an amount equal to the excess (if any)
of the "Aggregate Merger Consideration" over the "Estimated Closing
Payment" (as those terms are defined in the Merger Plan), to fund the
payment required by Section 1.8(f) of the Merger Plan;
(iii) dividends to Holdings to fund cash payments to members of
Holdings' management or employees under Holdings' Stock call rights and
repurchase obligations; provided, however that the aggregate amount of
-----------------
dividends under this Section 6.7(iii) and any intercompany loans to
Holdings in lieu thereof may not exceed (i) $1,000,000 per year prior to
the issuance of the High Yield Subordinated Permanent Debt, and (ii)
$1,500,000 per year after the issuance of the High Yield Subordinated
Permanent Debt;
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(iv) dividends to Holdings to fund the payment of principal, interest
and other amounts payable under the ▇▇▇▇▇▇ Subordinated Bridge Loan
Documents; provided, however that the aggregate amount of such dividends
-----------------
may not exceed the net proceeds from the issuance of the High Yield
Subordinated Permanent Debt received by the Borrowers and not applied to
repay amounts owed under the West Street Subordinated Bridge Loan
Documents; and
(v) dividends to Holdings to fund payments due under the Contingent
Promissory Note that is secured by the Stockholders' Committee Letter of
Credit.
Section 6.8 Transactions with Affiliates. Except as set forth on
----------------------------
Exhibit 6.8, the Borrowers will not, and will not permit Holdings or any
Subsidiary of Omega to, enter into any transaction with any Affiliate of Omega
or Holdings, except upon fair and reasonable terms no less favorable to the
Borrower, Holdings or such Subsidiary than would obtain in a comparable arm's-
length transaction with a Person not an Affiliate; and provided that the
--------
aggregate amount paid to BCC Industrial Services, Inc. pursuant to the
management agreement described on Exhibit 6.8 may not exceed $350,000 during any
fiscal year.
Section 6.9 Accounting Changes. The Borrowers will not, and will not
-----------------
permit Holdings or any Subsidiary or Omega to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of any Borrower, Holdings or any Subsidiary, except that
the Borrowers may adopt a 53 week fiscal year for the fiscal years ending on
January 2, 1999 and January 1, 2005 and may conform the fiscal year and other
accounting practices of any Subsidiary acquired after the Closing Date to the
fiscal year and other accounting practices of the Borrowers. The Borrowers shall
all have the same fiscal year at all times.
Section 6.10 Capital Expenditures. The Borrowers will not, and will
--------------------
not permit Holdings or any Subsidiary of Omega to, make Capital Expenditures in
an amount exceeding the sum of $4,500,000 plus the remaining Progressive
Allowance (if any) on a consolidated basis in any fiscal year.
Section 6.11 Subordinated Debt. The Borrowers will not, and will not
-----------------
permit Holdings or any Subsidiary of Omega to (a) make any scheduled payment of
the principal of or interest on any Subordinated Debt which would be prohibited
by the terms of such Subordinated Debt and any related subordination agreement;
(b) directly or indirectly make any prepayment on or purchase, redeem or defease
any Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory), except
that the Borrower may prepay Indebtedness outstanding under the ▇▇▇▇▇▇
Subordinated Bridge Loan Documents and the West Street Subordinated Bridge Loan
Documents out of the aggregate net proceeds of the High Yield Subordinated
Permanent Debt (if and only if the High Yield Subordinated Permanent Loan
Documents have been approved in writing by Agent and the
-60-
Majority Banks pursuant to Section 9.19), other Subordinated Debt or the
issuance of equity securities and Holdings may make prepayments of subordinated
notes issued to management or employees in connection with Holdings' Stock call
rights and repurchase obligations to the extent of any permissible Restricted
Payments under Section 6.7(iii); (c) amend or cancel the subordination
provisions applicable to any Subordinated Debt; (d) except for the prepayment
thereof permitted by Section 6.11(b), take or omit to take any action if as a
result of such action or omission the subordination of such Subordinated Debt,
or any part thereof, to the Obligations would be terminated, impaired or
adversely affected; or (e) omit to give the Agent prompt notice of any notice
received from any holder of Subordinated Debt, or any trustee therefor, or of
any default under any agreement or instrument relating to any Subordinated Debt
by reason whereof such Subordinated Debt might become or be declared to be due
or payable.
Section 6.12 Investments. The Borrowers will not, and will not
-----------
permit Holdings or any Subsidiary of Omega to, acquire for value, make, have or
hold any Investments, except:
6.12(a) Investments existing on the date of this Agreement and
listed on Exhibit 6.12 attached hereto.
6.12(b) Travel advances to management personnel and employees
in the ordinary course of business.
6.12(c) Investments in readily marketable direct obligations
issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States.
6.12(d) Certificates of deposit or bankers' acceptances issued
by any commercial bank organized under the laws of the United States or any
State thereof which has (i) combined capital and surplus of at least
$100,000,000, and (ii) a credit rating with respect to its unsecured
indebtedness from a nationally recognized rating service that is
satisfactory to the Agent.
6.12(e) Commercial paper given a rating of at least A-1 or P-1
by a nationally recognized rating service.
6.12(f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
6.12(g) Investments in shares of a money market fund that
invests solely in Investments of the types described in clauses 6.12(c),
(d), (e) and (f).
6.12(h) Investments in HomeCrest, Panther and other
Subsidiaries of Omega acquired after the Closing Date in transactions that
comply with Section 6.5.
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6.12(i) Intercompany loans and advances permitted by Section
6.13(g).
6.12(j) Any other Investment; provided that the maximum
aggregate cost of all Investments authorized by this clause 6.12(h) shall
not exceed $100,000.
Any Investments under clauses (c), (d), (e) or (f) above must mature within one
year of the acquisition thereof by the Borrower or a Subsidiary.
Section 6.13 Indebtedness. The Borrowers will not, and will not
------------
permit Holdings or any Subsidiary of Omega to, incur, create, issue, assume or
suffer to exist any Indebtedness, except:
6.13(a) The Obligations.
6.13(b) Current Liabilities incurred in the ordinary course of
business.
6.13(c) Indebtedness existing on the date of this Agreement and
disclosed on Exhibit 6.13 hereto, but not including any extension or
refinancing thereof.
6.13(d) Indebtedness secured by Liens permitted under Section
6.14 hereof.
6.13(e) Indebtedness outstanding under the ▇▇▇▇▇▇ Subordinated
Bridge Loan Documents and the West Street Subordinated Bridge Loan
Documents.
6.13(f) Indebtedness outstanding under the High Yield
Subordinated Permanent Loan Documents, if and only if the High Yield
Subordinated Permanent Loan Documents have been approved in writing by the
Agent and the Majority Banks as provided in Section 9.19 and the proceeds
of the High Yield Subordinated Permanent Debt are used to repay
Indebtedness described in Section 6.13(e), and Indebtedness outstanding
under subordinated notes issued by Holdings in connection with the exercise
of Stock repurchases, puts or calls, if and only if the form of such
subordinated notes has been approved in writing by the Agent and the
Majority Banks.
6.13(g) Indebtedness with respect to intercompany loans and
advances: (i) from a Subsidiary or Holdings to Omega or a Subsidiary of
Omega; (ii) from Omega to a Subsidiary of Omega; or (iii) from Omega or a
Subsidiary of Omega in lieu of Restricted Payments to Holdings that would
have been permitted by Section 6.7.
6.13(h) Indebtedness with respect to judgments and awards that
do not constitute an Event of Default.
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6.13(i) Indebtedness with respect to unfunded pension
liabilities with respect to Plans so long as such liabilities do not
violate Section 5.10 or Section 6.3.
6.13(j) Indebtedness with respect to Contingent Obligations
permitted by Section 6.15.
6.13(k) Indebtedness not authorized by any of the preceding
clauses of this Section 6.13, provided that the aggregate principal amount
outstanding of all Indebtedness authorized by this clause 6.13(j) shall not
exceed $100,000 at any time.
Section 6.14 Liens. The Borrowers will not, and will not permit
-----
Holdings or any Subsidiary of Omega to, create, incur, assume or suffer to exist
any Lien, or enter into, or make any commitment to enter into, any arrangement
for the acquisition of any property through conditional sale, lease-purchase or
other title retention agreements, with respect to any property now owned or
hereafter acquired by the Borrower, Holdings or a Subsidiary, except:
6.14(a) Liens granted to the Agent and the Banks under the
Security Documents to secure the Obligations.
6.14(b) Liens existing on the date of this Agreement and
disclosed on Exhibit 6.14 hereto.
6.14(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrowers
or a Subsidiary of Omega.
6.14(d) Liens for taxes, fees, assessments and governmental
charges not delinquent or to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of
Section 5.4.
6.14(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of
Section 5.4.
6.14(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance or other
similar bonds.
6.14(g) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution; provided that (i) such
-------- ----
deposit account is not a dedicated cash collateral account and is not
subject to restriction against access by the depositor in excess of those
set forth by
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regulations promulgated by the Board, and (ii) such deposit account is not
intended by the depositor to provide collateral to the depository
institution.
6.14(h) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property
and landlord's Liens under leases on the premises rented, which do not
materially detract from the value of such property or materially impair the
use thereof in the business of a Borrower, Holdings or a Subsidiary of
Omega.
6.14(i) The interest of any lessor under any Capitalized Lease
entered into after the Closing Date or purchase money Liens on property
acquired after the Closing Date; provided that (i) the Indebtedness secured
-------------
thereby is otherwise permitted by this Agreement, (ii) such Liens are
limited to the property acquired and do not secure Indebtedness other than
the related Capitalized Lease Obligations or the purchase price of such
property, and (iii) the aggregate amount of Indebtedness secured by such
Liens outstanding at any time does not exceed $3,000,000.
6.14(j) Liens created by operation of law that secure judgments
and awards that do not constitute an Event of Default.
Section 6.15 Contingent Liabilities. The Borrowers will not, and
----------------------
will not permit Holdings or any Subsidiary of Omega to, be or become liable on
any Contingent Obligations, other than as set forth on Exhibit 6.15 and any
Contingent Obligations of a Borrower or Holdings for Indebtedness of a Borrower
if and only if such Indebtedness is permitted by Section 6.13.
Section 6.16 Interest Coverage Ratio. The Borrowers will not permit
-----------------------
the Interest Coverage Ratio, as of the last day of any fiscal quarter ending on
or after September 27, 1997, for the four consecutive fiscal quarters ending on
that date, to be less than the ratios specified below for the periods specified
below:
Fiscal Quarter Ending: Coverage Ratio
--------------------- --------------
On or before September 26, 1998 1.5 to 1.0
After September 26, 1998, but on or 1.65 to 1.0
before October 2, 1999
After October 2, 1999, but on or 1.9 to 1.0
before September 30, 2000
After September 30, 2000, but on or 2.0 to 1.0
before September 29, 2001
After September 29, 2001, but on or 2.2 to 1.0
before September 28, 2002
After September 28, 2002, but on or 2.4 to 1.0
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before September 27, 2003
After September 27, 2003 2.7 to 1.0.
Section 6.17 Fixed Charge Coverage Ratio. The Borrower will not
---------------------------
permit the Fixed Charge Coverage Ratio of the Borrowers, as of the last day of
any fiscal quarter ending on or after September 27, 1997, for the four
consecutive fiscal quarters ending on that date, to be less than: (i) 1.05 to
1.0, for any fiscal quarter ending on or prior to October 2, 1999; and (ii) 1.1
to 1.0, for any fiscal quarter ending after October 2, 1999.
Section 6.18 Cash Flow Leverage Ratio. The Borrowers will not permit
------------------------
the Cash Flow Leverage Ratio of the Borrowers, as of the last day of any fiscal
month, for the period of twelve consecutive months ending on that date, to be
greater than the ratios specified below for the periods specified below:
Maximum Cash
Period: Flow Leverage Ratio.
------ -------------------
On or before May 23, 1998 6.2 to 1.0
After May 23, 1998, but on or 5.6 to 1.0
before November 21, 1998
After November 21, 1998, but on or 5.3 to 1.0
before May 29, 1999
After May 29, 1999, but on or 4.9 to 1.0
before November 27, 1999
After November 27, 1999, but on or 4.7 to 1.0
before November 25, 2000
After November 25, 2000, but on or 4.25 to 1.0
before November 24, 2001
After November 24, 2001, but on or 3.9 to 1.0
before November 23, 2002
After November 23, 2002 3.45 to 1.0.
Section 6.19 Loan Proceeds. The Borrowers will not, and will not
-------------
permit Holdings or any Subsidiary of Omega to, use any part of the proceeds of
any Loans or Advances directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose or (b) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of Regulations G, U or X of the
Board.
Section 6.20 Operating Leases. The Borrowers will not, and will not
----------------
permit Holdings or any Subsidiary of Omega to, become liable in any way, whether
directly or by assignment or as a guarantor or other surety, for the obligations
of the lessee under any Operating
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Lease, unless (a) immediately after giving effect to the incurrence of liability
with respect to such Operating Lease, the aggregate Operating Lease Payments per
fiscal year of Holdings, Omega and its Subsidiaries under all Operating Leases
then in effect will not exceed a maximum of $3,000,000 and (b) neither a
Borrower, Holdings nor any Subsidiary of Omega provides any down payment or
other equity payment to the lessor (i.e., the leased asset is 100% financed).
Section 6.21 Corporate Documents; Certain Material Contracts. The
-----------------------------------------------
Borrowers will not, and will not permit Holdings or any Subsidiary of Omega to,
amend or modify any of (i) its certificate or articles of incorporation, charter
or bylaws, or (ii) the Merger Documents, the ▇▇▇▇▇▇ Subordinated Bridge Loan
Documents, the West Street Subordinated Bridge Loan Documents and the High Yield
Subordinated Permanent Loan Documents, in each case in any way that materially
adversely affects the Banks.
Section 6.22 Other Indebtedness. Except as expressly authorized by
------------------
Section 6.11, the Borrowers will not, and will not permit Holdings or any
Subsidiary of Omega to, make any voluntary or optional payment, prepayment,
redemption, defeasance or acquisition for value of any Indebtedness for borrowed
money other than the Obligations or Indebtedness authorized by Section 6.13(b)
or Section 6.13(g), or amend or modify any of the payment terms of any
Indebtedness for borrowed money other than the Obligations in any way adverse to
the Banks.
ARTICLE VII
-----------
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of
-----------------
the following events shall constitute an Event of Default:
7.1(a) The Borrowers shall fail to: (i) make when due, whether
by acceleration or otherwise, any payment of principal of any Loan, Note or
Unpaid Drawing; or (ii) make within two Business Days of the date due,
whether by acceleration or otherwise, any payment of interest on any Note
or Unpaid Drawing, or any other Obligation required to be made to the Agent
or any Bank pursuant to this Agreement.
7.1(b) Any representation or warranty made by or on behalf of
any Borrower, Holdings or any Subsidiary of Omega in this Agreement or any
other Loan Document or by or on behalf of any Borrower, any Subsidiary of
Omega or Holdings in any certificate, statement, report or document
herewith or hereafter furnished to any Bank or the Agent pursuant to this
Agreement or any other Loan Document shall prove to have been false or
misleading in any material respect on the date as of which the facts set
forth are stated or certified.
7.1(c) Any Borrower shall fail to comply with Sections 3.2 or
5.14 hereof or any Section of Article VI hereof.
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7.1(d) Any Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this
Agreement (other than those hereinabove set forth in this Section 7.1) and
such failure to comply shall continue for 30 calendar days after whichever
of the following dates is the earlier to occur of: (i) the date a Borrower
gives notice of such failure to the Agent or the Banks, or (ii) the date
the Agent or any Bank gives written notice of such failure to Omega.
7.1(e) Any default (however denominated or defined), other than
Events of Default described in other clauses of this Section 7.1, shall
occur under any Security Document and any cure period applicable thereto
shall expire, or, if no cure period is specified in such Security Document
with respect to a failure to comply with the provisions thereof, if such
failure to comply shall continue for 30 calendar days after whichever of
the following dates is the earlier to occur of: (i) the date a Borrower
gives notice of such failure to the Agent or the Banks, or (ii) the date
the Agent or any Bank gives written notice of such failure to Omega.
7.1(f) Any Borrower, Holdings or any Subsidiary of Omega shall
become insolvent or shall generally not pay its debts as they mature or
shall apply for, shall consent to, or shall acquiesce in the appointment of
a custodian, trustee or receiver of any Borrower, Holdings or any
Subsidiary of Omega or for a substantial part of the property thereof or,
in the absence of such application, consent or acquiescence, a custodian,
trustee or receiver shall be appointed for any Borrower, Holdings or any
Subsidiary of Omega or for a substantial part of the property thereof and
shall not be discharged within 60 days, or the Borrower, Holdings or any
Subsidiary of Omega shall make an assignment for the benefit of creditors.
7.1(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against any Borrower, Holdings or any Subsidiary of Omega, and, if
instituted against any Borrower, Holdings or any Subsidiary of Omega, shall
have been consented to or acquiesced in by any Borrower, Holdings or any
Subsidiary of Omega, or shall remain undismissed for 60 days, or an order
for relief shall have been entered against any Borrower, Holdings or any
Subsidiary of Omega.
7.1(h) Any dissolution or liquidation proceeding not permitted
by Section 6.1 shall be instituted by or against any Borrower or any
Subsidiary of Omega or any dissolution or liquidation proceeding shall be
instituted by or against Holdings, and, if instituted against any Borrower,
Holdings or any Subsidiary of Omega, shall be consented to or acquiesced in
by any Borrower, such Subsidiary or Holdings or shall remain for 60 days
undismissed.
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7.1(i) A judgment or judgments for the payment of money in
excess of the sum of $100,000 in the aggregate shall be rendered against
any Borrower, Holdings or any Subsidiary of Omega and either (i) the
judgment creditor executes on such judgment or (ii) such judgment remains
unpaid or undischarged for more than 60 days from the date of entry thereof
or such longer period during which execution of such judgment shall be
stayed during an appeal from such judgment.
7.1(j) The maturity of any material Indebtedness of any Borrower
(other than Indebtedness under this Agreement), Holdings or any Subsidiary
of Omega, including but not limited to Indebtedness under any of the ▇▇▇▇▇▇
Subordinated Bridge Loan Documents, the West Street Subordinated Bridge
Loan Documents or the High Yield Subordinated Permanent Loan Documents,
shall be accelerated, or the Borrower, Holdings or any Subsidiary of Omega
shall fail to pay any such material Indebtedness when due (after the lapse
of any applicable grace period) or, in the case of such Indebtedness
payable on demand, when demanded (after the lapse of any applicable grace
period), or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting the holder of any such
Indebtedness or any trustee or other Person acting on behalf of such holder
to cause, such material Indebtedness to become due prior to its stated
maturity or to realize upon any collateral given as security therefor. For
purposes of this Section, Indebtedness of the Borrower, Holdings or any
Subsidiary of Omega shall be deemed "material" if it exceeds $750,000 as to
any item of Indebtedness or in the aggregate for all items of Indebtedness
with respect to which any of the events described in this Section 7.1(j)
has occurred.
7.1(k) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 30 days after the issuance thereof.
7.1(l) Holdings shall repudiate or purport to revoke the
Holdings Guaranty, or the Holdings Guaranty for any reason shall cease to
be in full force and effect or shall be judicially declared null and void.
7.1(m) Any Security Document shall, at any time, cease to be in
full force and effect or shall be judicially declared null and void, or the
validity or enforceability thereof shall be contested by any Borrower or
Holdings, or the Agent or the Banks shall cease to have a valid and
perfected security interest having the priority contemplated thereunder in
all of the collateral described therein, other than by action or inaction
of the Agent or the Banks if (i) the aggregate value of the collateral
affected by any of the foregoing exceeds $100,000 and (ii) any of the
foregoing shall remain unremedied for ten days or more after receipt of
notice thereof by the Borrower from the Agent.
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7.1(n) Any Change of Control shall occur.
7.1(o) Any Borrower or Holdings is required, pursuant to the
terms of any instrument governing any Subordinated Debt, to make one or
more offers to redeem, repurchase, prepay or defease any Subordinated Debt
prior to its stated maturity (provided, however that any requirement that
------------------
Holdings prepay the amounts outstanding under the ▇▇▇▇▇▇ Subordinated
Bridge Loan Documents or the West Street Subordinated Bridge Loan Documents
out of proceeds of the loans made under the High Yield Subordinated
Permanent Loan Documents shall not constitute an Event of Default).
Section 7.2 Remedies. If (a) any Event of Default described in
--------
Sections 7.1(f), (g) or (h) shall occur with respect to any Borrower , the
Commitments shall automatically terminate and the Notes and all other
Obligations shall automatically become immediately due and payable, and the
Borrowers shall without demand pay into the Holding Account an amount equal to
the aggregate face amount of all outstanding Letters of Credit; or (b) any other
Event of Default shall occur and be continuing, then, upon receipt by the Agent
of a request in writing from the Majority Banks, the Agent shall take any of the
following actions so requested: (i) declare the Commitments terminated,
whereupon the Commitments shall terminate, (ii) declare the outstanding unpaid
principal balance of the Notes, the accrued and unpaid interest thereon and all
other Obligations to be forthwith due and payable, whereupon the Notes, all
accrued and unpaid interest thereon and all such Obligations shall immediately
become due and payable, in each case without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything in
this Agreement or in the Notes to the contrary notwithstanding, and (iii) demand
that the Borrowers pay into the Holding Account an amount equal to the aggregate
face amount of all outstanding Letters of Credit. Upon the occurrence of any of
the events described in clause (a) of the preceding sentence, or upon the
occurrence of any of the events described in clause (b) of the preceding
sentence when so requested by the Majority Banks, the Agent may exercise all
rights and remedies under any of the Loan Documents, and enforce all rights and
remedies under any applicable law.
