<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
OMEGA CABINETS, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2434 42-1423186
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
----------------
PANTHER TRANSPORT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IOWA 4212 42-1395277
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
----------------
1205 PETERS DRIVE
WATERLOO, IOWA 50703
(319) 235-5700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
LANCE E. ERLICK
OMEGA CABINETS, LTD.
1205 PETERS DRIVE
WATERLOO, IOWA 50703
(319) 235-5700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
----------------
COPY TO:
LAUREN I. NORTON, ESQ. ROPES & GRAY ONE INTERNATIONAL PLACE BOSTON,
MASSACHUSETTS 02110 (617) 951-7000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered or this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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<TABLE>
<CAPTION>
PROPOSED
MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT FEE
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<S> <C> <C> <C>
10 1/2% Senior Subordinated Notes due
2007................................. $100,000,000 100% $30,303.00
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Guarantee of 10 1/2% Senior
Subordinated Notes due 2007.......... (1) (1) (2)
</TABLE>
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(1)No separate consideration will be received for the Guarantees.
(2)Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee is payable for the Guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO +
+COMPLETION OR AMENDMENT. UNDER NO CIRCUMSTANCES SHALL THIS PROSPECTUS +
+CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1997
PROSPECTUS
OMEGA CABINETS, LTD.
OFFER TO EXCHANGE
SENIOR SUBORDINATED NOTES DUE JUNE 15, 2007
WHICH HAVE BEEN REGISTERED UNDER THE
LOGO SECURITIES ACT OF 1933, AS AMENDED,
FOR AN EQUAL PRINCIPAL AMOUNT OF IT'S
SENIOR SUBORDINATED NOTES DUE JUNE 15, 2007,
WHICH HAVE NOT BEEN SO REGISTERED
-----------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS THEREUNDER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
-----------
Omega Cabinets, Ltd., a Delaware corporation, ("Omega") hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange an aggregate principal amount of up to $100,000,000 of its
new Senior Subordinated Notes due 2007 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its outstanding Senior Subordinated Notes due
2007 (the "Original Notes" and, together with the Exchange Notes, the "Notes")
from the holders (the "Holders") thereof. The terms of the Exchange Notes are
identical in all material respects to the Original Notes, except for certain
transfer restrictions and registration rights relating to the Original Notes.
Omega will accept for exchange any and all Original Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on , 1997, unless
extended (as so extended, the "Expiration Date"). Tenders of Original Notes may
be withdrawn at any time prior to the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Original Notes being
tendered for exchange pursuant to the Exchange Offer. The Exchange Offer is
subject to certain other customary conditions. See "The Exchange Offer."
Interest on the Exchange Notes will be payable semi-annually on June 15 and
December 15 of each year, commencing December 15, 1997. The Exchange Notes are
redeemable at the option of Omega, in whole or in part, from time to time on or
after June 15, 2002, at the redemption prices set forth herein, together with
accrued and unpaid interest to the date of redemption. In addition, at any time
or from time to time, prior to June 15, 2000, up to an aggregate of $35.0
million in aggregate principal amount of Notes will be redeemable at the option
of Omega from the net proceeds of public sales of common stock of Omega (or its
parent, Omega Holdings, Inc., to the extent such net proceeds are contributed
to Omega as common equity), at a price of 110.5% of the principal amount of the
Notes, together with accrued and unpaid interest to the date of redemption;
provided that at least $65.0 million in aggregate principal amount of Notes
remains outstanding immediately after each such redemption. Upon the occurrence
of a Change of Control (as defined herein), each holder of Exchange Notes may
require the Company to repurchase all or a portion of such holder's Exchange
Notes at 101% of the aggregate principal amount of the Exchange Notes together
with accrued and unpaid interest to the date of repurchase. See "Description of
Exchange Notes."
The Exchange Notes will be general, unsecured obligations of Omega, will rank
pari passu with all senior subordinated debt of Omega and will be senior in
right of payment to all existing and future subordinated debt of Omega, if any.
The Exchange Notes will be guaranteed by Omega's subsidiary Panther Transport,
Inc. ("Panther," or the "Guarantor"). The claims of the holders of Exchange
Notes will be subordinated to Senior Debt (as defined herein), which was
approximately $43.3 million as of September 23, 1997, all of which was fully
secured borrowings under the New Bank Credit Facility (as defined herein). See
"Capitalization."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of Omega contained in the Registration Rights Agreement dated July
24, 1997, among Omega and the other signatories thereto (the "Registration
Rights Agreement"). Omega believes that based on interpretations by the staff
of the Securities and Exchange Commission (the "Commission"), Exchange Notes
issued pursuant to the Exchange Offer in exchange for Original Notes may be
offered for resale, resold and otherwise transferred by each Holder thereof
(other than any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement with any person to participate in
the distribution of such Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
Omega will not receive any proceeds from the Exchange Offer and will pay all
expenses incident to the Exchange Offer.
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREIN FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1997.
<PAGE>
The Exchange Offer is not being made to, nor will Omega accept surrenders
for exchange from, Holders of Original Notes in any jurisdiction in which such
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
The Exchange Notes will be available initially only in book-entry form.
Omega expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Note (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in its name or in the name of Cede & Co., its
nominee. Beneficial interests in the Global Note representing the Exchange
Notes will be shown on, and transfers thereof will be effected through,
records maintained by the Depositary and its participants. After the initial
issuance of the Global Note, Exchange Notes in certificated form will be
issued in exchange for the Global Note only on the terms set forth in the
Indenture (the "Indenture") among Omega, The Chase Manhattan Bank, as trustee
(the "Trustee"), and the Guarantor, dated as of July 24, 1997. See
"Description of Exchange Notes--Book-Entry Transfer."
Prior to this Exchange Offer, there has been no public market for the
Original Notes. To the extent that Original Notes are tendered and accepted in
the Exchange Offer, a Holder's ability to sell untendered Original Notes could
be adversely affected. If a market for the Exchange Notes should develop, the
Exchange Notes could trade at a discount from their accreted value (as defined
herein). Omega does not currently intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system.
Omega has been advised by Goldman, Sachs & Co., Citicorp Securities, Inc.
and Montgomery Securities, the initial purchasers (the "Initial Purchasers")
of the Original Notes, that they intend to make a market in the Original Notes
and that, following the Exchange Offer, they intend to make a market in the
Exchange Notes; however, the Initial Purchasers are under no obligation to do
so and any market making activities with respect to the Exchange Notes may be
discontinued at any time.
Neither Omega nor any of its subsidiaries will receive any cash proceeds
from the issuance of the Exchange Notes offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL NOTES ARE URGED TO READ THIS PROSPECTUS AND
THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER.
<PAGE>
AVAILABLE INFORMATION
The Company (as defined herein) has filed a registration statement on Form
S-4 (herein referred to, together with all exhibits and schedules thereto and
any amendments thereto, as the "Exchange Offer Registration Statement") under
the Securities Act with respect to the Exchange Notes offered hereby. This
Prospectus, which forms a part of the Exchange Offer Registration Statement,
does not contain all of the information set forth in the Exchange Offer
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Exchange Notes offered hereby, reference is
made to the Exchange Offer Registration Statement. Statements made in this
Prospectus as to the contents of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of the document
filed as an exhibit to the Exchange Offer Registration Statement.
The Company is not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Pursuant to the Indenture, the Company has agreed that,
whether or not it is required to do so by the rules and regulations of the
Commission, for so long as any of the Notes remain outstanding, the Company
will furnish to the holders of the Notes and file with the Commission (unless
the Commission will not accept such a filing) (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company was required to file such
forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition
and results of operations of the Company and its subsidiaries on a
consolidated basis and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports, in each case within the time
periods specified in the Commission's rules and regulations.
Any reports or documents filed by the Company with the Commission (including
the Exchange Offer Registration Statement) may be inspected and copied at the
Public Reference Section of the Commission's office at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
in New York (7 World Trade Center, 13th Floor, New York, New York 10048) and
Chicago (Citicorp Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661). Copies of such reports or other documents may be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a Web site that contains reports and other information that is filed
through the Commission's Electronic Data Gathering Analysis and Retrieval
System. The Web site can be accessed at http://www.sec.gov.
Omega(R) and HomeCrest(R) are registered trademarks of Omega (as defined
herein).
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto, appearing elsewhere in this
Prospectus. Unless otherwise stated in this Prospectus, references to (a)
"Omega" shall mean Omega Cabinets, Ltd., a Delaware corporation and wholly
owned subsidiary of Omega Holdings, Inc. ("Holdings"); (b) "HomeCrest" shall
mean HomeCrest, a division of Omega; and (c) the "Company" shall mean Omega and
its subsidiary, Panther Transport, Inc. ("Panther"). All references to a fiscal
year refer to the 12 months ended on the last Saturday in December of the year
referenced.
Certain of the information contained in this summary and elsewhere in this
Prospectus, including under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and information with respect to the
Company's plans and strategy for its business are forward-looking statements.
For a discussion of important factors that could cause actual results to differ
materially from the forward-looking statements, see "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Forward Looking Statements."
THE COMPANY
The Company is a leading manufacturer of wood and laminate kitchen cabinetry,
bathroom vanities and related accessories. Headquartered in Waterloo, Iowa, the
Company produces a wide array of custom, semi-custom and stock kitchen and bath
cabinetry primarily for use in residential remodeling and, to a lesser extent,
in new construction. Both Omega and HomeCrest manufacture their products in
state-of-the-art, highly-integrated facilities under the Omega(R) (custom),
Dynasty (semi-custom), Embassy (semi-custom), Legend (stock) and HomeCrest(R)
(stock) brand names and sell to a broad network of kitchen and bath dealers,
home centers, builders/contractors and independent distributors.
Omega was founded in 1977 and in 1994 was purchased from its founder by Code,
Hennessy & Simmons, Inc., a private investment firm, and a group of private
investors including the Company's current senior management team. In May 1995,
the Company more than doubled in size, as measured by total sales, through its
acquisition of HomeCrest, a stock cabinetry manufacturer. As measured by 1996
gross sales, the Company believes that it is the seventh largest manufacturer
of kitchen cabinetry in the United States, and one of only two national
manufacturers that produce a full line of kitchen cabinetry for all three
market price points: custom, semi-custom and stock. Custom cabinetry is made-
to-order and is offered in an unlimited choice of design and construction
styles, wood species, configurations, finishes and colors. Semi-custom
cabinetry is less expensive and is made-to-order from a more limited set of
options than custom cabinetry. Stock cabinetry is the least expensive price
point and offers the fewest number of styles, wood species and finishes, with
choices generally limited to the standard guidelines established by the
manufacturer. Management believes that the Company's ability to sell nationally
at all three price points represents a competitive advantage, as it generates
cross-selling opportunities throughout the Company's broad distribution
network.
The Company operates three manufacturing facilities, one located in Iowa, one
in Indiana and one in Tennessee with an aggregate of approximately one million
square feet. Since January 1, 1994, Omega and HomeCrest have invested over
$13.8 million on capital expenditures directed primarily toward improving
product quality, modernizing manufacturing facilities and increasing capacity
and the level of automation in the manufacturing process. The Company's primary
channel of distribution is its
4
<PAGE>
network of over 1,660 kitchen and bath dealer locations, which accounted for
approximately 80% of total 1996 sales. Management believes that its quality
dealer relationships have created a strong, loyal network with low turnover
rates, resulting in a significant competitive advantage for the Company within
the cabinetry industry. In addition, the Company has developed several
relationships with national and regional home centers, including Home
Depot/Home Depot Expo, Lowe's, Menards and Eagle. The Company's sales to home
centers grew from $7.5 million in fiscal 1994 to $13.2 million in fiscal 1996.
According to Specialists in Business Information, a market research firm, the
United States kitchen and bath cabinetry market had sales in 1996 of
approximately $6.4 billion. Expansion in the industry has been driven by the
increasing popularity of kitchen and bathroom remodeling and a relatively
strong market for new home construction. As a result of these trends, growth in
the kitchen and bath cabinetry market over the past ten years has outpaced
growth in both the overall economy and the domestic building materials
industry. According to Specialists in Business Information, between 1986 and
1996, kitchen and bath cabinetry sales increased at a 7.2% compound annual
growth rate ("CAGR"), which represents a growth in the total dollar volume of
U.S. building material shipments made by manufacturers of kitchen and bath
cabinetry from $3.2 billion to $6.4 billion during this same ten-year period.
The United States kitchen and bath cabinetry industry is highly fragmented with
over 4,700 manufacturers. As evidence of ongoing industry consolidation, in
1990 the top twenty-five industry competitors represented 45.1% of total
industry sales, whereas in 1996 the top twenty-five competitors represented
50.8% of total industry sales.
5
<PAGE>
RECENT DEVELOPMENTS
On June 13, 1997 Omega Merger Corp. ("OMC") merged with and into Holdings
(the "OMC Merger"). Concurrently with the OMC Merger, aggregate consideration
of approximately $201.6 million was paid to certain selling stockholders of
Holdings, including (i) approximately $89.3 million of debt which was repaid in
connection therewith and (ii) a contingent promissory note of Holdings in the
principal amount of $3.0 million (the "Contingent Note"), which is secured by
a standby letter of credit. The Contingent Note is payable on March 31, 1998,
subject to offset and reduction to satisfy certain indemnification obligations
of the sellers under the merger agreement. The consideration to selling
shareholders is subject to adjustment based upon the working capital of
Holdings on the closing date of the OMC Merger. In connection with the OMC
Merger, Mezzanine Lending Associates III, L.P. ("MLA III"), an investment fund
managed by Butler Capital Corporation ("BCC"), purchased shares of capital
stock of Holdings representing 88.4%, and management and the Company's founder
retained shares of stock in Holdings representing approximately 11.1%, of the
outstanding shares of Holdings. The OMC Merger was accounted for as a
recapitalization. As a result, the historical basis of the Company's assets and
liabilities was not affected by the OMC Merger.
Concurrently with the OMC Merger, Holdings and the Company entered into the
following additional transactions (together with the OMC Merger and related
transactions, the "Transactions"): (i) West Street Fund I, L.L.C., an affiliate
of Goldman, Sachs & Co., and Citicorp USA, Inc., an affiliate of Citicorp
Securities, Inc., provided bridge loans (the "Bridge Loans") in the aggregate
principal amount of $90.0 million; (ii) Holdings issued an 11% junior
subordinated note to MLA III in the aggregate principal amount of $10.0 million
(the "Junior Subordinated Note"); and (iii) Holdings, Omega, HomeCrest and
Panther entered into a credit agreement with First Bank National Association as
lender and as agent (the "New Bank Credit Facility") providing for a syndicated
senior secured term loan facility of up to $40.0 million (the "Term Facility")
and a syndicated senior secured revolving credit facility of up to $20.0
million (the "Revolving Facility").
On July 24, 1997, the Company consummated the sale of the Original Notes in a
transaction exempt from the registration requirements of the Securities Act
(the "Initial Offering"). Concurrently with the Initial Offering, the Company
used the gross proceeds from the Initial Offering, cash from operations and
borrowings under the Revolving Facility to repay the indebtedness represented
by the Bridge Loans and the Junior Subordinated Note, and interest thereon, and
to pay certain related expenses. In connection with the Initial Offering, the
Company entered into the Registration Rights Agreement with the Initial
Purchasers pursuant to which it agreed to register the Exchange Notes under the
Securities Act and offer them in exchange for the Original Notes. See "Recent
Developments," "Use of Proceeds," "Description of New Bank Credit Facility,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
On October 1, 1997, HomeCrest, a wholly-owned subsidiary of the Company, was
merged with and into the Company (the "HomeCrest Merger") with the Company as
the surviving organization.
The Company's principal executive offices are located at 1205 Peters Drive,
Waterloo, Iowa 50703, and its telephone number is (319) 235-5700.
6
<PAGE>
THE EXCHANGE OFFER
THE EXCHANGE OFFER............ Up to $100,000,000 aggregate principal amount
of Exchange Notes are being offered in exchange
for a like aggregate principal amount of
Original Notes. The Company is making the
Exchange Offer in order to satisfy its
obligations under the Registration Rights
Agreement relating to the Original Notes. For a
description of the procedures for tendering
Original Notes, see "The Exchange Offer--
Procedures for Tendering Original Notes."
EXPIRATION DATE............... 5:00 p.m., New York City time, on , 1997,
unless the Exchange Offer is extended by the
Company in its sole discretion (in which case
the Expiration Date will be the latest date and
time to which the Exchange Offer is extended).
See "The Exchange Offer--Terms of the Exchange
Offer."
CONDITIONS TO THE EXCHANGE The Exchange Offer is subject to certain
OFFER........................ conditions, which may be waived by the Company
in its sole discretion. The Exchange Offer is
not conditioned upon any minimum principal
amount of Original Notes being tendered. See
"The Exchange Offer--Conditions to the Exchange
Offer."
RESALE OF THE EXCHANGE NOTES.. Based on an interpretation by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes
may be offered for resale, resold and otherwise
transferred by any holder thereof (other than
(i) a broker-dealer who purchased such Original
Notes directly from the Company for resale
pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a
person that is an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act provided that the holder
is acquiring the Exchange Notes in its ordinary
course of business and is not participating,
and has no arrangement or understanding with
any person to participate, in the distribution
of the Exchange Notes. Holders of Original
Notes wishing to accept an Exchange Offer must
represent to the Company that such conditions
have been met. In the event that the Company's
belief is inaccurate, holders of Exchange Notes
who transfer Exchange Notes in violation of the
prospectus delivery provisions of the
Securities Act and without an exemption from
registration thereunder may incur liability
under the Securities Act. The Company does not
assume or indemnify holders against such
liability, although the Company does not
believe that any such liability should exist.
7
<PAGE>
A broker-dealer that receives Exchange Notes in
exchange for Original Notes held for its own
account, as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange
Notes. Although such broker-dealer may be an
"underwriter" within the meaning of the
Securities Act, the Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. See "Plan of Distribution."
The Exchange Offer is not being made to, nor
will the Company accept surrenders for exchange
from, holders of Original Notes in any
jurisdiction in which the Exchange Offer or the
acceptance thereof would not be in compliance
with the securities or blue sky laws of such
jurisdiction.
PROCEDURES FOR TENDERING Each holder of Original Notes wishing to accept
NOTES......................... the Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal, as the
case may be, or a facsimile thereof, in
accordance with the instructions contained
herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Original Notes and
any other required documentation to the
Exchange Agent (as defined herein) at the
address set forth herein. By executing a Letter
of Transmittal, each holder will represent to
the Company conducting the related Exchange
Offer that, among other things, (i) the
Exchange Notes acquired pursuant to such
Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such Exchange Notes, whether or not
such person is the holder, (ii) neither the
holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such
Exchange Notes and that such holder is not
engaged in, and does not intend to engage in, a
distribution of Exchange Notes, and (iii) that
neither the holder nor any such other person is
an "affiliate," as defined under Rule 405 of
the Securities Act, of the Company. See "The
Exchange Offer--Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............
Any beneficial owner whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. See "The Exchange Offer--
Procedures for Tendering."
8
<PAGE>
GUARANTEED DELIVERY Holders of Original Notes who wish to tender
PROCEDURES.................... their Original Notes and whose Original Notes
are not immediately available or who cannot
deliver their Original Notes, the Letter of
Transmittal, as the case may be, or any other
documents required by such Letter of
Transmittal to the Exchange Agent (as defined
herein) (or comply with the procedures for
book-entry transfer) prior to the Expiration
Date must tender their Original Notes according
to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery
Procedures."
UNTENDERED NOTES.............. Following the consummation of the Exchange
Offer, Holders of Original Notes eligible to
participate but who do not tender their
Original Notes will not have any further
exchange rights and such Original Notes will
continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the
market for such Original Notes could be
adversely affected by the Exchange Offer.
CONSEQUENCES OF FAILURE TO
EXCHANGE.....................
The Original Notes that are not exchanged
pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such
Original Notes may be resold only (i) to the
Company, (ii) pursuant to Rule 144A or Rule 144
under the Securities Act or pursuant to some
other exemption under the Securities Act, (iii)
outside the United States to a foreign person
pursuant to the requirements of Rule 904 under
the Securities Act, or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange Offer--
Consequences of Failure to Exchange."
SHELF REGISTRATION STATEMENT.. In the event that any changes in law or the
applicable interpretations of the staff of the
Commission do not permit the Company to effect
the Exchange Offer or upon the request of a
Holder of Transfer Restricted Securities (as
defined) under certain circumstances the
Company has agreed pursuant to the Registration
Rights Agreement to register the Original Notes
issued by it on a shelf registration statement
(the "Shelf Registration Statement") and use
its best efforts to cause it to be declared
effective by the Commission. The Company has
agreed to maintain the effectiveness of the
Shelf Registration Statement for, under certain
circumstances, at least two years, to cover
resales of the Original Notes held by any such
holders.
WITHDRAWAL RIGHTS............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.
ACCEPTANCE OF ORIGINAL NOTES
AND DELIVERY OF EXCHANGE
NOTES........................ The Company will accept for exchange any and
all Original Notes which are properly tendered
in the Exchange Offer
9
<PAGE>
prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be
delivered promptly following the Expiration
Date. See "The Exchange Offer--Terms of the
Exchange Offer."
FEDERAL TAX CONSIDERATIONS.... The exchange pursuant to the Exchange Offer
will generally not be a taxable event for
Federal income tax purposes. See "Certain
Federal Income Tax Consequences."
USE OF PROCEEDS............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.
EXCHANGE AGENT................ The Chase Manhattan Bank.
THE EXCHANGE NOTES
GENERAL....................... The form and terms of the Exchange Notes are
the same as the form and terms of the
respective Original Notes except that (i) the
Exchange Notes have been registered under the
Securities Act and, therefore, will generally
not bear legends restricting the transfer
thereof, and (ii) the Holders of Exchange Notes
will not be entitled to rights under the
Registration Rights Agreement. See "The
Exchange Offer." The Exchange Notes will
evidence the same debt as the Original Notes
and will be entitled to the benefits of the
Indenture.
SECURITIES OFFERED............ $100.0 million in aggregate principal amount of
10 1/2% Senior Subordinated Notes due 2007.
MATURITY DATE................. June 15, 2007.
GUARANTEES.................... Omega's payment obligations under the Exchange
Notes will be guaranteed on a senior
subordinated basis (the "Subsidiary Guarantee")
by Omega's Subsidiary. The Subsidiary Guarantee
will be subordinated to all Senior Debt of the
Guarantor. See "Description of Exchange Notes--
Guarantee."
INTEREST PAYMENT DATES........ June 15 and December 15 of each year,
commencing December 15, 1997.
OPTIONAL REDEMPTION........... Except as described below, the Exchange Notes
are not redeemable at Omega's option prior to
June 15, 2002. From and after June 15, 2002,
the Exchange Notes will be subject to
redemption at the option of Omega, in whole or
in part, at the redemption prices set forth
herein, plus accrued and unpaid interest to the
date of redemption.