Section 7.3 Offset. In addition to the remedies set forth in Section
------
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, each Borrower hereby irrevocably authorizes each Bank to set off
any Obligations owed to such Bank against all deposits and credits of that
Borrower with, and any and all claims of that Borrower against, such Bank. Such
right shall exist whether or not such Bank shall have made any demand hereunder
or under any other Loan Document, whether or not the Obligations, or any part
thereof, or deposits and credits held for the account of the Borrower is or are
matured or unmatured, and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to such
Bank or the Banks. Each Bank agrees that, as promptly as is reasonably possible
after the exercise of any such setoff right, it shall notify Omega of its
exercise of such setoff right; provided, however, that the failure of such Bank
to provide such notice shall not affect the validity of the exercise of such
setoff rights. Nothing in this Agreement shall be
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deemed a waiver or prohibition of or restriction on any Bank to all rights of
banker's Lien, setoff and counterclaim available pursuant to law.
ARTICLE VIII
------------
THE AGENT
The following provisions shall govern the relationship of the Agent with
the Banks.
Section 8.1 Appointment and Authorization. Each Bank appoints and
-----------------------------
authorizes the Agent to take such action as agent on its behalf and to exercise
such respective powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted to be taken by it under or in
connection with the Loan Documents, except for its own gross negligence or
willful misconduct. The Agent shall act as an independent contractor in
performing its obligations as Agent hereunder and nothing herein contained shall
be deemed to create any fiduciary relationship among or between the Agent, the
Borrowers or the Banks.
Section 8.2 Note Holders. The Agent may treat the payee of any Note
------------
as the holder thereof until written notice of transfer shall have been filed
with it, signed by such payee and in form satisfactory to the Agent.
Section 8.3 Consultation With Counsel. The Agent may consult with
-------------------------
legal counsel selected by it and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
Section 8.4 Loan Documents. The Agent shall not be under a duty to
--------------
examine or pass upon the validity, effectiveness, genuineness or value of any of
the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
Section 8.5 First Bank and Affiliates. With respect to its
-------------------------
Commitments and the Loans made by it, First Bank shall have the same rights and
powers under the Loan Documents as any other Bank and may exercise the same as
though it were not the Agent consistent with the terms thereof, and First Bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrowers, Holdings and the Subsidiaries of
either as if it were not the Agent.
Section 8.6 Action by Agent. Except as may otherwise be expressly
---------------
stated in this Agreement, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of,
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the Loan Documents. The Agent shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all holders of Notes; provided, however, that the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to the Loan Documents or applicable law. The Agent shall
incur no liability under or in respect of any of the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties and to be consistent with the terms of this Agreement.
Section 8.7 Credit Analysis. Each Bank has made, and shall continue
---------------
to make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrowers and
Holdings in connection with entering into this Agreement and has made its own
appraisal of the creditworthiness of the Borrowers and Holdings. Except as
explicitly provided herein, the Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or other
information with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before the first Event of Default or at any time thereafter.
Section 8.8 Notices of Event of Default, Etc. In the event that the
--------------------------------
Agent shall have acquired actual knowledge of any Event of Default or Default,
the Agent shall promptly give notice thereof to the Banks.
Section 8.9 Indemnification. Each Bank agrees to indemnify the
---------------
Agent, as Agent (to the extent not reimbursed by the Borrowers), ratably
according to such Bank's share of the aggregate Revolving and Term Loan
Commitment Amounts from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on or
incurred by the Agent in any way relating to or arising out of the Loan
Documents or any action taken or omitted by the Agent under the Loan Documents,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. No payment by any Bank under this Section shall relieve the
Borrowers of any of their obligations under this Agreement.
Section 8.10 Payments and Collections. All funds received by the
------------------------
Agent in respect of any payments made by any Borrower on the Term Notes shall be
distributed forthwith by the Agent among the Banks, in like currency and funds
as received, ratably according to each Bank's Term Loan Percentage. All funds
received by the Agent in respect of any payments made by any Borrower on the
Revolving Notes, Revolving Commitment Fees or Letter of Credit Fees shall be
distributed forthwith by the Agent among the Banks, in like currency and funds
as received, ratably according to each Bank's Revolving Percentage. After any
Event of Default has occurred, all funds received by the Agent, whether as
payments by a Borrower or as realization
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on collateral or on any guaranties, shall (except as may otherwise be required
by law) be distributed by the Agent in the following order: (a) first to the
Agent or any Bank who has incurred unreimbursed costs of collection with respect
to any Obligations hereunder, ratably to the Agent and each Bank in the
proportion that the costs incurred by the Agent or such Bank bear to the total
of all such costs incurred by the Agent and all Banks; (b) next to the Agent for
the account of the Banks (in accordance with their respective Total Percentages)
for application on the Notes and Unpaid Drawings; (c) next to the Agent for the
account of the Banks (in accordance with their respective Revolving Percentages)
for any unpaid Revolving Commitment Fees or Letter of Credit Fees owing by the
Borrower hereunder; and (d) last to the Agent to be held in the Holding Account
to cover the Borrowers' reimbursement and other obligations with respect to any
outstanding Letters of Credit.
Section 8.11 Sharing of Payments. If any Bank shall receive and
-------------------
retain any payment, voluntary or involuntary, whether by setoff, application of
deposit balance or security, or otherwise, in respect of the Obligations in
excess of such Bank's share thereof as determined under this Agreement, then
such Bank shall purchase from the other Banks for cash and at face value and
without recourse, such participation in the Notes held by such other Banks as
shall be necessary to cause such excess payment to be shared ratably as
aforesaid with such other Banks; provided, that if such excess payment or part
thereof is thereafter recovered from such purchasing Bank, the related purchases
from the other Banks shall be rescinded ratably and the purchase price restored
as to the portion of such excess payment so recovered, but without interest.
Subject to the participation purchase obligation above, each Bank agrees to
exercise any and all rights of setoff, counterclaim or banker's lien first fully
against any Notes and participations therein held by such Bank, next to any
other Indebtedness of the Borrowers to such Bank arising under or pursuant to
this Agreement and to any participations held by such Bank in Indebtedness of
the Borrower arising under or pursuant to this Agreement, and only then to any
other Indebtedness of the Borrowers to such Bank.
Section 8.12 Advice to Banks. The Agent shall forward to the Banks
---------------
copies of all notices, financial reports and other communications received
hereunder from the Borrowers by it as Agent, excluding, however, notices,
reports and communications which by the terms hereof are to be furnished by the
Borrowers directly to each Bank.
Section 8.13 Resignation. If at any time First Bank shall deem it
-----------
advisable, in its sole discretion, it may submit to each of the Banks and Omega
a written notification of its resignation as Agent under this Agreement, such
resignation to be effective upon the appointment of a successor Agent, but in no
event later than 30 days from the date of such notice. Upon submission of such
notice, the Majority Banks may appoint a successor Agent.
ARTICLE IX
----------
MISCELLANEOUS
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Section 9.1 Modifications. Notwithstanding any provisions to the
-------------
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrowers; provided that no amendment, modification or waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure therefrom by any Borrower or other party thereto shall in any event be
effective unless the same shall be in writing and signed by the Majority Banks,
and then such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. (The Agent may
enter into amendments or modifications of, and grant consents and waivers to
departure from the provisions of, those Loan Documents to which the Banks are
not signatories without the Banks joining therein, provided the Agent has first
--------
obtained the separate prior written consent to such amendment, modification,
consent or waiver from the Majority Banks.) Notwithstanding the forgoing, no
such amendment, modification, waiver or consent shall:
9.1(a) Reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or modify any of
the provisions of any Note with respect to the payment or repayment
thereof, without the consent of the holder of each Note so affected; or
9.1(b) Increase the amount or extend the time of any Commitment
of any Bank, without the consent of such Bank; or
9.1(c) Reduce the rate or extend the time of payment of any fee
payable to a Bank, without the consent of the Bank affected; or
9.1(d) Except as may otherwise be expressly provided in any of
the other Loan Documents, release any material portion of collateral
securing, or any guaranties for, all or any part of the Obligations without
the consent of all the Banks; or
9.1(e) Amend the definition of Majority Banks or otherwise
reduce the percentage of the Banks required to approve or effectuate any
such amendment, modification, waiver, or consent, without the consent of
all the Banks; or
9.1(f) Amend any of the foregoing Sections 9.1 (a) through (e)
or this Section 9.1 (f) without the consent of all the Banks; or
9.1(g) Amend any provision of this Agreement relating to the
Agent in its capacity as Agent without the consent of the Agent; or
9.1(h) Amend any provision of this Agreement relating to the
issuance of Letters of Credit without the consent of the Agent.
Section 9.2 Expenses. Whether or not the transactions contemplated
--------
hereby are consummated, the Borrowers agree to reimburse the Agent upon demand
for all reasonable out-
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of-pocket expenses paid or incurred by the Agent (including filing and recording
costs and reasonable fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the
Agent) in connection with the negotiation, preparation, approval, review,
execution, delivery, administration, amendment, modification and interpretation
of this Agreement and the other Loan Documents and any commitment letters or
term sheets relating thereto. The Borrowers shall also reimburse the Agent and
each Bank upon demand for all reasonable out-of-pocket expenses (including
reasonable expenses of legal counsel) paid or incurred by the Agent or any Bank
in connection with the collection and enforcement of this Agreement and any
other Loan Document. The obligations of the Borrowers under this Section shall
survive any termination of this Agreement.
Section 9.3 Waivers, etc. No failure on the part of the Agent or the
------------
holder of a Note to exercise and no delay in exercising any power or right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
The remedies herein and in the other Loan Documents provided are cumulative and
not exclusive of any remedies provided by law.
Section 9.4 Notices. Except when telephonic notice is expressly
-------
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from three days after the date of mailing if mailed; provided, however, that
any notice to the Agent or any Bank under Article II hereof shall be deemed to
have been given only when received by the Agent or such Bank.
Section 9.5 Taxes. The Borrowers agree to pay, and save the Agent
-----
and the Banks harmless from all liability for, any stamp or similar taxes which
may be payable with respect to the execution or delivery of this Agreement or
the issuance of the Notes, which obligation of the Borrowers shall survive the
termination of this Agreement.
Section 9.6 Successors and Assigns; Disposition of Loans;
---------------------------------------------
Transferees.
9.6(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Banks, the Agent, all future holders of the
Notes, and their respective successors and assigns, except that the
Borrowers may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Bank.
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9.6(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("Participants") participating
------------
interests in any Revolving Loan, Term Loan or other Obligation owing to
such Bank, any Revolving Note or Term Note held by such Bank, and any
Revolving Commitment or Term Loan Commitment of such Bank, or any other
interest of such Bank hereunder. In the event of any such sale by a Bank
of participating interests to a Participant, (i) such Bank's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible for the
performance thereof, (iii) such Bank shall remain the holder of any such
Revolving Note or Term Note for all purposes under this Agreement, (iv) the
Borrowers and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement and (v) the agreement pursuant to which such Participant acquires
its participating interest herein shall provide that such Bank shall retain
the sole right and responsibility to enforce the Obligations, including,
without limitation the right to consent or agree to any amendment,
modification, consent or waiver with respect to this Agreement or any other
Loan Document, provided that such agreement may provide that such Bank will
--------
not consent or agree to any such amendment, modification, consent or waiver
with respect to the matters set forth in Sections 9.1(a) - (c), or to any
release of all or substantially all of the collateral, without the prior
consent of such Participant. The Borrowers agree that if amounts
outstanding under this Agreement, the Revolving Notes, the Term Notes and
the Loan Documents are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have, to the extent permitted by
applicable law, the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Revolving Note, Term
Note or other Loan Document to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this
Agreement or any Revolving Note, Term Note or other Loan Document;
provided, that such right of setoff shall be subject to the obligation of
--------
such Participant to share with the Banks, and the Banks agree to share with
such Participant, as provided in subsection 8.11. The Borrowers also agree
that each Participant shall be entitled to the benefits of Sections 2.13,
2.21, 2.22, 2.23, 2.24, 2.25, 9.2 and 9.12 with respect to its
participation in the Revolving Commitments, Term Loan Commitments,
Revolving Loans and Term Loans; provided, that no Participant shall be
--------
entitled to receive any greater amount pursuant to such Sections than the
transferor Bank would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
9.6(c) Each Bank may, from time to time, with the consent of the
Agent and the Borrowers (none of which consents shall be unreasonably
withheld), assign to other lenders ("Assignees") part of the Indebtedness
---------
evidenced by any Revolving Note then held by that Bank, together with
equivalent proportions of its Revolving Commitment, and any Term Note then
held by that Bank and its Term Loan Commitment
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pursuant to written agreements executed by such assigning Bank, such
Assignee(s), the Borrower and the Agent in substantially the form of
Exhibit 9.6, which agreements shall specify in each instance the portion of
the Obligations evidenced by the Revolving Notes and Term Notes which is to
be assigned to each Assignee and the portion of the Revolving Commitment
and Term Loan Commitment of such Bank to be assumed by each Assignee (each,
an "Assignment Agreement"); provided, however, that the assigning Bank must
-------- -------
pay to the Agent a processing and recordation fee of $3,000 and that each
Assignment must be for an aggregate amount of $5,000,000 or more (or the
entire amount of the assigning Bank's Revolving Commitment and Term Loan,
if lesser). Upon the execution of each Assignment Agreement by the
assigning Bank, the relevant Assignee, the Borrowers and the Agent, payment
to the assigning Bank by such Assignee of the purchase price for the
portion of the Obligations being acquired by it and receipt by Omega of a
copy of the relevant Assignment Agreement, (x) such Assignee lender shall
thereupon become a "Bank" for all purposes of this Agreement with a
Revolving Commitment and a Term Loan Commitment in the amount set forth in
such Assignment Agreement and with all the rights, powers and obligations
afforded a Bank under this Agreement, (y) such assigning Bank shall have no
further liability for funding the portion of its Revolving Commitment
assumed by such Assignee and (z) the address for notices to such Assignee
shall be as specified in the Assignment Agreement executed by it.
Concurrently with the execution and delivery of each Assignment Agreement,
the assigning Bank shall surrender to the Agent the Revolving Note and Term
Note a portion of which is being assigned, and the Borrowers shall execute
and deliver a Revolving Note and a Term Note to the Assignee in the amount
of its Revolving Commitment and its Term Loan Commitment, respectively, and
a new Revolving Note and Term Note to the assigning Bank in the amount of
its Revolving Commitment and Term Loan Commitment, respectively, after
giving effect to the reduction occasioned by such assignment, all such
Notes to constitute "Revolving Notes" and "Term Notes" for all purposes of
this Agreement and of the other Loan Documents.
9.6(d) The Borrowers shall not be liable for any costs incurred
by the Banks in effecting any participation or assignment.
9.6(e) Each Bank may disclose to any Assignee or Participant and
to any prospective Assignee or Participant any and all financial
information in such Bank's possession concerning the Borrowers, Holdings or
any Subsidiaries or Omega which has been delivered to such Bank by or on
behalf of the Borrowers, Holdings or any Subsidiaries of Omega pursuant to
this Agreement or which has been delivered to such Bank by or on behalf of
the Borrowers, Holdings or any Subsidiaries of Omega in connection with
such Bank's credit evaluation of the Borrowers prior to entering into this
Agreement, provided that prior to disclosing such information, such Bank
--------
shall first obtain the agreement of such prospective Assignee or
Participant to comply with the provisions of Section 9.7.
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Section 9.7 Confidentiality of Information. The Agent and each Bank
------------------------------
shall use reasonable efforts to assure that information about the Borrower and
its operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Agent or such
Bank pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between any Bank and the Borrower and shall
not be divulged to any Person other than the Banks, their Affiliates and their
respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of the rights
of the Banks hereunder and under the Notes, the Guaranties and the Security
Documents or otherwise in connection with applicable litigation, (c) in
connection with assignments and participations and the solicitation of
prospective assignees and participants referred to in the immediately preceding
Section, provided that the disclosing Bank complies with Subsection 9.6(e), and
(d) as may otherwise be required or requested by any regulatory authority having
jurisdiction over any Bank or by any applicable law, rule, regulation or
judicial process, in the opinion of such Bank's counsel, such opinion concerning
the making of such disclosure to be binding on the parties hereto. No Bank
shall incur any liability to the Borrower by reason of any disclosure expressly
permitted by this Section 9.7.
Section 9.8 Governing Law and Construction. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision
of this Agreement and the other Loan Documents and any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective and valid under
such applicable law (except that certain aspects of the Security Documents shall
be governed by the law of the state in which the collateral subject to the
Security Document is located, or, in the case of the Collateral Assignments, by
federal law), but, if any provision of this Agreement, the other Loan Documents
or any other statement, instrument or transaction contemplated hereby or thereby
or relating hereto or thereto shall be held to be prohibited or invalid under
such applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto.
Section 9.9 Consent to Jurisdiction. AT THE OPTION OF THE AGENT,
-----------------------
THIS AGREEMENT AND THE OTHER BORROWER LOAN DOCUMENTS MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN OR ▇▇▇▇▇▇ COUNTY,
MINNESOTA; AND EACH BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN
THE EVENT THAT A BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT
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THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
Section 9.10 Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT
--------------------
AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 9.11 Survival of Agreement. All representations, warranties,
---------------------
covenants and agreement made by the Borrowers herein or in the other Borrower
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Banks and shall survive
the making of the Loans by the Banks and the execution and delivery to the Banks
by the Borrowers of the Notes, regardless of any investigation made by or on
behalf of the Banks, and shall continue in full force and effect as long as any
Obligation is outstanding and unpaid and so long as the Commitments have not
been terminated; provided, however, that the obligations of the Borrowers under
Section 9.2, 9.5, 9.7 and 9.12 shall survive payment in full of the Obligations
and the termination of the Commitments.
Section 9.12 Indemnification. The Borrowers hereby agree to defend,
---------------
protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of the
foregoing being an "Indemnitee" and all of the foregoing being collectively the
"Indemnitees") from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Loan Document, any commitments
relating thereto, the creation of a Lien in favor of the Agent or the Banks
under any Loan Document, or any transaction contemplated by any Loan
Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or omitted by any
Person, or the exercise of
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any rights or remedies thereunder, including the acquisition of any
collateral by the Banks by way of foreclosure of the Lien thereon, deed or
▇▇▇▇ of sale in lieu of such foreclosure or otherwise;
provided, however, that the Borrowers shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee's gross negligence or willful misconduct. In the event this
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law.
This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the later of the
Termination Date or the date of payment in full of the Obligations, including
specifically Obligations arising under clause (b) of this Section. The
indemnification provisions set forth above shall be in addition to any liability
the Borrowers may otherwise have. Without prejudice to the survival of any
other obligation of the Borrowers hereunder the indemnities and obligations of
the Borrowers contained in this Section shall survive the payment in full of the
other Obligations.
Section 9.13 Captions. The captions or headings herein and any table
--------
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 9.14 Entire Agreement. This Agreement and the other Borrower
----------------
Loan Documents embody the entire agreement and understanding between the
Borrowers, the Agent and the Banks with respect to the subject matter hereof and
thereof. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Nothing contained in this Agreement or
in any other Loan Document, expressed or implied, is intended to confer upon any
Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.
Section 9.15 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 9.16 Borrower Acknowledgments. The Borrowers hereby
------------------------
acknowledge that (a) they have been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b)
neither the Agent nor any Bank has any fiduciary relationship to the Borrowers,
the relationship being solely that of debtor and creditor, (c) no joint venture
exists between the Borrowers and the Agent or any Bank, and (d) neither the
Agent nor any Bank undertakes any responsibility to the Borrowers to review or
inform the Borrowers of any matter in connection with any phase of the business
or operations of the Borrowers and the Borrowers shall rely entirely upon their
own judgment with respect to their business, and any review, inspection or
supervision of, or information supplied to, the Borrowers by the Agent or
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any Bank is for the protection of the Banks and neither the Borrowers nor any
third party is entitled to rely thereon.
Section 9.17 Relationship Among Borrowers.
----------------------------
9.17(a) JOINT AND SEVERAL LIABILITY. EACH BORROWER AGREES THAT
---------------------------
IT IS LIABLE, JOINTLY AND SEVERALLY WITH EACH OTHER BORROWER, FOR THE
PAYMENT OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT
THE BANKS AND THE AGENT CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL
BORROWERS, IN THE BANKS' OR THE AGENT'S SOLE AND UNLIMITED DISCRETION.
9.17(b) Waivers of Defenses. The obligations of the Borrowers
-------------------
hereunder shall not be released, in whole or in part, by any action or
thing which might, but for this provision of this Agreement, be deemed a
legal or equitable discharge of a surety or guarantor, other than
irrevocable payment and performance in full of the Obligations (except for
contingent indemnity and other contingent Obligations not yet due and
payable) at a time after any obligation of the Banks hereunder to make the
Term Loans and Revolving Loans and of the Agent to issue Letters of Credit
shall have expired or been terminated and all outstanding Letters of Credit
shall have expired or the liability of the Agent thereon shall have
otherwise been discharged. No Borrower shall be exonerated with respect to
its liabilities under this Agreement by any act or thing except irrevocable
payment and performance of the Obligations, it being the purpose and intent
of this Agreement that the Obligations constitute the direct and primary
obligations of each Borrower and that the covenants, agreements and all
obligations of each Borrower hereunder be absolute, unconditional and
irrevocable. Each Borrower shall be and remain liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security
agreement securing all or any part of the Obligations, whether or not the
liability of any other Person for such deficiency is discharged pursuant to
statute, judicial decision or otherwise.
9.17(c) Other Transactions. The Banks and the Agent are
------------------
expressly authorized to exchange, surrender or release with or without
consideration any or all collateral and security which may at any time be
placed with it by the Borrowers or by any other Person on behalf of the
Borrowers, or to forward or deliver any or all such collateral and security
directly to the Borrowers for collection and remittance or for credit. No
invalidity, irregularity or unenforceability of any security for the
Obligations or other recourse with respect thereto shall affect, impair or
be a defense to the Borrowers' obligations under this Agreement. The
liabilities of each Borrower hereunder shall not be affected or impaired by
any failure, delay, neglect or omission on the part of any Bank or the
Agent to realize upon any of the Obligations of any other Borrower to the
Banks or the Agent, or upon any collateral or security for any or all of
the
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Obligations, nor by the taking by any Bank or the Agent of (or the failure
to take) any guaranty or guaranties to secure the Obligations, nor by the
taking by any Bank or the Agent of (or the failure to take or the failure
to perfect its security interest in or other lien on) collateral or
security of any kind. No act or omission of any Bank or the Agent, whether
or not such action or failure to act varies or increases the risk of, or
affects the rights or remedies of a Borrower, shall affect or impair the
obligations of the Borrowers hereunder.
9.17(d) Actions Not Required. Each Borrower, to the extent
--------------------
permitted by applicable law, hereby waives any and all right to cause a
marshaling of the assets of any other Borrower or any other action by any
court or other governmental body with respect thereto or to cause any Bank
or the Agent to proceed against any security for the Obligations or any
other recourse which any Bank or the Agent may have with respect thereto
and further waives any and all requirements that any Bank or the Agent
institute any action or proceeding at law or in equity, or obtain any
judgment, against any other Borrower or any other Person, or with respect
to any collateral security for the Obligations, as a condition precedent to
making demand on or bringing an action or obtaining and/or enforcing a
judgment against, such Borrower under this Agreement.
9.17(e) No Subrogation. Notwithstanding any payment or payments
--------------
made by any Borrower hereunder or any setoff or application of funds of any
Borrower by any Bank or the Agent, such Borrower shall not be entitled to
be subrogated to any of the rights of any Bank or the Agent against any
other Borrower or any other guarantor or any collateral security or
guaranty or right of offset held by any Bank or the Agent for the payment
of the Obligations, nor shall such Borrower seek or be entitled to seek any
contribution or reimbursement from any other Borrower or any other
guarantor in respect of payments made by such Borrower hereunder, until all
amounts owing to the Banks and the Agent by the Borrowers on account of the
Obligations are irrevocably paid in full. If any amount shall be paid to a
Borrower on account or such subrogation rights at any time when all of the
Obligations shall not have been irrevocably paid in full, such amount shall
be held by that Borrower in trust for the Banks and the Agent, segregated
from other funds of that Borrower, and shall, forthwith upon receipt by the
Borrower, be turned over to the Agent in the exact form received by the
Borrower (duly indorsed by the Borrower to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such
order as the Agent may determine.
9.17(f) Application of Payments. Any and all payments upon the
-----------------------
Obligations made by the Borrowers or by any other Person, and/or the
proceeds of any or all collateral or security for any of the Obligations,
may be applied by the Banks on such items of the Obligations as the Banks
may elect.
9.17(g) Recovery of Payment. If any payment received by the
-------------------
Banks or the Agent and applied to the Obligations is subsequently set
aside, recovered, rescinded
-81-
or required to be returned for any reason (including, without limitation,
the bankruptcy, insolvency or reorganization of a Borrower or any other
obligor), the Obligations to which such payment was applied shall, to the
extent permitted by applicable law, be deemed to have continued in
existence, notwithstanding such application, and each Borrower shall be
jointly and severally liable for such Obligations as fully as if such
application had never been made. References in this Agreement to amounts
"irrevocably paid" or to "irrevocable payment" refer to payments that
cannot be set aside, recovered, rescinded or required to be returned for
any reason.
9.17(h) Borrowers' Financial Condition. Each Borrower is
------------------------------
familiar with the financial condition of the other Borrowers, and each
Borrower has executed and delivered this Agreement based on that Borrower's
own judgment and not in reliance upon any statement or representation of
the Bank. The Banks and the Agent shall have no obligation to provide any
Borrower with any advice whatsoever or to inform any Borrower at any time
of the Bank's actions, evaluations or conclusions on the financial
condition or any other matter concerning the Borrowers.
9.17(i) Bankruptcy of the Borrowers. Each Borrower expressly
---------------------------
agrees that, to the extent permitted by applicable law, the liabilities and
obligations of that Borrower under this Agreement shall not in any way be
impaired or otherwise affected by the institution by or against any other
Borrower or any other Person of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or any other similar
proceedings for relief under any bankruptcy law or similar law for the
relief of debtors and that any discharge of any of the Obligations pursuant
to any such bankruptcy or similar law or other law shall not diminish,
discharge or otherwise affect in any way the obligations of that Borrower
under this Agreement, and that upon the institution of any of the above
actions, such obligations shall be enforceable against that Borrower.
9.17(j) Limitation; Insolvency Laws. As used in this Section
---------------------------
9.17(j): (a) the term "Applicable Insolvency Laws" means the laws of the
United States of America or of any State, province, nation or other
governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
transfers or conveyances or other similar laws (including, without
limitation, 11 U. S. C. (S)547, (S)548, (S)550 and other "avoidance"
provisions of Title 11 of the United Stated Code) as applicable in any
proceeding in which the validity and/or enforceability of this Agreement
against HomeCrest or Panther or any Specified Lien is in issue; and (b)
"Specified Lien" means any security interest, mortgage, lien or encumbrance
granted by HomeCrest or Panther securing the Obligations, in whole or in
part. Notwithstanding any other provision of this Agreement, if, in any
proceeding, a court of competent jurisdiction determines that with respect
to HomeCrest or Panther this Agreement or any Specified Lien would, but for
the operation of this Section, be subject to avoidance and/or recovery or
be unenforceable by reason of Applicable Insolvency Laws, this Agreement
and each such Specified Lien shall be valid and enforceable against
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HomeCrest or Panther, as applicable, only to the maximum extent that would
not cause this Agreement or such Specified Lien to be subject to avoidance,
recovery or unenforceability. To the extent that any payment to, or
realization by, the Banks or the Agent on the Obligations exceeds the
limitations of this Section and is otherwise subject to avoidance and
recovery in any such proceeding, the amount subject to avoidance shall in
all events be limited to the amount by which such actual payment or
realization exceeds such limitation, and this Agreement as limited shall in
all events remain in full force and effect and be fully enforceable against
HomeCrest and Panther. This Section is intended solely to reserve the
rights of the Banks and the Agent hereunder against HomeCrest and Panther
in such proceeding to the maximum extent permitted by Applicable Insolvency
Laws and neither the Borrowers, any guarantor of the Obligations nor any
other Person shall have any right, claim or defense under this Section that
would not otherwise be available under Applicable Insolvency Laws in such
proceeding.
Section 9.18 Waiver of Stock Restriction. Pursuant to Section 6 of
---------------------------
the Bylaws of Panther ("Section 6"), no share of Stock of Panther may be sold,
transferred or assigned without such Stock first being offered for sale to
Panther pursuant to the terms and conditions set forth in Section 6. Each of
Omega, as sole shareholder of the Stock of Panther, and Panther hereby
irrevocably waive any rights and privileges it may have pursuant to Section 6,
solely to the extent necessary to permit the pledge to the Agent, for the
benefit of the Banks, by Omega of such Stock to secure the Obligations and the
realization of the Agent's rights (pursuant to the terms and conditions of the
Omega Pledge Agreement) of the Agent's and the Banks' rights in such Stock upon
the occurrence and during the continuation of an Event of Default.
Section 9.19 Approval of High Yield Subordinated Permanent Loan
--------------------------------------------------
Documents. The Agent and the Banks hereby agree to approve the High Yield
---------
Subordinated Permanent Loan Documents (and, consequently, that the High Yield
Subordinated Permanent Debt will be permitted pursuant to Section 6.13(f)), if
and only if each of the following conditions is satisfied:
(a) The subordination provisions of the High Yield Subordinated
Permanent Loan Documents, and all defined terms used therein, are identical
to the subordination provisions attached hereto as Exhibit 9.19, with such
changes as may be acceptable to the Agent and the Majority Banks in their
sole and unlimited discretion;
(b) The covenants and events of default contained in the High Yield
Subordinated Permanent Loan Documents are, in the reasonable judgment of
the Agent and the Majority Banks, at least as favorable to both the
Borrowers and the Banks (in their capacity as Senior Lenders under the High
Yield Subordinated Permanent Loan Documents) as those contained in the
Senior Subordinated Bridge Loan Agreement that is included in the High
Yield Subordinated Permanent Loan Documents, as executed and delivered on
the Closing Date, with the following revisions: (i) the Borrowers will be
free to sell assets without regard to compliance with any financial
covenant or other test, as long as such asset sales generate proceeds equal
to or greater 90% of the fair market value
-83-
of the assets sold, and the covenants permit the application of the net
proceeds of the sale to the Obligations; (ii) payment defaults with respect
to Indebtedness (other than the High Yield Subordinated Permanent Debt)
would not constitute events of default under the High Yield Subordinated
Permanent Loan Documents unless such payment defaults resulted in the
acceleration of the relevant Indebtedness or occurred at the final maturity
thereof; (iii) the percentage of holders of the High Yield Subordinated
Permanent Debt required to exercise remedies will be twenty five per cent
(25%) or greater; (iv) the provision authorizing additional Loans under
this Agreement or any replacement thereof will authorize up to $120,000,000
in principal amount outstanding at any time, without regard to any prior
principal payments; and (v) the trustee with respect to the High Yield
Subordinated Permanent Debt will be required to deliver promptly to the
Agent copies of certain specified material notices to or from such trustee
with respect to the High Yield Subordinated Permanent Debt;
(c) The High Yield Subordinated Permanent Debt is not guaranteed by
Holdings; and
(d) The final version of each High Yield Subordinated Permanent Loan
Document is reasonably acceptable to the Agent and the Majority Banks.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
-84-
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OMEGA CABINETS, LTD.
By __________________________________
Name ________________________________
Title _______________________________
HOMECREST CORPORATION
By __________________________________
Name ________________________________
Title _______________________________
PANTHER TRANSPORT, INC.
By __________________________________
Name ________________________________
Title _______________________________
Address for Borrowers:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
S-1
Commitment Amount
-----------------
Revolving Term
--------- ----
$20,000,000 $40,000,000
FIRST BANK NATIONAL ASSOCIATION
In its individual corporate capacity and
as Agent
By ___________________________________
▇▇▇▇ ▇▇▇▇▇
Vice President
Address:
First Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, MPFP 0702
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
S-2
EXHIBIT 1.1-1
TO CREDIT AGREEMENT
Legal Description of Indiana Facility
A part of the South half (S 1/2) of Section Twenty-two (22), Township Thirty-six
(36) North, Range Six (6) East, Elkhart Township, Elkhart County, Indiana, more
particularly described as follows:
Commencing at an iron pipe marking the center of said Section Twenty-two (22);
thence South Eighty-nine (89) degrees Fourteen (14) minutes Zero (00) seconds
East (recorded bearing), along the North line of the Southeast Quarter (SE 1/4)
of Section Twenty-two (22), a distance of One hundred ninety and thirteen
hundredths (190.13) feet to the East line of Fifteenth Street; thence South Zero
(00) degrees Twenty-three (23) minutes Zero (00) seconds East along the East
line of said Fifteenth Street, a distance of Four hundred ninety-one and forty-
two hundredths (491.42) feet to the Northeast corner of the intersection of
Fifteenth Street and Eisenhower Drive; thence South One (01) degree Zero (00)
minutes Zero (00) seconds West, a distance of Sixty (60) feet to the North line
of a parcel of land conveyed to York Industrial Park, Inc. as described and
recorded in Elkhart County Deed Record 300, page 86 through 88 and the point of
beginning of this description; thence South Eighty-nine (89) degrees Zero (00)
minutes Eight (08) seconds East along the North line of said York Industrial
Park, Inc. parcel and along the South line of Eisenhower Drive North, a distance
of Sixty-two and eighty-seven hundredths (62.87) feet to a rebar marking the
Northeast corner of said York Industrial Park, Inc. parcel and the Northwest
corner of a parcel of land conveyed to HomeCrest Corporation as described and
recorded in Elkhart County Deed 383, page 924 through 927; thence South Eighty-
nine (89) degrees Fourteen (14) minutes Thirteen (13) seconds East along the
North line of said HomeCrest Corporation parcel (Deed 383, pages 924 through
927) and along the South line of said Eisenhower Drive North, a distance of Four
hundred thirty-four and seventy hundredths (434.70) feet to the Northeast corner
of said HomeCrest Corporation parcel (Deed 383, pages 924 through 927); thence
South Zero (00) degrees Forty-five (45) minutes Forty-seven (47) seconds West
along the East line of said HomeCrest Corporation Parcel (Deed 383, page 924
through 927), a distance of Five hundred one and sixty-two hundredths (501.62)
feet to a rebar marking the Southeast corner of said HomeCrest Corporation
parcel (Deed Record 383, page 924 through 927); thence North Eighty-nine (89)
degrees Zero (00) minutes Thirty-six (36) seconds West along the South line of
said HomeCrest Corporation parcel (Deed 383 page 924 through 927) York
Industrial Park, Inc., parcel (Deed 300, page 86 through 88), and HomeCrest
Corporation parcel (Deed 353, page 321), a distance of Eight hundred seventy-
nine and fifty-five hundredths (879.55) feet to an iron pipe marking the
Northeast corner of a parcel of land conveyed to HomeCrest Corporation as
described and recorded in Elkhart County Deed 400, pages 852 and 853; thence
South Zero (00) degrees Fifty-three (53) minutes Fifty-two (52) seconds West
along the East line of said HomeCrest Corporation parcel (Deed 400, page 852 and
853), a distance of Four hundred ninety-seven and ninety-nine hundredths
(497.99) feet to a cut in the concrete;
1.1-1-1
thence North Eighty-nine (89) degrees Seven (07) minutes Thirty-four (34)
seconds West along the South line of HomeCrest Corporation parcel (Deed 400,
page 852 and 853) and the North line of Eisenhower Drive South, a distance of
Five hundred (500) feet to the Southwest corner of said HomeCrest Corporation
parcel (Deed 400, pages 852 and 853); thence North Zero (00) degrees Fifty-three
(53) minutes Fifty-two (52) seconds East along the West line of said HomeCrest
Corporation parcel (Deed 400, pages 852 and 853), a distance of Four hundred
ninety-nine (499) feet to an iron pipe marking the Northwest corner of said
HomeCrest Corporation parcel (Deed 400, pages 852 and 853); thence North Eighty-
nine (89) degrees Zero (00) minutes Thirty-six (36) seconds West along the South
line of parcels of land conveyed to HomeCrest Corporation as described and
recorded in Elkhart County Deed 370, page 637 and Deed 411, page 591, a distance
of Five hundred (500) feet to an iron pipe marking the Southwest corner of said
HomeCrest Corporation parcel (Deed 411, page 591); thence North Zero (00)
degrees Fifty-eight (58) minutes Thirteen (13) seconds East along the West line
of said HomeCrest Corporation parcel (Deed 411, page 591) and along the East
line of said Eisenhower Drive, a distance of Three hundred eighty and four
hundredths (380.04) feet to a rebar marking the point of curvature of a One
hundred twenty (120) foot radius curve to the right; thence Northeasterly along
the arc of said curve, also being along the Northwesterly line of said HomeCrest
Corporation parcel (Deed 411, page 591) and along the Southeasterly line of said
Eisenhower Drive, a distance of One hundred eighty-eight and fifty-five
hundredths (188.55) feet to an iron pipe marking the point of tangency of said
curve; thence South Eighty-nine (89) degrees Zero (00) minutes Eight (08)
seconds East along the North line of said HomeCrest Corporation parcel (Deed
Record 411, page 591), HomeCrest Corporation parcel (Deed 370, page 637), York
Industrial Park, Inc. (Deed 300, page 86 through 88) and HomeCrest Corporation
parcel (Deed 353, page 321) and along the South line of Eisenhower Drive North,
a distance of One thousand two hundred sixty and twelve hundredths (1260.12)
feet to the point of beginning.
ALSO
Heretofore described real estate benefits from an easement for railroad purposes
as recorded in Deed Record 241, page 598 in the Office of the Recorder of
Elkhart County, Indiana.
1.1-1-2
EXHIBIT 1.1-2
TO CREDIT AGREEMENT
Legal Description of Iowa Facility
PARCEL lA:
The East 102.5 feet of the South 140 feet of that part of Lot No. 9 (now
vacated) in "Hardy & ▇▇▇▇▇▇'▇ Plat, Waterloo, Iowa", which lies North of Wilby
Street and West of Linden Avenue, and being that part of the Southeast Quarter
of Section ▇▇. ▇▇, ▇▇▇▇▇▇▇▇ ▇▇. ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ No. 13 West of the Fifth
Principal Meridian, in the City of Waterloo, Black Hawk County, Iowa, lying
within the following described boundaries:
Commencing at the point of intersection of the West line of Linden Avenue
with the North line of Wilby Street; thence West along the North line of
Wilby Street a distance of 102.5 feet; thence North along a line which is
parallel with the West line of Linden Avenue a distance of 140 feet; thence
East along a line which is parallel with the North line of Wilby Street a
distance of 102.5 feet to the West line of Linden Avenue; thence South
along the West line of Linden Avenue a distance of 140 feet to the place of
beginning;
and
PARCEL 1B:
Lots Nos. 4 and 5 in ▇▇▇▇▇'▇ Third Addition to Waterloo, Iowa.
PARCEL 2:
The West 40 feet and the South 307 feet of the East 110 feet of Lot No. 8 and
Lots Nos. 9 through 24 in Airline-▇▇▇▇▇▇ Industrial Park, Waterloo, Iowa.
PARCEL 3:
Perpetual easement for roadway for the benefit of Parcel 2 as set forth in the
Easement Agreement recorded January 26, 1979 in Book 6 Ease, page 283 over
Airline Drive, ▇▇▇▇▇▇ Drive and ▇▇▇▇▇ Drive as shown on the plat of Airline-
▇▇▇▇▇▇ Industrial Park.
PARCEL 4:
1.1-2-1
Easement for ingress and egress and access to loading dock and Westerly side of
building for the benefit of Parcel 1A over the Westerly 47.5 feet of the East
105 feet of the South 140 feet of that part of Lot 9 (now vacated) in "Hardy &
▇▇▇▇▇▇'▇ Plat, Waterloo, Iowa," which lies North of Wilby Street and West of
Linden Avenue, as created by Warranty Deed from Construction Machinery Company
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, d/b/a ▇▇▇▇▇▇ ▇▇▇▇ Specialties, recorded April 14, 1982 in
Book 563 CLD, page 61.
All situated in the State of Iowa, County of Black Hawk.
1.1-2-2
EXHIBIT 1.1-3
TO CREDIT AGREEMENT
REVOLVING NOTE
$[ ]
June 13, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, each of OMEGA CABINETS, LTD., a Delaware corporation
("Omega"), HOMECREST CORPORATION, a Delaware corporation ("HomeCrest"), PANTHER
TRANSPORT, INC., an Iowa corporation ("Panther" and, collectively with Omega,
HomeCrest and any other party that becomes a party hereto pursuant to Section
6.5 of the Credit Agreement hereinafter referred to [the "Credit Agreement"],
the "Borrowers"), hereby jointly, severally and unconditionally, in accordance
with the terms of the Credit Agreement, promises to
pay to the order of [ ] (the "Bank") at the main office of First Bank National
Association in Minneapolis, Minnesota, in lawful money of the United States of
America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Credit Agreement) on the Revolving
Commitment Ending Date, the principal amount of [ ] AND NO/100 DOLLARS ($[ ])
or, if less, the aggregate unpaid principal amount of the Revolving Loans made
by the Bank under the Credit Agreement, and to pay interest (computed on the
basis of actual days elapsed and a year of 360 days) in like funds on the unpaid
principal amount hereof from time to time outstanding at the rates and times set
forth in the Credit Agreement.