10
<PAGE>
In addition, prior to June 15, 2000, up to an
aggregate of $35.0 million in aggregate
principal amount of Notes will be redeemable at
the option of Omega from the net proceeds of
public sales of common stock of Omega (or
Holdings, to the extent such net proceeds are
contributed to Omega as common equity), at a
price of 110.5% of the principal amount of the
Notes, plus accrued and unpaid interest to the
date of redemption; provided that at least
$65.0 million in aggregate principal amount of
Notes remains outstanding immediately after
each such redemption; and provided, further,
that the notice of any such redemption shall be
mailed within 60 days of the receipt by Omega
or Holdings of proceeds from the public
offering.
CHANGE OF CONTROL............. In the event of a Change of Control, Holders of
the Exchange Notes will have the right to
require Omega to repurchase their Exchange
Notes, in whole or in part, at a price equal to
101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase.
RANKING....................... The Exchange Notes will be general, unsecured
obligations of the Company, will be
subordinated in right of payment to all Senior
Debt, will rank pari passu with all senior
subordinated debt of the Company and will be
senior in right of payment to all existing and
future subordinated debt of the Company, if
any. The claims of the Holders of the Exchange
Notes will be subordinated to the Senior Debt,
which, as of September 23, 1997, after giving
effect to the Initial Offering, is $43.3
million, all of which is fully secured
borrowings under the New Bank Credit Facility.
See "Description of Notes -- Subordination."
RESTRICTIVE COVENANTS.........
The Indenture contains certain covenants that
will, among other things, limit the ability of
Omega and its Subsidiary to incur additional
Indebtedness (as defined herein) and issue
Disqualified Stock (as defined herein), pay
dividends or distributions or make investments
or make certain other Restricted Payments (as
defined herein), enter into certain
transactions with affiliates, dispose of
certain assets, incur liens securing pari passu
and subordinated indebtedness and engage in
mergers and consolidations. See "Description of
Exchange Notes--Certain Covenants."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Exchange Notes.
11
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
Set forth below are summary historical and pro forma consolidated financial
data of the Company and its predecessor. The historical Statement of Income and
Balance Sheet Data of the Company for the periods from June 17, 1994 (the date
of the acquisition by the Company of its predecessor) to December 28, 1996 have
been derived from the Company's audited consolidated financial statements for
those periods. The historical Statement of Income and Balance Sheet Data of the
predecessor for each of the two years in the period ended December 31, 1993 and
for the period from January 1, 1994 through June 16, 1994 have been derived
from its audited financial statements for those periods. The historical
Statement of Income and Balance Sheet Data for the six months ended June 28,
1997 and June 29, 1996 have been derived from the unaudited consolidated
financial statements for those periods and, in the opinion of management,
include all adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation of said information. The information
presented below should be read in conjunction with "Capitalization," "Unaudited
Pro Forma Condensed Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto and other financial information included
elsewhere in this Offering Circular.
<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY(1)
---------------------------- -------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, PERIOD PERIOD ------------------------------------ --------------------------------------
---------------- FROM FROM
JANUARY 1, JUNE 17, PRO FORMA
1994 TO 1994 TO DECEMBER 28, JUNE 29, JUNE 28, PRO FORMA
JUNE 16, DECEMBER DECEMBER DECEMBER 1996 1996 1997 JUNE 28, 1997
1992 1993 1994 31, 1994 30, 1995(2) 28, 1996 (UNAUDITED)(3) (UNAUDITED) (UNAUDITED) (UNAUDITED)(3)
------- ------- ---------- -------- ----------- -------- -------------- ----------- ----------- --------------
(IN THOUSANDS, EXCEPT RATIOS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
INCOME DATA:
Net sales....... $40,332 $47,637 $24,917 $33,893 $97,958 $136,225 $136,225 $65,607 $ 76,540 $76,540
Cost of goods
sold........... 26,762 32,495 17,564 22,485 72,690 97,287 97,287 47,583 55,470 55,470
------- ------- ------- ------- ------- -------- -------- ------- -------- -------
Gross profit.... 13,570 15,142 7,353 11,408 25,268 38,938 38,938 18,024 21,070 21,070
Selling, general
and
administrative
expenses....... 4,097 4,949 5,235(7) 3,708 10,964 15,309 15,309 7,597 12,979(4) 12,979
Amortization of
goodwill....... -- -- -- 519 1,163 1,332 1,332 662 683 683
------- ------- ------- ------- ------- -------- -------- ------- -------- -------
Operating
income......... 9,473 10,193 2,118 7,181 13,141 22,297 22,297 9,765 7,408 7,408
Interest
expense........ (192) (60) (22) (4,123) (9,701) (10,441) (15,220) (5,248) (6,605) (7,603)
Interest and
dividend
income......... 271 155 -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- -------- -------- ------- -------- -------
Income (loss)
before income
taxes and
extraordinary
item........... 9,552 10,288 2,096 3,058 3,440 11,856 7,077 4,517 803 (195)
Income tax
expense ....... -- -- -- 1,110 1,360 4,700 2,812 1,763 530 136
------- ------- ------- ------- ------- -------- -------- ------- -------- -------
Income before
extraordinary
item........... 9,552 10,288 2,096 1,948 2,080 7,156 4,071 2,754 273 (331)
Extraordinary
loss on debt
refinancing(5). -- -- -- -- -- -- -- -- (947) --
------- ------- ------- ------- ------- -------- -------- ------- -------- -------
Net income
(loss)......... $ 9,552 $10,288 $ 2,096(7)$ 1,948 $ 2,080 $ 7,156 $ 4,265 $ 2,754 $ (674)(4) $ (331)
======= ======= ======= ======= ======= ======== ======== ======= ======== =======
OTHER DATA:
EBITDA(6)(7).... $10,289 $11,149 $ 2,643 $ 7,993 $15,500 $ 25,527 $ 25,527 $11,294 $ 13,976 $13,976
EBITDA
margin(7)...... 25.5% 23.4% 10.6% 23.6% 15.8% 18.7% 18.7% 17.2% 18.3% 18.3%
Gross margin.... 33.6% 31.8% 29.5% 33.7% 25.8% 28.6% 28.6% 27.5% 27.5% 27.5%
Capital
expenditures... $ 1,398 $ 1,557 $ 1,727 $ 2,565 $ 3,045 $ 1,421 $ 1,421 $ 461 $ 1,319 $ 1,319
Depreciation and
amortization.... 858 971 538 964 2,781 3,731 3,731 1,802 1,935 1,935
Net cash provided
(used) by:
Operating
activities..... 10,061 10,658 3,635 6,088 9,077 13,262 10,371 6,744 (3,484) (4,088)
Investing
activities..... 979 (1,575) (1,727) (58,598) (33,175) (2,181) (2,181) (461) (4,600) (4,600)
Financing
activities..... (10,123) (11,193) (2,134) 52,510 24,103 (11,083) (11,083) (6,285) 8,085 8,085
Ratio of EBITDA
to interest
expense........ 1.9x 1.6x 2.4x 1.7x 2.2x 2.1x 1.8x
Number of active
selling
locations (at
end of year)(8)
............... 1,441 1,564 1,624 2,042
<CAPTION>
AT JUNE 28,
1997
-----------
ACTUAL
-----------
<S> <C>
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital..................... $ 14,583
Total assets........................ 114,418
Long-term debt, including current
portion............................ 146,670
Stockholder's equity (deficit)...... (47,318)
</TABLE>
12
<PAGE>
(1) The Company commenced operations on June 17, 1994, upon acquiring its
predecessor, Omega Cabinets, Ltd.
(2) In May 1995, the Company acquired the operating assets of HomeCrest
Corporation in a transaction accounted for as a purchase.
(3) The Pro Forma Statement of Income Data and Other Data gives effect to the
Transactions and the Initial Offering as though these transactions had
occurred on December 31, 1995. The pro forma adjustments as applied to the
respective historical consolidated financial information of the Company
reflect and account for the OMC Merger as a recapitalization. Accordingly,
the historical basis of the Company's assets and liabilities has not been
effected by the Transactions and the Initial Offering.
(4) The loss reported for the six months ended June 28, 1997 includes a non-
cash compensation expense relating to stock option grants of $4,894 (before
related income tax benefit of $1,762) included in selling, general and
administrative expenses.
(5) As a result of the Transactions and related refinancing, in June 1997 the
Company wrote off existing unamortized deferred financing costs of $1,554,
resulting in an extraordinary loss of $947 (net of a related income tax
benefit of $607).
(6) EBITDA represents income from operations before interest expense (including
amortization of deferred financing costs), income taxes, depreciation,
amortization of goodwill and non-cash stock option compensation expense. A
non-cash compensation expense of $4,894 relating to stock option grants was
incurred in the six months ended June 28, 1997. EBITDA is presented because
it is a widely accepted financial indicator of a leveraged company's
ability to service and/or incur indebtedness and because management
believes that EBITDA is a relevant measure of the Company's ability to
generate cash without regard to the Company's capital structure or working
capital needs. EBITDA as presented may not be comparable to similarly
titled measures used by other companies, depending upon the non-cash
charges included. When evaluating EBITDA, investors should consider that
EBITDA (i) should not be considered in isolation but together with other
factors which may influence operating and investing activities, such as
changes in operating assets and liabilities and purchases of property and
equipment, (ii) is not a measure of performance calculated in accordance
with generally accepted accounting principles, (iii) should not be
construed as an alternative or substitute for income from operations, net
income or cash flows from operating activities in analyzing the Company's
operating performance, financial position or cash flows and (iv) should not
be used as an indicator of the Company's operating performance or as a
measure of its liquidity.
(7) In the predecessor period from January 1, 1994 to June 16, 1994, net
income, EBITDA and EBITDA margin were adversely affected due to special
employee bonuses totaling $2,231 which were paid in connection with the
sale of the predecessor. Excluding the effect of such bonuses, EBITDA and
EBITDA margin would have been $4,874 and 19.6%, respectively.
(8) Active selling locations represent customer locations which have purchased
over five hundred dollars of product in the prior year. No data is
available with respect to active selling locations on December 31, 1992,
June 29, 1996 or June 28, 1997, respectively.
13
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before making
an investment in the Exchange Notes offered hereby. This Prospectus contains
certain forward looking statements within the meaning of Section 27A of the
Securities Act. Actual results could differ materially from those projected in
the forward looking statements as a result of certain factors and
uncertainties set forth below and elsewhere in this Prospectus.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE INDEBTEDNESS
As a result of the Transactions and the Offering, the Company will be highly
leveraged. As of June 28, 1997, the Company's indebtedness was approximately
$147.0 million and its deficit in stockholder's equity was $47.3 million.
After giving pro forma effect to the Transactions and the Initial Offering,
the Company's ratio of earnings to fixed charges for fiscal 1996 would have
been 1.5 to 1. For the six month period ended June 28, 1997, pro forma
earnings would have been insufficient to cover fixed charges by $0.2 million.
In addition, subject to the restrictions in the New Bank Credit Facility, the
Company may incur additional indebtedness from time to time.
The level of the Company's indebtedness could have important consequences to
Holders of the Notes, including, but not limited to, (i) a substantial portion
of the Company's cash flow from operations must be dedicated to the payment of
principal and interest on the Notes and up to $120 million which may be
borrowed under the New Bank Credit Facility and will not be available for
other purposes; (ii) the Company's ability to obtain additional debt financing
in the future for working capital, capital expenditures or acquisitions may be
limited; (iii) the Company's level of indebtedness could limit its flexibility
in reacting to changes in the industry and economic conditions generally; (iv)
certain of the Company's borrowings are at variable rates of interest, and a
substantial increase in interest rates could adversely affect the Company's
ability to meet its debt service obligations; and (v) borrowings under the New
Bank Credit Facility will become due prior to the time the Notes will become
due, which may adversely affect the ability of the Company to pay principal
and interest when due on the Notes. In addition, the Indenture and the New
Bank Credit Facility will contain financial and other restrictive covenants
that will limit the ability of the Company to, among other things, borrow
additional funds. Failure by the Company to comply with such covenants could
result in an event of default which, if not cured or waived, could have a
material adverse effect on the Company. In addition, the degree to which the
Company is leveraged and the terms of agreements governing Senior Debt could
prevent it from repurchasing all of the Notes tendered to it upon the
occurrence of a Change of Control. As of September 23, 1997 the Company had
approximately $13.5 million in additional borrowing capacity under the
Revolving Facility. See "Description of Exchange Notes -- Repurchase at the
Option of Holders -- Change of Control" and "Description of New Bank Credit
Facility."
The Company's ability to make scheduled payments of principal of, or to pay
the interest on, or to refinance, its indebtedness (including the Notes), or
to fund planned capital expenditures will depend on its future performance,
which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond its
control. Based upon the current level of operations, management believes that
cash flow from operations and available cash, together with available
borrowings under the New Bank Credit Facility, will be adequate to meet the
Company's anticipated future requirements for working capital, budgeted
capital expenditures and scheduled payments of principal and interest on its
indebtedness, including the Notes, for the next several years. The Company is
permitted under the Indenture to increase the amounts currently available for
borrowing under the New Bank Credit Facility. The Company may, however, need
to refinance all or a portion of the principal of the Notes on or prior to
maturity. There can be no assurance that the
14
<PAGE>
Company's business will generate sufficient cash flow from operations or that
future borrowings will be available under the New Bank Credit Facility in an
amount sufficient to enable the Company to service its indebtedness, including
the Notes, or make anticipated capital expenditures or acquisitions. In
addition, there can be no assurance that the Company will be able to effect
any such refinancing on commercially reasonable terms, or at all.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture will restrict, among other things, the Company's ability to
incur additional indebtedness, incur liens, pay dividends or make certain
other restricted payments, enter into certain transactions with affiliates,
impose restrictions on the ability of a subsidiary to pay dividends or make
certain payments to the Company, merge or consolidate with any other person or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. In addition, the New Bank
Credit Facility contains other and more restrictive covenants and prohibits
the Company from prepaying its other indebtedness (including the Notes). See
"Description of Exchange Notes -- Certain Covenants" and "Description of New
Bank Credit Facility." The New Bank Credit Facility requires the Company to
maintain specified financial ratios and satisfy certain financial condition
tests. The Company's ability to meet those financial ratios and tests can be
affected by events beyond its control, and there can be no assurance that the
Company will meet those tests. A breach of any of these covenants could result
in a default under the New Bank Credit Facility and/or the Indenture. Upon the
occurrence of an event of default under the New Bank Credit Facility, the
lenders could elect to declare all amounts outstanding under the New Bank
Credit Facility, together with accrued interest, to be immediately due and
payable. If the Company were unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness. If
the lenders under the New Bank Credit Facility accelerate the payment of the
indebtedness, there can be no assurance that the assets of the Company would
be sufficient to repay in full such indebtedness and the other indebtedness of
the Company, including the Notes. Substantially all of the assets of Omega and
its subsidiary are pledged as security under the New Bank Credit Facility. See
"Description of New Bank Credit Facility."
SUBORDINATION
The Notes will be subordinated in right of payment to all existing and
future Senior Debt, including the principal of (and premium, if any) and
interest on and all other amounts due on or payable in connection with Senior
Debt. As of September 23, 1997, there was outstanding approximately $43.3
million of Senior Debt, all of which was fully secured borrowings under the
New Bank Credit Facility. Amounts available for borrowing under the New Bank
Credit Facility are permitted by the terms of the Indenture to be increased up
to $120.0 million. By reason of such subordination, in the event of the
insolvency, liquidation, reorganization, dissolution or other winding-up of
the Company or upon a default in payment with respect to, or the acceleration
of, any Senior Debt, the holders of such Senior Debt and any other creditors
who are holders of Senior Debt, holders of Senior Debt of Guarantors and
creditors of subsidiaries that are not Guarantors must be paid in full before
the Holders of the Notes may be paid. If the Company incurs any additional
pari passu debt, the holders of such debt would be entitled to share ratably
with the Holders of the Notes in any proceeds distributed in connection with
any insolvency, liquidation, reorganization, dissolution or other winding-up
of the Company. This may have the effect of reducing the amount of proceeds
paid to Holders of the Notes. In addition, certain holders of Senior Debt may
prevent cash payments with respect to the principal of (and premium if any) or
interest on the Notes for a period of up to 180 days following a non-payment
default with respect to Senior Debt. In addition, the Indenture permits the
subsidiaries of the Company to incur debt under certain circumstances. Any
such debt incurred by a subsidiary of the Company that is not a Guarantor
would be structurally senior to the Notes. See "Description of Notes."
15
<PAGE>
INDUSTRY CONDITIONS AND CYCLICALITY
The markets for the Company's cabinetry products are cyclical and are
affected by the same economic factors that affect the remodeling and housing
industries in general, including the availability of credit, changes in
interest rates, market demand and general economic conditions, all of which
are beyond the Company's control. Any deterioration in these markets could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business."
COST OF LUMBER
The Company's results of operations are affected significantly by
fluctuations in the market prices of hardwood lumber, which represent
approximately 20% of the total cost of goods sold by the Company. The Company
buys its hardwood supplies at market-based prices from numerous independent
sawmill operators. The cost of hardwood lumber is subject to fluctuation and
is affected by levels of supply as well as development in the timber cutting
industry. Significant increases in the price of lumber would increase the cost
of goods sold. Unless the Company was able to increase the prices of its
products, such price increases could have a materially adverse affect on the
Company's results of operation.
COMPETITION
The Company is engaged in a highly fragmented and competitive industry. The
Company competes with many local, regional and national cabinetry
manufacturing companies in the markets that it serves. Some of the Company's
principal competitors are less highly-leveraged than the Company and may have
greater financial and operating flexibility. See "Business -- Competition."
PAYMENT UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
may require the Company to repurchase all or a portion of such Holder's Notes
at 101% of the principal amount of the Notes together with accrued and unpaid
interest and Liquidation Damages, if any, to the date of repurchase. See
"Description of Exchange Notes -- Repurchase at the Option of Holders --
Change of Control" for the definition of "Change of Control." There can be no
assurance that the Company would have the funds necessary to effect such a
purchase if such an event were to occur. In addition, the New Bank Credit
Facility prohibits the Company from purchasing any Notes and also provides
that certain changes in control of the Company would constitute a default
thereunder. Any future credit agreements or other agreements relating to
Senior Debt to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Change of Control occurs at a time
when the Company is prohibited from purchasing Notes, the Company could seek
the consent of its lenders to purchase the Notes or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited
from purchasing Notes. In such case, the Company's failure to purchase
tendered Notes would constitute an Event of Default under the Indenture. See
"Description of Exchange Notes -- Repurchase at the Option of Holders --
Change of Control."
DEPENDENCE ON KEY MANAGEMENT
The Company's success will continue to depend to a significant extent on its
executive and other key management personnel. Although the Company has entered
into employment agreements with certain of its executive officers, there can
be no assurance that the Company will be able to retain its executive officers
and key personnel or attract additional qualified management in the future. In
addition, the success of certain of the acquisitions contemplated by the
Company may depend, in part, on the Company's ability to retain management
personnel of the acquired companies.
16
<PAGE>
CONTROLLING STOCKHOLDER
MLA III owns in excess of a majority of the outstanding voting stock of
Holdings, the sole stockholder of the Company. By virtue of such ownership,
MLA III has the power to control all matters submitted to stockholders of
Holdings and to elect all directors of Holdings and its subsidiaries,
including the Company. See "Principal Stockholders."
FRAUDULENT CONVEYANCE LAW
In the event of a bankruptcy, reorganization or rehabilitation case or
similar proceeding relating to, or a lawsuit by or on behalf of unpaid
creditors of the Company, a court may review the Initial Offering under
relevant federal and state fraudulent conveyance law (the "fraudulent
conveyance statutes"). Generally, if a court were to find either (a) that the
Company entered into the Initial Offering with the intent ("fraudulent
intent"), which in certain circumstances may be presumed, of hindering,
delaying or defrauding its current or future creditors or (b) that, after
giving effect to the Initial Offering, the Company both (i) received (or was
deemed to have received under applicable law) less than reasonably equivalent
value or fair consideration for or in connection with the transfer of property
or obligations incurred as part of the Initial Offering and (ii) (A) was
insolvent on the date such transfer was made or such obligations were incurred
or was rendered insolvent as a result of such transfer or obligations, (B) was
engaged or about to engage in a business or transaction for which its assets
constituted unreasonably small capital or (C) intended to incur, or believed
that it would incur, debts beyond its ability to pay as such debts matured (as
all of the foregoing terms are defined in or interpreted under the fraudulent
conveyance statutes) (the circumstances that meet the requirements of this
clause (b) are referred to herein as "constructive fraud"), such court could,
under certain fraudulent conveyance statutes and subject to applicable
statutes of limitation, take action detrimental to the holders of the Exchange
Notes, or to the Company, including, under certain circumstances, setting
aside or subordinating to trade or other creditors any of the obligations with
respect to the Exchange Notes, or setting aside any transfer of property
pursuant thereto by the Company.
A legal challenge of the Subsidiary Guarantee on fraudulent conveyance
grounds could, among other things, focus on the benefits, if any, realized by
the Guarantor as a result of the issuance by Omega of the Notes. To the extent
that the Subsidiary Guarantee were held to be unenforceable as a fraudulent
conveyance for any reason, the holders of the Notes would cease to have any
direct claim in respect of the Guarantor and would be solely creditors of
Omega. In the event the Subsidiary Guarantee were held to be subordinated, the
claims of the holders of the Notes would be subordinated to claims of other
creditors of the Guarantor.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction that is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its liabilities, including contingent
liabilities, were greater than the fair saleable value of the debtor's assets
at a fair valuation, or if the present fair saleable value of the debtor's
assets were less than the amount required to repay its probable liabilities on
its existing debts, including contingent liabilities, as they become absolute
and matured. There can be no assurance as to what standard a court would apply
in order to make such determination.
The Company believes (i) that it did not enter into the Initial Offering
with fraudulent intent, (ii) that circumstances constituting constructive
fraud will not have arisen with respect to the Company as a result of, and
after giving effect to, the Initial Offering and (iii) that, accordingly, the
property transferred to the Company as part of the Initial Offering and the
obligations of the Company with respect to the Exchange Notes would not be
subject to such detrimental action. These beliefs are based on the Company's
operating history and analysis of internal cash flow projections and estimated
values of assets and liabilities of the Company and the Guarantor at the time
of the Initial Offering. Since each of the components of the question of
whether the incurrence of the debt represented by the Notes or
17
<PAGE>
any Guarantee constitutes a fraudulent conveyance is inherently fact-based and
fact-specific, there can be no assurance that a court passing on such
questions would agree with the Company.
LACK OF PUBLIC MARKET FOR THE NOTES; RESTRICTIONS ON RESALE
The Exchange Notes are new securities for which there currently is no
market. Although the Initial Purchasers have informed the Company that they
intend to make a market in the Exchange Notes, they are not obligated to do so
and any such market making may be discontinued at any time without notice.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the Exchange Notes. The Exchange Notes are expected to be
eligible for trading by qualified buyers in the PORTAL market. The Company
does not intend to apply for listing of the Exchange Notes, on any securities
exchange or for quotation through the Nasdaq National Market.