This note is one of the Revolving Notes referred to in the Credit Agreement
dated as of June 13, 1997 (as the same may hereafter be from time to time
amended, restated or otherwise modified, the "Credit Agreement") among the
undersigned, the Bank and the other banks named therein. This note is secured,
it is subject to certain permissive and mandatory prepayments and its maturity
is subject to acceleration, in each case upon the terms provided in said Credit
Agreement.
In the event of default hereunder, the undersigned agrees to pay all costs
and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
1.1-3-1
OMEGA CABINETS, LTD.
By _____________________
Name ___________________
Title __________________
HOMECREST CORPORATION
By _____________________
Name ___________________
Title __________________
PARTHER TRANSPORT, INC.
By _____________________
Name ___________________
Title __________________
1.1-3-2
EXHIBIT 1.1-4
[AMERICAN APPRAISAL ASSOCIATES LETTERHEAD]
June 13, 1997
The Boards of Directors of each of the following corporations:
Omega Merger Corp.
Omega Holdings, Inc.
Omega Cabinets, Ltd.
HomeCrest Corporation
Panther Transport, Inc.
First Bank National Association, as Agent for the Banks referred to below
West Street Fund I, L.L.C.
Citicorp (USA), Inc.
and Mezzanine Lending Associates III, L.P.
c/▇ ▇▇▇▇▇▇ Capital Corporation
Gentlemen:
This letter is furnished at your request, concerning the recapitalization (the
"Recapitalization") of Omega Holdings, Inc., a Delaware corporation ("Ornega"),
and the financial and refinancing thereof, as discussed further below.
We understand that Omega Cabinets Ltd., a Delaware corporation ("Omega
Cabinets") is wholly owned by Omega. We also understand that HomeCrest
Corporation, a Delaware corporation ("HomeCrest") and Panther Transport, Inc.,
an Iowa corporation ("Panther') are wholly-owned subsidiaries of Omega Cabinets.
We understand that in the Recapitalization, Omega Merger Corp., a Delaware
Corporation ("Merger Corp.") will merge (the "Merger") with and into Omega, with
Omega being the surviving corporation. A portion of the capital stock and
options of Omega will be cashed out in the Recapitalization and the balance of
such capital stock will remain outstanding, and existing debt refinanced, for an
aggregate consideration, including transaction fees and expenses, of $215
million. The financing (the "Financing") to accomplish the Acquisition will
comprise: (1) a $60 million senior bank facility, provided to Omega Cabinets,
HomeCrest and Panther (collectively the "Borrowers") by a group of banks (the
"Banks") led by First Bank National Association, involving a $20 million senior
revolving credit facility and a $40 million term loan facility; (2) a $90
million subordinated bridge loan to the Borrowers (the "Bridge Loan") provided
by West Street Fund I, L.L.C. and Citicorp (USA), Inc. (the "Initial Lenders");
(3) a $10 million junior subordinated bridge
to Omega (the "Junior Bridge Loan") provided by Mezzanine Lending Associates
III, L.P., (the "▇▇▇▇▇▇ Fund", together with the Initial Lenders, the "Other
Financing Sources") and (4) approximately $70 million in equity contributed to
Omega by management and the ▇▇▇▇▇▇ Fund.
We also understand that as soon as possible after the close of the Transaction,
as defined below, Omega Cabinets will issue up to $100 million of subordinated
debt through a private placement, the proceeds of which will be used to
refinance (the "Refinancing") the $90 million Bridge Loan and the $10 million
Junior Bridge Loan.
For purposes of our Opinion (the "Opinion") (a) the balance sheet, operating
results and cash flows of Omega Cabinets, on a consolidated basis, are
synonymous or identical to the balance sheet, operating results and cash flows
of Omega; (b) any reference to the "Borrowers" is a reference to Omega Cabinets,
HomeCrest and Panther on an aggregate basis and not on an individual company
basis; and (c) references to Omega assume Omega on a consolidated basis.
The transactions contemplated by the Recapitalization and the related Financing
and Refinancing, any changes in Omega's and the Borrowers' assets and
liabilities as a result of the Financing and Refinancing required to effect the
Recapitalization, any guaranties made in connection with the Financing and
Refinancing and the payment of related fees and expenses are collectively
referred to as the "Transaction".
You have requested our opinion (the "Opinion"), as to whether, immediately fter,
and giving effect o, the consummation of the Transaction:
(a) The fair value of the aggregate assets of Omega and the Borrowers,
will exceed each of their total liabilities (including, without limitation,
subordinated, unmatured, unliquidated, disputed and contingent
liabilities);
(b) The present fair saleable value of the aggregate assets of Omega
and the Borrowers will be greater than each of their probable liabilities
(including, without limitation, unliquidated, unmatured, disputed and
contingent liabilities) on their debts as such debts become absolute and
matured;
(c) Omega and the Borrowers will be able to pay their respective debts
and other liabilities, including contingent liabilities and other
commitments, as they mature; and
(d) Omega and the Borrowers will not have unreasonably small capital
for the business in which they are engaged, as now conducted by Omega and
the Borrowers and as business is proposed to be conducted following the
consummation of the Transaction.
In rendering our Opinion, we have valued the aggregate assets, on a going
concern basis, of Omega and the Borrowers, immediately after, and giving effect
to, the Transaction. The valuation included the aggregate assets of the business
enterprise of Omega and the Borrowers, or total invested capital
2
as represented by the total net working capital, tangible plant, property and
equipment, and intangible assets of the business enterprise. We believe that
this is a reasonable basis to value Omega and the Borrowers. Nothing has come
to our attention that causes us to believe that Omega and the Borrowers, after
the Transaction, will not be a going concern. For purposes of the Opinion, the
following terms will have the meanings set forth below:
(1) "Fair value" means the amount at which the assets would change
----------
hands between a willing buyer and a willing seller, within a commercially
reasonable period of time, each having reasonable knowledge of the relevant
facts, neither being under any compulsion to act, with equity to both;
(2) "Present fair saleable value" means the amount that may be
---------------------------
realized if the assets are sold in their entirety with reasonable
promptness in an arm's-length transaction under present market conditions
for the sale of comparable business enterprises, as such conditions can be
reasonably evaluated by AAA;
(3) "Contingent liabilities" means the maximum estimated amount of
----------------------
contingent liabilities, which contingent liabilities have been identified
to us by responsible officers and employees of Omega and the Borrowers,
their respective accountants and financial advisors, and such other experts
as we deemed necessary to consult, and valued by AAA after consultation
with responsible officers and employees of Omega and the Borrowers and/or
such industry, economic and other experts as we deemed necessary to consult
(the valuation of contingent liabilities to be computed in light of all the
facts and circumstances existing at the time of such valuation as the
maximum amount that can reasonably be expected to become an actual or
matured liability), which contingent liabilities may not meet the criteria
for accrual under Statement of Financial Accounting Standards No. 5 and
therefore may not be recorded as liabilities under GAAP;
(4) "Able to pay its debts as they mature" means, assuming the
------------------------------------
Transaction has been consummated as proposed (and taking into consideration
additional borrowing capacity under Omega's and the Borrowers' borrowing
facilities based on their collateral borrowing base and other conditions in
such bank financing agreements) during the period December 31, 1997 through
December 31, 2001 covered by the financial projections dated May 28, 1997
for the December 31, 1997 through December 31, 1999 time period prepared by
management of Omega Cabinets (the "Management Projections," Exhibit A.1)
and the financial projections dated May 2, 1997 for the December 3 1, 2000
through December 31, 2001 time period prepared by ▇▇▇▇▇▇ Capital
Corporation (the "▇▇▇▇▇▇ Projections," Exhibit A.2; the Management
Projections and the ▇▇▇▇▇▇ Projections are collectively referred to as the
"Financial Projections") that (i) Omega and the Borrowers will have
positive cash flow after paying their scheduled anticipated indebtedness;
(ii) the realization of current assets in the ordinary course of business
will be sufficient to pay recurring current debt, short-term debt, long-
term debt service and other contractual obligations, including contingent
liabilities, as such obligations mature; and (iii) the cash flow will be
sufficient to provide
3
cash necessary to repay Omega's and the Borrowers long-term indebtedness as
such debt matures; and
(5) "Will not have unreasonably small capital with which to conduct
--------------------------------------------------------------
its business" means that Omega and the Borrowers will not lack sufficient
------------
capital for the needs and anticipated needs for capital of their respective
businesses, including contingent liabilities, as management of Omega and
the Borrowers has indicated that Omega's and the Borrowers' business is
proposed to be conducted following the consummation of the Transaction.
Our Opinion of fair value and present fair saleable value is subject to the
following conditions:
(i) Any sale of Omega or the Borrowers, including the underlying
assets thereof, will be completed as the sale of an ongoing business
entity; and
(ii) A "commercially reasonable period" of time means at least
twelve months for a willing buyer and a willing seller to agree on price
and terms, plus the time necessary to complete the sale of Omega or the
Borrowers, and
(iii) "Reasonable Promptness" means a period of time of nine to
twelve months for a willing buyer and a willing seller to agree on price
and terms, plus the time necessary to complete the sale of Omega or the
Borrowers.
In connection with our Opinion of the fair value and the present fair saleable
value of Omega and the Borrowers, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate and were provided
historical and projected operating results. In addition to this information, we
were provided other operating data and information all of which has been
accepted, without independent verification, as representing a fair statement of
historical and projected results of each of Omega and the Borrowers in the
opinion of the management of Omega and the Borrowers. However, in the course of
our investigation, nothing has led us to believe that our acceptance and
reliance on such operating data and information was unreasonable.
The determination of the fair value and present fair saleable value of each of
Omega and the Borrowers was based on the generally accepted valuation principles
used in the market and discounted cash flow approaches, described as follows:
Market Approach - Based on correlation of. (a) current stock market prices
of publicly held companies whose businesses are similar to that of Omega
and the Borrowers and premiums paid over market price by acquirers of total
or controlling ownership in such businesses; and (b) acquisition prices
paid for total ownership positions in businesses whose lines of business
are similar to that of Omega and the Borrowers.
4
Discounted Cash Flow Approach - Based on the present value of Omega and the
Borrowers, future debt-free operating cash flow as estimated by the
management of Omega and the Borrowers, and contained in the Financial
Projections. The present value is determined by discounting the projected
operating cash flow at a rate of return that reflects the financial and
business risks of Omega and the Borrowers.
In determining the amount that would be required by pay the total liabilities of
Omega and the Borrowers as such liabilities become absolute and mature for
purposes of Opinion (b) below, we have applied valuation techniques, including
present value analysis, using appropriate rates over appropriate periods, to the
amounts that will be required from time to time to pay such liabilities and
contingent liabilities as they become absolute and mature based on their
scheduled maturities.
In the course of our investigation of identified contingent liabilities, the
areas brought to our attention by the management of Omega and the Borrowers
included: (i) environmental matters; (ii) the adequacy of the corporate
insurance program; (iii) tax audit exposure; (iv) pension and employee benefits
programs; and (v) various lawsuits and claims filed and/or pending against Omega
and the Borrowers.
Reserves for contingent liabilities have been made in the pro forma consolidated
balance sheet of Omega (the "Pro Forma Balance Sheet") prepared and furnished to
us by the managements of Omega and the Borrowers and provisions for the ongoing
expenses related to these issues have been included with the projection of
income and expenses presented in the Financial Projections, and are considered
in our valuation study as ongoing business operating expenses. We have taken
these identified contingent liabilities into account in rendering our Opinion
and have concluded that such liabilities and ongoing expenses do not require any
qualification of our Opinion. Our conclusion is based on: (i) our review of
various acquisition transactions including leveraged transactions and
recapitalization transactions financed through the incurrence of significant
indebtedness involving corporations engaged in businesses similar to those of
Omega and the Borrowers; (ii) the opinion of the managements of Omega and the
Borrowers that the issues concerning various lawsuits, claims and other
identified contingent liabilities do not and are not reasonably likely to have a
material adverse effect on the consolidated financial position of each of Omega
and the Borrowers; and (iii) our discussions with the management of Omega and
the Borrowers, their accountants, consultants and counsel concerning, and our
investigation of, the various lawsuits, claims and other contingent liabilities
identified to us.
We have assumed that the total identified liabilities of each of Omega and the
Borrowers will be only those liabilities set forth in the Financial Projections
and the Pro Forma Balance Sheet of Omega, and the identified contingent
liabilities referred to herein. In the course of our investigation, nothing
came to our attention which caused us to believe such assumptions to be
unreasonable. The Pro Forma Balance Sheet is the unaudited Pro Forma Condensed
Balance Sheet as of March 29, 1997 for Omega as reflected in Exhibit B,
attached, adjusted to give effect to: (a) the planned financing of the
Transaction; and (b) the application of the proceeds of the financing and
restated by us to reflect the fair value and present fair saleable value of
Omega.
5
Merger Corp.'s, Omega's and the Borrowers' management have represented to us,
and we have relied on the management of Merger Corp.'s, Omega's and the
Borrowers' representation, that no adverse changes have occurred since their
preparation which would materially impact the content of Omega's and the
Borrowers' Pro Forma Balance Sheet and Financial Projections. Nothing has come
to our attention which would lead us to believe that our reliance on such
representations is unreasonable.
In connection with our Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
(i) Reviewed the Transaction documents including but not limited to
(a) the Agreement and Plan of Merger as of April 28, 1997, as amended
through the Sixth Amendment dated May 30, 1997; (b) the Omega Holdings,
Inc. Descriptive Memorandum; (c) Credit Agreement dated as of June 13,
1997 by and between the Borrowers and First Bank National Association as
Agent and as a Bank, and the Banks party thereto; (d) the Senior
Subordinated Bridge Loan Agreement dated June 13, 1997 by and among the
Borrowers, Omega and the Initial Lenders; (e) Merger Financing Agreement by
and between Omega Holdings, Inc. and Mezzanine Lending Associates III,
L.P., and the Subordinated Note issued to Mezzanine Lending Associates III,
L.P. (f) the Management Agreement dated as of June 13, 1997 by and between
Omega Holdings, Inc., Omega Cabinets, Ltd. and BCC Industrial Services,
Inc., (g) Common Stock Purchase Warrant issued to BCC Industrial Services,
Inc.; (h) Stock Option Plan by Omega Holdings, Inc.; and (i) the
Stockholders' Agreement dated as of June 13, 1997 by and among Omega
Holdings, Inc. Mezzanine Lending Associates III, L.P., BCC Industrial
Services and the other parties thereto.
(ii) Reviewed the Financial Projections prepared by management of
Omega, the Borrowers and ▇▇▇▇▇▇ Capital Corporation and inquired of the
management of Omega, the Borrowers and ▇▇▇▇▇▇ Capital Corporation and/or
their advisors as to the foundation for any such projections and the basic
assumptions made in the preparation of projections relating to the type of
business, geographic markets, economic conditions, and capital facilities
and working capital requirements;
(iii) Reviewed audited and unaudited historical income statements,
balance sheets and statements of sources and uses-of funds of Omega and the
Borrowers as provided by management and its accountants;
(iv) Visited the headquarters of Omega and the Borrowers to discuss
historical and projected operating results and industry data, including the
impact of future trends on the industry and Omega and the Borrowers, as
well as the effects of the Financing and the Transaction;
6
(v) Reviewed internal Omega and the Borrowers financial analyses
and other internally generated data for Omega and the Borrowers;
(vi) Inquired of the managements of Omega and the Borrowers and
their respective financial advisors AS to the estimated levels of cash and
working capital required by Omega and the Borrowers;
(vii) Reviewed certain publicly available economic, financial and
market information as it relates to the business operations of Omega and
the Borrowers;
(viii) Reviewed information regarding businesses similar to Omega and
the Borrowers and investigated the financial terms and post-transaction
performance of recent acquisitions of companies comparable to Omega and the
Borrowers;
(ix) Met or held discussions with members of the senior management
of Omega and the Borrowers to discuss the business, properties, past
history, results of operations and prospects of Omega and the Borrowers,
including discussions of the competitive environment in which Omega and the
Borrowers will operate ;
(x) Held discussions with representatives of Omega's and the
Borrowers' independent accounting firm and counsel to discuss certain
matters; and
(xi) Discussed all of the foregoing information, where appropriate,
with management of Omega and the Borrowers, their respective employees,
agents, accountants and financial advisors;
(xii) Conducted such other studies, analyses and investigations as we
deem relevant or necessary for purposes of the Opinion.
We have assumed, without independent verification, that the Pro Forma Balance
Sheet and Financial Projections provided to us have been reasonably prepared and
reflect the best available estimates, at the time they were prepared, of the
actual and future financial results and condition of Omega and the Borrowers,
and that there has been no material adverse change in the assets, financial
condition, business or prospects of Omega and the Borrowers since the date of
the most recent financial statements made available to us. Nothing has come to
our attention which would lead us to believe that the foregoing assumptions are
unreasonable.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Although we have not independently verified the accuracy and completeness of the
Financial Projections and forecasts, or any of the assumptions, estimates, or
judgments referred to therein, or the basis therefore, and although no
assurances can be given that such Financial Projections and forecasts can be
realized or that actual results will not vary materially from those projected,
nothing has come to our
7
attention during the course of our engagement which led us to believe that any
information reviewed by us or presented to us in connection with our rendering
of the Opinion is unreasonable in any material respect or that it was
unreasonable for us to utilize and rely upon the financial projections,
financial statements, assumptions, description of the business and liabilities,
estimates and judgements of the managements of Omega and the Borrowers, their
respective counsel, accountants and financial advisors. Our Opinion is
necessarily based on business, economic, market and other conditions as they
currently exist and as they can be evaluated by us at the date of this Opinion.
Further, our Opinion is subject to the following assumptions: (a) The
Transaction is consummated as described herein; (b) the senior revolving credit
facility will be refinanced on or before year 2001; and (c) Omega Cabinets will
issue up to $I 00 million of subordinated debt shortly after the closing, the
proceeds of which will be used to refinance the $90 million Bridge Loan and the
$10 million Junior Bridge Loan.
Based upon the foregoing and in reliance thereon, it is our opinion as of this
date that, assuming the Transaction has been consummated as proposed,
immediately after, and giving effect to, the consummation of the Transaction:
(a) The fair value of the aggregate assets of Omega and the Borrowers,
will exceed each of their total liabilities (including, without limitation,
subordinated, unmatured, unliquidated, disputed and contingent
liabilities);
(b) The present fair saleable value of the aggregate assets of Omega
and the Borrowers will be greater than each of their probable liabilities
(including, without limitation, unliquidated, unmatured, disputed and
contingent liabilities) on their debts as such debts become absolute and
matured;
(c) Omega and the Borrowers will be able to pay their respective debts
and other liabilities, including contingent liabilities and other
commitments, as they mature; and
(d) Omega and the Borrowers will not have unreasonably small capital
for the business in which they are engaged, as now conducted by Omega and
the Borrowers and as business is proposed to be conducted following the
consummation of the Transaction.
Our Opinion is intended to supplement, not to substitute for the addressees' due
diligence to the extent required in this or any related transaction.
It is understood that this Opinion is solely for the information of the above
mentioned addressees, their successors, assignees or participants, and is not to
be quoted, or referred to, in whole or in part, in any written document other
than in (i) a filing and disclosure of the Opinion in such filings with the
Securities and Exchange Commission (the "SEC") and any state
8
securities commission or blue sky authority, or other governmental authority or
agency if such filing or disclosure is required pursuant to the rules and
regulations thereof, or required by applicable law in the opinion of Omega's and
the Borrowers' counsel; (ii) the use or disclosure of the Opinion upon the
demand, order or request of any court, administrative or governmental agency or
regulatory body (whether or not such demand, order or request has the force of
law) or as may be required or appropriate in response to any summons, subpoena,
or discovery requests; (iii) the attachment of this Opinion as an exhibit to the
Transaction documents governing the Financing; (iv) the disclosure of this
Opinion in connection with (A) the Transaction, (B) the prospective sale,
assignment, participation or any other disposition by the Banks or Other
Financing Sources of any right or interest in the Financing, (C) an audit of the
Banks or Other Financing Sources by an independent public accountant or any
administrative agency or regulatory body or (D) the exercise of any right or
remedy by Omega and the Borrowers or their respective stockholders in connection
with the Transaction or the Banks or Other Financing Sources in connection with
the Financing; (v) the disclosure of the Opinion as may be requested, required
or ordered in order to protect the interest of Omega and the Borrowers or their
respective stockholders, the Banks or Other Financing Sources or in any
litigation, or any governmental proceeding or investigation to which the Banks
or Other Financing Sources are subject or purported to be subject; or (vi) the
disclosure of the Opinion as otherwise required by, or as reasonably determined
by Omega and the Borrowers, the Banks or Other Financing Sources to be required
by, any law, order, regulation or ruling application to Omega, the Borrowers,
the Banks or Other Financing Sources.
Very truly yours,
AMERICAN APPRAISAL ASSOCIATES, INC.