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
18
<PAGE>
RECENT DEVELOPMENTS
On June 13, 1997, OMC merged with and into Holdings. Concurrently with the
OMC Merger, aggregate consideration of approximately $201.6 million was paid
to certain selling stockholders of Holdings, including (i) approximately $89.3
million of debt which was repaid in connection therewith and (ii) the $3.0
million Contingent Note, which is secured by a standby letter of credit. The
Contingent Note is payable on March 31, 1998, subject to offset and reduction
to satisfy certain indemnification obligations of the sellers under the merger
agreement. The consideration to selling shareholders is subject to adjustment
based upon the working capital of Holdings on the closing date of the OMC
Merger. Concurrently with the OMC Merger, Holdings and the Company entered
into the following additional transactions: (i) West Street Fund I, L.L.C., an
affiliate of Goldman, Sachs & Co., and Citicorp USA, Inc., an affiliate of
Citicorp Securities, Inc., provided the Bridge Loans; (ii) Holdings issued the
Junior Subordinated Note; and (iii) Holdings, Omega, HomeCrest and Panther
entered into the New Bank Credit Facility. In connection with the OMC Merger,
MLA III purchased shares of capital stock of Holdings representing 88.4% and
management and the Company's founder retained shares of stock in Holdings
representing approximately 11.1% of the outstanding shares of Holdings. The
OMC Merger was accounted for as a recapitalization. As a result, the
historical basis of the Company's assets and liabilities was not affected by
the OMC Merger.
On July 24, 1997, the Company consummated the sale of the Original Notes in
a transaction exempt from the registration requirements of the Securities Act.
In connection with the Initial Offering, the Company entered into a
Registration Rights Agreement with the Initial Purchasers pursuant to which it
agreed to register the Exchange Notes under the Securities Act and offer them
in exchange for the Original Notes.
On October 1, 1997, HomeCrest, a wholly-owned subsidiary of the Company, was
merged with and into the Company, with the Company as the surviving
organization.
USE OF PROCEEDS
The Company will receive no proceeds from the issuance of the Exchange
Notes.
The gross proceeds of $100.0 million from the issuance of the Original
Notes, cash from operations and borrowings under the Revolving Facility were
used to repay the Bridge Loans and the Junior Subordinated Note and interest
thereon, and to pay certain fees and expenses in connection with the Initial
Offering. The Bridge Loans and the Junior Subordinated Note were incurred to
finance, in part, the consideration paid to selling shareholders in the OMC
Merger.
19
<PAGE>
CAPITALIZATION
The following table sets forth the historical consolidated capitalization of
the Company as of June 28, 1997 and the pro forma consolidated capitalization
as of such date after giving effect to the Initial Offering. This table
should be read in conjunction with the "Unaudited Pro Forma Condensed
Consolidated Financial Data" and the Consolidated Financial Statements and
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO
FORMA
FOR THE
INITIAL
HISTORICAL OFFERING
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion:
New Bank Credit Facility
Term Facility(1)..................................... $ 36,820 $ 36,820
Revolving Facility................................... 6,850 6,850
Bridge Loans........................................... 90,000 --
10 1/2% Senior Subordinated Notes due 2007............. -- 100,000
Junior Subordinated Note(2)............................ 10,000 --
Contingent Note(1)..................................... 3,000 3,000
-------- --------
Total long-term debt, including current portion.......... 146,670 146,670
Total stockholder's equity (deficit)(3).................. (47,318) (47,318)
-------- --------
Total capitalization..................................... $ 99,352 $ 99,352
======== ========
</TABLE>
- --------
(1) A standby letter of credit of approximately $3.2 million has been issued
under the New Bank Credit Facility to secure the Contingent Note. The
amounts shown under the Term Facility excludes $3.2 million which would be
borrowed thereunder upon a draw under such standby letter of credit.
(2) The Junior Subordinated Note is a direct obligation of Holdings that is
guaranteed by the Company and has been "pushed down" to the Company for
financial reporting purposes.
(3) Omega has 10,000 authorized shares of Common Stock, of which 1,000 are
issued and outstanding and are held by Holdings.
20
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Set forth below are selected historical consolidated financial data of the
Company and its predecessor. The historical Statement of Income and Balance
Sheet Data of the Company for the periods from June 17, 1994 (the date of the
acquisition by the Company of its predecessor) to December 28, 1996 have been
derived from the Company's audited consolidated financial statements for those
periods. The historical Statement of Income and Balance Sheet Data of the
predecessor for each of the two years in the period ended December 31, 1993
and for the period from January 1, 1994 through June 16, 1994 have been
derived from its audited financial statements for those periods. The
historical Statement of Income and Balance Sheet Data for the six months ended
June 28, 1997 and June 29, 1996 have been derived from the unaudited
consolidated financial statements for those periods and, in the opinion of
management, include all adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation of said information. The
information presented below should be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
thereto and other financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY(1)
---------------------------- -------------------------------------------------------
YEAR ENDED PERIOD PERIOD YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, FROM FROM -------------------- -----------------------
---------------- JANUARY 1, JUNE 17,
1994 TO 1994 TO JUNE 29, JUNE 28,
JUNE 16, DECEMBER DECEMBER DECEMBER 1996 1997
1992 1993 1994 31, 1994 30, 1995(2) 28, 1996 (UNAUDITED) (UNAUDITED)
------- ------- ---------- -------- ----------- -------- ----------- -----------
(IN THOUSANDS, EXCEPT RATIOS AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales............... $40,332 $47,637 $24,917 $33,893 $ 97,958 $136,225 $ 65,607 $ 76,540
Cost of goods sold...... 26,762 32,495 17,564 22,485 72,690 97,287 47,583 55,470
------- ------- ------- ------- -------- -------- -------- --------
Gross profit............ 13,570 15,142 7,353 11,408 25,268 38,938 18,024 21,070
Selling, general and
administrative
expenses............... 4,097 4,949 5,235(7) 3,708 10,964 15,309 7,597 12,979(4)
Amortization of
goodwill............... -- -- -- 519 1,163 1,332 662 683
------- ------- ------- ------- -------- -------- -------- --------
Operating income........ 9,473 10,193 2,118 7,181 13,141 22,297 9,765 7,408
Interest expense........ (192) (60) (22) (4,123) (9,701) (10,441) (5,248) (6,605)
Interest and dividend
income................. 271 155 -- -- -- -- -- --
------- ------- ------- ------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item..... 9,552 10,288 2,096(7) 3,058 3,440 11,856 4,517 803
Income tax expense ..... -- -- -- 1,110 1,360 4,700 1,763 530
------- ------- ------- ------- -------- -------- -------- --------
Income before
extraordinary item..... 9,552 10,288 3,073 1,948 2,080 7,156 2,754 273
Extraordinary loss on
debt refinancing(3).... -- -- -- -- -- -- -- (947)
------- ------- ------- ------- -------- -------- -------- --------
Net income (loss)....... $ 9,552 $10,288 $ 2,096 $ 1,948 $ 2,080 $ 7,156 $ 2,754 $ (674)(4)
======= ======= ======= ======= ======== ======== ======== ========
Ratio of earnings to
fixed charges(5)....... 27.7x 35.8x 14.3x 1.7x 1.3x 2.1x 1.8x 1.1x
OTHER DATA:
EBITDA(6)(7)............ $10,289 $11,149 $ 2,643 $ 7,993 $ 15,500 $ 25,527 $ 11,294 $ 13,976
EBITDA margin(7)........ 25.5% 23.4% 10.6% 23.6% 15.8% 18.7% 17.2% 18.3%
Gross margin............ 33.6% 31.8% 29.5% 33.7% 25.8% 28.6% 27.5% 27.5%
Capital expenditures.... 1,398 1,557 1,727 2,565 3,045 1,421 461 1,319
Depreciation and
amortization........... 858 971 538 964 2,781 3,731 1,802 1,935
Net cash provided (used)
by:
Operating activities... 10,061 10,658 3,635 6,088 9,077 13,262 6,744 (3,484)
Investing activities... 979 (1,575) (1,727) (58,598) (33,175) (2,181) (461) (4,600)
Financing activities... (10,123) (11,193) (2,134) 52,510 24,103 (11,083) (6,285) 8,085
Ratio of EBITDA to
interest expense....... 1.9x 1.6x 2.4x 2.2x 2.1x
Number of active
selling locations
(at end of year)(8).... 1,441 1,564 1,624 2,042
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital
(deficit).............. $ 6,454 $ 4,800 $(4,101) $ (1,971) $ (850) $ (82) $ 14,583
Total assets............ 18,386 16,791 69,434 102,206 103,577 104,828 114,418
Long-term debt,
including
current portion........ 1,346 290 68,000 92,539 81,636 86,426 146,670
Stockholder's equity
(deficit).............. 14,420 13,909 (7,084) (4,354) 2,790 (1,611) (47,318)
</TABLE>
21
<PAGE>
(1) The Company commenced operations on June 17, 1994, upon acquiring its
predecessor Omega Cabinets, Ltd. The Company has not paid or declared any
cash dividends during the periods presented and is restricted in paying
cash dividends under the terms of its borrowing agreements.
(2) In May 1995, the Company acquired the operating assets of HomeCrest
Corporation in a transaction accounted for as a purchase.
(3) As a result of the Transactions and related refinancing, in June 1997 the
Company wrote off existing unamortized deferred financing costs of $1,554,
resulting in an extraordinary loss of $947 (net of a related income tax
benefit of $607).
(4) The loss reported for the six months ended June 28, 1997 includes a non-
cash compensation expense relating to stock option grants of $4,894
(before related income tax benefit of $1,762) included in selling, general
and administrative expenses.
(5) For purposes of calculating the ratio, earnings consist of income or loss
before income taxes plus fixed charges. Fixed charges consist of interest
expense, amortization of deferred financing costs, and 25% of the rent
expense from operating leases which management believes is a reasonable
approximation of the interest factor included in the rent.
(6) EBITDA represents income from operations before interest expense
(including amortization of deferred financing costs), income taxes,
depreciation, amortization of goodwill and non-cash stock option
compensation expenses. A non-cash compensation expense of $4,894 relating
to stock option grants was incurred in the six months ended June 28, 1997.
EBITDA is presented because it is a widely accepted financial indicator of
a leveraged company's ability to service and/or incur indebtedness and
because management believes that EBITDA is a relevant measure of the
Company's ability to generate cash without regard to the Company's capital
structure or working capital needs. EBITDA as presented may not be
comparable to similarly titled measures used by other companies, depending
upon the non-cash charges included. When evaluating EBITDA, investors
should consider that EBITDA (i) should not be considered in isolation but
together with other factors which may influence operating and investing
activities, such as changes in operating assets and liabilities and
purchases of property and equipment, (ii) is not a measure of performance
calculated in accordance with generally accepted accounting principles,
(iii) should not be construed as an alternative or substitute for income
from operations, net income or cash flows from operating activities in
analyzing the Company's operating performance, financial position or cash
flows and (iv) should not be used as an indicator of the Company's
operating performance or as a measure of its liquidity.
(7) In the predecessor period from January 1, 1994 to June 16, 1994, net
income, EBITDA and EBITDA margin were adversely affected due to special
employee bonuses totaling $2,231 which were paid in connection with the
sale of the predecessor. Excluding the effect of such bonuses, EBITDA and
EBITDA margin would have been $4,874 and 19.6%, respectively.
(8) Active selling locations represent customer locations which have purchased
over five hundred dollars of product in the prior year. No data is
available with respect to active selling locations on December 31, 1992,
June 29, 1996 or June 28, 1997, respectively.
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following Unaudited Pro Forma Condensed Consolidated Financial Data are
based on the historical consolidated financial statements of the Company
included elsewhere in this Prospectus, adjusted to give effect to the pro
forma adjustments described in the notes thereto. The Unaudited Pro Forma
Condensed Consolidated Statement of Income Data gives effect to the
Transactions and the Initial Offering as though each had occurred on December
31, 1995.
The pro forma adjustments are based upon available data and certain
assumptions that the Company management believes are reasonable. The Unaudited
Pro Forma Condensed Consolidated Financial Data are not necessarily indicative
of the Company's results of operations that might have occurred had the
aforementioned transactions been completed as of the dates indicated above and
do not purport to represent what the Company's consolidated results of
operations might be for any future period or date. The Unaudited Pro Forma
Condensed Consolidated Financial Data should be read in conjunction with the
Consolidated Financial Statements of the Company and the information contained
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
The pro forma adjustments as applied to the respective historical
consolidated financial statements of the Company reflect and account for the
OMC Merger as a recapitalization. Accordingly, the historical basis of the
Company's assets and liabilities has not been affected by the OMC Merger.
23
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME DATA FOR THE
YEAR ENDED DECEMBER 28, 1996
(IN THOUSANDS, EXCEPT RATIO)
<TABLE>
<CAPTION>
HISTORICAL COMPANY PRO FORMA COMPANY
FOR YEAR ENDED PRO FORMA FOR YEAR ENDED
DECEMBER 28, 1996 ADJUSTMENTS (1) DECEMBER 28, 1996
------------------ --------------- -----------------
<S> <C> <C> <C>
Net sales................. $136,225 -- $136,225
Cost of goods sold........ 97,287 -- 97,287
-------- ------- --------
Gross profit.............. 38,938 -- 38,938
Selling, general and
administrative expenses.. 15,309 -- 15,309
Amortization of goodwill.. 1,332 -- 1,332
-------- ------- --------
Operating income.......... 22,297 -- 22,297
Interest expense.......... 10,441 $ 4,779 (2) 15,220
-------- ------- --------
Income before income
taxes.................... 11,856 (4,779) 7,077
Income tax expense........ 4,700 (1,888)(3) 2,812
-------- ------- --------
Net income................ $ 7,156 $(2,891) $ 4,265
======== ======= ========
Ratio of earnings to fixed
charges (5).............. 2.1x 1.5x
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME DATA FOR THE SIX MONTHS ENDED JUNE 28, 1997
(IN THOUSANDS, EXCEPT RATIO)
<CAPTION>
HISTORICAL COMPANY PRO FORMA COMPANY
FOR THE SIX FOR THE SIX
MONTHS ENDED PRO FORMA MONTHS ENDED
JUNE 28, 1997 ADJUSTMENTS(1) JUNE 28, 1997
------------------ --------------- -----------------
<S> <C> <C> <C>
Net sales................. $ 76,540 -- $ 76,540
Cost of goods sold........ 55,470 -- 55,470
-------- ------- --------
Gross profit.............. 21,070 -- 21,070
Selling, general and
administrative
expense.................. 12,979 -- 12,979
Amortization of goodwill.. 683 -- 683
-------- ------- --------
Operating income.......... 7,408 -- 7,408
Interest expense.......... 6,605 $ 998 (2) 7,603
-------- ------- --------
Income (loss) before
income taxes............. 803 (998) (195)
Income tax expense........ 530 (394)(3) 136
-------- ------- --------
Net income (loss) (4)..... $ 273 $ (604) $ (331)
======== ======= ========
Ratio of earnings to fixed
charges (5).............. 1.1x --
</TABLE>
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME DATA
(IN THOUSANDS)
(1) Pro Forma Adjustments include adjustments necessary to complete the
Transactions. The OMC Merger has been accounted for as a recapitalization
which will have no impact on the historical basis of the Company's assets
and liabilities. Certain expenses, which were incurred in connection with
the Transactions, have been excluded from the pro forma adjustments,
including (i) the write-off of $1,554 of deferred financing costs relating
to debt repaid; (ii) $5,570 of fees and expenses incurred in connection
with the Transactions; and (iii) $1,960 of income tax benefit relating to
such expenses. Such amounts represent non-recurring expenses of which the
Company anticipates that approximately $3,004, net of income tax benefit,
will be recorded in the Consolidated Statement of Income for the period
including or subsequent to the OMC Merger; and $2,160, representing costs
related to issuance of new equity capital, will be charged to
stockholder's equity.
(2) Represents the incremental amount of interest expense relating to the
Transactions and the Initial Offering as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 28, ENDED
1996 JUNE 28, 1997
------------ -------------
<S> <C> <C>
Interest expense related to new debt:
Revolving Facility......................... $ 827 $ 414
Term Facility.............................. 3,020 1,510
Senior Subordinated Notes due 2007......... 10,500 5,250
Contingent Note............................ 180 90
Amortization of deferred financing costs... 693 339
-------- -------
Subtotal..................................... 15,220 7,603
Less: interest expense relating to
outstanding debt to be repaid and other non-
recurring interest expense.................. (10,441) (6,605)
-------- -------
Pro forma adjustment......................... $ 4,779 $ 998
======== =======
</TABLE>
Interest expense related to the Revolving Facility is based on an annual
average of approximately $9.2 million of borrowings outstanding. Interest
expense was calculated using the following assumed average rates: (a)
Revolving Facility: 9.0%; (b) Term Facility: 8.2%; (c) Notes: 10.5% and (d)
Contingent Note: 6.0%.
A 0.125% increase or decrease in the assumed interest rates for the New
Bank Credit Facility would change the pro forma interest expense by $186.
Pro forma net income would change by $113.
For the year ended December 28, 1996 and for the period of six months ended
June 28, 1997, each $1,000 increase or decrease in the Revolving Facility
would change pro forma interest expense $90 and $45, respectively, and pro
forma net income would change by $54 and $27, respectively.
(3) Represents the income tax effect of the pro forma adjustments computed
using an effective income tax rate of 39.5%.
(4) Historical net income for the six months ended June 28, 1997 is shown
before the effect of an extraordinary loss on debt refinancing of $947.
(5) For purposes of computing the ratio, earnings consist of income or loss
before income taxes plus fixed charges, fixed charges consist of interest
expense, amortization of deferred financing costs and 25% of the rent
expense from operating leases which the Company believes is a reasonable
approximation of the interest factor included in the rent. For the period
of six months ended June 28, 1997, pro forma earnings were insufficient to
cover fixed charges by $195.0.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the financial
condition and results of operations of the Company for the six months ended
June 28, 1997 and June 29, 1996 and the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994. This discussion and analysis should
be read in conjunction with, and is qualified in its entirety by, the sections
entitled "Selected Historical Consolidated Financial Data" and the
Consolidated Financial Statements of the Company and its predecessor and the
notes thereto included elsewhere in this Prospectus.
GENERAL
The Company's business is affected by the same general regional and national
economic factors which affect the remodeling and housing industries, including
the availability of credit, changes in interest rates, market demand,
demographic shifts and overall economic conditions. Management's market
research demonstrates that remodeling has historically been less sensitive
than new home construction to general economic conditions. Although the
Company believes that HomeCrest's results have tended to correlate closely
with housing starts, management believes the Company's overall focus on the
remodeling market and high-end product lines (custom and semi-custom
cabinetry) has allowed it to outpace overall industry growth rates over the
past several years. While the average annual price of lumber has fluctuated
somewhat over the past several years, the Company has historically been able
to pass the major portion of most lumber price increases on to the customer
over time.
PREVIOUS ACQUISITIONS
In June 1994, Omega acquired all of the outstanding common stock of the
predecessor to Omega for an aggregate purchase price of approximately $71.1
million. The transaction was accounted for by the purchase method and resulted
in goodwill of approximately $43.1 million, which is being amortized over 40
years. In May 1995, Omega acquired HomeCrest for a total purchase price of
$29.8 million, which was accounted for by the purchase method and resulted in
goodwill of approximately $13.5 million, which is being amortized over 40
years.
MERGER
Concurrently with the OMC Merger, MLA III purchased stock of Holdings for
approximately $61.9 million and loaned Holdings an additional $10.0 million
represented by the Junior Subordinated Note, and existing management
shareholders and the Company's founder retained approximately 11.1% of common
stock with a fair value of approximately $7.8 million in Holdings. In
addition, the Company entered into the New Bank Credit Facility. The OMC
Merger was accounted for as a recapitalization. As a result, the historical
basis of the Company's assets and liabilities was not affected by the OMC
Merger.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 28, 1997 COMPARED TO SIX MONTHS ENDED JUNE 29, 1996
Net Sales for the six months ended June 28, 1997 ("first half of 1997") were
$76.5 million compared to $65.6 million for the comparable period in 1996
("first half of 1996"), an increase of 16.7%. Net sales of the Omega lines
(custom and semi-custom cabinetry and bath vanities) for the first half of
1997 were $36.5 million compared to $34.2 million for the first half of 1996,
an increase of 7.0%, reflecting an increase in the number of dealer locations
and sales attributable to the addition of a new regional distributor. Net
sales of stock cabinetry for the first half of 1997 were $40.0 million
compared to $31.4 million for the first half of 1996, a 27.2% increase, as the
result of an increase in dealer locations, entry into the manufactured housing
channel, and additional product enhancements introduced in mid-1996.
26
<PAGE>
Gross Profit for the first half of 1997 was $21.1 million compared to $18.0
million for the first half of 1996, an increase of 16.9%. For the first half
of 1997, gross profit as a percentage of net sales was 27.5%, the same as in
the first half of 1996.
Selling, General and Administrative Expenses for the first half of 1997 were
$13.0 million compared to $7.6 million for the same period of 1996. The
increase of $5.4 million for the first half of 1997 over the comparable period
of 1996 is primarily attributable to non-cash compensation expense for
employee stock options granted of $4.9 million for the first half of 1997.
Selling, general and administrative expenses without giving effect to this
charge would have been $8.1 million compared to $7.6 million for the first
half of 1996, an increase of 6.4%. For the first half of 1997, selling,
general and administrative expenses as a percentage of net sales, excluding
the non-cash compensation expense referred to above, decreased to 10.6%
compared to 11.6% in the first half of 1996, primarily due to the increase in
net sales and lower commissions and advertising expenses.
Operating Income for the first half of 1997 was $7.4 million, or 9.7% of net
sales, compared to $9.8 million, or 14.9% of net sales, for the first half of
1996. For the first half of 1997, operating income, without giving effect to
the non-cash compensation expense referred to above, was $12.3 million, or
16.1% of net sales, compared to $9.8 million, or 14.9% of net sales, for the
first half of 1996. The primary reason for this increase in operating income
as a percentage of net sales for the first half of 1997 over 1996 was lower
selling, general and administrative expenses as a percentage of net sales.
Interest Expense for the first half of 1997 was $6.6 million compared to
$5.2 million for the first half of 1996, an increase of 25.9%. This increase
is primarily due to amortization of Bridge Loan fees and increased borrowings
associated with the Transactions.
Income Taxes for the first half of 1997 consisted of an expense of $0.5
million compared to an expense of $1.8 million for the first half of 1996.
Net Income (Loss) for the first half of 1997 was a loss of $0.7 million
compared to net income of $2.8 million for the first half of 1996. The
decrease in net income for the first half of 1997 was primarily attributable
to the extraordinary loss on debt refinancing, amortization of Bridge Loan
fees, and the non-cash stock option compensation expense discussed above.
FISCAL 1996 COMPARED TO FISCAL 1995
Net Sales for fiscal 1996 were $136.2 million compared to $98.0 million in
1995, an increase of 39.1%. Before giving effect to the acquisition of
HomeCrest in May 1995, Omega net sales were $69.1 million and $59.6 million in
fiscal 1996 and fiscal 1995, respectively, representing an increase of 16.0%.
The increase was primarily attributable to the addition of new selling
locations in fiscal 1996, maturation of dealer accounts added in fiscal 1995
and growth in the kitchen and bath remodeling industry, reflecting a continued
improvement in the economy generally. New locations added in fiscal 1996
included a private label vanity distributor, new locations with Home Depot and
Lowe's and 150 kitchen and bath dealers. Accounts added in fiscal 1995 more
than doubled their sales with Omega in fiscal 1996, adding $3.0 million of
additional revenue. Net sales increased in all three lines of Omega's
traditional business (custom and semi-custom cabinetry and bath vanities),
with net sales to dealers increasing 12.0%. Net sales at HomeCrest were $64.5
million and $38.1 million in fiscal 1996 and fiscal 1995, respectively.
Comparing to a full year, including the pre-acquisition period, net sales at
HomeCrest were $64.5 million and $64.1 million in fiscal 1996 and fiscal 1995,
respectively, essentially unchanged. During 1996, HomeCrest terminated its
relationship with its second largest distributor, which over the years had
become only marginally profitable. The termination of this $5.0 million
account reduced HomeCrest's net sales in 1996 by $3.5 million but had minimal
effect on profitability. To offset this decrease, HomeCrest expanded its
distribution into the manufactured housing industry, which accounted for net
sales in fiscal 1996 of approximately $1.6 million.
27
<PAGE>
Gross Profit for fiscal 1996 was $38.9 million compared to $25.3 million for
fiscal 1995, an increase of 54.1%. As a percentage of net sales, gross profit
improved to 28.6% in fiscal 1996 from 25.8% in fiscal 1995. Before giving
effect to the acquisition of HomeCrest in May 1995, gross profit was $23.0
million and $17.8 million in fiscal 1996 and fiscal 1995, respectively,
representing an increase of 29.3%. Omega's gross profit as a percentage of net
sales increased from 29.9% to 33.3% as a result of improved material yields,
negotiated material price reductions, operating efficiencies, improved truck
utilization and favorable worker's compensation experience. Gross profit at
HomeCrest was $14.7 million and $7.3 million in fiscal 1996 and fiscal 1995,
respectively. Comparing to a full year, including the pre-acquisition period,
gross profit at HomeCrest was $14.7 million and $12.9 million in the
comparable periods of fiscal 1996 and fiscal 1995, respectively, an increase
of 13.3%. HomeCrest's gross profit as a percentage of net sales increased from
20.2% to 22.8%, primarily due to negotiated material price reductions,
improved scrap performance and operating efficiencies.
Selling, General and Administrative Expenses for fiscal 1996 were $15.3
million compared to $11.0 million in fiscal 1995, an increase of 39.6%. Before
giving effect to the acquisition of HomeCrest in May 1995, selling, general
and administrative expenses were $7.9 million and $6.8 million in fiscal 1996
and fiscal 1995, respectively, an increase of 15.1%. This increase is due
primarily to commissions and increased support staff to address increased
sales levels. As a percentage of net sales, these expenses were 11.2% in both
fiscal 1996 and fiscal 1995. Selling, general and administrative expenses at
HomeCrest were $7.3 million and $4.1 million in fiscal 1996 and fiscal 1995,
respectively. Compared to a full year, including the pre-acquisition period,
selling, general and administrative expenses at HomeCrest were $7.3 million
and $9.9 million in 1996 and 1995, respectively, a decrease of 26.5%. This
decrease was primarily due to reduced executive salaries, as two prior
owner/executives of HomeCrest left the business concurrently with the
acquisition and were not replaced, and to the closing of distribution
facilities in Florida and Indiana.
Operating Income for fiscal 1996 was $22.3 million compared to $13.1 million
for fiscal 1995, an increase of 69.7%. Before giving effect to the acquisition
of HomeCrest in May 1995, operating income was $14.2 million and $10.0 million
in 1996 and 1995, respectively, an increase of 41.9%. This increase resulted
from higher sales and improved manufacturing costs.
Interest Expense for fiscal 1996 was $10.4 million compared to $9.7 million
for fiscal 1995, an increase of 7.6%. Before giving effect to the acquisition
of HomeCrest in May 1995, net interest expense was $7.5 million and $7.8
million in fiscal 1996 and fiscal 1995, respectively. The decrease in
interest, excluding the effect of the acquisition of HomeCrest, was due to
scheduled repayment of the term notes.
Income Taxes for fiscal 1996 were $4.7 million compared to $1.4 million for
fiscal 1995, which reflects approximately the same effective tax rate.
Net Income for fiscal 1996 was $7.2 million compared to $2.1 million in
fiscal 1995. The increase in net income is primarily attributable to increased
sales and lower manufacturing costs.
FISCAL 1995 COMPARED TO COMBINED RESULTS FOR FISCAL 1994
For purposes of the discussion below, fiscal 1994 consists of the combined
results of the predecessor company of Omega from January 1, 1994 through June
16, 1994 and of the Company for the period June 17, 1994 through December 31,
1994.
Net Sales for fiscal 1995 were $98.0 million compared to $58.8 million in
fiscal 1994, an increase of 66.6%. Before giving effect to the acquisition of
HomeCrest in May 1995, Omega net sales were $59.6 million and $58.8 million in
fiscal 1995 and fiscal 1994, respectively, an increase of 1.3%. This increase
was attributable to placing business with Lowe's, adding locations with Home
Depot,
28
<PAGE>
additional product placement with Menards and the addition of new dealer
locations. Partly offsetting this increase was the elimination of selected
accounts due to credit or performance issues. As a consequence, dealer sales
declined 3.5% in 1995. HomeCrest's net sales for the period following the
acquisition in May 1995 were $38.1 million.
Gross Profit for fiscal 1995 was $25.3 million compared to $18.8 million for
fiscal 1994, an increase of 34.7%. As a percentage of sales, gross profit
decreased to 25.8% in fiscal 1995 from 31.9% in fiscal 1994 primarily as a
result of consolidating the lower margin HomeCrest business into Omega. Before
giving effect to the acquisition of HomeCrest in May 1995, Omega gross profit
was $17.8 million and $18.8 million in 1995 and 1994, respectively, a decrease
of 5.1%. The Omega gross profit as a percentage of sales decreased from 31.9%
to 29.9%, primarily due to plant reorganization and startup costs associated
with implementing a new rough mill and a new finishing system and to revamping
the layout of the facility for improved material flow. Aside from the
reorganization costs, material costs were favorable as a result of better
yields with the new rough mill. HomeCrest's gross profit for the period
following the acquisition in May 1995 was $7.3 million.
Selling, General and Administrative Expenses for fiscal 1995 were $11.0
million compared to $8.9 million in fiscal 1994, an increase of 22.6%. Before
giving effect to the acquisition of HomeCrest in May 1995, selling, general
and administrative expenses were $6.8 million and $8.9 million in fiscal 1995
and fiscal 1994, respectively, a decrease of 23.6%. This decrease reflects a
special employee bonus totaling $2.2 million paid in connection with the sale
to Omega in 1994. HomeCrest's selling, general and administrative expenses for
the period following the acquisition in May 1995 were $4.1 million.
Operating Income for fiscal 1995 was $13.1 million compared to $9.3 million
for 1994, an increase of 41.3%. Before giving effect to the acquisition of
HomeCrest in May 1995, operating income was $10.0 million and $9.3 million in
fiscal 1995 and fiscal 1994, respectively, an increase of 7.3%. Operating
income in fiscal 1995 was affected by increased costs associated with plant
reorganization and start-up costs in 1995. Operating income in 1994 was
affected by the special employee bonus referred to above. HomeCrest's
operating income for the period following the acquisition in May 1995 was $3.0
million.
Interest Expense for fiscal 1995 was $9.7 million compared to $4.1 million
for fiscal 1994. Before giving effect to the acquisition of HomeCrest in May
1995, net interest expense was $7.8 million and $4.1 million in fiscal 1995
and fiscal 1994, respectively, an increase of 87.7%. The increase in interest
expense was primarily due to the borrowings in June 1994 used to support the
acquisition of Omega.
Income Taxes for fiscal 1995 were $1.4 million compared to $1.1 million for
fiscal 1994. Since Omega was an S Corporation prior to the acquisition in
fiscal 1994, taxes for fiscal 1994 reflect only the post-acquisition period.
Net Income for fiscal 1995 was $2.1 million compared to $4.0 million for
fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash needs are working capital, capital expenditures
and debt service. The Company has financed these cash requirements primarily
through internally generated cash flow and funds borrowed under the Company's
credit facilities.
Net cash used by operating activities for the first half of 1997 was $3.5
million compared to net cash provided by operating activities of $6.7 million
for the first half of 1996, a decrease of $10.2 million. The decrease was
primarily due to changes in operating assets and liabilities. The increase in
working capital of $10.9 million for the first half of 1997 compared to a
decrease in working capital of $1.5 million for the first half of 1996
included payment of non-current accrued interest on June 13 of $5.8 million
compared to an increase in the accrual in the first half of 1996 of $1.9
million.
29
<PAGE>
Net cash provided by operating activities for fiscal 1996 was $13.3 million
compared to $9.1 million for fiscal 1995. The major component for both years
was income before non-cash charges of $12.3 million and $6.4 million for fiscal
years 1996 and 1995, respectively, primarily due to increased income from
operations as described above. The portion of net cash from operating
activities due to changes in working capital was $1.0 million and $2.7 million
for fiscal years 1996 and 1995, respectively, due to fluctuations from the mid-
year acquisition of HomeCrest in fiscal 1995.
The Company used cash for investing activities of $4.6 million in the first
half of 1997 compared to $0.5 million in the comparable period of 1996. During
the first half of 1997, additional contingent purchase price was paid for the
1994 acquisition of Omega of $3.3 million. The Company used cash for investing
activities of $1.4 million and $3.0 million for capital expenditures during
fiscal years 1996 and 1995, respectively. The Company has made approximately
$1.5 million of capital expenditures through the end of August 1997 and
anticipates, based on current requirements, that it will incur an additional
$1.0 million of capital expenditures through the end of fiscal 1997.
Cash provided by financing activities was $8.1 million for the first half of
1997 compared to cash used in financing activities of $6.3 million for the
first half of 1996, reflecting the debt and equity refinancing associated with
the Transactions. Prior bank term notes and revolver in the amount of $49.2
million were paid off, along with $32.4 million of subordinated debt and a
dividend related to the Transactions of $114.5 million. New debt consisted of
the New Bank Credit Facility in the amount of $36.8 million of notes and $6.9
million of revolver, the $100.0 million of Notes, and the $3.0 million
Contingent Note. In addition, fees in the amount of $4.7 million were paid to
establish the Bridge Loans, the New Bank Credit Facility and the Notes. Cash
used in financing activities during fiscal 1996 consisted primarily of the
scheduled repayment of $8.0 million of term notes and a scheduled repayment of
a contingent note related to the fiscal 1994 acquisition of Omega in the amount
of $2.0 million.
The Company's ability to make scheduled payments of principal of, or to pay
the interest or premium, if any, on, or to refinance, its indebtedness
(including the Notes), or to fund planned capital expenditures will depend on
its future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
that are beyond its control. Based upon the current level of operations,
management believes that cash flow from operations and available cash, together
with available borrowings under the New Bank Credit Facility, will be adequate
to meet the Company's anticipated future requirements for working capital,
budgeted capital expenditures and scheduled payments of principal and interest
on its indebtedness, including the Notes, for the next several years. There can
be no assurance that the Company's business will generate sufficient cash flow
from operations or that future borrowings will be available under the New Bank
Credit Facility in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or make anticipated capital expenditures.
As a result of the Transactions, the Company's capital structure has changed
substantially. At the closing of the Initial Offering on July 24, 1997, the
Company's capital structure consisted of the $100.0 million of Notes and the
New Bank Credit Facility, consisting of a $40.0 million Term Facility and a
$20.0 million Revolving Facility. The New Bank Credit Facility is permitted by
the terms of the Notes to be increased to a total borrowing capacity of $120.0
million. As of September 23, 1997, approximately $36.8 million of the Term
Facility and approximately $6.5 million of the Revolving Facility were
outstanding. The Company anticipates that it will borrow under the Term
Facility to fund its obligations of up to $3.2 million under the Contingent
Note. As of September 23, 1997, the Company had additional borrowing
availability under the Revolving Facility of approximately $13.5 million. The
Term Facility requires quarterly principal payments beginning in September 1997
at approximately $0.6 million per quarter and increasing at each anniversary.
Subsequent payments will be approximately
30
<PAGE>
$1.0 million, $1.4 million, $1.5 million, $1.9 million, and $2.3 million per
quarter during the four-quarter periods beginning in September 1998, 1999,
2000, 2001 and 2002, respectively, with the balance due in the following two
quarters. The Revolving Facility will mature in 2002 and has no scheduled
interim amortization.
INFLATION
The Company does not believe that inflation has had a material impact on its
results of operations.
FORWARD LOOKING STATEMENTS
When used in this Prospectus, the words "believes," "anticipates" and
similar expressions are used to identify forward looking statements. Such
statements are subject to risks and uncertainties which could cause actual
results to differ materially from those projected. The Company wishes to
caution readers that the following important factors, among the factors
discussed in "Risk Factors" above and others, in some cases have affected and
in the future could affect the Company's actual results and could cause the
Company's results for 1997 to differ materially from those expressed in any
forward statements made by the Company: (i) economic conditions in the
remodeling and housing markets, (ii) availability of credit, (iii) increases
in interest rates, (iv) cost of lumber and other raw materials, (v) inability
to maintain state-of-the-art manufacturing facilities, (vi) heightened
competition, including intensification of price and service competition, the
entry of new competitors and the introduction of new products by existing
competitors, (vii) inability to capitalize on opportunities presented by
industry consolidation, (viii) loss or retirement of key executives and (ix)
inability to grow by acquisition of additional cabinetry manufactures or to
effectively consolidate operations of businesses acquired.
31
<PAGE>
BUSINESS
The Company is a leading manufacturer of wood and laminate kitchen
cabinetry, bathroom vanities and related accessories. Headquartered in
Waterloo, Iowa, the Company produces a wide array of custom, semi-custom and
stock kitchen cabinetry and bathroom vanities primarily for use in residential
remodeling and, to a lesser extent, in new construction. Both Omega and
HomeCrest manufacture their products in state-of-the-art, highly-integrated
facilities under the Omega (custom), Dynasty (semi-custom), Embassy (semi-
custom), Legend (stock) and HomeCrest (stock) brand names and sell to a broad
network of kitchen and bath dealers, home centers, builders/contractors and
independent distributors.
COMPANY HISTORY
Omega was founded in 1977 by Robert J. Bertch. In its early years, Omega
principally manufactured bath vanities. In 1984, Omega began manufacturing
custom kitchen cabinetry under the Omega Custom brand name. In 1990, Omega
introduced a semi-custom kitchen cabinetry line under the Dynasty brand name
as a lower price alternative to the Omega Custom line.
In June 1994, Code, Hennessy & Simmons, Inc. led a group of private
investors, including the Company's current senior management team, in the
acquisition of Omega from its founder. In May 1995, Omega acquired HomeCrest
Corporation, a manufacturer of stock cabinetry under the HomeCrest brand name.
Pursuant to the OMC Merger, OMC, a company formed by affiliates of BCC,
merged with and into Holdings, the sole stockholder of the Company, with
Holdings as the surviving entity. Concurrently with the OMC Merger, aggregate
consideration of approximately $201.6 million was paid to certain selling
stockholders of Holdings, including (i) approximately $89.3 million of debt
which was repaid in connection therewith and (ii) the Contingent Note. The
merger consideration is subject to a post-closing working capital adjustment.
See "Recent Developments."
PRODUCTS
The Company specializes in manufacturing kitchen cabinetry and bathroom
vanities and accessories. The Company offers its customers one of the most
extensive product lines in the cabinetry industry and believes that it is one
of only two national manufacturers that produces a full line of kitchen
cabinetry for all three market price points: custom, semi-custom and stock.
The Company's cabinetry is distinguished by its high quality materials,
superior finishes and expert construction. The following chart illustrates the
Company's fiscal 1996 sales by product line:
1996 SALES BY PRODUCT LINE
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PRODUCT $ % OF SALES
------- ------ ----------
<S> <C> <C>
Custom Cabinetry........................................ $ 11.4 8.4%
Semi-Custom Cabinetry................................... 41.7 30.6%
Stock Cabinetry......................................... 67.0 49.2%
Bath Vanities & Other................................... 16.1 11.8%
------ -----
Total................................................... $136.2 100.0%
====== =====
</TABLE>
CUSTOM CABINETRY. The Company manufactures and markets custom kitchen
cabinetry under the Omega Custom brand name. Omega Custom cabinets are
manufactured to individual customer specifications and are distinguished by
their high quality design, premium materials and superior
32
<PAGE>
construction. Omega Custom offers the consumer the widest choice of cabinetry
configurations, door styles and wood species within the Company's product
lines. The Company believes it is one of the few custom cabinetry
manufacturers capable of offering national distribution as well as an
unlimited choice of finishes through its "custom color match" program. The
Company's custom cabinetry is primarily sold to kitchen and bath dealers and
is also sold through Home Depot Expo locations.
SEMI-CUSTOM CABINETRY. The Company manufactures and markets semi-custom
kitchen cabinetry under the Dynasty and Embassy brand names. Dimensional
modifications of size are available in both the Dynasty and Embassy lines, but
not to the extent available with the Omega Custom line. The Company believes,
however, that its semi-custom line is significantly broader than most of its
competitors' lines in terms of cabinetry configurations, door styles, wood
species and finish options. In addition, management believes that the Company
is the largest cabinetry manufacturer with a semi-custom line that is 100%
wood construction. Approximately 36% of Dynasty/Embassy cabinetry sales are
produced from oak, with the balance made up of maple (33%), pecan (19%) and
cherry (12%). The Dynasty line is sold primarily to kitchen and bath dealers,
while the Embassy line is sold primarily through home centers such as Home
Depot/Home Depot Expo and Lowe's.
STOCK CABINETRY. The Company manufactures and markets stock cabinetry under
the HomeCrest and Legend brand names. The HomeCrest brand is sold through the
HomeCrest distribution network of dealers, builder/contractors and independent
distributors. In September 1995, the Company launched its Legend line of stock
cabinetry, a line of 100% framed cabinetry that was developed subsequent to
the acquisition of HomeCrest in order to cross-sell stock cabinetry through
the Omega dealer network. In early 1997, the Company introduced the Legend II
product line, which will extend the Legend product line into the market for
frameless (i.e., European style) stock cabinetry.
The Company believes it provides the most options and option combinations
for stock cabinetry in the industry. These options include dovetailed wood
drawers, plywood cabinetry side material options (instead of furniture board)
and premium drawer slides, which allow for a level of customization even at
this lowest price point. The Company manufactures 54 different stock door
styles in six types of wood including oak (43%), maple (15%), hickory (8%),
ash (6%) and others (11%), as well as white foil on medium-density fiberboard
(17%).
BATHROOM VANITIES AND ACCESSORIES. The Company manufactures and markets
bathroom vanities under a variety of brand names, including Classic, Coventry,
Hallmark, Lancaster, Monticello, Montrose, Omega Custom, Spectrum, Summit and
Sunrise. The Company's vanity line is one of the broadest in the industry,
with ten different price points covering the market from value-priced,
frameless cabinetry through high-end, furniture quality custom vanities. The
Company's vanity line includes the same high-quality materials, construction
and finishes found in the Company's kitchen cabinetry lines. Vanities are sold
to kitchen and bath dealers, home centers and, on a private-label basis, to
one distributor.
NEW/OTHER PRODUCTS. Although the Company manufactures numerous standard wall
and base cabinetry sizes, the Company also manufactures various corner
cabinets, peninsula cabinets, special wall cabinets, medicine cabinets,
special use cabinets, sink bases, appliance cabinets and tall storage
cabinets. The Company also manufactures furniture products, such as bookcases,
entertainment centers, hutches and desks and offers a line of kitchen and
bath-related accessory products.
In December 1996, the Company began marketing a newly-developed line of all-
wood, value-priced home entertainment centers. The Company currently offers
this line in five styles. Initial distribution plans include some of the
larger selling locations in the Company's distribution network and,
potentially, certain furniture and electronics retailers.
33
<PAGE>
In addition, by the end of 1997 the Company expects to begin offering whole
house mouldings through its existing distribution network. These millwork
products are used throughout a house as trim for baseboards, ceilings, windows
and doors.
MANUFACTURING
GENERAL. The Company operates three manufacturing facilities, one in
Waterloo, Iowa, one in Goshen, Indiana and one in Clinton, Tennessee. Custom
and semi-custom kitchen cabinetry and bathroom vanities are manufactured in
Waterloo, and stock cabinetry and vanities are manufactured and assembled in
Goshen. Finished cabinetry frames and flat panel doors for stock cabinetry are
manufactured in Clinton.
The plants are primarily machining, assembly and finishing operations. Raw
materials used by the plants consist of raw, kiln-dried lumber and plywood. At
the Waterloo facility, the lumber is cut and moulded in a manner designed to
maximize material usage and minimize waste. At the Goshen facility,
dimensioned lumber and particle board is supplied by third-party vendors and
the Waterloo facility. Prior to assembly, plywood and furniture board is
laminated and machined. Panels, shelves, drawers, drawer fronts, floors and
back parts are then assembled. Semi-custom and stock cabinetry are finished
(sanded, stained, varnished and cured) and then assembled. Custom products are
finished after assembly. Hardware is then added, and the final product is
inspected, packaged and staged for shipment.
SUPPLIERS. In 1996, the Company purchased roughly $30 million of lumber and
other raw materials from 12 different suppliers, the largest of which
represented roughly 22% of such purchases. The Company is not dependent upon
any specific supplier for any of its raw materials or component parts. The
Company believes that its sources of supply are adequate for its needs.
Additionally, the Company recently formed a dedicated materials management
team to help monitor and further reduce its materials purchasing costs.
TRANSPORTATION/FREIGHT. Panther provides trucking and freight services to
the Company for its Omega product lines. Panther leases 31 tractors, two
trucks and 51 trailers. The Company's stock products are primarily shipped
through contract carriers to customers.
SALES AND MARKETING
The Company sells its products in the United States principally through its
network of over 1,660 active kitchen and bath dealer locations, as well as
through home centers, builder/contractors and independent distributors. An
individual dealer may maintain more than one store location. Active kitchen
and bath dealer selling locations are defined by the Company as only those
dealer locations which have purchased over $500 of products in the past year.
The sales force and distribution network for the Company's Omega product lines
is separate and distinct from the stock product lines manufactured by
HomeCrest. The following chart illustrates the growth in the Company's active
selling locations from 1994 to 1996:
ACTIVE SELLING LOCATIONS
<TABLE>
<CAPTION>
KITCHEN &
BATH HOME TOTAL
YEAR DEALERS CENTERS OTHER(1) LOCATIONS
---- --------- ------- -------- ---------
<S> <C> <C> <C> <C>
1994 1,327 235 2 1,564
1995 1,348 274 2 1,624
1996 1,663 362 17 2,042
</TABLE>
--------
(1) Includes independent distributors and
builders/contractors.