("AAA")
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Principal
9
EXHIBIT 1.1-5
TO CREDIT AGREEMENT
CERTIFICATE OF
CHIEF FINANCIAL OFFICER
-----------------------
TO: First Bank National Association, as Agent First Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
This Certificate is delivered to you pursuant to clause (xxv) of Section
3.1 of the Credit Agreement, dated as of June 13, 1997 (the "Credit Agreement"),
between Omega Cabinets, Ltd. ("Omega"), HomeCrest Corporation ("HomeCrest"),
Panther Transport, Inc. ("Panther," and, collectively with Omega and Panther,
the "Borrowers"), certain Banks party thereto and First Bank National
Association, as a Bank and as Agent. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein with the meanings so defined.
I, ▇▇▇▇▇ ▇▇▇▇▇▇, the Chief Financial Officer of Omega, hereby certify on
behalf of the Borrowers as follows:
1. I am the Chief Financial Officer of Omega. I have held such position
since July 25, 1994. In that capacity, I have participated actively in the
management of the financial affairs of the Borrowers. I have, together with
other officers of the Borrowers, acted on behalf of the Borrowers in connection
with the negotiation of the Credit Agreement, the other Loan Documents and the
dividends to be paid on the Closing Date as described in Section 6.7(i) of the
Credit Agreement (the "Dividend"). I am also familiar with the properties,
business, assets and liabilities of the Borrowers.
2. I certify that I have carefully reviewed the contents of this
Certificate and have made such investigations and inquiries as I deem necessary
and prudent in connection with the matters set forth herein. Among other
things, I have reviewed the Credit Agreement and the Loan Documents.
3. In connection with preparation for consummation of the transactions
contemplated by the Loan Documents, I have caused the preparation of and have
reviewed pro forma consolidated net income and cash flow projections dated May
28, 1997 for the Borrowers for their fiscal years 1997 through 1999, inclusive
prepared by management of Omega and pro forma consolidated net income and cash
flow projections dated May 2, 1997 for the Borrowers for their fiscal years 1997
through 1999, inclusive prepared by ▇▇▇▇▇▇ Capital Corporation (collectively,
the "Projections"). The Projections, which are attached hereto as Exhibits I-a
and I-b, as of the date prepared and subject to the assumptions made as of such
date, give effect to the consummation of the transactions contemplated by the
Loan Documents including the payment of the Dividend. The Borrowers intend to
pay the debt obligations of the Borrowers from the
1.1-5-1
cash flow generated by the operation of the Borrowers, except for the payment of
the Indebtedness outstanding under the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents
and the West Street Subordinated Bridge Loan Documents out of the proceeds of
the High Yield Subordinated Permanent Debt. The Borrowers do not expect that
any asset dispositions (other than the sale of Inventory in the ordinary course
of business) will be required to pay the debt obligations of the Borrowers. In
connection with the preparation of the Projections, I have made such
investigation and inquiries as I deemed reasonably necessary and prudent
therefor and specifically have relied on historical information, sales, costs,
and other data supplied by the management personnel and personnel responsible
for the various operations involved of the Borrowers.
4. I have also supervised and participated in the preparation of the pro
forma consolidated balance sheet of the Borrowers as of the Closing Date (the
"Closing Date Balance Sheet"), which is based on the March, 1997 historical
unaudited financial statements of the Borrowers. The Closing Date Balance Sheet
is attached hereto as Exhibit II, and, subject to the assumptions made therein,
reflects (a) the assets and liabilities of the Borrower at historical costs, (b)
the adjustments which would result upon consummation of the transactions
contemplated in the Loan Documents, and (c) the adjustments which would be
required to account for the Dividend.
5. In connection with the preparation of the Projections and the Closing
Date Balance Sheet, I have made such investigation and inquiries as I deemed
reasonably necessary and prudent therefor and specifically have relied on
historical information, sales, costs, and other data supplied by the management
personnel and personnel responsible for the various operations involved of the
Borrowers. I believe that the financial information and assumptions which
underlie and form the basis for the Projections, the Closing Date Balance Sheet
and the representations made in this Certificate were reasonable when made and
continue to be reasonable as of the date hereof, provided that such Projections
should not be viewed as facts because actual results during the period covered
by such Projections will differ from projected results.
6. For purposes of this Certificate, the term "Transactions" means the
payment of the Dividend and the consummation of the transactions contemplated by
the Loan Documents, the Merger Agreements, the ▇▇▇▇▇▇ Subordinated Bridge Loan
Documents, the West Street Subordinated Bridge Loan Documents and the High Yield
Subordinated Permanent Loan Documents. As of the date hereof, assuming each of
the Transactions (other than issuance of the High Yield Subordinated Permanent
Debt) is consummated on and as of the date hereof and taking into account the
effect thereof, (a) the Borrowers intend, and expect to be able, to pay their
debts and obligations as they mature in the ordinary course of their business as
proposed to be conducted following the payment of the Dividend, out of the cash
flow from the operations of the Borrowers, except for the payment of the
Indebtedness outstanding under the ▇▇▇▇▇▇ Subordinated Bridge Loan Documents and
the West Street Subordinated Bridge Loan Documents out of the proceeds of the
High Yield Subordinated Permanent Debt, and (b) the
1.1-5-2
Borrowers believe that they do not have an unreasonably small capital to carry
out their business as proposed to be conducted following the payment of the
Dividend.
7. The Borrowers do not intend to, or believe that they will, incur
indebtedness beyond their ability to pay such indebtedness as it matures.
8. In consummating the Transactions, the Borrowers do not intend to
disturb, delay, hinder or defraud either present or future creditors or other
persons to which any Borrower is or will become, on or after the date hereof,
indebted.
9. No Borrower contemplates filing a petition for relief under the United
States Bankruptcy Code or for receivership, arrangement, liquidation or
reorganization, or any similar purpose, under any state law, nor does any
Borrower have any knowledge of any bankruptcy or insolvency proceedings
threatened against any Borrower.
10. Omega on behalf of the Borrowers hereby acknowledges that the Banks
and the Agent, in entering into the Credit Agreement and the other Loan
Documents and agreeing to make loans and otherwise extend credit thereunder,
have relied on the accuracy of this Certificate and the attachments hereto.
IN WITNESS WHEREOF, I have executed this Certificate as of June 13, 1997.
OMEGA CABINETS, LTD.
By: _________________________________
Name: _____________________________
Title: Chief Financial Officer
1.1-5-3
EXHIBIT 1.1-6(a)
[FIRST BANK NATIONAL ASSOCIATION LETTERHEAD]
June 13, 1997
▇▇▇▇▇▇ ▇. Code, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. Key, as members of The
Stockholders' Committee, as attorney-in-
fact for the former stockholders of Omega
Holdings, Inc., a Delaware corporation (the "Company")
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Our Irrevocable Standby Letter of Credit No. 76671
Amount: $3,180,000 U.S. Funds
Ladies and Gentlemen:
We hereby establish, at the request and for the account of Omega Cabinets,
Ltd., HomeCrest Corporation and Panther Transport, Inc. (collectively, the
"Account Party"), in favor of ▇▇▇▇▇▇ ▇. Code, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇.
Key, as members of The Stockholders' Committee (the "Stockholders Committee"),
as attorney-in-fact for the former stockholders of Omega Holdings, Inc., a
Delaware corporation (the"Company") our Irrevocable Standby Letter of Credit,
numbered as indicated above, in the amount of and not to exceed Three Million
One Hundred Eighty Thousand and no/100 Dollars ($3,180,000.00) U.S. Funds
available to you to draw at sight, by one or more drafts in an aggregate amount
not to exceed the Stated Amount (as defined below), effective immediately. Said
amount secures the indebtedness owing to the Stockholders' Committee by the
Company pursuant to the terms of that certain Contingent Promissory Note made by
Omega Merger Corp. and payable to the Stockholders' Committee, in the original
principal amount of Three Million Dollars ($3,000,000).
Each drawing under this Letter of Credit shall be made by delivery of a
certificate signed on behalf of the Stockholders' Committee, in the form of
Exhibit A hereto, appropriately completed, accompanied by a sight draft which in
each case shall include the clause "Drawn under First Bank National Association,
Minneapolis Office Credit Number 76671 dated June 13, 1997."
The amount available for drawing from time to time under this Letter of
Credit (the "Stated Amount") shall be as follows:
(1) Upon issuance of this Letter of Credit, the Stated Amount shall be
$3,180,000.00;
(2) The Stated Amount shall be reduced by the amount of any drawing we
pay under this Letter of Credit; and
(3) Upon our receipt of a completed and signed certificate in the form
of Exhibit B hereto, purporting to be signed by you and the Company, the
Stated Amount shall be reduced by the amount set forth in such certificate.
Drawing certificates which otherwise conform to the terms and conditions
hereof shall be deemed to be properly presented if presented to us at the
address, in the manner and on or before the appropriate time specified under
SPECIAL CONDITIONS, paragraph 1.
We hereby engage with the drawer that drafts drawn and negotiated in
conformity with the terms of this Letter of Credit will be duly honored on
presentation. Except as stated herein, this undertaking is not subject to any
condition or qualification. Our obligation under this Letter of Credit shall be
our individual obligation, in no way contingent upon reimbursement with respect
thereto by the Account Party.
SPECIAL CONDITIONS:
1. Time of Drawings. Demand for payment may be made by you under this
----------------
Letter of Credit by original documentation or by tested telex, at any time
during our business hours at our office located at First Bank Place, 601 Second
Avenue South, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (Attention: IBD
Standby Letters of Credit) on a Business Day (as hereinafter defined). If a
drawing is made by you hereunder at a particular time on a Business Day, and
provided that such drawing and the documents and other items presented in
connection therewith conform to the terms and conditions hereof, payment shall
be made to you of the amount specified, in immediately available funds, not
later than that same time on the next Business Day. "Business Day" means any
day on which banking institutions in the State of Minnesota are not required or
authorized by law to close.
2. Method of Payment. Payments made in accordance with paragraph 1 under
-----------------
SPECIAL CONDITIONS shall be made with our own funds in immediately available
funds by Federal Reserve wire transfer to American National Bank, CHS II L.P.
Omega Clearing Account, Acct. No. ▇▇▇▇▇▇▇▇, ABA No. ▇▇▇▇▇▇▇▇▇, or in
immediately available funds credited to an account designated by you which is
maintained by you with us.
3. Expiration. This Letter of Credit shall expire automatically at the
----------
close of business of this Bank on the earlier to occur of the following:
(i) Upon our receipt from you of a completed and signed certificate
in the form of Exhibit B hereto, reducing the Stated Amount to zero; or
(ii) April 15, 1998.
GENERAL CONDITIONS:
1. Governing Law and Customs. This Letter of Credit is subject to the
-------------------------
"Uniform Customs and Practice for Documentary Credits," 1993 Revision,
International Chamber of Commerce Publication No. 500, or any subsequent
revision (the "Uniform Customs"). This Letter of Credit shall be deemed to be a
contract made under the laws of the State of Minnesota and, as to matters not
governed by the Uniform Customs, shall be governed by and construed in
accordance with the laws of such state.
2. Transferability. This Letter of Credit is not transferable.
---------------
3. Irrevocability. This Letter of Credit is irrevocable.
--------------
4. Nonconforming Drawing. If a demand for payment made by you hereunder
---------------------
does not, in any instance, conform to the terms and conditions of this Letter of
Credit, we shall, at or before the time by which we would have been obligated to
honor a conforming drawing hereunder give you prompt notice that the purported
negotiation was not effected in accordance with the terms and conditions of this
Letter of Credit, stating the reasons therefor and that we are holding any
documents at your disposal or returning the same to you, as we may elect. Upon
being notified that the purported negotiation was not effected in conformity
with this Letter of Credit, you may attempt to correct any such nonconforming
demand for payment if and to the extent that you are entitled (without regard to
the provisions of this sentence) and able to do so.
5. Complete Agreement. This Letter of Credit sets forth in full the
------------------
terms of our undertaking to you and strict compliance with each and all of the
terms of this Letter of Credit is required. Reference in this Letter of Credit
to other documents or instruments is for identification purposes only and such
reference shall not modify or affect the terms hereof or cause such documents or
instruments to be deemed incorporated herein.
FIRST BANK NATIONAL ASSOCIATION
By _____________________________________
Its Customer Service Specialist
Name_________________________________
By _____________________________________
Its Assistant Vice President
Name_________________________________
EXHIBIT A TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76671
DRAWER CERTIFICATE A
--------------------
Re: First Bank National Association
Letter of Credit No. 76671
Dated: June 13, 1997
The undersigned, a duly authorized member or representative of the
Stockholders' Committee (the "Stockholders' Committee"), as attorney-in-fact for
the former stockholders of Omega Holdings, Inc., a Delaware corporation (the
"Company"), with a reference to the Standby Letter of Credit No. 76671 (the
"Standby Letter of Credit") issued by Bank in favor of the Stockholders'
Committee to secure the indebtedness owing to the Stockholders' Committee by the
Company pursuant to the terms of that certain Contingent Promissory Note
("Contingent Promissory Note"), made by Omega Merger Corp. and payable to the
Stockholders' Committee in the original principal amount of Three Million
Dollars ($3,000,000), hereby certifies:
1. That the Stockholders' Committee is making a draw under the Standby
Letter of Credit with respect to that portion of the Obligation Amount (as
defined in the Contingent Promissory Note and determined in accordance with the
provisions thereof) payable under the Contingent Promissory Note.
2. That (i) the Stockholders' Committee has delivered to the Company
written notice of the occurrence of an Event of Default under the Contingent
Promissory Note (as defined therein) (the "Demand"); (ii) at least seven (7)
days have passed since such Demand has been made; (iii) under the Contingent
Promissory Note, unless such Event of Default has been cured on or prior to such
time, all amounts thereunder became due and payable in full upon the expiration
of such seven (7) day period; and (iv) the amount owed under the Contingent
Promissory Note representing such payment of the Obligation Amount has not been
received as of the date hereof.
3. That portion of the Obligation Amount owed under the Contingent
Promissory Note is $__________.
IN WITNESS WHEREOF, the Stockholders' Committee has executed and delivered
this Certificate as of the ____ day of _____________, 199_.
STOCKHOLDERS' COMMITTEE
By ___________________________________
Name______________________________
A Member
EXHIBIT B TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76671
REDUCTION CERTIFICATE
---------------------
Re: First Bank National Association
Letter of Credit No. 76671
Dated: June 13,1997
The undersigned, a duly authorized member or representative of the
Stockholders' Committee (the "Stockholders' Committee"), as attorney-in-fact for
the former stockholders of Omega Holdings, Inc., a Delaware corporation (the
"Company"), with reference to the Standby Letter of Credit No. 76671 (the
"Standby Letter of Credit") issued by Bank in favor of the Stockholders'
Committee to secure the indebtedness owing to the Stockholders' Committee by the
Company pursuant to the terms of that certain Contingent Promissory Note
("Contingent Promissory Note"), made by Omega Merger Corp. and payable to the
Stockholders' Committee in the original principal amount of Three Million
Dollars ($3,000,000), hereby certifies:
1. That the Company and the Stockholders' Committee are directing the
Bank to reduce the amount available under the Standby Letter of Credit as the
result of the reduction of the Obligation Amount (as defined in the Contingent
Promissory Note) owed under the Contingent Promissory Note.
2. That the amount available under this Standby Letter of Credit after
such reduction is $__________.
IN WITNESS WHEREOF, the Company and Stockholders' Committee has executed
and delivered this Certificate the ____ day of _____________, 199_.
STOCKHOLDERS' COMMITTEE
By _____________________________________
Name_________________________________
A Member
OMEGA HOLDINGS, INC.
By _____________________________________
Name_________________________________
Title________________________________
EXHIBIT 1.1-6(b)
[FIRST BANK NATIONAL ASSOCIATION LETTERHEAD]
June 6, 1997
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Our Irrevocable Standby Letter of Credit No. 76670
Amount: $570,509.48 U.S. Funds
Ladies and Gentlemen:
We hereby establish, at the request and for the account of Omega Cabinets,
Ltd., HomeCrest Corporation and Panther Transport, Inc. (collectively, the
"Account Party"), in your favor our Irrevocable Standby Letter of Credit,
numbered as indicated above, in the amount of and not to exceed Five Hundred
Seventy Thousand Five Hundred Nine and 48/100 Dollars ($570,509.48) U.S. Funds
available to you to draw at sight, by one or more drafts in an aggregate amount
not to exceed the Stated Amount (as defined below), effective immediately.
Each drawing under this Letter of Credit shall be made by delivery of a
certificate signed on your behalf, in the form of Exhibit A hereto,
appropriately completed, accompanied by a sight draft which in each case shall
include:
(a) a reference to one of the standby letters of credit listed on
Exhibit B hereto; and
(b) the clause "Drawn under First Bank National Association,
Minneapolis Office Credit Number 76670 dated June 6, 1997."
The amount available for drawing from time to time under this Letter of
Credit (the "Stated Amount") shall be as follows:
(1) Upon issuance of this Letter of Credit, the Stated Amount shall be
$570,509.48;
(2) The Stated Amount shall be reduced by the amount of any drawing we
pay under this Letter of Credit; and
(3) Upon our receipt from you of a completed and signed certificate in
the form of Exhibit C hereto, the Stated Amount shall be reduced by the
amount set forth in such certificate.
Drawing certificates which otherwise conform to the terms and conditions
hereof shall be deemed to be properly presented if presented to us at the
address, in the manner and on or before the appropriate time specified under
SPECIAL CONDITIONS, paragraph 1.
We hereby engage with the drawer that drafts drawn and negotiated in
conformity with the terms of this Letter of Credit will be duly honored on
presentation.
SPECIAL CONDITIONS
1. Time of Drawings. Demand for payment may be made by you under this
----------------
Letter of Credit by original documentation or by tested telex, at any time
during our business hours at our office located at First Bank Place, 601 Second
Avenue South, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (Attention: IBD
Standby Letters of Credit) on a Business Day (as hereinafter defined). If a
drawing is made by you hereunder at a particular time on a Business Day, and
provided that such drawing and the documents and other items presented in
connection therewith conform to the terms and conditions hereof, payment shall
be made to you of the amount specified, in immediately available funds, not
later than that same time on the next Business Day. "Business Day" means any
day on which banking institutions in the State of Minnesota are not required or
authorized by law to close.
2. Method of Payment. Payments made in accordance with paragraph 1 under
-----------------
SPECIAL CONDITIONS shall be made with our own funds in immediately available
funds by Federal Reserve wire transfer or in immediately available funds
credited to an account designated by you which is maintained by you with us by
wire transfer of immediately available funds to an account designated by you.
3. Expiration. This Letter of Credit shall expire automatically at the
----------
close of business of this Bank on the earlier to occur of the following:
(i) Upon our receipt from you of a completed and signed certificate
in the form of Exhibit C hereto, reducing the Stated Amount to zero; or
(ii) June 5, 1998.
GENERAL CONDITIONS:
1. Governing Law and Customs. This Letter of Credit is subject to the
-------------------------
"Uniform Customs and Practice for Documentary Credits," 1993 Revision,
International Chamber of Commerce Publication No. 500, or any subsequent
revision (the "Uniform Customs"). This Letter of Credit shall be deemed to be a
contract made under the laws of the State of Minnesota and, as to matters not
governed by the Uniform Customs, shall be governed by and construed in
accordance with the laws of such state.
2. Transferability. This Letter of Credit is not transferable.
---------------
3. Irrevocability. This Letter of Credit is irrevocable.
--------------
4. Nonconforming Drawing. If a demand for payment made by you hereunder
---------------------
does not, in any instance, conform to the terms and conditions of this Letter of
Credit, we shall, at or before the time by which we would have been obligated to
honor a conforming drawing hereunder give you prompt notice that the purported
negotiation was not effected in accordance with the terms and conditions of this
Letter of Credit, stating the reasons therefor and that we are holding any
documents at your disposal or returning the same to you, as we may elect. Upon
being notified that the purported negotiation was not effected in conformity
with this Letter of Credit, you may attempt to correct any such nonconforming
demand for payment if and to the extent that you are entitled (without regard to
the provisions of this sentence) and able to do so.
5. Complete Agreement. This Letter of Credit sets forth in full the
------------------
terms of our undertaking to you and strict compliance with each and all of the
terms of this Letter of Credit is required. Reference in this Letter of Credit
to other documents or instruments is for identification purposes only and such
reference shall not modify or affect the terms hereof or cause such documents or
instruments to be deemed incorporated herein.
FIRST BANK NATIONAL ASSOCIATION
By _____________________________________
Its Customer Service Specialist
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
By _____________________________________
Its Assistant Vice President
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
EXHIBIT A TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76670
DRAWER CERTIFICATE A
--------------------
Re: First Bank National Association
Letter of Credit No. 76670
Dated: June 6, 1997
The undersigned, a duly authorized officer of The First National Bank of
Chicago ("FNB Chicago"), hereby certifies to First Bank National Association
(the "Bank"), with reference to the Letter of Credit identified above (the
"Letter of Credit"), issued by the Bank in favor of FNB Chicago, that:
(a1) A drawing [has been] or [is being] made against one of the
standby letters of credit identified on Exhibit B to the Letter of Credit
as follows:
Letter of Credit Number ______________________
Stated Amount $_____________________
Expiry Date ______________________
Amount Drawn $_____________________
(a2) The request for the drawing described above [conformed] or
[conforms] to the requirements therefor and FNB Chicago [honored such
drawing on ________, 199_] or [shall honor such drawing at or before ____
_. m. on _____________, 199_].
(b1) FNB Chicago has made demand of Omega Cabinets, Ltd. and/or
HomeCrest Corporation in the amount of $____________ a payment for letter
of credit fees owed with respect to one or more of the standby letters of
credit identified on Exhibit B to the Letter of Credit and Omega Cabinets,
Ltd. and/or HomeCrest Corporation has failed to pay the same.
(c1) The amount remaining available to be drawn under all standby
letters of credit listed on Exhibit B to the Letter of Credit is $_________
the aggregate amount of letter of credit fees in respect of such letters of
credit through to maturity is $____________, and the Letter of Credit will
expire within ten Business Days of the date of this certificate.
In accordance with the terms of the Letter of Credit, we hereby demand
payment in the amount of $___________, which is either (i) the sum of the amount
being drawn in the drawing (if any) described in (a1) above and the fees (if
any) described in (b1) above, or (ii) the amount remaining available to be drawn
under the standby letters of credit and letter of credit fees
through maturity as described in (c1) above; which amount demanded does not
exceed the Stated Amount (as defined in the Letter of Credit).
IN WITNESS WHEREOF, The First National Bank of Chicago has executed
and delivered this Certificate as of the ____ day of __________, 199_.
THE FIRST NATIONAL BANK OF CHICAGO
By _____________________________________
Name: _______________________________
Title: ______________________________
1.1-5-15
EXHIBIT B TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76670
DESCRIPTION OF OUTSTANDING LETTERS OF CREDIT
-------------------------------------------------------------
L/C No. Beneficiary Expiry Date Amount
-------------------------------------------------------------
0032601 Old Republic December 17, 1997 $170,000
Insurance
Company
-------------------------------------------------------------
00326200 Liberty Mutual June 17, 1998 $ 40,000
Insurance Company
-------------------------------------------------------------
00326199 Employers February 26, 1998 $350,000
Insurance of
Wausau
-------------------------------------------------------------
EXHIBIT C TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76670
REDUCTION CERTIFICATE
---------------------
Re: First Bank National Association
Letter of Credit No. 76670
Dated: June 6, 1997
The undersigned, a duly authorized officer of The First National Bank of
Chicago ("FNB Chicago"), hereby certifies to First Bank National Association
(the "Bank"), with reference to the Letter of Credit identified above (the
"Letter of Credit"), issued by the Bank in favor of FNB Chicago, that the amount
available to be drawn under standby letter of credit no. ______ described in
Exhibit B to the Letter of Credit has been reduced by $________, and the Stated
Amount shall be reduced accordingly.
IN WITNESS WHEREOF, The First National Bank of Chicago has executed and
delivered this Certificate as of the ____ day of ____________, 19__.
THE FIRST NATIONAL BANK OF CHICAGO
By _____________________________________
Name: _______________________________
Title: ______________________________
EXHIBIT D TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76670
TERMINATION CERTIFICATE
-----------------------
Re: First Bank National Association
Letter of Credit No. 76670
Dated: June 6, 1997
The undersigned, a duly authorized officer of The First National Bank of
Chicago ("FNB Chicago"), hereby certifies to First Bank National Association
(the "Bank"), with reference to the Letter of Credit identified above (the
"Letter of Credit"), issued by the Bank in favor of FNB Chicago, that all
standby letters of credit described in Exhibit B to the Letter of Credit have
expired or been terminated, that all letter of credit fees in connection
therewith have been paid and that the Letter of Credit (the original of which is
attached hereto) is hereby surrendered and terminated.
IN WITNESS WHEREOF, The First National Bank of Chicago has executed and
delivered this Certificate as of the ____ day of __________, 19__.
THE FIRST NATIONAL BANK OF CHICAGO
By ____________________________________
Name: ______________________________
Title: _____________________________
EXHIBIT 1.1-7
TO CREDIT AGREEMENT
Legal Description of Tennessee Facility
SITUATED in District No. One (1) of ▇▇▇▇▇▇▇▇ County, Tennessee, and being made
up of four individual tracts, said tracts being more fully bounded and described
as follows:
TRACT ONE:
BEGINNING at an iron pin, said iron pin being the intersection of the southern
margin of U.S. Highway 25W and the western margin of Granite Road, and being the
most easterly corner of the herein described tract; thence with said western
margin of Granite Road, South 53 deg. 05 min. 13 sec. West, a distance of 202.23
feet to an iron pin; thence continuing with a curve to the left, having a radius
of 390.19 feet, an arc length of 106.53 feet, a chord bearing of South 45 deg.
15 min. 55 sec. West, and a chord distance of 106.20 feet to an iron pin; thence
continuing South 37 deg. 26 min. 37 sec. West, a distance of 167.76 feet to an
iron pin; thence with a curve to the right having a radius of 496.89 feet, an
arc length of 183.74 feet, a chord bearing of South 48 deg. 02 min. 14 sec.
West, and a chord distance of 182.69 feet to an iron pin; thence continuing
South 58 deg. 37 min. 50 sec. West, a distance of 97.26 feet to an iron pin;
thence with a curve to the left having a radius of 346.17 feet, an arc length of
13.74 feet, a chord bearing of South 57 deg. 29 min. 37 sec. West and a chord
distance of 13.74 feet to an iron pin; thence continuing South 56 deg. 21 min.
24 sec. West, a distance of 223.32 feet to an iron pin; thence with a curve to
the left having a radius of 682.91 feet, an arc length of 180.89 feet, a chord
bearing of South 48 deg. 46 min. 06 sec. West, and a chord distance of 180.36
feet to an iron pin, said iron pin being the most southerly point of the herein
described tract and the to be described Tract Two; thence leaving said westerly
margin of Granite Road and with the line of the said Tract Two, North 40 deg. 35
min. 42 sec. West, a distance of 592.05 feet to an iron pin, said iron pin being
the most westerly corner of the herein described tract and the most northerly
corner of said Tract Two and lying on the eastern margin of the CSX Railroad
right of way as described in Deed Book U-2, page 179, and as shown on Louisville
and Nashville Railroad Company Map Station 13557+30 to Station 13662+90 dated
June 30, 1917; then with said eastern margin and with a curve to the left having
a radius of 6164.67 feet, an arc length of 301.43 feet, a chord bearing of North
35 deg. 38 min. 21 sec. East and a chord distance of 301.40 feet to an iron pin;
thence continuing with a line radial to the curve North 55 deg. 45 min. 42 sec.
West, a distance of 25.00 feet to an iron pin; thence continuing with a curve to
the left having a radius of 6139.67 feet, an arc length of 602.27 feet, a chord
bearing of North 31 deg. 25 min. 42 sec. East, a distance of 602.02 feet to an
iron pin; thence continuing North 28 deg. 37 min. 05 sec. East, a distance of
461.21 feet to an iron pin, said iron pin being the intersection of the eastern
margin of the aforementioned CSX Railroad right of way and the southern margin
of ▇▇▇▇▇▇ Road; thence leaving the CSX Railroad right of way with the said
southern margin of ▇▇▇▇▇▇ Road and with a curve to the left having a radius of
485.45 feet, an arc length of 42.82 feet, a chord bearing of
1.1-7-1
South 83 deg. 46 min. 58 sec. East and a chord distance of 42.80 feet to an iron
pin, said iron pin being the common corner of an unmarked cemetery as described
in Will Book 3, pages 129 and 130 of the ▇▇▇▇▇▇▇▇ County Register's Office;
thence leaving said southern margin and with the line of said cemetery, South 3
deg. 55 min. 35 sec. West, a distance of 89.57 feet to an iron pin; thence
continuing South 77 deg. 54 min. 07 sec. East, a distance of 192.78 feet to an
iron pin; thence continuing North 05 deg. 09 min. 30 sec. West, a distance of
127.12 feet to an iron pin, said iron pin being the most northerly corner of the
herein described tract and lying on the southern margin of ▇▇▇▇▇▇ Road; thence
with said Southern margin and with a curve to the left having a radius of 120.00
feet, an arc length of 10.99 feet, a chord bearing of South 74 deg. 57 min. 38
sec. East and a chord distance of 10.99 feet to an iron pin, said iron pin being
the intersection of the southern margin of ▇▇▇▇▇▇ Road and the Southern margin
of U.S. Highway 25W; thence with said southern margin South 14 deg. 16 min. 49
sec. East, a distance of 20.23 feet to an iron pin; thence continuing South 23
deg. 34 min. 00 sec. East, a distance of 842.10 feet to an iron pin; thence
continuing South 66 deg. 26 min. 00 sec. West, a distance of 10.00 feet to an
iron pin; thence continuing South 23 deg. 34 min. 00 sec. East, a distance of
75.12 feet to the point of BEGINNING, containing 24.488 acres, more or less,
according to the survey of ▇▇▇▇▇ ▇. ▇▇▇▇, RLS No. 1433, of ETE Consulting
Engineering, Inc., ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ dated May 27,
1997, and bearing Job No. ▇▇-▇▇▇-▇▇▇.
TRACT TWO:
BEGINNING at an iron pin, said iron pin being 1175 feet, more or less, from the
intersection of the southern margin of U.S. Highway 25W and the western margin
of Granite Road and being the southern most corner of the previously described
Tract One, and lying on the western margin of Granite Road; thence with said
western margin and with a curve to the left having a radius of 682.91 feet, an
arc length of 84.24 feet, a chord bearing of South 37 deg. 38 min. 47 sec. West,
and a chord distance of 84.18 feet to an iron pin; thence continuing South 34
deg. 06 min. 46 sec. West, a distance of 115.62 feet to an iron pin, said iron
pin being the most southerly corner of the herein described tract and being the
common corner with the lands of ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇▇▇▇▇▇ as recorded in Deed
Book F-18, page 883, of the ▇▇▇▇▇▇▇▇ County Register's Office; thence leaving
said western margin and with the line of McAfee, North 40 deg. 31 min. 21 sec.
West, a distance of 597.55 feet to an iron pin, said iron pin being the
Southwestern corner of the herein described tract and the northwestern corner of
the to be described Tract Three and lying on the eastern margin of the CSX
Railroad right of way as described in Deed Book U-2, page 179 and shown on
Louisville and Nashville Railroad Company right of way Map Station 13557+30 to
Station 13662+90 dated June 30, 1917; thence with said easterly margin North 37
deg. 05 min. 55 sec. East, a distance of 191.43 feet to an iron pin; thence
continuing and with a curve to the left having a radius of 6164.67 feet, an arc
length of 6.30 feet, a chord bearing of North 37 deg. 04 min. 09 sec. East, and
a chord distance of 6.30 feet to an iron pin, said iron pin being the northwest
corner of the herein described tract and the southwest corner of the previously
described Tract One; thence leaving said eastern margin and with the line of
previously described Tract One, South 40 deg. 35 min. 42 sec. East, a distance
of 592.05 feet to -the point of BEGINNING, containing 2.634 acres, more or lees
and being according to the survey of ▇▇▇▇▇
1.1-7-2
▇. ▇▇▇▇, RLS No. 1433, of ETE Consulting Engineering, Inc., ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ dated May 27, 1997, and bearing Job No. 97-402-
216.
TRACT THREE:
BEGINNING at an iron pin, said iron pin being the southwestern corner of the
previously described Tract Two and lying on the eastern margin of the CSX
Railroad right of way as recorded in Deed Book U-2, page 179, and shown on the
Louisville and Nashville Railroad Company right of way Map Station 13557+30 to
Station 13662+90 dated June 30, 1917; thence leaving said eastern margin and
with the line of the previously described Tract Two, South 40 deg. 31 min. 21
sec. East, a distance of 40.00 feet to an iron pin, said iron pin being the
common corner with the lands of ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇▇▇▇▇▇ as recorded in Deed
Book F-18, page 883, in the ▇▇▇▇▇▇▇▇ County Register's Office; thence with the
line of McAfee, South 42 deg. 43 min. 16 sec. West, a distance of 398.88 feet to
an iron pin, said iron pin being the southern corner of the herein described
tract and the northeast corner of the to be described Tract Four and lying on
the aforementioned easterly margin of the CSX Railroad; thence with said
easterly margin, North 37 deg. 05 min. 55 sec. East, a distance of 405.54 feet
to the POINT OF BEGINNING, containing 0.182 acres, more or less, according to
the survey of ▇▇▇▇▇ ▇. ▇▇▇▇, RLS No. 1433, of ETE Consulting Engineering, Inc.,
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ dated May 27, 1997, and bearing Job
No. ▇▇-▇▇▇-▇▇▇.
THERE IS RESERVED a fifty (50) foot easement for the right of ingress and egress
across Tract Three the centerline being further described as follows:
COMMENCING at a point, said point being the northwest corner of the previously
described Tract Three and lying on the aforementioned CSX Railroad right of way;
thence with said eastern margin, South 37 deg. 05 min. 55 sec. West, a distance
of 222.54 feet to the point of BEGINNING; thence with the centerline, South 52
deg. 54 min. 05 sec. east of said easement, a distance of 18.02 feet to a point,
said point lying on the line common corner Tract Three and the aforementioned
McAfee lands. The easement extending 25 feet to either side of centerline to
include only that portion lying within Tract Three.
TRACT FOUR:
BEGINNING at an iron pin, said iron pin being the southern corner of the
previously described Tract Three and lying on the eastern margin of the CSX
Railroad right of way as recorded in Deed Book U-2, page 179, and shown on the
Louisville and Nashville Railroad Company right of way map Station 13557+30 to
Station 13662+90 dated June 30, 1917, and lying on the line of ▇▇▇▇▇▇▇ ▇. and
▇▇▇▇▇ ▇▇▇▇▇▇ as recorded in Deed Book F-18, page 883, of the ▇▇▇▇▇▇▇▇ County
Register's Office; thence with the line of McAfee, South 42 deg. 43 min. 16 sec.
West, a distance of 188.63 feet to a point, said point being the southwest
corner of the aforementioned McAfee lands and the northwest corner of the lands
of ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as recorded in Deed Book M-17, pages 275 and
278 of the ▇▇▇▇▇▇▇▇ County Register's Office;
1.1-7-3
thence continuing and with the line of ▇▇▇▇▇▇▇▇, South 42 deg. 43 min. 16 sec.
West, a distance of 66.54 feet to an iron pin, said iron pin being the southern
corner of the herein described Tract and lying on the aforementioned eastern
margin of the CSX Railroad right of way; thence with said eastern margin North
37 deg. 05 min. 55 sec. East, a distance of 253.95 feet to an iron pin, said
iron pin being the northwest corner of the herein described tract; thence
continuing South 52 deg. 54 min. 05 sec. East, a distance of 25.00 feet to the
point of BEGINNING, containing 0.073 acres, more or less, according to the
survey of ▇▇▇▇▇ ▇. ▇▇▇▇, RLS No. 1433, of ETE Consulting Engineering, Inc., ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ dated May 27, 1997, and bearing Job No.
▇▇-▇▇▇-▇▇▇.
BEING the same property conveyed to HomeCrest Corporation, a Delaware
corporation, by deed from HomeCrest Corporation (formerly Home-Crest
Corporation), an Indiana corporation, dated May 26, 1995, and recorded in Deed
Book G, Vol. 19, page 398, in the ▇▇▇▇▇▇▇▇ County Register's Office.
1.1-7-4
EXHIBIT 1.1-8 TO
CREDIT AGREEMENT
TERM NOTE
June 13, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, each of OMEGA CABINETS, LTD., a Delaware
corporation ("Omega"), HOMECREST CORPORATION, a Delaware corporation
("HomeCrest"), PANTHER TRANSPORT, INC., an Iowa corporation ("Panther" and,
collectively with Omega, HomeCrest and any other party that becomes a party
hereto pursuant to Section 6.5 of the Credit Agreement hereinafter referred to
[the "Credit Agreement"], the "Borrowers"), hereby jointly, severally and
unconditionally, in accordance with the terms of the Credit Agreement, to pay to
the order of [ ] (the "Bank") at the main office
of First Bank National Association in Minneapolis, Minnesota, in lawful money of
the United States of America in Immediately Available Funds (as such term and
each other capitalized term used herein are defined in the Credit Agreement),
the principal amount of [ ] AND NO/100 DOLLARS ( [$]), or, if less,
the aggregate unpaid principal amount of the Term Loans made by the Bank under
the Credit Agreement, and to pay interest (computed on the basis of factual days
elapsed and a year of 360 days) in like funds on the unpaid principal amount
hereof from time to time outstanding at the rates and times set forth in the
Credit Agreement. The principal hereof is payable as provided in the Credit
Agreement.
This note is one of the Term Notes referred to in the Credit Agreement
dated as of June 13, 1997 (as the same may hereafter be from time to time
amended, restated or otherwise modified, the "Credit Agreement") among the
undersigned, the Bank and the other banks named therein. This note is secured,
it is subject to certain mandatory and permissive prepayments and its maturity
is subject to acceleration, in each case upon the terms provided in said Credit
Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
OMEGA CABINETS, LTD.
1.1-8-1
By ____________________________________
Name __________________________________
Title _________________________________
HOMECREST CORPORATION
By ____________________________________
Name __________________________________
Title _________________________________
PANTHER TRANSPORT, INC.
By ____________________________________
Name __________________________________
Title _________________________________
1.1-8-2
EXHIBIT 2.2
FORM OF LOAN REQUEST
____________, 199_
First Bank National Association,
as Agent
First Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Agreement') dated as of
June 13, 1997, among Omega Cabinets, Ltd. ("Omega"), HomeCrest Corporation,
Panther Transport, Inc. (collectively with Omega, the "Borrowers"), certain
Banks and First Bank National Association as Agent for the Banks (as the same
may be amended, supplemented or modified, the "Agreement"). Pursuant to the
Agreement, the undersigned Responsible Officer of Omega hereby certifies as
follows:
1. All of the representations and warranties of the Borrowers that were
made in connection with the Agreement and the other Loan Documents, including
but not limited to the Notes executed thereunder, are true and correct in all
material respects as of the date hereof to the same extent as if made and given
on the date hereof (unless specifically made as of a specific date, in which
case they are true and correct in all material respects as of such date). All
conditions and covenants to the Agreement have been satisfied or complied with.
2. No Default or Event of Default exists on the date hereof.
3. There has been no material adverse change in the financial condition
of the Borrowers and their Subsidiaries.
4. Omega hereby requests on behalf of the Borrowers that on _________,
199_, the Banks (make, continue or convert) a (Eurodollar Rate Advance or Base
Rate Advance) to the Borrowers in the principal amount of _____________ dollars
($_______ ), which Advance constitutes all or part of (the Revolving Loans or
Term Loans). If the request relates to a LIBOR Advance, the Borrowers agree
that it be (made, continued, converted) for the following Interest
2.2-1
Period: ___________________. After the requested Advance is (made, continued,
converted), no more than ten Interest Periods will be outstanding.
Very truly yours,
OMEGA CABINETS, LTD.
By:___________________________
Name:_________________________
Title:________________________
2.2-2
EXHIBIT 2.20
1. The Amended and Restated Credit Agreement, dated as of May 26, 1995, among
Omega, HomeCrest, the financial institutions from time to time party
thereto, and The First National Bank of Chicago, as agent;
2. a. The Senior Subordinated Loan Agreement, dated as of May 26, 1995,
between Omega and InterCoast Capital Company;
b. The Subordinated Promissory Notes, dated June 17, 1994, issued by
Omega to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Trust and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust (the "Bertches");
--------
c. The Junior Subordinated Promissory Notes issued from time to time by
Holdings to each stockholder of Holdings; and
d. The Agreement and Plan of Merger, dated as of May 26, 1994, among
Holdings, the Bertches and the other parties thereto.
2.2-3
EXHIBIT 4.12
List of all patented or registered Intellectual Property and patent applications
for registration of any Intellectual Property held by Holdings and each of the
Borrowers as of the Closing Date.
OMEGA
-----
Registered Trademarks Reg. No. Country Expiration
--------------------- -------- ------- ----------
1. OMEGA 1,623,711 U.S. November 20, 2000
2. HomeCrest 1,552,925 U.S. August 22, 2009
INFRINGEMENTS
-------------
1. Omega is aware that there is a company called Omega in Michigan.
Management is currently considering what action to take against this
company.
2. Omega is aware that there is a company called Omega Industries in Indiana
which manufactures wood accessories. Management has made a decision not to
take action against this company.
3. HomeCrest has knowledge that there is another company called "HomeCrest"
which makes patio furniture, that some of HomeCrest's distributors use the
HomeCrest name in their advertising and that one HomeCrest distributor in
the State of New York has incorporated using the name "HomeCrest Scotia."
4. HomeCrest of Indiana is the successor to HomeCrest's Indianapolis
operations. HomeCrest permits the business to operate under the name
"HomeCrest of Indiana," and such permission is renewable annually at
HomeCrest's option.
EXHIBIT 4.19
List of all Subsidiaries of Holdings, the number and percentage of the shares of
each class of capital stock owned beneficially or of record by Holdings or any
Subsidiary and the jurisdiction of incorporation of each entity as of the date
of this Agreement.