34
<PAGE>
In 1996, over 80% of the Company's sales were through kitchen and bath
dealers. The Company has established strong relationships with its dealers
through superior customer service, timely delivery, quality products and
competitive pricing. Extensive interviews of kitchen and bath cabinetry
dealers indicate that service, timeliness of delivery, and product quality are
all more important than price in choosing a cabinetry supplier. Market
research indicates that cabinetry manufacturers affect dealer profitability
more through service than through price, as dealers can typically pass
manufacturers' price increases on to customers. The Company has an on-time,
accurate completion record of 95%, which is aided by its newly-implemented bar
coding system for tracking work-in-progress and finished goods inventory. This
system enables the Company to provide its dealers with rapid order status and
product information and options. The Company seeks to establish long-term
relationships with quality dealers and has experienced very low dealer
turnover rates, creating what management believes is a significant competitive
advantage within the industry.
Management believes the Company is the largest supplier of products for most
of its dealers. Kitchen and bath dealers primarily service the remodeling
market and provide design consultation services to the consumer. These dealers
primarily sell custom and semi-custom products. The Company added 315 new
kitchen and bath dealer active selling locations in 1996 and believes that the
addition of new dealers is important to future sales growth. It has been the
Company's experience that new selling locations generally mature within a 9-
to 18-month time period. The Company has focused particularly on adding
dealers for its stock products in an effort to increase sales of stock
cabinetry into the remodeling market.
The Company further markets its products through home centers such as Home
Depot, Home Depot Expo, Lowe's, Menards and Eagle. The Company has selectively
targeted certain national and regional chains to distribute its semi-custom
cabinetry and bath vanities. In 1996, the Company grew its home center channel
by 32.1% over 1995 by adding 88 new home center locations to its distribution
network. In 1996, sales in the home center distribution channel represented
approximately 10% of the Company's total net sales.
The Company also sells products through two independent distributors which
accounted for approximately 9.4% of total sales in 1996. In January 1996, the
Company established a pilot builder-direct program to sell stock cabinetry to
contractors in the Chicago-area market. The builder-direct program is
currently supported by one dedicated sales person.
In early 1996, the Company also began targeting the manufactured housing
market and generated $1.6 million in sales in fiscal 1996 from one
manufacturer and is currently in discussions with other manufacturers. The
Company is uniquely positioned to serve the manufactured housing segment
through its Goshen, Indiana stock cabinetry manufacturing facility, which
geographically neighbors Elkhart, Indiana, the center of the U.S. manufactured
housing industry.
The Company produces its cabinetry primarily in response to firm orders. By
producing products only to order, the Company reduces its inventory risk by
lowering its work-in-progress inventory and improving inventory turns, all of
which contribute to the Company's low overall working capital requirements.
The Company generally ships its custom cabinetry within five weeks of order,
its semi-custom cabinetry within four weeks of order and its stock cabinetry
within 10 days of order. The Company possesses an on-time, accurate order
completion record of over 95% which management believes is among the highest
in the industry. Order accuracy and lead times have been enhanced by the
implementation of the bar code system.
The Company maintains separate sales forces for products produced by Omega
and HomeCrest consisting of 74 independent sales representatives, five
Company-employed salespersons and 30
35
<PAGE>
customer service professionals. The sales force assists the Company's dealers
with training, promotions, cabinetry displays and other services. All orders
are placed directly with the Company.
FACILITIES/PROPERTIES
The following are the Company's principal manufacturing facilities and
properties:
<TABLE>
<CAPTION>
CURRENT
ESTIMATED
CAPACITY
LOCATION OWNED/LEASED PRODUCTS SQUARE FT. PRODUCTION UTILIZATION
- -------- ------------ -------- ---------- ------------ -----------
(UNITS/WEEK)
<S> <C> <C> <C> <C> <C>
Waterloo, Owned Custom and semi- 366,323 6,450 66%
Iowa...... custom cabinetry
and vanities
Goshen, Owned
Indiana... Stock cabinetry 476,607 15,000 66%
Clinton, Owned Finished frames and 200,757 N.A.(1) N.A.(1)
Tennessee. flat panel doors
</TABLE>
- --------
(1) The Clinton property is a flexible facility currently utilized for the
sub-assembly of cabinetry and vanities.
The Waterloo facility was reorganized in 1995 to optimize operating
efficiency and capacity. In addition, in late 1995 and early 1996 the bar code
tracking system was installed in the Waterloo facility to improve on-time
delivery, reduce lead times and re-work costs and enhance customer service
through more accurate order processing and faster responsiveness to customer
inquiries.
The Company believes that its plants and properties are generally very well
maintained and in excellent operating condition. While the Company maintains
adequate insurance coverage on all of its properties, the loss of those
facilities could have an adverse effect on the Company's operations.
EMPLOYEES
As of August 22, 1997, the Company employed approximately 1,587 people of
which 1,275 were involved in manufacturing, 94 in warehousing and distribution
and 54 in sales and service. Of such employees, 184 were salaried and 1,403
were hourly. Management considers its employee relations to be good.
INDUSTRY OVERVIEW
The United States kitchen and bath cabinetry market totaled approximately
$6.4 billion in annual sales volume in 1996, according to Specialists in
Business Information. Industry expansion has been driven by the increasing
popularity of kitchen and bathroom remodeling and a relatively strong market
for new home construction. As a result of these trends, growth in the kitchen
and bath cabinetry market over the past two decades has outpaced growth in
both the overall economy and the domestic building material industry.
According to Specialists in Business Information, from 1986 to 1996 kitchen
and bath cabinetry sales increased at a 7.2% CAGR, which represents a growth
in the total dollar volume of U.S. building material shipments made by
manufacturers of kitchen and bath cabinetry from $3.2 billion to $6.4 billion
during this same ten-year period.
According to Wood & Wood Products, 48% of sales in the kitchen and bath
cabinetry market in 1996 were driven by residential remodeling, whereas 52% of
industry sales were driven by new home construction. Residential remodeling
activity is primarily driven by (i) the turnover of existing single-family
homes, (ii) the average age of the housing stock, and (iii) lifestyle changes
and increased wealth
36
<PAGE>
within the "baby-boomer" generation. Cabinetmakers have benefited from the
growth in residential remodeling expenditures, which, according to Kitchen &
Bath Business, increased by a CAGR of 6.9% between 1988 and 1996. Industry
data indicate that consumers undertaking remodeling activity have most
frequently looked to the kitchen and bathroom as their primary areas of focus
inside the home, and such kitchen and bathroom remodeling typically involves
the purchase of new cabinetry.
The United States kitchen and bath cabinetry industry is highly fragmented
with over 4,700 manufacturers. As evidence of ongoing industry consolidation,
in 1990 the top twenty-five industry competitors represented 45.1% of total
industry sales, whereas in 1996 the top twenty-five competitors represented
50.8% of total industry sales. Management believes this trend toward industry
consolidation will continue as larger competitors with broader product
offerings and more extensive distribution networks will displace smaller,
less-capable competitors.
The kitchen and bath cabinetry industry consists of three primary price
points: custom, semi-custom and stock. Custom cabinetry is made-to-order and
is offered in an unlimited choice of design and construction styles, wood
species, configurations, finishes and colors. Semi-custom cabinetry is less
expensive and is made-to-order from a more limited set of options than custom
cabinetry. Stock cabinetry is the least expensive price point and offers the
fewest number of styles, wood species and finishes, with choices generally
limited to the standard guidelines established by the manufacturer.
Of the three market price points, stock cabinetry continues to represent the
majority of industry sales, and in recent years has also been the fastest
growing market segment. The following table provides an historical sales
breakdown and CAGR for the cabinetry industry by price point.
INDUSTRY SALES BY PRODUCT LINE
(DOLLARS IN BILLIONS)(1)
<TABLE>
<CAPTION>
1990 1996 6 YR.
----------- ----------- -----
$ % $ % CAGR
---- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C>
Custom...................................... $1.1 24.0% $0.7 10.5% -7.3%
Semi-Custom................................. 1.0 21.7% 1.3 19.7% 4.5%
Stock....................................... 2.4 54.4% 4.5 69.8% 11.0%
---- ------ ---- ------ -----
Total Cabinet Sales......................... $4.5 100.0% $6.4 100.0% 6.0%
==== ====== ==== ====== =====
</TABLE>
--------
(1) Includes both kitchen cabinetry and bathroom vanity products.
Source: Specialists in Business Information; Kitchen & Bath Business
Kitchen cabinetry and bathroom vanities are generally distributed through
four separate channels: kitchen and bath dealers, home centers,
builders/contractors and independent distributors. Management estimates that
there are over 10,000 kitchen and bath dealers in the United States. Dealers
are distinguished by their superior levels of customer service, as they
primarily sell custom and semi-custom products and generally carry no more
than two brands of cabinetry at each price point, generally avoiding any brand
sold by home centers. Dealers also generally provide sales and installation of
cabinetry to existing home owners and small contractors. This sales and
installation process is time intensive and requires significant advance
scheduling. In order for dealers to change their primary cabinetry providers,
they must incur additional costs to replace displays and retrain installation
and purchasing workforce.
Home centers are the fastest growing distribution channel in the kitchen and
bath cabinetry industry, and they typically sell stock cabinetry to the do-it-
yourself and contractor markets. Home centers generally have limited
installation capabilities and sales forces with limited time available to
service customers.
37
<PAGE>
Home builders primarily purchase stock cabinetry and, depending on their
size, will purchase directly through manufacturers, major distributors or
local cabinetry dealers.
Distributors of kitchen and bath cabinetry primarily sell stock cabinetry to
builders, contractors and kitchen and bath dealers, and they typically
maintain high levels of inventory so that they can deliver large quantities on
short notice to customers.
INDUSTRY SALES BY CHANNEL OF DISTRIBUTION
(DOLLARS IN BILLIONS)
<TABLE>
<CAPTION>
1990 1996 6 YR.
----------- ----------- -----
$ % $ % CAGR
---- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C>
Kitchen and Bath Dealers................... $1.3 29.9% $1.4 22.1% 1.2%
Home Centers............................... 0.7 15.6% 1.6 24.4% 14.8%
Builders/Contractors....................... 0.9 19.9% 1.4 22.1% 7.6%
Independent Distributors................... 1.4 32.2% 1.9 29.7% 5.2%
Other...................................... 0.1 2.4% 0.1 1.7% 0.0%
---- ------ ---- ------ -----
Total Sales................................ $4.5 100.0% $6.4 100.0% 6.0%
==== ====== ==== ====== =====
</TABLE>
--------
Source: Kitchen & Bath Business; Specialists in Business Information
COMPETITION
According to Wood & Wood Products, in 1996 the Company was the seventh
largest producer of kitchen and bath cabinetry, as measured by gross sales.
The cabinetry industry is mature, competitive, regional and fragmented, with
approximately 4,734 manufacturers, many of which are small and compete
primarily on a local or regional basis. According to Kitchen & Bath Business,
the average annual sales per producer is only $2.2 million. There are
relatively low capital requirements for cabinetry assembly, and therefore it
is relatively easy for small competitors to enter the industry.
Despite the relatively low barriers to entry facing small potential industry
entrants, ongoing consolidation is occurring due to customer demands for
shorter lead times and product innovation and the need for manufacturers to
invest in automation and technology. Such consolidation is making it more
difficult for smaller players to compete with larger, more integrated
manufacturers on a cost-effective basis. Management therefore believes that
its principal competitors include only those cabinetry manufacturers with
strong dealer networks and adequate capital supplies to invest in technology
and develop the economies of scale in manufacturing and purchasing required to
deliver the important combination of service, product quality and competitive
pricing demanded by customers.
Key competitive factors in the cabinetry industry include product quality,
customer service, speed of delivery, value and price. The cabinetry industry
is subject to price competition, especially in the stock cabinetry price point
of the market. The Company believes that it competes favorably with other
manufacturers due to the breadth of its product offerings, its production
capacity and its delivery and service. Some of the Company's competitors,
however, are larger and have greater financial resources than the Company.
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive federal, state and local
laws and regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment. Permits are
required for certain of the Company's operations, and these permits are
subject to revocation, modification and renewal by issuing authorities.
Governmental authorities have
38
<PAGE>
the power to enforce compliance with their regulations, and violations may
result in the payment of fines or the entry of injunctions, or both. The
Company does not believe it will be required under existing environmental laws
and enforcement policies to expend amounts that will have a material adverse
effect on its results of operations or financial condition. The requirements
of such laws and enforcement policies, however, have generally become stricter
in recent years. Accordingly, the Company is unable to predict the ultimate
cost of compliance with environmental laws and enforcement policies.
LEGAL PROCEEDINGS
The Company is a party to various legal actions arising in the ordinary
course of its business. The Company believes that the resolution of these
legal actions will not have a material adverse effect on the Company's
financial position or results of operations.
39
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers, including their respective ages as of
September 30, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Henry P. Key.................. 56 Director, President, Chief Executive Officer,
Omega and Panther
Lance E. Erlick............... 46 Vice President, Treasurer, Chief Financial
Officer, Omega and Panther
Robert L. Moran............... 43 Vice President, Operations, Omega and Panther
Henry T. Wellnitz............. 47 Vice President, Sales & Marketing, Omega and
Panther
John A. Goebel, Jr. .......... 53 President, HomeCrest
Michael Hagan................. 45 Vice President, Administration, HomeCrest
Thomas Schmidt................ 44 Vice President, Marketing, HomeCrest
Douglas J. Conley............. 40 Vice President, Manufacturing, HomeCrest
Robert J. Bertch.............. 51 Director, Omega and Panther
Gilbert Butler................ 60 Director, Omega and Panther
Donald E. Cihak............... 49 Director, Omega and Panther
Costa Littas.................. 41 Director, Omega and Panther
</TABLE>
Henry P. Key has served as a director of Omega and has been Chief Executive
Officer of Omega since October 1994. Mr. Key has executive management
responsibility for all functional areas of Omega, including finance,
operations, strategic planning, sales and marketing, management information
systems, quality control and human resources. Mr. Key is also a director of
Holdings, Omega's sole stockholder, and Panther. Mr. Key currently serves as
President and Chief Executive Officer of Holdings and President and Chief
Executive Officer of Panther. Prior to 1994, Mr. Key was employed as President
and Chief Executive Officer of Pioneer Screw & Nut Co., a manufacturer of
specialty fasteners for automotive applications, in Elk Grove, Illinois. Mr.
Key was also previously President of Metal Crafters, a manufacturer of
specialty fasteners for automotive applications, and Vice President of
Operations for Ideal Industries, a manufacturer of electrical supplies.
Lance E. Erlick has served as Vice President, Treasurer and Chief Financial
Officer of Omega since July 1994. Mr. Erlick is also the Vice President and
Chief Financial Officer of each of Holdings and Panther. Mr. Erlick is
responsible for all aspects of accounting, budgeting, management information
systems, corporate cash management and all other finance and reporting
functions for Omega. From September 1992 to June 1994, Mr. Erlick was employed
as chief financial officer of The Hirsh Co., a home shelving manufacturer.
Prior to Hirsh, Mr. Erlick was chief financial officer of Component
Technologies, a custom plastics components manufacturer.
Robert L. Moran has served as Vice President, Operations of Omega since 1995
and is also Vice President, Operations at Panther. Mr. Moran has
responsibility for manufacturing operations at Omega, which include
manufacturing engineering, materials planning, purchasing, production,
inventory control and maintenance. Prior to 1994, Mr. Moran was employed at
Newell Company, a mass merchandise retailer of consumer products, where he was
the Vice President of Operations for the Home Hardware Division.
Henry T. Wellnitz has served as Vice President, Sales and Marketing of Omega
since 1992. Mr. Wellnitz is responsible for sales and marketing for Omega. Mr.
Wellnitz has been with Omega since 1984.
40
<PAGE>
John A. Goebel, Jr. has served as President of HomeCrest since 1995 and
currently oversees all aspects of HomeCrest's operations, including finance,
manufacturing, sales and marketing, distribution, management information
systems and human resources. Mr. Goebel has been with HomeCrest since 1986. He
was plant manager at the Clinton facility from 1986 to 1990, and served as
Vice President, Operations at HomeCrest from 1990 to 1995. Mr. Goebel also has
certain strategic planning responsibilities at HomeCrest.
Michael Hagan has served as Vice President, Administration, HomeCrest since
1991. Mr. Hagan has been with HomeCrest since 1978.
Thomas Schmidt has served as Vice President, Marketing, HomeCrest since
1991. Mr. Schmidt is responsible for sales and marketing at HomeCrest.
Douglas J. Conley has served as Vice President, Manufacturing, HomeCrest
since 1995. From May 1991 to May 1995, Mr. Conley served as Vice President,
Human Resources for HomeCrest. Mr. Conley has been with HomeCrest since 1989.
Robert J. Bertch has been a director of Omega since its inception. Mr.
Bertch founded the Company in 1977 and has served as its President and Chief
Executive Officer until Omega was sold to Code, Hennessy & Simmons in 1994.
Gilbert Butler became a director of the Company in June 1997. Since its
formation in 1981, he has been the President of BCC, a private investment firm
providing management advisory services to five investment limited
partnerships, including MLA III, that provide financing for leveraged buyouts,
other acquisitions and business expansions. Mr. Butler is also the managing
general partner of five limited partnerships that serve as the respective
general partners of the five investment limited partnerships. Mr. Butler is a
trustee and member of the investment committee of Corporate Property
Investors, a real estate investment trust.
Donald E. Cihak became a director of the Company in June 1997. Mr. Cihak has
served as Managing Director of BCC Industrial Services, Inc. ("ISI"), a
management consulting company wholly owned by certain investment funds managed
by BCC, since September 1993. From April 1990 to September 1993, Mr. Cihak was
the Vice President/Finance and Administration for the Marine Group of
Brunswick Corporation.
Costa Littas became a director of the Company in June 1997. He has been a
Managing Director of BCC since February 1994, a principal from April 1991 to
February 1994 and a Vice President from October 1989 to April 1991. Mr. Littas
is also a general partner of four limited partnerships that serve as the
respective general partners of four of the investment limited partnerships
advised by BCC, including MLA III. From 1978 to 1989, Mr. Littas was employed
by Bank of Boston, most recently as a Vice President and Manager.
DIRECTOR COMPENSATION
The Company pays no compensation to its independent directors, and pays no
additional remuneration to its employees or to executives of the Company for
serving as directors. There are no family relations among any of the directors
or executive officers.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation earned in fiscal 1996
by the Company's Chief Executive Officer and each of the other five most
highly compensated executive officers whose remuneration exceeded $100,000
("Named Executives"). The current compensation arrangements for each of these
officers are described in "Employment Agreements" below.
41
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------
NUMBER OF
SECURITIES ALL
UNDERLYING OTHER
NAME AND POSITION SALARY BONUS OPTIONS(1) COMPENSATION
- ----------------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Henry P. Key........................ $191,644 $150,000 2.00 $5,358(2)
President, Chief Executive Officer,
Omega and Panther
John A. Goebel, Jr. ................ 124,407 77,797 0.34 930(3)
President, HomeCrest
Thomas Schmidt...................... 115,253 72,003 0.20 183(3)
Vice President, Marketing, HomeCrest
Robert L. Moran..................... 120,000 47,000 0.34 --
Vice President, Operations, Omega
and Panther
Michael Hagan....................... 97,990 61,242 0.20 148(3)
Vice President, Administration,
HomeCrest
Lance E. Erlick .................... 100,590 52,013 0.75 2,572(3)
Treasurer, Chief Financial Officer,
Omega and Panther
</TABLE>
- --------
(1) The Options are options to purchase shares of common stock of Holdings
granted in 1996.
(2) Mr. Key's additional compensation reflects a $2,000 annual premium on a
life insurance policy maintained by the Company as well as amounts matched
by the Company under a 401(k) Profit Sharing Plan for fiscal 1996.
(3) Additional compensation amounts refer to amounts matched by the Company
under the Company's 401(k) Profit Sharing Plan for fiscal 1996.
OPTION GRANTS
The table below shows grants of options to purchase common stock of Holdings
made to the Chief Executive Officer and Named Executives during fiscal 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------- ---------------------
NUMBER OF
SECURITIES % OF TOTAL EXERCISE
UNDERLYING OPTIONS TO PRICE EXPIRATION
NAME OPTIONS(1) EMPLOYEES ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Henry P. Key............ 2.00 34.2% $6,257.15 -- $21,211.70 $22,817.70
Lance E. Erlick......... 0.75 12.8% 6,257.15 -- 7,954.39 8,556.64
John A. Goebel, Jr. .... 0.34 5.8% 6,257.15 -- 3,605.99 3,879.01
Robert L. Moran......... 0.34 5.8% 6,257.15 -- 3,605.99 3,879.01
Thomas Schmidt.......... 0.20 3.4% 6,257.15 -- 2,121.17 2,281.77
Michael Hagan........... 0.20 3.4% 6,257.15 -- 2,121.17 2,281.77
</TABLE>
- --------
(1) The Options represent options to purchase shares of common stock of
Holdings in 1996, prior to the Merger.
42
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. Key is currently employed as President and Chief Executive Officer of
Holdings pursuant to an agreement dated September 16, 1994. Under this
agreement, Mr. Key is entitled to receive an annual salary of $180,000,
subject to annual increases. In addition, Mr. Key is eligible for an annual
bonus of up to 100% of base salary determined by (i) the achievement of
operating earnings targets and (ii) the achievement of performance plan
objectives. Mr. Key is also entitled to receive twelve months' continued
salary and benefits if he is separated from Holdings other than for cause.
Omega also pays Mr. Key an additional $2,000 per year for incremental life
insurance premiums. Pursuant to a letter agreement dated April 24, 1997, Mr.
Key is entitled to a lump sum payment equal to 18 months of base salary then
in effect, continuation of coverage under group health, group life, group
long-term disability and any other group plans and other benefits for a
maximum of two years if he is terminated without cause or resigns voluntarily
for good reason within 180 days of the OMC Merger.
Mr. Moran is currently employed with the Company pursuant to an agreement
dated September 11, 1995, as amended on June 13, 1997. Under this agreement,
Mr. Moran receives an annual salary of $120,000, subject to annual increases,
and is eligible for a bonus of up to 30% of base salary. Mr. Moran is entitled
to receive twelve months' continued salary and benefits if he is terminated
for reasons other than cause. Pursuant to a letter agreement dated April 24,
1997, Mr. Moran is entitled to a lump sum payment equal to 18 months of base
salary then in effect, continuation of coverage under group health, group
life, group long-term disability and any other group plans and other benefits
for a maximum of two years if he is terminated without cause or resigns
voluntarily for good reason within 180 days of the OMC Merger.