--------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE
JURISDICTION SHARES OWNERSHIP
OF CLASS OF BENEFICIALLY OF SUCH
BORROWER INCORPORATION STOCK SHAREHOLDER OWNED SUBSIDIARY
--------------------------------------------------------------------------------------------------------
1. Omega Cabinets, Ltd. Delaware Common Omega Holdings, Inc. 1000 100%
-------------------------------------------------------------------------------------------------------
1. HomeCrest Corporation Delaware Common Omega Cabinets, Ltd. 100 100%
-------------------------------------------------------------------------------------------------------
2. Panther Transport, Inc. Iowa Common Omega Cabinets, Ltd. 1000 100%
-------------------------------------------------------------------------------------------------------
EXHIBIT 4.21
List of all facilities leased to Holdings and each of the Borrowers as of the
Closing Date.
Facilities Leased to Holdings, Omega, HomeCrest and Panther
-----------------------------------------------------------
1. Lease dated June 17, 1994 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Omega for premises
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇.
2. Lease dated March 10, 1994 between HomeCrest and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ d/b/a ▇▇▇▇▇▇▇▇ Company for premises located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
3. Lease dated October 18, 1991 between First Industrial, L.P., successor-in-
interest to ▇▇▇▇ County Pension Fund, and HomeCrest for premises located at
8520 and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
Lease of Advertising Space at the Waterloo Airport
--------------------------------------------------
1. Airport Advertising Space Contract dated August 6, 1996 between Omega and
In-Ter-Space Services, Inc., d/b/a Interspace Airport Advertising.
Leases or Subleases at the Facilities to Third Parties
------------------------------------------------------
1. Oral sublease between HomeCrest and HCI Cabinetry at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
2. Oral sublease between HomeCrest and HCI Cabinetry at 8520 and ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
3. Sublease dated July 1, 1996 between HomeCrest and Western Waterproofing,
Inc. at 8520 and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
4. Lease dated June 18, 1993 between HomeCrest and Allied Film and Video at
the Tennessee Facility.
5. Lease dated January 6, 1993 between HomeCrest and Becromal of America, Inc.
at the Tennessee Facility.
6. Lease dated January 22, 1997 between HomeCrest and Ultra Tech Extrusions of
Tennessee at the Tennessee Facility.
EXHIBIT 4.25
List of all assumed names and names under which Holdings or any Borrower is
doing business as of the Closing Date.
OMEGA
-----
1. Dynasty
2. Embassy
3. Omega Bath Collection
4. Affinity
HOMECREST
---------
1. Legend
2. HomeCrest has filed the name "Kitchens at the Crossing" as an assumed name
in Indiana.
EXHIBIT 4.26
List of all policies of insurance for the Borrowers in effect as of the Closing
Date.
See Attached Schedule 4.26.
----
OMEGA CABINETS, LTD. Schedule 4.2.6
Policy Period: Various
---------------------------------------------------------------------------------------------------
LINE OF COVERAGE LIMIT CARRIER
---------------------------------------------------------------------------------------------------
WORKERS' COMP
Statutory
500,000 Ea Acc
500,000 Disease
500,000 Per Empl
AIG
Statutory
500
1,500
---------------------------------------------------------------------------------------------------
GENERAL LIABILITY 1,000,000 Ea Occ
1,000,000 Prsnl/Adv Inj
2,000,000 Products Agg
2,000,000 Gen Agg AIG
1,000,000 Fire Dmg Lgl
---------------------------------------------------------------------------------------------------
AUTO
LIABILITY
1,000,000
5,000 Med Pay
1,000,000 UM AIG
---------------------------------------------------------------------------------------------------
PROPERTY
100,000,000 Per Occ Combined Travelers Indemnity
All Coverages Company of Illinois
50,000,000 Per Occ & Annual Allianz Insurance Co.
Agg - Earthquake Westchester Fire
(excl CA
Earthquake)
50,000,000 Per Occ & Annual
Agg - Flood
---------------------------------------------------------------------------------------------------
BOILER &
MACHINERY 50,000,000 Combined Single Travelers Indemnity
Limit Property Dmg, Business Company of Illinois
Interr, Extra Exp
250,000 Per Occ Water Dmg.
Exped Exp, Ammonia Cont, Haz
Subst
---------------------------------------------------------------------------------------------------
UMBRELLA
50,000,000
AIG
---------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------
CRIME
3,000,000
Chubb
------------------------------------------------------------------------------
DIRECTORS &
OFFICERS 5,000,000
AIG
------------------------------------------------------------------------------
FIDUCIARY
Included in D&O Chubb
------------------------------------------------------------------------------
NON-OWNED
AVIATION 15,000,000 Per Occ
3,000 Medical
Per Person Cigna
------------------------------------------------------------------------------
OCEAN MARINE 1,000,000 Per Vessel
1,000,000 Per Aircraft
100,000 Shpt On Deck Indemnity Ins.
1,000,000 War Risk Co of NA
------------------------------------------------------------------------------
FOREIGN 1,000,000 GL
1,000,000 Excess Agg
1,000,000 Empl Benefit Chubb
Laws
------------------------------------------------------------------------------
EXHIBIT 5.1 (d) TO
CREDIT AGREEMENT
[FORM OF COMPLIANCE CERTIFICATE]
To: First Bank National Association
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected chief financial officer of Omega Cabinets,
Ltd. ("Omega");
(2) I have reviewed the terms of the Credit Agreement dated as of June 13,
1997 among Omega, HomeCrest Corporation, Panther Transport, Inc. (collectively,
the "Borrowers"), First Bank National Association, as Agent and certain Banks
party thereto (as the same may be amended, supplemented or modified, the "Credit
Agreement") and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of the Borrowers during the
accounting period covered by the Attachment hereto;
(3) The examination described in paragraph (2) did not disclose, and I
have no knowledge, whether arising out of such examinations or otherwise, of the
existence of any condition or event which constitutes a Default or an Event of
Default (as such terms are defined in the Credit Agreement) during or at the end
of the accounting period covered by the Attachment hereto or as of the date of
this Certificate, except as described below (or on a separate attachment to this
Certificate). The exceptions listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which the Borrower
has taken, is taking or proposes to take with respect to each such condition or
event are as follows:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing certification, together with the computations in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this __ day of _________ 199__,
pursuant to Section 5.1 (d) of the Credit Agreement.
OMEGA CABINETS, LTD.
By ______________________
Name_____________________
Title____________________
5.1(d)-1
ATTACHMENT TO COMPLIANCE CERTIFICATE
AS OF ____________, 199_ WHICH PERTAINS
TO THE PERIOD FROM ____________, 199_
TO ____________ 199_
SUMMARY OF FINANCIAL COVENANTS
------------------------------
Interest Coverage Ratio (Minimum __ to 1.0) __ to 1.0
(Section 6.16)
Fixed Charge Coverage Ratio
(Minimum __ to 1.0) __ to 1.0
(Section 6.17)
Cash Flow Leverage Ratio (Maximum __ to 1.0) __ to 1.0
(Section 6.18)
CALCULATION OF FINANCIAL COVENANTS
----------------------------------
6.16 Minimum Interest Coverage Ratio, for any four-fiscal-quarter period (any
such period, a "measurement period") ending on a date falling in any
period set forth in Section 6.16 (an "ICR applicable period"):
1. Consolidated net income for the measurement period: $________
2. To the extent deducted in computing consolidated net
income, income tax expense for the measurement period $________
3. To the extent deducted in computing consolidated net
income, Interest Expense for the measurement period $________
4. To the extent deducted in computing consolidated net
income, depreciation and amortization for the
measurement period $________
5. To the extent deducted in computing consolidated net
income for the year, transactional fees and
other expenses incurred in connection with the
Credit Agreement, the Merger Agreements, the ▇▇▇▇▇▇
Subordinated Bridge Loan Documents, the West Street
Subordinated Bridge Loan Documents, the West Street
Subordinated Permanent Loan Documents $________
6. To the extent deducted in computing consolidated net
income for the year, all non-cash compensation
expense recorded in connection with the granting
of options $________
7. EBITDA for the year (the sum of lines
1 through 6) $________
8. Interest Expense for the measurement period
(for periods ending on or prior to March 28, 1998,
determined in accordance with exception in definition of
Interest Coverage Ratio: actual Interest Expense for __
quarter(s) ending on ____, or $______, divided by ___) $________
9. Interest Coverage Ratio (line 7 divided by line 8) ______ to 1.0
10. Minimum permitted Interest Coverage Ratio for the
ICR applicable period (Section 6.16) ______ to 1.0
6.17 Minimum Fixed Charge Coverage Ratio, for any measurement period ending
on a date falling in any period set forth in Section 6.17 (a "FCCR
applicable
period"):
11. EBITDA for the measurement period (line 7) $________
12. Permissible Capital Expenditures during
measurement period $________
13. Taxes paid in cash during measurement period $________
14. Numerator of Fixed Charge Coverage Ratio (sum of
lines 11, 12 and 13) $________
15. Interest Expense during measurement period $________
16. Non-cash amortized deferred financing charges during
measurement period $________
17. Required principal payments with respect to
Indebtedness during measurement period $________
18. Denominator of Fixed Charge Coverage Ratio (the
2
sum of lines 15 and 17, minus line 16) $________
19. Actual Fixed Charge Coverage Ratio (line 14 divided by
line 18) ______ to 1.0
20. Minimum permitted Fixed Charge Coverage Ratio for the
FCCR applicable period (Section 6.17) ______ to 1.0
6.18 Maximum Cash Flow Leverage Ratio, for any measurement period ending on a
date falling in any period set forth in Section 6.18 (a "CLR applicable
period"):
21. Aggregate principal amount of Indebtedness outstanding
on last day of the measurement period $________
22. EBITDA for the measurement period (line 7) $________
23. Actual Cash Flow Leverage Ratio (line 21 divided by
line 22) ______ to 1.0
24. Maximum permitted Cash Flow Leverage Ratio for the
CLR applicable period (Section 6.18) ______ to 1.0
Applicable Margin
25. Cash Flow Leverage Ratio (line 23) ______ to 1.0
26. Applicable Margin for Cash Flow Leverage Ratio
specified on line 25 (from definition of Applicable
Margin) For Eurodollar Rate Advances ______
For Base Rate Advances ______
3
EXHIBIT 5.1(i) TO
CREDIT AGREEMENT
[FORM OF EXCESS CASH FLOW PREPAYMENT CERTIFICATE]
To: First Bank National Association
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected chief financial officer of Omega Cabinets,
Ltd. ("Omega");
(2) I have reviewed the terms of the Credit Agreement dated as of
June 13, 1997 among Omega, HomeCrest Corporation, Panther Transport, Inc.
(collectively, the "Borrowers"), First Bank National Association, as agent and
certain Banks named therein (as amended, supplemented or modified, the "Credit
Agreement") and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of the Borrowers during the
accounting period covered by the Attachment hereto;
(3) I certify that the information set out in the Attachment hereto
is accurate; and
(4) The mandatory payment specified in line 24 of the Attachment is
delivered herewith, as required by Section 2.6(c) of the Credit Agreement, for
application in accordance with Section 2.6(f) of the Credit Agreement.
The foregoing certification, together with the computations in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of _________, 199_,
pursuant to Section 5.1 (i) of the Credit Agreement.
OMEGA CABINETS, LTD.
By _____________________
Name____________________
Title___________________
5.1(i)-1
ATTACHMENT TO EXCESS CASH FLOW PREPAYMENT CERTIFICATE
AS OF_____________, 199_ WHICH PERTAINS
TO THE YEAR ENDED DECEMBER 31, 199_
CALCULATION OF EXCESS CASH FLOW PREPAYMENT
------------------------------------------
1. Consolidated net income for the year: $__________
2. To the extent deducted in $__________
computing consolidated net income,
income tax expense for the year
3. To the extent deducted in computing $__________
consolidated net income, Interest
Expense for the year
4. To the extent deducted in computing $__________
consolidated net income,
depreciation and amortization for
the year
5. To the extent deducted in $__________
computing consolidated net income
for the year, transactional fees
and other expenses incurred in
connection with the Credit
Agreement, the Merger Agreements,
the ▇▇▇▇▇▇ Subordinated Bridge
Loan Documents, the West Street
Subordinated Bridge Loan
Documents, the West Street
Subordinated Permanent Loan
Documents
6. To the extent deducted in $__________
computing consolidated net income
for the year, all non-cash
compensation expense recorded in
connection with the granting of
options
7. EBITDA for the year (the sum of $__________
lines 1 through 6)
8. To the extent not included in $__________
EBITDA, any extraordinary cash
income, business interruption
insurance proceeds and net cash
gains from non-ordinary course
asset sales during the year
9. Any payment to Holdings pursuant $__________
to Section 1.8(f) of the Merger
Plan during such year
10. The net reduction, if any, in $__________
Working Capital during such year
11. Sum of lines 7, 8, 9 and 10 $__________
12. Taxes paid in cash or accrued $__________
during such year
13. Permissible Capital $__________
Expenditures during such year
14. Interest Expense for such year $__________
15. Interest Expense accrued on the $__________
Indebtedness under the ▇▇▇▇▇▇
Subordinated Bridge Loan
Documents but not paid in cash
during the year
16. Scheduled principal payments $__________
with respect to Indebtedness
during year
17. Optional principal payments $__________
made on the Term Loans during
such year
18. Any payment by Holdings $__________
pursuant to Section 1.8(f) of the
Merger Plan during such year
19. The net increase, if any, in $__________
Working Capital during such year
20. The aggregate amount of $__________
permissible Restricted Payments
to Holdings during such year
21. Sum of lines 11 and 15 $__________
22. Sum of lines 12, 13, 14, 16, $__________
17, 18, 19 and 20 during such year
-2-
23. Excess Cash Flow for year (line $__________
21 minus line 22)
23. Prepayment due under Section $__________
2.6(c) (75% of line 23)
-3-
EXHIBIT 6.5
[FORM OF NEW BORROWER AGREEMENT]
THIS NEW BORROWER AGREEMENT, dated as of __________________, 19__, between
and among OMEGA CABINETS, LTD.,, a Delaware corporation ("Omega"),
_______________________, a _____________ corporation (the "New Borrower"), and
FIRST BANK NATIONAL ASSOCIATION, a national banking association, in its capacity
as Agent (the "Agent"), under that certain Credit Agreement dated as of June 13,
1997 by and among Omega, HomeCrest Corporation, Panther Transport, Inc., the
Banks party thereto, the Agent and the Co-Agent (as amended from time to time,
the "Credit Agreement").
WITNESSES:
WHEREAS, the New Borrower wishes to become a "Borrower" under the Credit
Agreement and become obligated, jointly and severally, to pay when due all
Obligations (as defined in the Credit Agreement); and
WHEREAS, the New Borrower has determined that it is in its best interest to
become a Borrower.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged by the New Borrower, and in order to induce the Banks to
consider the financial condition of the New Borrower in evaluating the
Borrowers' compliance with the covenants contained in the Credit Agreement and
to consent to the New Borrower becoming a Subsidiary (direct or indirect) of
Omega, the parties hereto hereby agree as follows:
1. Definitions. Terms not defined herein shall have the meaning assigned
-----------
to them in the Credit Agreement.
2. Representations. Omega, on behalf of the existing Borrowers, and the
---------------
New Borrower, jointly and severally, represent and warrant to the Agent and the
Banks that:
(a) The New Borrower is a wholly owned Subsidiary, direct or indirect,
of Omega, and the acquisition or creation of the New Borrower by Omega complies
with the provisions of Section 6.5 of the Credit Agreement;
(b) This New Borrower Agreement has been duly and validly authorized,
executed and delivered by Omega and the New Borrower, and constitutes the valid
and binding obligation of each such party enforceable in accordance with its
terms and the terms of the Credit Agreement; and
6.5-1
(c) No Default or Event of Default exists or will result from the
acquisition or creation of the New Borrower or its designation as a Borrower,
nor would any such Default or Event of Default have resulted had such
designation been effective as the most recently ended fiscal quarter of Omega.
3. Undertakings. The Credit Agreement is hereby incorporated into
------------
this New Borrower Agreement by reference and made a part hereof as if set forth
in full herein. The New Borrower hereby agrees to each and every covenant,
agreement, term and provision of the Credit Agreement (including any amendments
and supplements thereto made after the date hereof in accordance with the terms
of the Credit Agreement). The New Borrower hereby specifically agrees with the
Agent (and with, and for the benefit of, the Banks) as follows:
(a) The New Borrower agrees to become, and by this New Borrower
Agreement has become, a Borrower;
(b) The New Borrower agrees to be bound by all the terms and
provisions of the Credit Agreement, including those covenants, agreements and
restrictions applicable to Borrowers; and
(c) The New Borrower agrees that it is liable, jointly and
severally, with Omega and all other Borrowers for the payment when due of all
Obligations under the Credit Agreement in accordance with the terms of the
Credit Agreement (but subject to the limitation contained in Section 9.17(j) of
the Credit Agreement).
The provisions of this Section 3 shall be effective from the date of
this New Borrower Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this New Borrower
Agreement to be duly executed and delivered by their respective officers,
thereon to duly authorize, as of the date first above written.
OMEGA CABINETS, LTD.
By:________________________
Name:______________________
Title:_____________________
[NEW BORROWER]
6.5-2
By:________________________
Name:______________________
Title:_____________________
FIRST BANK NATIONAL ASSOCIATION,
as Agent
By:________________________
Name:______________________
Title:_____________________
6.5-3
EXHIBIT 6.8
Permissible transactions with Affiliates.
1. Lease dated June 17, 1997 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Omega.
2. Senior Management Non-Competition Agreement dated as of June 13, 1997
between Omega Merger Corp. and each of ▇▇▇▇▇ ▇. Key and ▇▇▇▇ ▇. ▇▇▇▇▇▇.
3. Management Non-Competition Agreement dated as of June 13, 1997 between
Omega Merger Corp. and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
4. Non-Competition Agreement dated as of June 13, 1997 among Omega Merger
Corp. and each of the stockholders party thereto.
5. Stockholders Agreement dated as of June 13, 1997 by and among Holdings,
Mezzanine Lending Associates III, L.P., BCC Industrial Services, Inc. and
each of the other stockholders party thereto, and any subordinated
promissory notes issued in respect of repurchase rights or obligations
thereunder.
6. The Holdings Stock Option Plan and stock options issued thereunder.
7. Management Agreement dated as of June 13, 1997 among Holdings, Omega and
BCC Industrial Services, Inc.
8. Warrant dated as of June 13, 1997 issued to BCC Industrial Services, Inc.
in connection with that certain Management Agreement dated June 13, 1997.
9. The Management Investor Subscription Agreement dated as of June 13, 1997
among Holdings and each of the investors party thereto.
10. Put-right Agreements dated June 13, 1997 between Holdings and each of ▇▇▇▇▇
▇. Key and ▇▇▇▇ ▇▇▇▇▇▇.
11. Letter dated September 16, 1994 to ▇▇▇▇▇ ▇. Key relating to employment with
Omega.
12. Letter dated July 11, 1994 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ relating to employment with
Omega.
13. Letter dated September 11, 1995 to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ relating to employment
with Omega.
14. Letter dated November 11, 1996 to ▇▇▇▇▇ ▇▇▇▇▇▇ relating to employment with
Omega.
15. Employment and Noncompetition Agreement dated as of June 17, 1994 between
Omega and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
16. Letter dated April 10, 1995 to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ relating to employment with HomeCrest.
17. ▇▇▇▇▇▇ Subordinated Bridge Loan Documents.
18. Rabbi Trust established by Holdings on June 13, 1997.
19. The 1997 Omega Holdings, Inc. Deferred Compensation Plan dated June 13,
1997.
20. The Transaction Severance Agreements listed on Exhibit 6.15.
2
EXHIBIT 6.12
List of Investments of Holdings and each of the Borrowers existing on the date
of this Agreement.
1. Holdings owns 100% of the stock of Omega.
2. Omega owns 100% of the stock of HomeCrest and Panther.
3. Omega has less than a one percent limited partnership interest in
August/Kona, Ltd.
4. Rabbi Trust established by Holdings on June 13, 1997.
5. Put-right Agreements dated June 13, 1997 between Holdings and each of ▇▇▇▇▇
▇. Key and ▇▇▇▇ ▇▇▇▇▇▇.
EXHIBIT 6.13
List of indebtedness of Holdings and each of the Borrowers existing on the date
of this Agreement.
1. Funded Debt as defined in the Agreement and Plan of Merger dated as of
April 28, 1997 by and among Holdings, Omega Merger Corp. and certain
Stockholders of Holdings (as identified therein), prepaid at closing.
2. Liabilities in respect of the deferred compensation arrangements between
Omega and each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
3. Liabilities with respect to the 1997 Omega Holdings, Inc. Deferred
Compensation Plan dated June 13, 1997, and the related Rabbi Trust
Agreement dated June 13, 1997.
4. Contingent Promissory Note dated June 13, 1997 issued to the Stockholders
Committee by Holdings.
EXHIBIT 6.14
List of Liens of Holdings and each of the Borrowers existing on the date of this
Agreement.
1. All of the documents listed as title exceptions in the title insurance
policies for the Iowa, Indiana and Tennessee Facilities issued in
connection with this Credit Agreement.