Mr. Erlick is currently employed with the Company pursuant to an employment
agreement dated July 11, 1994. Under this agreement, Mr. Erlick receives an
annual salary of $95,000, subject to annual increases, and is eligible to
receive an annual bonus of up to 30% of base salary. Under the agreement, Mr.
Erlick will receive six months continued salary and benefits if he is
terminated without cause after July 1996. Pursuant to a letter agreement dated
April 24, 1997, Mr. Erlick is entitled to a lump sum payment equal to 18
months of base salary then in effect, continuation of coverage under group
health, group life, group long-term disability and any other group plans for a
maximum of 2 years, and other benefits if he is terminated without cause or
resigns voluntarily for good reason within 180 days of the OMC Merger.
Mr. Goebel is currently employed as President, HomeCrest pursuant to an
agreement dated April 10, 1995, as amended on June 13, 1997. Under this
agreement, Mr. Goebel is entitled to receive a base salary, subject to annual
increases, and a bonus in accordance with the Company's Executive Bonus Plan
for senior management ("Bonus Plan"). Mr. Goebel is also entitled to receive
twelve months' continued salary and benefits if he is terminated from the
Company without cause. Pursuant to a letter agreement dated April 24, 1997,
Mr. Goebel is entitled to a lump sum payment equal to 18 months of base salary
then in effect, continuation of coverage under group health, group life, group
long-term disability and any other group plans and other benefits for a
maximum of two years if he is terminated without cause or resigns voluntarily
for good reason within 180 days of the OMC Merger.
Mr. Hagan is currently employed as Vice President, Administration, HomeCrest
pursuant to an agreement dated April 10, 1995. Under this agreement, Mr. Hagan
is entitled to receive a base salary, subject to annual increases, and a bonus
in accordance with the Company's Bonus Plan. Mr. Hagan is also entitled to
receive six months' continued salary and benefits if he is terminated from the
Company without cause. Pursuant to a letter agreement dated April 24, 1997,
Mr. Hagan is entitled to a lump sum payment equal to 18 months of base salary
then in effect, continuation of coverage under group health, group life, group
long-term disability and any other group plans and other benefits for a
maximum of two years if he is terminated without cause or resigns voluntarily
for good reason within 180 days of the OMC Merger.
43
<PAGE>
Mr. Schmidt is currently employed as Vice President, Marketing, HomeCrest
pursuant to an agreement dated April 10, 1995. Under this agreement, Mr.
Schmidt is entitled to receive a base salary, subject to annual increases, and
a bonus in accordance with the Company's Bonus Plan. Mr. Schmidt is also
entitled to receive six months' continued salary and benefits if he is
terminated from the Company without cause. Pursuant to a letter agreement
dated April 24, 1997, Mr. Schmidt is entitled to a lump sum payment equal to
18 months of base salary then in effect, continuation of coverage under group
health, group life, group long-term disability and any other group plans and
other benefits for a maximum of two years if he is terminated without cause or
resigns voluntarily for good reason within 180 days of the OMC Merger.
Pursuant to a Deferred Non-Qualified Compensation Agreement between the
Company and Mr. Wellnitz, dated June 28, 1987, Mr. Wellnitz is entitled to
retirement benefits and will receive monthly payments equal to $20,000 per
year ($1,666.67 per month) up to a maximum of $200,000 upon retirement at age
65 if he is employed by the Company at such time, or to his heirs or estate if
he predeceases his retirement age. The Deferred Non-Qualified Compensation
Agreement terminates automatically upon the termination of Mr. Wellnitz's
employment for any reason other than Mr. Wellnitz's death.
The Named Executive Officers of the Company participate in the Bonus Plan
whereby they are eligible to receive a base bonus potential of 30% of base
salary, with the Chief Executive Officer having a base bonus potential of 50%
of salary. Payout is on a sliding scale based on operating profit performance
against budget starting at 85% of budget. There is an opportunity to earn up
to 125% of the base potential based on achieving 105% of planned operating
income performance.
44
<PAGE>
PRINCIPAL STOCKHOLDERS
Omega has 10,000 authorized shares of capital stock, 1,000 of which are
issued and owned by Holdings. Panther has 100,000 authorized shares of
capital, 1,000 of which are issued and owned by Omega.
Holdings' common stock, par value $.01 per share, ("Holdings' Common Stock")
is the only class of Holdings' stock. At consummation of the Initial Offering,
there were 70,000 shares of Holdings' Common Stock issued and outstanding.
Certain Company directors and members of the Company's management own 8,135
shares of Holdings' Common Stock. The following table sets forth the
beneficial ownership of each class of issued and outstanding securities of
Holdings, as of the date hereof, by each director of Omega, each of the
executive officers of Omega listed under "Management," the directors and
executive officers of Omega as a group and each person who beneficially owns
more than 5% of the outstanding shares of Holdings' Common Stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES(1) CLASS(1)
---- ---------- ----------
<S> <C> <C>
Mezzanine Lending Associates III, L.P.(2)........ 64,256.402 88.8%
767 Fifth Avenue, 6th Floor
New York, NY 10153
Gilbert Butler(3)................................ 64,256.402 88.8
Costa Littas(3).................................. 64,256.402 88.8
Donald Cihak..................................... 0.000 0.0
Robert J. Bertch................................. 3,500.000 5.0
Henry P. Key..................................... 1,250.000(4) 1.8
John A. Goebel, Jr. ............................. 450.000(5) 0.6
Robert L. Moran.................................. 340.000(4) 0.5
Lance E. Erlick.................................. 300.000 0.4
Henry T. Wellnitz................................ 300.000(4) 0.4
All Directors and Executive Officers Combined.... 6,140.000(6) 8.8
</TABLE>
- --------
(1) As used in this table, beneficial ownership means the sole or shared power
to vote, or to direct the voting of a security, or the sole or shared
power to dispose, or direct the disposition of, a security.
(2) The shares held by MLA III include 2,391.402 shares subject to acquisition
from Holdings by ISI, a corporation wholly-owned by certain investment
funds managed by BCC, pursuant to immediately exercisable warrants issued
by Holdings for the purchase of such shares. See "Certain Relationships
and Related Transactions." Mezzanine Lending Management III, L.P. ("MLM
III") is the general partner of MLA III, and, as such general partner, may
be deemed to own beneficially all the shares deemed to be owned
beneficially by MLA III.
(3) All of such shares are held directly by MLA III or subject to warrants
held directly by ISI, as described in note 2 above. Gilbert Butler and
Costa Littas are managing general partner and general partner,
respectively, of MLM III, and, as such, may be deemed to own beneficially
all shares beneficially owned by MLA III.
(4) All of such shares are beneficially owned by the persons indicated and are
held in the Rabbi Trust. See "Certain Relationships and Related
Transactions."
(5) Includes 323.372 shares which are beneficially owned by Mr. Goebel and are
held in the Rabbi Trust. See "Certain Relationships and Related
Transactions."
(6) Excludes shares deemed to be beneficially owned by Mr. Butler and Mr.
Littas.
45
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OMC MERGER AND RELATED AGREEMENTS
The OMC Merger occurred on June 13, 1997. Concurrently with the OMC Merger,
an aggregate consideration of $201.6 million was paid, subject to adjustment
based on the working capital of Holdings at the closing date. The merger
agreement contains customary representations, warranties, covenants and
indemnification provisions. In connection with the OMC Merger, pursuant to a
Merger Financing Agreement (the "Financing Agreement") with MLA III, MLA III
purchased 61,865 shares of Common Stock of Holdings for $61.9 million and
Holdings issued to MLA III the Junior Subordinated Note. Under the Financing
Agreement, the Company has agreed to indemnify and pay certain expenses of BCC
and its affiliates and their advisors and consultants under certain
circumstances.
MANAGEMENT AGREEMENT
In connection with the OMC Merger, the Company and Holdings entered into a
management agreement ("Management Agreement") with Industrial Services, Inc.
("ISI"), a management consulting company wholly owned by investment funds
managed by BCC, whereby the Company and Holdings agree to pay ISI $325,000 per
year plus certain fees and expenses, including legal and accounting fees and
any out-of-pocket expenses incurred by ISI in connection with providing
services to the Company, and to indemnify ISI under certain circumstances. In
addition, ISI received warrants to purchase an aggregate of 2,391.4020 shares
of common stock of Holdings at an exercise price of $1,000 per share. The
warrants expire in 2007.
DEFERRED COMPENSATION PLAN AND RABBI TRUST
In connection with the OMC Merger, Holdings and its subsidiaries adopted the
1997 Omega Holdings, Inc. Deferred Compensation Plan (the "Plan") for the
purpose of providing specified benefits to employees of Holdings and its
subsidiaries. The benefits provided by the Plan represent the unsecured
obligations of Holdings.
As contemplated by the Plan and pursuant to the Rabbi Trust Agreement dated
as of June 13, 1997 between Holdings and American National Bank and Trust
Company of Chicago, as trustee, Holdings established the Rabbi Trust to hold
approximately 3,224.4670 shares of Holdings Common Stock to satisfy Holdings'
obligations as provided in the Plan. Benefits are payable to the beneficiaries
of the Rabbi Trust upon termination of employment or earlier, under certain
limited circumstances.
MANAGEMENT EQUITY ARRANGEMENTS
Holdings adopted a stock option plan for the benefit of employees of
Holdings and its subsidiaries in June 1997. Pursuant to the Plan, 7,322.0100
shares of Holdings common stock have been reserved for issuance pursuant to
the plan; however, no options have been granted thereunder. In addition,
pursuant to certain agreements executed in connection with the OMC Merger,
certain employees have the right to cause Holdings to repurchase Holdings
common stock held by such employees upon their departure from the Company in
connection with certain specified termination events, subject to restrictions
in the event that the Company does not have adequate liquidity. See also
"Executive Compensation."
46
<PAGE>
DESCRIPTION OF NEW BANK CREDIT FACILITY
The Company and its subsidiaries have entered into an agreement with various
banks including First Bank National Association as a bank lender and as agent
for the bank lenders party thereto ("First Bank", and collectively with such
other lenders, the "Lenders") providing for the New Bank Credit Facility
consisting of the Term Facility of up to $40.0 million and (ii) a Revolving
Facility of up to $20.0 million. The New Bank Credit Facility is permitted by
the terms of the Notes to be increased to a total borrowing capacity of $120.0
million.
The Term Facility requires quarterly principal payments beginning in
September 1997 at approximately $0.6 million per quarter and increasing at
each anniversary. Subsequent payments will be approximately $1.0 million, $1.4
million, $1.5 million, $1.9 million, and $2.3 million per quarter during four-
quarter periods beginning in 1998, 1999, 2000, 2001, 2002, respectively, with
the balance due in the following two quarters. The Term Facility matures on
December 26, 2003. The Revolving Facility portion of the New Bank Credit
Facility will mature in 2002 and has no scheduled interim amortization. In
addition, the Company is required to make prepayments on the New Bank Credit
Facility under certain circumstances, including certain sales of assets and
the issuance of debt or equity securities other than issuances of equity
securities to finance acquisitions permitted under the New Bank Credit
Facility or equity securities issued to management employees and directors up
to $500,000. The Company is also required on an annual basis to make
prepayments on the New Bank Credit Facility in an amount equal to 75% of the
Company's Excess Cash Flow (as defined therein). These mandatory prepayments
will be applied first to prepay the Term Loan and then to the permanent
reduction of the Revolving Facility. Subject to reduction in the event the
Company meets certain leverage tests, and subject to increase upon the
occurrence and during the continuation of an event of default, the New Bank
Credit Facility bears interest, at the Company's option, (a) at an adjusted
base rate equal to the Applicable Margin (as defined therein) plus the greater
of the federal funds rate plus 0.5% or First Bank's customary base rate or (b)
at the Applicable Margin (as defined therein) plus First Bank's Eurodollar
rate.
The New Bank Credit Facility is guaranteed by the Company's sole
stockholder, Holdings. The New Bank Credit Facility is secured by all of the
stock of the Company, all of the stock of the Company's subsidiary and all of
the Company's and its subsidiary's properties and assets.
The New Bank Credit Facility contains certain financial covenants,
including, but not limited to, covenants related to interest coverage, fixed
charge coverage and a leverage test. In addition, the New Bank Credit Facility
contains other affirmative and negative covenants relating to (among other
things) liens, negative pledges, limitations on additional debt, transactions
with affiliates, maintenance of lockbox, mergers and dispositions of assets,
subsidiaries and acquisitions, operating leases, restricted payments
(including junior debt payments), guarantees, capital expenditures and
investments. It is also an event of default under the New Bank Credit Facility
if the Company prepays the Notes prior to maturity. The New Bank Credit
Facility contains customary events of default for highly leveraged financing,
including changes in control of the Company.
47
<PAGE>
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an Indenture (the "Indenture")
among the Company, Panther, as Guarantor, and The Chase Manhattan Bank, as
trustee (the "Trustee"). The terms of the Exchange Notes include those stated
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended, (the "Trust Indenture Act"). The
Exchange Notes are subject to all such terms, and Holders of Exchange Notes
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of the material provisions of the Indenture
does not purport to be complete and is qualified in its entirety by reference
to the Indenture, including the definitions therein of certain terms used
below. Copies of the Indenture are available as set forth above under "--
Additional Information." The definitions of certain terms used in the
following summary are set forth below under "-- Certain Definitions." For
purposes of this summary, the term "Company" refers only to Omega Cabinets,
Ltd. and not to its Subsidiary.
The Exchange Notes will be general unsecured obligations of the Company and
will be subordinated in right of payment to all current and future Senior
Debt. As of September 23, 1997, the Company had Senior Debt outstanding of
approximately $43.3 million. The Indenture will permit the incurrence of
additional Senior Debt in the future.
As of the date hereof, the Company's sole Subsidiary, Panther, is a
Restricted Subsidiary. However, under certain circumstances, the Company will
be able to designate future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be limited to $100.0 million in aggregate principal
amount. The Exchange Notes will mature on June 15, 2007. Interest on the
Exchange Notes will accrue at the rate of 10 1/2% per annum and will be
payable semi-annually in arrears on June 15 and December 15, commencing on
December 15, 1997, to Holders of record on the immediately preceding June 1
and December 1, respectively. Interest on the Exchange Notes will accrue from
the most recent date to which interest has been paid or, if no interest has
been paid, from the date of original issuance. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Principal,
premium, if any, and interest on the Exchange Notes will be payable at the
office or agency of the Company maintained for such purpose within the City
and State of New York or, at the option of the Company, payment of interest
may be made by check mailed to the Holders of the Exchange Notes at their
respective addresses set forth in the register of Holders of Exchange Notes;
provided that all payments of principal, premium, interest with respect to
Exchange Notes the Holders of which have given wire transfer instructions to
the Company will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Until
otherwise designated by the Company, the Company's office or agency in New
York will be the office of the Trustee maintained for such purpose. The
Exchange Notes will be issued in denominations of $1,000 and integral
multiples thereof.
GUARANTEES
The Company's payment obligations under the Exchange Notes will be
guaranteed (the "Subsidiary Guarantee") by the Guarantor. The Subsidiary
Guarantee of the Guarantor will be subordinated to the prior payment in full
of all Senior Debt of such Guarantor, which includes approximately $43.3
million of Senior Debt outstanding as of September 23, 1997, and the amounts
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for which the Guarantor will be liable under the guarantees issued from time
to time with respect to Senior Debt. The obligations of the Guarantor under
the Subsidiary Guarantee will be limited so as not to constitute a fraudulent
conveyance under applicable law. See "Risk Factors--Fraudulent Conveyance
Law."
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition,
by way of such a merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of such Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture. See "Mandatory Redemption" or "Repurchase at the Option of
Holders--Asset Sales and Sales of Subsidiary Stock."
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Exchange
Notes and the exercise of rights of rescission or other claims, if any, in
respect of the issuance of the Exchange Notes, will be subordinated in right
of payment, as set forth in the Indenture, to the prior payment in full of all
Senior Debt, whether outstanding on the date of the Indenture or thereafter
incurred.
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, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full in cash of all Obligations (including, without limitation,
Post-Petition Interest) due or to become due in respect of such Senior Debt
before the Holders of Exchange Notes will be entitled to receive any payment
with respect to the Exchange Notes, and until all Obligations with respect to
Senior Debt are paid in full in cash, any distribution to which the Holders of
Exchange Notes would be entitled shall be made to the holders of Senior Debt
(except that Holders of Exchange Notes may receive and retain Permitted Junior
Securities and payments made from the trust described under "-- Legal
Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the Exchange
Notes and may not acquire any Exchange Notes from the Trustee or any holder
(except in Permitted Junior Securities or from the trust described under "--
Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of
the principal of, premium, if any, or interest on Designated Senior Debt
occurs and is continuing or (ii) any other default occurs and is continuing
with respect to Designated Senior Debt that permits holders of the Designated
Senior Debt as to which such default relates to accelerate its maturity and
the Company and the Trustee each receive a notice of such default (a "Payment
Blockage Notice") from a representative of the holders of such Designated
Senior Debt. Payments on the Exchange Notes may and shall be resumed (a) in
the case of a payment default on any Designated Senior Debt, upon the date on
which such default is cured or waived in accordance with the terms of such
Designated Senior Debt and (b) in case of a nonpayment default on any
Designated Senior Debt, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received. Notwithstanding the provisions in clause
(b) of the immediately preceding sentence, unless the holders of any
Designated Senior Debt or the representative thereof have accelerated the
maturity of such Designated Senior Debt or a payment default has occurred and
is continuing with respect to such Designated Senior Debt, the Company may and
shall resume payments on the Exchange Notes after the end of such payment
blockage period. No new Payment Blockage Notice may be delivered unless
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and until 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice (although a
subsequent breach of the same provision of the New Bank Credit Facility or any
Permitted Refinancing Indebtedness in respect thereof may be made the basis
for a subsequent Payment Blockage Notice if the original breach has been cured
or waived for at least 90 consecutive days prior to the effective date of such
subsequent Payment Blockage Notice).
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Exchange Notes is accelerated because of an
Event of Default.
The Guarantor's obligations under the Subsidiary Guarantee will be
subordinated to the Senior Debt of the Guarantor, and subject to blockage
provisions, on terms comparable to those described for the Company above.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Exchange Notes may recover less
ratably than creditors of the Company who are holders of Senior Debt.
"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 under the Indenture the principal amount of which
is $10 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Permitted Junior Securities" means (i) Equity Interests (other than
Disqualified Stock, including 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 any
debt securities issued in exchange for 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
Exchange Notes and the Subsidiary Guarantee are subordinated to Senior Debt of
the Company and the Guarantor.
"Senior Debt" means (i) all Indebtedness of the Company and the Guarantor
outstanding under the New Bank Credit Facility and all Permitted Hedging
Obligations with respect thereto, (ii) any other Indebtedness of the Company
and the Guarantor permitted to be incurred under the terms of the 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 Exchange Notes or the Subsidiary Guarantee, 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
the Indenture.
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OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the Company's
option prior to June 15, 2002. On and after such date, the Exchange Notes will
be subject to redemption at any time at the option of the Company, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on June 15 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.............................. 105.25%
2003.............................. 103.50%
2004.............................. 101.75%
2005 and thereafter............... 100.00%
</TABLE>
In addition, at any time on or prior to June 15, 2000, the Company may (but
shall not have the obligation to) redeem, on one or more occasions, up to an
aggregate of $35.0 million in aggregate principal amount of Notes at a
redemption price equal to 110.5% of the principal amount thereof, plus accrued
and unpaid interest thereon, to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings by Holdings or the Company (to
the extent that the net proceeds therefrom are contributed by Holdings to the
Company as common equity); provided that at least $65.0 million in aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of such redemption; and provided further, that the notice of redemption with
respect to any such redemption shall be mailed within 60 days of the date of
the receipt by the issuer of the proceeds of such Public Equity Offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed or repurchased in an offer
to purchase at any time, selection of Notes for redemption or repurchase will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed, or, if
the Notes are not so listed, on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate; provided that no
Notes of $1,000 or less shall be redeemed or repurchased in part. Notices of
redemption may not be conditional. Notices of redemption or repurchase shall
be mailed by first class mail at least 30 but not more than 60 days before the
redemption date or repurchase date to each Holder of Notes to be redeemed or
repurchased at its registered address. If any Note is to be redeemed or
repurchased in part only, the notice of redemption or repurchase that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed or repurchased. A new Note in principal amount equal to the
unredeemed or unrepurchased portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption or repurchase date, interest ceases to accrue on Notes or portions
of them called for redemption or repurchase.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Exchange Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
offer to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Exchange Notes in the
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manner described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control (unless notice of
the redemption of the Notes has been given as provided above under the
caption, "-- Selection and Notice"), the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change
of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 business days and no later than
60 business days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. The Company will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of the Notes as a result of a Change of
Control. To the extent that the provisions of any securities laws or
regulations conflict with this covenant, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations hereunder by virtue thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Exchange Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to
the Trustee the Exchange Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Exchange Notes or
portions thereof being purchased by the Company. The Paying Agent will
promptly mail to each Holder of Notes so tendered the Change of Control
Payment for such Exchange Notes, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided that each such new Exchange Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Indenture will provide
that, prior to complying with the provisions of this covenant, but in any
event within 40 days following a Change of Control, if the terms of the Senior
Debt restrict or prohibit the repurchase of Exchange Notes under this
covenant, the Company will either repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase of Notes required by this covenant. The
Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Exchange Notes to require
that the Company repurchase or redeem the Exchange Notes in the event of a
takeover, recapitalization or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiary taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under
applicable law. Accordingly, the ability of a Holder of Exchange Notes to
require the Company to repurchase such Exchange Notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all
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of the assets of the Company and its Subsidiary taken as a whole to another
Person or group may be uncertain.