2. See attached lien search summary.
5
Borrower Name Secured Party Collateral Filing Office, Number and Date
------------------------------- ---------------- ------------------ ------------------------------
Omega Cabinets, Ltd. Ameritech Credit Specific Equipment Iowa SOS
Corporation K712768 - 2/19/96
Omega Cabinets, Ltd. Ameritech Credit Specific Equipment Iowa SOS
Corporation K752365 - 7/12/96
HomeCrest Corporation Midwest Commerce Specific Equipment Indiana SOS
Leasing 1840708 -4/19/93
HomeCrest Corporation NBD Leasing Inc. Specific Leased Indiana SOS
Equipment 1908318 - 4/18/94
HomeCrest Corporation ▇▇▇▇▇ Leasing Specific Leased Indiana SOS
Company Equipment 2101600 - 1/30/97
HomeCrest Corporation ▇▇▇▇▇ Leasing Specific Leased Elkhart County Recorder
Company Equipment 03112 - 1/28/97
HomeCrest Corporation ▇▇▇▇▇ Leasing Specific Leased Indiana SOS
Company Equipment 2127483 - 5/29/97
HomeCrest Corporation ▇▇▇▇▇ Leasing Specific Leased Elkhart County Recorder
Company Equipment 04286 - 5/5/97
EXHIBIT 6.15
List of permissible Contingent Obligations of Holdings and each of the
Borrowers.
1. Deferred compensation arrangements between Omega and each of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. 1997 Omega Holdings, Inc. Deferred Compensation Plan dated June 13, 1997,
and the related Rabbi Trust Agreement dated June 13, 1997.
3. ▇▇▇▇▇▇ Subordinated Bridge Loan Documents (including guarantee of
Holdings).
4. West Street Subordinated Bridge Loan Documents (including guarantee of
Holdings).
5. High Yield Subordinated Permanent Loan Documents.
6. Guaranty, dated January 1, 1993, by Omega, to guarantee obligations of
Panther under its Ryder truck leases.
7. Reimbursement obligations under the following First Chicago Letters of
Credit:
a. The Old Republic Insurance Company Letter of Credit issued on June 16,
1995.
b. The Liberty Mutual Insurance Company Letter of Credit issued on June
16, 1995.
c. The Employers Insurance of Wausau Letter of Credit issued on June 16,
1995.
8. Reimbursement obligation with respect to the First Chicago Backstop Letter
of Credit issued on June 13, 1997 by First Bank.
9. Reimbursement obligation with respect to the Stockholders' Committee Letter
of Credit issued on June 13, 1997.
10. Contingent Promissory Note dated June 13, 1997 issued pursuant to the
Agreement and Plan of Merger dated as of April 28, 1997 by and among
Holdings, Omega Merger Corp. and certain Stockholders of Holdings (as
identified therein).
11. Contingent Obligations under the Loan Documents.
12. The Transition Severance Agreements dated April 24, 1997 between Omega or
HomeCrest, as the case may be, and each of ▇▇▇▇▇ ▇. Key, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
13. Put-right Agreements dated June 13, 1997 between Holdings and each of ▇▇▇▇▇
▇. Key and ▇▇▇▇ ▇▇▇▇▇▇.
2
Exhibit 9.6
TO CREDIT AGREEMENT
ASSIGNMENT AGREEMENT
--------------------
ASSIGNMENT AGREEMENT, dated as of (the "Transferor Bank"), 199__, among
-----------------
(the "Purchasing Bank"), Omega Cabinets, Ltd., a Delaware corporation, HomeCrest
----------------
Corporation, a Delaware corporation and Panther Transport, Inc. (collectively,
the "Borrowers") and First Bank National Association, as Agent for the Banks
-----------
under the Credit Agreement described below (in such capacity, the "Agent").
WITNESSETH
----------
WHEREAS, this Assignment Agreement is being executed and delivered in
accordance with subsection 9.6(c) of the Credit Agreement, dated as of June 13,
1997, among the Borrowers, the Transferor Bank and the other Banks party
thereto, and the Agent (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "Credit Agreement" terms
----------------
defined therein being used herein as therein defined);
WHEREAS, the Purchasing Bank (if it is not already a Bank party to the
Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to the Purchasing
Bank rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon the execution and delivery of this Assignment Agreement by the
Purchasing Bank, the Transferor Bank, the Agent, and the Borrowers, the
Purchasing Bank [shall be] [shall continue to be] a Bank party to the Credit
Agreement for all purposes thereof.
2. Prior to the execution and delivery of this Assignment Agreement, the
Transferor Bank's and the Purchasing Bank's Revolving Commitment Amounts were
$_________ and $_________ respectively (the "Original Revolving Commitments").
Upon the execution and delivery of this Assignment Agreement, the Revolving
Commitment Amounts of the Transferor Bank and the Purchasing Bank shall be
$___________ and $_________ respectively, and the
9.6-1
sum of their Revolving Commitment Amounts shall equal the Original Revolving
Commitments. Prior to the execution and delivery of this Assignment Agreement,
the Transferor Bank's and the Purchasing Bank's Revolving Percentages were - and
respectively (the "Original Revolving Percentages"). Upon the execution and
delivery of this Assignment Agreement, the Revolving Percentages of the
sum of their Revolving Percentages shall equal the Original Revolving
Percentages. Prior to the execution and delivery of this Assignment Agreement,
the Transferor Bank's and the Purchasing Bank's Term Loan Commitment Amounts
were $____________ and $___________ respectively(the "Original Term Loan
Commitments"). Upon the execution and delivery of this Assignment Agreement,
the Term Loan Commitment Amounts of the Transferor Bank and the Purchasing Bank
shall be $___________ and $___________ respectively, and the sum of their Term
Loan Commitment Amounts shall equal the Original Term Loan Commitments. Prior
to the execution and delivery of this Assignment Agreement, the Transferor
Bank's and the Purchasing Bank's Term Loan Percentages were ______ and ______
respectively (the "Original Term Loan Percentages"). Upon the execution and
delivery of this Assignment Agreement, the Term Loan Percentages of the
Transferor Bank and the Purchasing Bank shall be and respectively, and the sum
of their Term Loan Percentages shall equal the Original Term Loan Percentages.
Prior to the execution and delivery of this Assignment Agreement, the
Transferor Bank's and the Purchasing Bank's Total Percentages were ________
and _________, respectively (the "Original Total Percentages"). Upon the
execution and delivery of this Assignment Agreement, the Total Percentages of
the Transferor Bank and the Purchasing Bank shall be and _______, respectively,
and the sum of their Total Percentages shall equal the Original Total
Percentages. The Transferor Bank acknowledges receipt from the Purchasing Bank
of an amount equal to the purchase price, as agreed between the Transferor Bank
and such Purchasing Bank, of the portion of the Transferor Bank's Revolving
Commitment and Term Loan Commitment being purchased by such Purchasing Bank (the
"Purchased Commitment"). The Transferor Bank hereby irrevocably sells, assigns
--------------------
and transfers to the Purchasing Bank, without recourse, representation or
warranty, and the Purchasing Bank hereby irrevocably purchases, takes and
assumes from the Transferor Bank, the Purchased Commitment and the appropriate
portion of all presently outstanding Revolving Loans, Term Loans and other
amounts owing to the Transferor Bank under the Credit Agreement and the
Transferor Bank's Revolving Note and Term Note, together with all guarantees
thereof and all collateral security therefor and all instruments and documents
pertaining thereto.
3. The Transferor Bank has made arrangements with the Purchasing Bank
with respect to the portion, if any, to be paid by the Transferor Bank to the
Purchasing Bank of fees heretofore received by the Transferor Bank pursuant to
the Credit Agreement.
4. From and after the date hereof, principal, interest, fees and other
amounts that would otherwise be payable to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Transferor Bank's Revolving Note
and Term Note shall, instead, be payable to or for the account of the Transferor
Bank and the Purchasing Bank, as the case may be, in accordance with their
respective interests as reflected in this Assignment Agreement, whether such
amounts have accrued prior to the date hereof or accrue subsequent to the date
hereof.
5. Concurrently with the execution and delivery hereof, (i) the
Borrowers, the Transferor Bank and the Purchasing Bank shall make appropriate
arrangements so that a replacement Revolving Note and Term Note is issued to the
Transferor Bank (unless it has
9.6-2
transferred its entire Revolving Commitment and Term Loan Commitment), and a new
Revolving Note and Term Note is issued to the Purchasing Bank, in each case in
principal amounts reflecting, in accordance with the Credit Agreement, their
Revolving Commitments (as adjusted pursuant to this Assignment Agreement), and
(ii) the Transferor Bank shall pay to the Agent a processing and recordation fee
of $3,000.
6. Concurrently with the execution and delivery hereof, the Agent will,
at the expense of the Transferor Bank, provide to the Purchasing Bank (if it is
not already a Bank party to the Credit Agreement) conformed copies of all
documents delivered to the Agent on the date of the initial Loans under the
Credit Agreement in satisfaction of the conditions precedent set forth in the
Credit Agreement.
7. Each of the parties to this Assignment Agreement agrees that at any
time and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Assignment Agreement.
8. The address for notices to the Purchasing Bank as well as
administrative information with respect to the Purchasing Bank is as set out
below:
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA.
9.6-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date first set forth above.
________________________________,
Transferor Bank
By:_____________________________
Name:___________________________
Title:__________________________
________________________________,
as Purchasing Bank
By:_____________________________
Name:___________________________
Title:__________________________
FIRST BANK NATIONAL ASSOCIATION,
as Agent
By:_____________________________
Name:___________________________
Title:__________________________
CONSENTED AND ACKNOWLEDGED
OMEGA CABINETS, LTD.
By:_____________________________
Name:___________________________
Title:__________________________
HOMECREST CORPORATION
By:_____________________________
Name:___________________________
9.6-4
Title:__________________________
PANTHER TRANSPORT, INC.
By:_____________________________
Name:___________________________
Title:__________________________
9.6-5
Exhibit 9.19
[L&W Draft Dated 6/13/96]
PROPOSED SUBORDINATION PROVISIONS FOR 144A INDENTURE
----------------------------------------------------
KEY DEFINITIONS:
`Bank Agent' means First Bank National Association in its capacity as
Agent under the New Bank Credit Facility, or any successor or replacement agent
under the New Bank Credit Facility or any refinancing Indebtedness in respect
thereof.
"Designated Senior Debt" means (i) so long as the New Bank Credit
Facility is in effect, all Indebtedness outstanding under the New Bank Credit
Facility and (ii) after the New Bank Credit Facility is no longer in effect or
with the prior written consent of the lenders under the New Bank Credit
Facility, any other Senior Debt permitted hereunder the principal amount of
which is $10 million or more and that has been designated by the Company as
'Designated Senior Debt."
`New Bank Credit Facility" means, collectively, (i) that certain
Credit Agreement, dated as of June 13, 1997, by and among the Company, HomeCrest
Corporation and Panther Transport, Inc., as Borrowers, and First Bank National
Association, as agent, and First Bank National Association and such other
lenders who may at any time be a party thereto, as lenders, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, supplemented,
extended, modified, renewed, refunded, replaced or refinanced from time to time
in one or more successive transactions (including any such transaction that
changes the amount available thereunder, replaces such agreement or document, or
provides for other agents or lenders); provided that in no event will the
aggregate principal amount outstanding under the New Bank Credit Facility (with
letters of credit under the revolving credit portion of the New Bank Credit
Facility being deemed to have a principal amount equal to the maximum potential
liability of the Company and the Guarantors thereunder), including all
Indebtedness incurred to refund, refinance or replace any Indebtedness under the
New Bank Credit Facility, at any time exceed the amount permitted by Section
4.09(a) hereof and (ii) each of the other 'Loan Documents" under and as defined
in the Credit Agreement referenced in the preceding clause (i).
"Permitted Junior Securities" means (i) Equity Interests (other than
Disqualified Stock and other Equity Interests containing mandatory redemption
provisions) of the Company or any Guarantor or (ii) debt securities of the
Company or any Guarantor with respect to which no scheduled principal payment is
due before the scheduled maturity date of the Senior Debt and that are
subordinated to all Senior Debt (and any debt securities issued in exchange for
Senior Debt) to substantially the same extent as, or to a greater extent than,
the Notes and the Subsidiary Guarantees are subordinated to Senior Debt of the
Company and the Guarantors pursuant to Article 10 hereof.
`Representative' means the Bank Agent, with respect to the New Bank
Credit Facility, and the indenture trustee or other trustee, agent or
representative for any other Senior Debt.
`Senior Debt" means (i) all Indebtedness of the Company and the
Guarantors outstanding under the New Bank Credit Facility and all Permitted
Hedging Obligations with respect thereto, (ii) any other Indebtedness of the
Company and the Guarantors permitted to be incurred under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees, as applicable, and (iii) all
Obligations with respect to the foregoing; provided that if any payment or
proceeds of any collateral is applied to the Senior Debt and is subsequently set
aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of the Company
or any Guarantor, or any claim of fraudulent or preferential transfer), the
Senior Debt to which such payment was applied will, for purposes of the
Indenture, be deemed to have continued in existence, notwithstanding such
application, and the subordination provisions of the Indenture will be
enforceable as to such Senior Debt as fully as if such application had never
been made. Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include (w) any liability for federal, state, local or other
taxes owed or owing by the Company or any Guarantor, (x) any Indebtedness of the
Company to any of its Subsidiaries or Affiliates, (y ) any trade payables or (z)
any Indebtedness that is incurred in violation of this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE
(a) The Company agrees, and each Holder by accepting a Note agrees,
that the Indebtedness evidenced by the Notes (including the payment of principal
of, premium, if any, and interest and Liquidated Damages, if any, on the Notes,
and the exercise of rights of rescission or other claims, if any, in respect of
the issuance of the Notes) is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment in full of
all Senior Debt of the Company (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt of the Company.
(b) The Guarantors agree, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Subsidiary Guarantees (including
the payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes, and the exercise of rights of rescission or other
claims, if any, in respect of the issuance of the Notes) is subordinated in
right of payment, to the extent and in the manner provided in this Article 10,
to the prior payment in full in cash or cash equivalents of all Senior Debt of
the Guarantors (whether outstanding on the date hereof or thereafter incurred),
and that the subordination is for the benefit of holders of Senior Debt of the
Guarantors.
SECTION 10. 02. LIQUIDATION, DISSOLUTION; BANKRUPTCY
(a) Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:
(1) holders of Senior Debt of the Company shall be entitled to
receive payment in full of all such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt, whether or not an allowable claim) before Holders
of the Notes shall be entitled to receive any payment with respect to the
Notes (except that Holders may receive (i) Permitted Junior Securities and
(ii) payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 hereof); and
(2) until all Senior Debt of the Company (as provided in subsection
(1) above) is paid in full, any distribution to which Holders would be
entitled but for this Article 10 shall be made to holders of Senior Debt of
the Company as their interests may appear (except that Holders of Notes may
receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section
8.01 hereof).
2
(b) Upon any distribution to creditors of any Guarantor in a
liquidation or dissolution of such Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Guarantor or its
property, in an assignment for the benefit of creditors or any marshalling of
such Guarantor's assets and liabilities:
(1) holders of Senior Debt of such Guarantor shall be entitled to
receive payment in full of all such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt, whether or not an allowable claim) before Holders
of the Notes shall be entitled to receive any payment with respect to such
Guarantor's Subsidiary Guarantee (except that Holders may receive (i)
Permitted Junior Securities and (ii) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof); and
(2) until all Senior Debt of the Guarantors (as provided in
subsection (1) above) is paid in full, any distribution to which Holders
would be entitled but for this Article 10 shall be made to holders of
Senior Debt of such Guarantor as their interests may appear (except that
Holders of Notes may receive (i) Permitted Junior Securities and (ii)
payments and other distributions made from any defeasance trust created
pursuant to Section 8.01 hereof ).
SECTION 10. 03. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) The Company may not make any payment or distribution to the
Trustee or any Holder in respect of the Notes and may not acquire from the
Trustee or any Holder any Notes for cash or property (other than (i) Permitted
Junior Securities and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof) until all Senior Debt
has been paid in full if:
(i) an event of default in the payment of any Designated Senior Debt
(a "Payment Default") occurs and is continuing beyond any applicable grace
period in the agreement, indenture or other document governing such
Designated Senior Debt; or
(ii) an event of default, other than a Payment Default, on Designated
Senior Debt occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and the Company and the
Trustee each receives a notice of the default from the Representative of
the Designated Senior Debt (a 'Payment Blockage Notice") pursuant to
Section 10.11 hereof. If any such Payment Blockage Notice is delivered
pursuant to the preceding sentence, no subsequent Payment Blockage Notice
shall be effective for purposes of this Section 10.03 unless and until 360
days shall have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No event of default covered by this Section 10.03
that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Company and the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall
have been waived for a period of not less than 360 days; provided, however,
that a subsequent breach of the same provision of the New Bank Credit
Facility may be made the basis for a subsequent Payment Blockage Notice if
such breach has been cured or waived for at least 90 consecutive days prior
to the effective date of such subsequent Payment Blockage Notice.
The Company shall cause the Trustee to give prompt written notice to
the Holders of any default described in this Section 10.03(a)(i) or (ii).
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the event of default is cured or waived, or
3
(2) in the case of an event of default referred to in Section
10.03(a)(ii) hereof, 179 days pass after notice is received if the maturity
of such Designated Senior Debt has not been accelerated and no Payment
Default with respect to the Designated Senior Debt has occurred and is
continuing,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
(b) No Guarantor may make any payment or distribution to the Trustee
or any Holder in respect of its Subsidiary Guarantee or acquire from the Trustee
or any Holder any Notes for cash or property (other than (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof) until all Senior Debt has been
paid in full if:
(i) a Payment Default occurs and is continuing beyond any applicable
grace period in the agreement, indenture or other document governing
Designated Senior Debt; or
(ii) an event of default, other than a Payment Default, on Designated
Senior Debt occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and such Guarantor and
the Trustee each receives a Payment Blockage Notice pursuant to Section 10.
I 1 hereof. If any such Payment Blockage Notice is delivered pursuant to
the preceding sentence, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section 10.03 unless and until 360 days
shall have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No event of default covered by this Section 10.03 that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to such Guarantor and the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have
been waived for a period of not less than 360 days; provided, however, that
a subsequent breach of the same provision of the New Bank Credit Facility
may be made the basis for a subsequent Payment Blockage Notice if such
breach has been cured or waived for at least 90 consecutive days prior to
the effective date of such subsequent Payment Blockage Notice.
A Guarantor to which a Payment Blockage Notice has been delivered may
and shall resume payments on and distributions in respect of its Subsidiary
Guarantee and may acquire Notes upon the earlier of:
(1) the date upon which the event of default is cured or waived, or
(2) in the case of an event of default referred to in Section
10.03(b)(h) hereof, 179 days pass after notice is received if the maturity of
such Designated Senior Debt has not been accelerated and no Payment Default with
respect to the Designated Senior Debt has occurred and is continuing,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly give notice of the acceleration to (a) the Bank
Agent, at any time while there is Indebtedness outstanding under the New Bank
Credit Facility and/or (b) the Representative under the indenture or other
agreement (if any) pursuant to which any other applicable Senior Debt has been
issued.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment with
respect to the Notes at a time when the Trustee or such Holder, as applicable,
has actual knowledge that such payment is prohibited by Section 10.03
4
hereof, or if the Trustee has actual knowledge of such prohibition at any time
prior to distributing such payment to any one or more Holders, such payment
shall be held by the Trustee or such Holder, in trust for the benefit of, and
shall be forthwith paid over and delivered, upon written request, to, the Bank
Agent on behalf of the Senior Lenders at any time while there is Indebtedness
outstanding under the New Bank Credit Facility and/or (if applicable) the
Representative under the indenture or other agreement (if any) pursuant to which
any other applicable Senior Debt has been issued, in each case as their
respective interests may appear, for application to the payment of all Senior
Debt remaining unpaid to the extent necessary to pay such Senior Debt in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the New Bank Credit Facility and the
holders of any other Senior Debt.
With respect to the holders of Senior Debt. the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders, the Company,
any Guarantor or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment with respect to the
Notes to violate this Article 10, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Debt as provided in this
Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and the Guarantors, on the one
hand, and Holders of Notes, on the other hand, the obligations of the
Company and the Guarantors, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company and the Guarantors other than such Holders' rights in relation
to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company and the Guarantors fail because of this Article 10 to
pay principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
5
SECTION 10.09. SUBROGATION MAY NOT BE IMPAIRED BY COMPANY OR ANY GUARANTOR.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company, any Guarantor or any Holder or by the failure of the
Company, any Guarantor or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given hereunder to
holders of Senior Debt, the distribution may be made and the notice given, (a)
with respect to Senior Debt under the New Bank Credit Facility, to the Bank
Agent, or (b) with respect to any other Senior Debt, to the Representative of
the holders of such Senior Debt.
Upon any payment or distribution of assets of the Company or any
Guarantor referred to in this Article 10, the Trustee and the Holders of Notes
shall be entitled to rely upon (i) any order or decree made by any court of
competent jurisdiction or (ii) any certificate of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company or such Guarantor, as applicable, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.11 RIGHT'S OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least one Business Day prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Bank Agent or
another Representative with respect to Designated Senior Debt may give the
notice. Nothing in this Article 10 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee as Representative on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 10, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the Representatives of the holders of Senior Debt are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt.
6