Asset Sales and Sales of Subsidiary Stock
The Indenture will provide that the Company will not, and will not permit
its Restricted Subsidiary to, consummate an Asset Sale unless (i) the Company
(or the Restricted Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the fair market value (evidenced
by a resolution of the Board of Directors of the Company set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary
is in the form of cash; provided that the amount of (x) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes
or any guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (y) any securities,
notes or other obligations received by the Company or any such Restricted
Subsidiary from such transferee that are converted by the Company or such
Restricted Subsidiary into cash within 90 days of receipt thereof by the
Company or such Restricted Subsidiary (to the extent of the cash received),
shall be deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior
Debt, (b) to the acquisition of a controlling interest in another business,
the making of a capital expenditure or the acquisition of other long-term
assets (i.e., assets that would not be classified as short-term assets under
GAAP) or (c) to an investment in properties or assets that replace the
properties or assets that are the subject of such Asset Sale. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
Senior Debt or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer
to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased
on a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
The New Bank Credit Facility prohibits the Company from purchasing any Notes
and provides that certain change of control events with respect to the Company
would constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
or Asset Sale occurs at a time when the Company is prohibited from purchasing
Notes, the Company could seek the consent of its lenders to the purchase of
Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture which would, in turn, constitute a
default under the New Bank Credit Facility. In such circumstances, the
subordination provisions in the Indenture would likely restrict payments to
the Holders of Notes. The
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Company's ability to pay cash to the Holders upon a repurchase may be limited
by the Company's then existing financial resources. There can be no assurance
that sufficient funds will be available when necessary to make any required
repurchases.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
its Restricted Subsidiary to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or its Restricted Subsidiaries' Equity Interests (including, without
limitation, any such payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
or its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or its Restricted
Subsidiary); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, any such payment in connection with any merger
or consolidation involving the Company) any Equity Interests of the Company or
any direct or indirect parent of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted Subsidiary of
the Company); (iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Notes, except a payment at Stated Maturity; or (iv)
make any Restricted Investment (all such payments and other actions set forth
in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated EBITDA Ratio test set forth in the first paragraph of the
covenant described below under caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiary
after the date of the Indenture (including Restricted Payments permitted by
clauses (i), (v) and (xi) of the next succeeding paragraph), does not
exceed the sum (without duplication) of (i) 50% of the aggregate amount of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the date of the Indenture of Equity Interests of
the Company (other than Disqualified Stock) or of Disqualified Stock of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or Disqualified Stock) sold to a Subsidiary of the
Company and other than Disqualified Stock that has been converted into
Disqualified Stock), plus (iii) 100% of the aggregate amounts contributed
as common equity to the Company since the date of the Indenture, plus (iv)
the amount by which Indebtedness of the Company or its Restricted
Subsidiary is reduced on the Company's consolidated balance sheet upon the
conversion or exchange subsequent to the date of the Indenture of any
Indebtedness of the Company or its Restricted Subsidiary issued after the
date of the Indenture that is convertible
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into or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash or other property distributed by
the Company or any Restricted Subsidiary upon such conversion or exchange),
plus (v) to the extent that any Restricted Investment that was made after
the date of the Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with respect
to such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment, plus (vi) 50% of any
dividends received by the Company or a Wholly Owned Restricted Subsidiary
after the date of the Indenture from an Unrestricted Subsidiary of the
Company to the extent that such dividends were not otherwise included in
Consolidated Net Income of the Company for such period.
The foregoing provisions will not prohibit, without duplication, (i) the
payment of any dividend within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of the Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded (to the extent otherwise included) from clause (c) (ii) of
the preceding paragraph; (iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Restricted Subsidiary of the Company to the holders of its
common Equity Interests on a pro rata basis; (v) payments to Holdings or by
the Company, in either case, for the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of Holdings, the
Company or the Company's Restricted Subsidiary held by any director, officer,
employee or consultant or any of such Persons' heirs, estates or assigns
pursuant to or in connection with any management, employee or consultant
agreement, equity subscription agreement, stock option agreement or
stockholders' agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$1.5 million in any twelve-month period and no Default or Event of Default
shall have occurred and be continuing immediately after such transaction; (vi)
cash payments to Holdings or by the Company, in either case, in lieu of
fractional shares issuable as dividends on preferred securities of the Company
or its Restricted Subsidiary; provided that such cash payments shall not
exceed $20,000 in the aggregate in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction; (vii) payments to Holdings or by the Company, in either case to
fund the repurchase, redemption, retirement or other acquisition of the
Contingent Note; (viii) cash dividends on any series of Disqualified Stock of
the Company or its Restricted Subsidiary to the extent included in
Consolidated Interest Expense; provided that the Company would, at the time of
such Restricted Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable four-
quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated EBITDA Ratio test set forth in the
first paragraph of the covenant described below under caption "Incurrence of
Indebtedness and Issuance of Preferred Stock;" (ix) payments to Holdings in
amounts equal to the amounts required to pay its franchise taxes and other
fees required to maintain its corporate existence and to provide for other
operating costs in an amount not to exceed $250,000 per fiscal year; (x)
payments to Holdings in amounts required for Holdings to pay federal, state
and local taxes to the extent such taxes are actually owed by Holdings and are
attributable to the Company and its Subsidiary; (xi) so long as no Default or
Event of Default shall have occurred and be continuing, other Restricted
Payments in an amount not to exceed $2.0 million; (xii) payments to Holdings
in the amounts required for Holdings to make payments pursuant to the Rabbi
Trust in existence on the date of the Indenture and established for the
benefit of officers and employees pursuant to the 1997 Omega Holdings Deferred
Compensation Plan, in accordance with the terms thereof as in effect on such
date; (xiii) payments to Holdings of amounts required to enable Holdings to
satisfy its obligations under the purchase price
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adjustment provisions of the Merger Agreement; and (xiv) payments to Holdings
to repay interest and principal in respect of the Junior Subordinated Note and
the Bridge Loans. To the extent that any Restricted Payment is permitted by
any one of the foregoing clauses (i) through (xiv), such Restricted Payment
shall not be taken into account for purposes of calculating the amount of
Restricted Payments permitted by any other such clauses.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined
by the Board of Directors of the Company whose resolution with respect thereto
shall be delivered to the Trustee. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting
forth the basis upon which the calculations required by the covenant
"Restricted Payments" were computed, together with a copy of any fairness
opinion or appraisal required by the Indenture.
The Board of Directors the Company may designate any Restricted Subsidiary
(other than Panther Transport, Inc.) to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such
determination, all outstanding Investments by the Company and its Restricted
Subsidiary (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the greatest of (x) the
net book value of such Investments at the time of such designation, (y) the
fair market value of such Investments at the time of such designation and (z)
the original fair market value of such Investments at the time they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit its
Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock and will not
permit its Subsidiary to issue any shares of preferred stock; provided,
however, that the Company or its Restricted Subsidiary may incur Indebtedness
(including Acquired Debt) or issue shares of Disqualified Stock or preferred
stock if the Consolidated EBITDA Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock or preferred stock is issued would have
been at least 2.0 to 1.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock
had been issued, as the case may be, at the beginning of such four-quarter
period.
The provisions of the first paragraph of this covenant do not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) Indebtedness of the Company and its Restricted Subsidiaries under the
New Bank Credit Facility;
(ii) Existing Indebtedness;
(iii) Indebtedness represented by the Notes and the Subsidiary Guarantee;
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(iv) Indebtedness represented by Capital Lease Obligations in an
aggregate principal amount not to exceed $5.0 million at any time
outstanding;
(v) Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness
that was permitted by the Indenture to be incurred;
(vi) intercompany Indebtedness between or among the Company and its
Restricted Subsidiary; provided, however, that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary of the Company and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary of the Company shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be, that is not permitted by
this clause (vi);
(vii) Indebtedness consisting of Permitted Hedging Obligations;
(viii) Indebtedness in respect of performance, surety and similar bonds
provided by the Company in the ordinary course of business;
(ix) the guarantee of Indebtedness of the Company or a Restricted
Subsidiary that was permitted to be incurred by another provision of this
covenant;
(x) Indebtedness in respect of industrial revenue bonds or other similar
governmental and municipal bonds, mortgage financings or purchase money
obligations in an aggregate amount not to exceed $5.0 million;
(xi) Indebtedness in respect of (A) letters of credit (other than letters
of credit issued under the New Bank Credit Facility) incurred in the
ordinary course of business for the purpose of securing foreign trade
credit obligations of the Company or a Restricted Subsidiary of the Company
and (B) Acquired Debt in connection with the acquisition of new assets or a
new Subsidiary; provided that such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary prior to the acquisition by the
Company or its Restricted Subsidiary and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or such
Restricted Subsidiary; and provided further that the aggregate principal
amount (or accredited value, as applicable) of all Indebtedness incurred
pursuant to this clause (xi) shall not exceed $5.0 million at any one time
outstanding;
(xii) additional Indebtedness in an aggregate principal amount (or
accredited value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (xii), not to exceed
$10.0 million; and
(xiii) Non-Recourse Debt of an Unrestricted Subsidiary, provided,
however, that if any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness that is not permitted by this clause (xiii).
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (i) through (xiii) above or is entitled
to be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant.
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Liens
The Indenture provides that the Company will not, and will not permit its
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Permitted Liens) securing Pari Passu
Indebtedness or Subordinated Indebtedness on any asset now owned or hereafter
acquired by the Company or its Restricted Subsidiary, or any income or profits
therefrom or assign or convey any right to receive income therefrom, unless
the Notes are equally and ratably secured with the obligations so secured
until such time as such obligations are no longer secured by a Lien; provided
that in any case involving a Lien securing Subordinated Indebtedness, such
Lien is subordinated to the Lien securing the Notes on a basis no less
favorable than such Subordinated Indebtedness is subordinated to the Notes.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit its
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary of the Company to (i)(a) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any indebtedness owed to the Company or its Restricted Subsidiary, (ii) make
loans or advances to the Company or its Restricted Subsidiary or (iii)
transfer any of its properties or assets to the Company or its Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness and Liens with respect thereto as in
effect or entered into on the date of the Indenture, (b) the New Bank Credit
Facility as in effect as of the date of the Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the New Bank
Credit Facility as in effect on the date of the Indenture, (c) the Indenture,
the Notes and the Subsidiary Guarantee, (d) applicable law, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
its Restricted Subsidiary as in effect at the time of such acquisition (except
to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of the Indenture to be incurred, (f) customary non-assignment
provisions in (A) leases, licenses, encumbrances, contracts or similar assets
entered into or acquired in the ordinary course of business (B) any agreement
to transfer, or option or right with respect to the transfer of, any property
or assets of the Company or its Restricted Subsidiary not otherwise prohibited
by the Indenture or (C) provisions of security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary that is not otherwise
prohibited by the Indenture to the extent that such provisions restrict the
transfer of the property or assets subject to the Lien created thereby, (g)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii)
above on the property so acquired, (h) any restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the
sale or disposition of all or substantially all of the Capital Stock or assets
of such Restricted Subsidiary or (i) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being refinanced.
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit its
Restricted Subsidiary to, make any payment to or Investment in, or sell,
lease, transfer or otherwise dispose of any of its
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properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (i) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness of such
Affiliate Transaction to the Company from a financial point of view issued by
an accounting, appraisal or investment banking firm of national standing;
provided that (i) any employment agreement entered into by the Company or its
Restricted Subsidiary which provides for aggregate annual payments not in
excess of $350,000, (ii) transactions between or among the Company and/or its
Restricted Subsidiary, (iii) Restricted Payments that are permitted by the
provisions of the Indenture described above under the caption "--Restricted
Payments," (iv) existing transactions and arrangements described in the
Offering Circular of the Original Notes dated July 18, 1997, including,
without limitation, the transactions described under the caption "Use of
Proceeds," "Certain Relationships and Related Transactions" and "The
Transactions," (v) reasonable and customary fees, indemnification and similar
arrangements for directors and officers, (vi) collective bargaining
agreements, employee and director benefit plans, related trust agreements or
other similar arrangements entered into in the ordinary course of business,
(vii) payment of compensation to employees, officers, directors or consultants
who are not otherwise Affiliates of the Company in the ordinary course of
business, (viii) any transaction between the Company and a Wholly Owned
Restricted Subsidiary of the Company, (ix) the payment of fees and obligations
under the Management Agreement in accordance with its terms as in effect on
the date of the Indenture, or as the same may be amended from time to time
(except any such amendment that would increase the fees and obligations
thereunder) and (x) payments to reimburse Holdings for costs, fees and
expenses incident to a public offering of Equity Securities of Holdings,
provided that the proceeds therefrom (other than any such proceeds used to
redeem Notes as described above in the second paragraph under the caption
"Optional Redemption"), are contributed to the Company, in each case, shall
not be deemed Affiliate Transactions.
Senior Subordinated Debt
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Guarantor will incur,
create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to Senior Debt
of such Guarantor and senior in any respect in right of payment to the
Subsidiary Guarantee.
Issuances and Sales of Capital Stock of Wholly Owned Restricted Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the Company or
a Wholly Owned Restricted Subsidiary of the Company), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Capital
Stock of such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds
from such transfer, conveyance, sale, lease or other disposition are applied
in accordance with the covenant described above under the caption
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"Repurchase at the Option of Holders--Asset Sales and Sales of Subsidiary
Stock," and (ii) will not permit any Wholly Owned Restricted Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company.
Payments for Consent
The Indenture provides that neither the Company nor its Subsidiary will,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
Additional Guarantees
The Indenture provides that if the Company or its Subsidiary shall acquire
or create another Subsidiary after the date of the Indenture, then such newly
acquired or created Subsidiary shall execute a supplemental indenture and
deliver an opinion of counsel, in accordance with the terms of the Indenture;
provided that this covenant shall not apply to any Subsidiaries that have
properly been designated as Unrestricted Subsidiaries in accordance with the
Indenture for so long as they continue to constitute Unrestricted
Subsidiaries.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) definitive reports containing all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition
and results of operations of the Company and its consolidated Subsidiary
(showing in reasonable detail, either on the face of the financial statements
or in the footnotes thereto and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, the financial condition and
results of operations of the Company and its Restricted Subsidiary separate
from the financial condition and results of operations of the Unrestricted
Subsidiaries of the Company) and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K, if the Company were required to file such reports, in each case
within the time periods set forth in the Commission's rules and regulations.
In addition, whether or not required by the rules and regulations of the
Commission, at any time after the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, the Company will file a
copy of all such information and reports with the Commission for public
availability within the time periods set forth in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors
upon request. In addition, the Company and the Guarantors have agreed that,
for so long as any Notes remain outstanding, they will furnish to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise
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dispose of all or substantially all of its properties or assets in one or more
related transactions, to another corporation, Person or entity unless (i) the
Company is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger or to which such sale,assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the entity or Person formed by
or surviving any such consolidation or merger or the entity or Person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the Notes and
the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated EBITDA Ratio test set
forth in the first paragraph of the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock."
Notwithstanding the foregoing, any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties or assets to the Company
or another Restricted Subsidiary.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) default in payment when due of the principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company or its Subsidiary
to comply with the provisions described under the captions "Repurchase at the
Option of Holders--Change of Control," "Repurchase at the Option of Holders--
Asset Sales and Sales of Subsidiary Stock," "Certain Covenants--Restricted
Payments," "Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock" or "--Merger, Consolidation or Sale of Assets" and the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding; (iv) failure by the Company or its Restricted Subsidiary for 60
days after notice by the Trustee or by the Holders of at least 25% of Notes
then outstanding to comply with any of its other agreements in the Indenture
or the Notes; (v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or its Restricted Subsidiary
(or the payment of which is guaranteed by the Company or its Restricted
Subsidiary), whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of which has been so accelerated,
aggregates $5.0 million or more; (vi) failure by the Company or its Restricted
Subsidiary to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for
any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Company or its Significant Subsidiary.
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If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency with respect to the Company, all outstanding Notes
will become due and payable without further action or notice. Holders of the
Exchange Notes may not enforce the Indenture or the Exchange Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default if
it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
June 15, 2002, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to June 15, 2002, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes rescind an acceleration and waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest on, or the principal of, the
Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or the Subsidiary Guarantee or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations and the obligations of the Guarantor discharged with respect to
the outstanding Notes ("Legal Defeasance") except for (i) the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due
from the trust referred to below, (ii) the Company's obligations with respect
to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and
at any
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time, elect to have the obligations of the Company released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not
constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events of the Company
but not its Subsidiaries) described under "Events of Default and Remedies"
will no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date; (ii) in the case of
Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of counsel
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance,
the Company shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) the Company must have delivered to the Trustee an opinion of
counsel to the effect that such Legal Defeasance or Covenant Defeasance will
not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which the
Company or its Subsidiary is a party or by which the Company or its Subsidiary
is bound; (v) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vi) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and (vii) the Company must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER
A Holder may transfer Exchange Notes in accordance with the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer any Exchange Note selected
for redemption. Also, the Company is not required to transfer any Exchange
Note for a period of 15 days before a selection of Exchange Notes to be
redeemed.
The registered Holder of an Exchanged Note will be treated as the owner of
it for all purposes.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Subsidiary Guarantee or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes),
and any existing default or compliance with any provision of the Indenture,
the Subsidiary Guarantee or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed
maturity of any Note or alter the provisions with respect to the redemption of
the Notes (other than provisions relating to the covenants described above
under the caption "--Repurchase at the Option of Holders"), (iii) reduce the
rate of or change the time for payment of interest on any Note, (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Notes (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Note payable in money other than that stated in the Notes, (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium, if any, or interest on the Notes, (vii) waive a redemption payment
with respect to any Note (other than a payment required by one of the
covenants described above under the caption "--Repurchase at the Option of
Holders," (viii) make any changes to the subordination provisions of the
Indenture that adversely affects the rights of any Holder, or (ix) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Guarantor and the Trustee may amend or supplement the
Indenture, the Subsidiary Guarantee or the Notes to cure any ambiguity, defect
or inconsistency in the Indenture, the Notes or any Guarantee, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or a Guarantor's obligations to
Holders of Notes in the case of a merger or consolidation or successor
corporation, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
The Indenture will prohibit any amendment to the subordination provisions
thereof without the prior written consent of the lenders under the New Bank
Credit Facility. The New Bank Credit Facility will contain provisions which
prohibit amendments to the Indenture that would materially affect the lenders
under the New Bank Credit Facility.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
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shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form, without coupons. Except as described below, the Exchange
Notes will be deposited with, or on behalf of, The Depository Trust Company,
New York, New York (the "Depository"), and registered in the name of Cede &
Co., as the Depositary's nominee (such nominee being referred to herein as the
"Global Note Holder") in the form of a global Exchange Note certificate (the
"Global Note") or will remain in the custody of the Trustee pursuant to a FAST
Balance Certificate Agreement between the Depositary and the Trustee.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only by the Depositary to its nominee or by its nominee to such
Depositary or another nominee of the Depositary or by the Depositary or its
nominee to a successor of the Depositary or a nominee of such successor.
Exchange Notes that were issued as described below under "Certificated
Securities," will be issued in registered form (the "Certificated
Securities"). Upon the transfer to a qualified institutional buyer of
Certificated Securities initially issued to a Non-Global Purchaser, such
Certificated Securities will, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Exchange Notes being
transferred.
The Depositary is a limited-purpose trust company which was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchaser), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's
system is also available to other entities such as banks, brokers, dealers and
trust companies (collectively, the "Indirect Participants" or the
"Depositary's Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Persons who are not Participants may beneficially own securities held by or on
behalf of the Depositary only through the Depositary's Participants or the
Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Trustee with portions of the
principal amount of the Global Note and (ii) ownership of the Exchange Notes
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depositary (with respect to the interests
of the Depositary's Participants), the Depositary's Participants and the
Depositary's Indirect Participants. The laws of some states require that
certain Persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Exchange Notes will be limited
to such extent.
So long as the Global Note Holder is the registered owner of any Exchange
Notes, the Global Note Holder will be considered the sole owner or Holder of
such Exchange Notes outstanding under the Indenture. Except as provided below,
owners of Exchange Notes will not be entitled to have Exchange Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Exchange Notes in definitive form, and will not be considered the
owners or holders thereof under the
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Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. As a result,
the ability of a Person having a beneficial interest in Exchange Notes
represented by the Global Note to pledge such interest to Persons or entities
that do not participate in the Depositary's system or to otherwise take
actions in respect of such interest, may be affected by the lack of a physical
certificate evidencing such interest.
Neither the Company, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Exchange Notes by the Depositary, or for
maintaining, supervising or reviewing any records of the Depositary relating
to such Exchange Notes.
Payments in respect of the principal of, premium, if any, and interest on
any Exchange Notes registered in the name of a Global Note Holder on the
applicable record date will be made by the Company through a paying agent to
or at the direction of such Global Note Holder in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the Persons in whose names the Exchange
Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Trustee nor any paying agent has or will
have any responsibility or liability for the payment of such amounts to
beneficial owners of Exchange Notes.
The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants
with such payment, in accounts proportionate to their respective holdings in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and
the Depositary's Indirect Participants to the beneficial owners of Exchange
Notes will be governed by standing instructions and customary practice and
will be the responsibility of the Depositary's Participants or the
Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in
the Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Exchange Notes in the form of Certificated Securities.
Upon any such issuance, the Trustee is required to register such Exchange
Notes in the name of, and cause the same to be delivered to, such Person or
Persons (or the nominee of any thereof). In addition, if (i) the Depositary or
the Company notifies the Trustee in writing that the Depositary is no longer
willing or able to act as a depositary and the Company is unable to locate a
qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that they elect to cause the issuance of
Exchange Notes in the form of Certificated Securities under the Indenture,
then, upon surrender by the relevant Global Note Holder of its Global Note,
Exchange Notes in such form will be issued to each Person that such Global
Note Holder and the Depositary identifies as the beneficial owner of the
related Exchange Notes.
Neither the Company nor the Trustee shall be liable for any delay by the
related Global Note Holder or the Depositary in identifying the beneficial
owners or the related Exchange Notes and each such Person may conclusively
rely on, and shall be protected in relying on, instructions from such Global
Note Holder or of the Depositary for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Exchange Notes to be issued).
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Exchange Notes
(including principal, premium, if any, and interest, if any) be made by wire
transfer of immediately available funds to the accounts specified by the
Global Note Holders. Secondary trading in long-term Exchange Notes and
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debentures of corporate issuers is generally settled in clearing-house or
next-day funds. In contrast, the Exchange Notes are expected to be eligible to
trade in the PORTAL Market and to trade in the Depositary's Next-Day Funds
Settlement System, and any permitted secondary market trading activity in the
Exchange Notes will therefore be required by the Depositary to be settled in
immediately available funds. The Company expects that secondary trading in the
Exchange Notes also will be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of the Voting Stock, by agreement or otherwise.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (provided that the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole, or the merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, or the merger of a Wholly Owned
Restricted Subsidiary of the Company with or into another Wholly Owned
Restricted Subsidiary of the Company, will be governed by the provisions of
the Indenture described above under the caption "Repurchase at the Option of
Holders--Change of Control" and/or the provisions described above under the
caption "--Merger, Consolidation or Sale of Assets" and not by the provisions
of the Asset Sale covenant), and (ii) the issue or sale by the Company or any
of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries,
in the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions that have a fair market value (as determined in
good faith by the Board of Directors of the Company) in excess of $1.0 million
or for net cash proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets, including the sale, lease, conveyance or
other disposition of any assets, by the Company to a Guarantor or by a
Guarantor to the Company or to another Guarantor, (ii) an issuance of Equity
Interests by a Guarantor to the Company or to another Guarantor, (iii) the
incurrence of Permitted Liens, (iv) a Restricted Payment that is permitted by
the covenant described above under the caption "Certain Covenants--Restricted
Payments" and (v) a disposition of goods held for sale or obsolete equipment
in the ordinary course of business of the Company or a Restricted Subsidiary
will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments, excluding all amounts
required to be paid on account of maintenance, repairs, taxes, insurance and
similar items,
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during the remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been extended or
may, at the option of the lessor, be extended).
"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.
"Bridge Loans" means Indebtedness pursuant to that certain Senior
Subordinated Bridge Loan Agreement, dated as of June 13, 1997, by and among
the Company, the Guarantors, Holdings, West Street Fund I, L.L.C., a Delaware
limited liability company, and Citicorp USA, Inc., a Delaware corporation.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability or obligation that is required to be
accounted for as a capital lease for financial reporting purposes in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the full faith and credit of
the United States government or any agency or instrumentality thereof having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the New Bank Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing
within six months after the date of acquisition or (vi) money market mutual
funds investing at least 95% of their assets in Investments of the types
permitted in clauses (i) through (v) above.
"Change of Control" means the occurrence of any of the following: (i) prior
to the first public offering of Voting Stock of the Company or Holdings, as
the case may be, the Permitted Holders cease to be the "beneficial owners" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of majority voting power of the Voting Stock of Holdings or
Holdings shall cease to own, directly or indirectly, 100% of the issued and
outstanding Voting Stock of the Company, whether as a result of issuance of
securities of the Company or Holdings, as the case may be, any merger,
consolidation, liquidation or dissolution of the Company or Holdings, as the
case may be, any direct or indirect transfer of securities by any Permitted
Holder or otherwise (for purposes of this clause (i) and clause (ii) below,
the Permitted Holders will be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation (the
"parent corporation") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, a majority of the Voting Stock of the parent
corporation); and (ii) following the first public offering of Voting Stock of
the Company or Holdings, as the case may be, any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined in clause
(i) above, except that a person shall be deemed to have "beneficial
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ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting power of
the Voting Stock of the Company or Holdings, as the case may be; provided that
Permitted Holders beneficially own (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of the Company or Holdings, as the case may be, than such
other person and do not have the right or ability, by voting power, contract
or otherwise, to elect or designate for election a majority of the Board of
Directors of the Company or Holdings, as the case may be (for purposes of this
clause (ii), such other person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation if such other
person "beneficially owns" (as defined in this clause (ii)), directly or
indirectly, more than 50% of the voting power of the Voting Stock of such
parent corporation and the Permitted Holders "beneficially own" (as defined in
clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent corporation
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the board of directors of such
parent corporation).
"Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes on income or profits
of such Person and its Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income,
plus (iii) Consolidated Interest Expense of such Person for such period, to
the extent that any such expense was deducted in computing such Consolidated
Net Income, plus (iv) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges
(excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash charges were deducted in computing such
Consolidated Net Income, plus (v) in the case of the Company's Consolidated
Net Income, non-cash compensation charges arising from the grant of stock
options to employees under Holdings' 1996 Stock Option Plan to the extent such
non-cash compensation charges are deducted in determining the Company's
Consolidated Net Income for such period, minus (vi) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Subsidiary of a Person shall be
added to Consolidated Net Income to compute Consolidated EBITDA only to the
extent (and in the same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to such Person by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated EBITDA Ratio" means with respect to any Person for any period,
the ratio of the Consolidated EBITDA of such Person for such period to the
Consolidated Interest Expense of such Person for such period. In the event
that such Person or its Restricted Subsidiary incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues
preferred stock subsequent to the commencement of the period for which the
Consolidated EBITDA Ratio is being calculated but prior to the date on which
the event for which the calculation of the Consolidated EBITDA Ratio is being
made (the "Calculation Date"), then the Consolidated EBITDA Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee
or redemption of
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Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by such Person or its Restricted
Subsidiary (including any Person which became a Restricted Subsidiary during
such period), including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated EBITDA for such reference period shall be
calculated on a pro forma basis giving effect to any adjustments (including
adjustments for cost savings) relating to such transaction that would be
permitted or required pursuant to Regulation S-X to be reflected in any pro
forma financial statements that would be included in a registration statement
on Form S-1 under the Securities Act and without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income, and
(ii) the Consolidated EBITDA attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Consolidated
Interest Expense attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Consolidated Interest Expense will not be
obligations of the referent Person or its Restricted Subsidiary following the
Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiary for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) but
excluding amortization of deferred financing and debt issuance costs on such
Person's balance sheet on the date of the Indenture and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiary that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person or its Restricted
Subsidiary or secured by a Lien on assets of such Person or its Restricted
Subsidiary (whether or not such Guarantee or Lien is called upon) and (iv) the
product of (a) all cash dividend payments, on any series of preferred stock of
such Person or its Restricted Subsidiary, other than dividend payments on
Equity Interests payable solely in Equity Interests (other than Disqualified
Stock) of such Person, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiary
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or
its stockholders, (iii) except as provided in clause (i) above, the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (iv) the cumulative
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effect of a change in accounting principles shall be excluded and (v) the Net
Income (but not loss) of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Contingent Note" means the contingent promissory note, dated June 13, 1997
in the principal amount of $3.0 million, issued to the former stockholders of
Holdings in connection with the Merger, as in effect on the date of the
Indenture.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that a class of Capital Stock shall
not be Disqualified Stock hereunder solely as the result of any maturity or
redemption that is conditioned upon, and subject to, compliance with the
covenant described above under the caption "--Certain Covenants--Restricted
Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and the Guarantor
(other than Indebtedness under the New Bank Credit Facility) in existence on
the date of the Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
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"Guarantor" means (i) Panther Transport, Inc. and (ii) each of the
Subsidiaries of the Company that executes a Subsidiary Guarantee in accordance
with the provisions of the Indenture.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates.
"Junior Subordinated Notes" means Indebtedness evidenced by those certain
11% payment-in-kind junior subordinated notes due December 13, 2007 of
Holdings and guaranteed by the Company pursuant to a junior subordinated
guarantee in an initial aggregate principal amount of $10,000,000.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past
due, in the case of any other Indebtedness.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or
indirect loans (including guarantees of Indebtedness), advances or capital
contributions (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If such
Person or any Subsidiary of such Person sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of such Person such
that, after giving effect to any such sale or disposition, such Subsidiary is
no longer a Subsidiary of the referent Person, the referent Person shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described above under the caption "Certain Covenants--
Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
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"Management Agreement" means the Management Agreement among ISI, Holdings
and the Company, dated as of June 13, 1997, as in effect on the date of the
Indenture.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate proceeds in cash or Cash Equivalents
received by the Company or any of its Restricted Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received upon the sale
or other disposition of any non-cash consideration received in any Asset
Sale), net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and brokerage and
sales commissions) and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts
required to be applied to the repayment of Indebtedness (other than
Indebtedness under the New Bank Credit Facility) secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"New Bank Credit Facility" means, collectively, (i) that certain Credit
Agreement, dated as of June 13, 1997, by and among the Company, HomeCrest
Corporation (subsequently merged into Omega) 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) and (ii) each of the other "Loan Documents" under and as defined
in the Credit Agreement referenced in the preceding clause (i); provided that
in no event will the aggregate principal amount outstanding under the New Bank
Credit Facility (with letters of credit 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,
supplement, refinance or replace any Indebtedness under the New Bank Credit
Facility, at any time exceed $120.0 million.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor its Restricted Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or its Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity; and (iii) as to which the lenders have been notified
in writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
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"Obligations" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.
"Pari Passu Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiary that ranks pari passu in right of payment to the Notes
or any Guarantee thereof.
"Permitted Holders" means BCC, any Person controlled by BCC or under common
control with BCC and any other Person during the period in which such Person
is acting as an underwriter in connection with a public offering of the
Capital Stock of Holdings or the Company.
"Permitted Hedging Obligation" shall mean any Hedging Obligation entered
into in the ordinary course of business and not for speculation or trading
purposes.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Restricted Subsidiary in a Person, if as a
result of such Investment (i) such Person becomes a Restricted Subsidiary or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Restricted Subsidiary; (d) any Restricted Investment
made as a result of the receipt of non-cash consideration from an Asset Sale
that was made pursuant to and in compliance with the covenant described above
under the caption "-- Repurchase at the Option of Holders, Asset Sales and
Sales of Subsidiary Stock;" (e) any acquisition of assets solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (f) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (f) that are at the time outstanding,
not to exceed $2.0 million; (g) any Investment existing on the date of the
Indenture and any extension or renewals thereof, in each case, on terms that
are substantially similar to those in effect on the date hereof with respect
to such Investment; (h) Permitted Hedging Obligations; (i) loans and advances
to customers or vendors in the ordinary course of business; and (j) loans to
officers, directors and employees in the ordinary course of business.
"Permitted Liens" means (i) Liens on assets of the Company or its Subsidiary
securing Senior Debt that was permitted by the terms of the Indenture to be
incurred; (ii) Liens in favor of the Company or a Restricted Subsidiary; (iii)
Liens on property of a Person existing at the time such Person is merged into
or consolidated with the Company or any Subsidiary of the Company; provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property or assets
existing at the time of acquisition thereof by the Company or any Subsidiary
of the Company or such Subsidiary, provided that such Liens were in existence
prior to the contemplation of such acquisition; (v) Liens to secure the
performance of statutory or regulatory obligations, leases, surety or appeal
bonds, performance bonds, carriers' warehouseman's, mechanic's, landlord's,
materialman's or repairman's Liens or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clauses (iv) and (x) of the
second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock" covering only the assets acquired with such
Indebtedness; (vii) Liens existing on the date of the Indenture; (viii) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (ix) Liens incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit
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in the ordinary course of business) and (b) do not in the aggregate materially
detract from the value of the property or materially impair the use thereof in
the operation of business by the Company or such Subsidiary; (x) Liens on
assets of the Guarantor to secure Senior Debt of such Guarantor that was
permitted by the Indenture to be incurred; and (xi) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness of the Company or its Restricted Subsidiary; provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith including premiums
paid, if any, to the holders thereof); (ii) such Permitted Refinancing
Indebtedness has a final maturity date at or later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded, or, in
the case of the New Bank Credit Facility, such Indebtedness is incurred by the
Company or any Subsidiary of the Company, provided that any such Subsidiary
that is not a Guarantor prior to the incurrence of such Indebtedness shall
execute a supplemental indenture and deliver an opinion of counsel in the
manner described above under the caption "Additional Guarantees."
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person
in accordance with and at the contract rate (including, without limitation,
any rate applicable upon default) specified in the agreement or instrument
creating, evidencing or governing such Indebtedness, whether or not, pursuant
to applicable law or otherwise, the claim for such interest is disallowed in
such Insolvency or Liquidation Proceeding.
"Public Equity Offering" means an underwritten public offering of common
stock (other than Disqualified Stock) of Holdings or the Company, pursuant to
an effective registration statement filed with the Commission in accordance
with the Securities Act, other than an offering pursuant to Form S-8 (or any
successor thereto).
"Rabbi Trust" means the irrevocable trust created by that certain Rabbi
Trust Agreement, dated as of June 13, 1997, by and between Holdings and
American National Bank & Trust Company of Chicago, as Trustee.
"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.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
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"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date of the
Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on, or any other payments with respect to, any series of
Indebtedness, the date on which such payment of interest or principal or other
payment (including any sinking fund payment) was scheduled or required to be
paid, and shall not include any acceleration of such payment or any contingent
obligations to repay, redeem or repurchase any such interest or principal
prior to the date originally scheduled for the payment thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company or its
Restricted Subsidiary which is by its terms expressly subordinated in right of
payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Unrestricted Subsidiary" means, with respect to any Person (i) any
Subsidiary of such Person (other than Panther Transport, Inc. in the case of
the Company) that is designated by the Board of Directors of such Person as an
Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt;
(b) is not when designated as an Unrestricted Subsidiary party to any
agreement, contract, arrangement or understanding with the referent Person or
any Restricted Subsidiary of such Person unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
such Person or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of the referent Person; (c) is a
Person with respect to which neither the referent Person nor its Restricted
Subsidiary has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve any specified
levels of operating results; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the referent Person
or its Restricted Subsidiary; and (e) has at least one director on its board
of directors that is not a director or executive officer of the referent
Person or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the referent Person or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors of such Person shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the caption "Certain Covenants--Restricted Payments."
If, at any time, any Unrestricted Subsidiary of the Company would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary of the Company for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Company as of such date (and, if
such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," the Company shall be in default
of such covenant). The Board of Directors any Person may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary of such Person;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of such Person of any outstanding
Indebtedness of such Unrestricted Subsidiary
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and such designation shall only be permitted if (i) such Indebtedness is
permitted under the covenant described under the caption "Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a
pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (ii) no Default or Event of Default would
be in existence following such designation. If, at any time, any Unrestricted
Subsidiary of the Company would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary of the Company for purposes of the Indenture, and such Subsidiary
shall execute a Subsidiary Guarantee and deliver an opinion of counsel, in
accordance with the terms of the Indenture.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is then outstanding and at the time is entitled to vote in the
election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
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THE EXCHANGE OFFER
REGISTRATION RIGHTS
At the Closing, the Company entered into the Registration Rights Agreement
with the Initial Purchasers pursuant to which the Company agreed, at its cost,
(i) within 120 days after the date of the original issue of the Original
Notes, to file the Exchange Offer Registration Statement with the Commission
with respect to the Exchange Offer for the Exchange Notes, (ii) to use its
best efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act within 180 days after the date of original
issuance of the Original Notes, and (iii) unless the Exchange Offer is not
then permitted by a policy of the Commission, to use its best efforts to issue
within 30 business days of the effective date (the "Effective Date") of the
Exchange Offer Registration Statement, Exchange Notes in exchange for
surrender of Original Notes. The Company agreed to keep its Exchange Offer
open for not less than 20 Business Days (or longer if required by applicable
law) after the date on which notice of the Exchange Offer is mailed to the
holders of the Original Notes. The Registration Rights Agreement also provides
an agreement to include in the prospectus for the Exchange Offer certain
information necessary to allow broker-dealers who hold Original Notes (other
than Original Notes acquired directly from the Company) to exchange such
Original Notes pursuant to the Exchange Offer and to satisfy the prospectus
delivery requirements in connection with resales of Exchange Notes received by
such broker-dealers in the Exchange Offer.
This Prospectus covers the offer and sale of the Exchange Notes pursuant to
the Exchange Offer made hereby and the resale of Exchange Notes received in
the Exchange Offer by any Participating Broker-Dealer who held Original Notes
(other than Original Notes acquired directly from the Company or one of its
affiliates).
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Exchange Notes would in
general be freely tradeable after the Exchange Offer without further
registration under the Securities Act. However, any purchaser of Original
Notes who is an "affiliate" of the Company or who intends to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes (i) will
not be able to rely on the interpretation of the staff of the Commission, (ii)
will not be able to tender its Original Notes in the Exchange Offer and (iii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Original Notes
unless such sale or transfer is made pursuant to an exemption from such
requirements.
Each holder of the Original Notes (other than certain specified holders) who
wishes to exchange Original Notes for Exchange Notes in the Exchange Offer
will be required to make certain representations, including that (i) it is not
an affiliate of the Company (ii) any Exchange Notes to be received by it were
acquired in the ordinary course of its business and (iii) it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. If the Holder is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Original Notes that were acquired as a result of market-making activities
or other trading activities, it will be required to acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
In the event that (i) any changes in law or the applicable interpretations
of the staff of the Commission do not permit the Company to effect its
Exchange Offer, (ii) any Holder of Transfer Restricted Securities shall notify
the Company within 20 Business Days following the consummation of the Exchange
Offer that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and this prospectus is not appropriate or available
for such resales by such Holder or (C) such Holder is a broker-dealer and
holds Original
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Notes acquired directly from the Company or one of its affiliates, the Company
will, at its cost, (a) use its best efforts to file, within 30 days after such
filing obligation arises, a Shelf Registration Statement (which may be an
amendment of the Exchange Offer Registration Statement of which this
Prospectus is a part) covering resales of the Original Notes, (b) use its best
efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act within 90 days after such filing obligation arises
and (c) use its best efforts to keep effective the Shelf Registration
Statement for at least two years after its effective date or such shorter
period that will terminate when all securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company will, in the event of the filing of a Shelf
Registration Statement, provide to each holder of the Original Notes eligible
to participate in such Shelf Registration Statement copies of the prospectus
which is a part of the Shelf Registration Statement, notify each such holder
when the Shelf Registration Statement for the Original Notes has become
effective and take certain other actions as are required to permit resales of
the Original Notes. A holder of Original Notes that sells such Original Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations).
In addition, each such holder will be required to deliver information to be
used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Original Notes
included in the Shelf Registration Statement and to benefit from the
provisions regarding liquidated damages set forth in the following paragraph.
If (i) the Company fails to consummate the Exchange Offer within 30 business
days of the effectiveness of the Exchange Offer Registration Statement, or
(ii) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of Transfer Restricted Securities without
being succeeded immediately by a post-effective amendment to such Shelf
Registration Statement that cures such failure and that is itself declared
effective immedately (each such event referred to above a "Registration
Default"), then the Company will pay Liquidated Damages to each Holder of
Transfer Restricted Securities, with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to 0.25% per annum, increasing by 0.25% every 90 days up to a maximum of
1.0% per annum until such Registration Default has been cured. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will
cease.
"Transfer Restricted Securities" means each Original Note, until the
earliest to occur of (a) the date on which such Original Note is exchanged in
the Exchange Offer and entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the
Act, (b) the date on which such Original Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such
Original Note is disposed of by a broker-dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Original Note is distributed to the public pursuant to Rule 144
under the Act.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Exchange Offer
Registration Statement.
Except as set forth herein, after consummation of the Exchange Offer,
holders of Original Notes have no registration or exchange rights under the
Registration Rights Agreement. See""--Consequences of Failure to Exchange,"
and "--Resales of Exchange Notes; Plan of Distribution."
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CONSEQUENCES OF FAILURE TO EXCHANGE
The Original Notes which are not exchanged for Exchange Notes pursuant to an
Exchange Offer and are not included in a resale prospectus will remain
Transfer Restricted Securities. Accordingly, such Original Notes may not be
offered, sold or otherwise transferred prior to the date which is two years
after the later of the date of original issue and the last date that the
Company or any affiliate of the Company was the owner of such securities (or
any predecessor thereto) (the "Resale Restriction Termination Date") only (a)
to the Company (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) for so long as the Original
Notes are eligible for resale pursuant to Rule 144A, to a person the owner
reasonably believes is a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
to an "accredited investor" within the meaning of subparagraph (1), (2), (3)
or (7) of paragraph (a) of Rule 501 under the Securities Act that is
purchasing for his own account or for the account of such an "accredited
investor" in each case in a minimum of Original Notes with a purchase price of
$500,000 or (c) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of its property
or the property of such investor account or accounts be at all times within
its or their control. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or other
transfer of the Original Notes is proposed to be made pursuant to clause (d)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee to the Company and the Trustee, which
shall provide, among other things, that the transferee is an "accredited
investor" within the meaning of subparagraph (1), (2), (3) or (7) of paragraph
(a) of Rule 501 under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation of
the Securities Act. Prior to any offer, sale or other transfer of Original
Notes prior to the Resale Restriction Termination Date pursuant to clauses (d)
or (e) above, the issuer and the Trustee may require the delivery of an
opinion of counsel, certifications and/or other information satisfactory to
each of them.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in the Prospectus and
in the Letter of Transmittal, the form of which is included as Exhibit 99.1 to
the Registration Statement of which this prospectus is a part, the Company
will accept any and all Original Notes validly tendered and not withdrawn
prior to the applicable Expiration Date. The Company will issue $1,000
principal amount of Exchange Notes in exchange for each $1,000 principal
amount of Original Notes accepted in the Exchange Offer. Holders may tender
some or all of their Original Notes pursuant to the Exchange Offer. However,
Original Notes may be tendered only in integral multiples of $1,000 principal
amount.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes, except that (i) the Exchange Notes have been registered
under the Securities Act and therefore will not bear legends restricting their
transfer pursuant to the Securities Act, and (ii) the holders of Exchange
Notes will not be entitled to rights under the Registration Rights Agreement
(except under certain limited circumstances). The Exchange Notes will evidence
the same debt as the Original Notes (which they replace), and will be issued
under, and be entitled to the benefits of, the Indenture.
Solely for reasons of administration (and for no other purpose) the Company
has fixed the close of business on , 1997 as the record date for the
Exchange Offer for purpose of determining the persons to whom this Prospectus
and the Letter of Transmittal will be mailed initially. Only a registered
holder of Original Notes (or such holder's legal representative or attorney-
in-fact) as reflected on the records of the trustee under the governing
indenture may participate in the Exchange Offer. There will be no fixed record
date for determining registered holders of the Original Notes entitled to
participate in the relevant Exchange Offer.
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Holders of the Original Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of Delaware or under the Indenture in
connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Original Notes
when, as and if it has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders of the
Original Notes for the purposes of receiving the Exchange Notes.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Original Notes will be
returned without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Original Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of the
Original Notes pursuant to the Exchange Offer. The Company will pay all
charges and expenses, other than certain applicable taxes, in connection with
their Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSION; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on ,
1997, unless the Company extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date and time to which such Exchange
Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, prior to 9:00 a.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Original Notes, (ii) extend the Exchange Offer, (iii) if the
condition set forth below under "--Conditions of the Exchange" shall not have
been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (iv)
to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by a public announcement thereof. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
it will promptly disclose such amendment by means of a prospectus supplement
that will be distributed to the registered holders of the Original Notes and
the Exchange Offer will be extended for a period of five to ten business days,
as required by law, depending upon the significance of the amendment and the
manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such five to ten business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of its Exchange
Offer, the Company shall not have an obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release thereof to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, have the signatures thereon
guaranteed if required by such Letter of Transmittal, and mail or otherwise
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deliver such Letter of Transmittal to the Exchange Agent at the address set
forth below under "--Exchange Agent" for receipt prior to the applicable
Expiration Date. In addition, either (i) certificates for such Original Notes
must be received by the Exchange Agent along with the Letter of Transmittal,
or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Original Notes into the Exchange Agent's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the applicable Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below. To be
tendered effectively, the Letter of Transmittal and all other required
documents must be received by the Exchange Agent at the address set forth
below under "--Exchange Agent" prior to the applicable Expiration Date.
The tender by a holder will constitute an agreement between such holder and
the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal applicable to such Exchange
Offer.
THE METHOD OF DELIVERY OF THE ORIGINAL NOTES AND THE APPLICABLE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE APPLICABLE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR
ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering
such owner's Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such beneficial owner's name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Original Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Delivery
Instructions" on the Letter of Transmittal designated for such Original Notes,
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a participant
in a recognized signature guarantee medallion program within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If a Letter of Transmittal is signed by a person other than the registered
holder of any Original Notes listed therein, such Original Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Original
Notes, with signature guaranteed by an Eligible Institution.
If a Letter of Transmittal or any Original Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to the
Company, as applicable, of their authority to so act must be submitted with
the Letter of Transmittal designated for such Original Notes.
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All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Original Notes not properly tendered or any Original Notes the issuer's
acceptance of which would, in the opinion of counsel for such issuer, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Original Notes. The
interpretation of the terms and conditions of the Exchange Offer (including
the instructions in the Letter of Transmittal) by the Company will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as
the Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Original Notes issued by
it, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Original Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Original Notes received by the Exchange Agent that
are not validly tendered and as to which the defects or irregularities have
not been cured or waived, or if Original Notes are submitted in a principal
amount greater than the principal amount of Original Notes being tendered by
such tendering holder, such unaccepted or non-exchanged Original Notes will be
returned by the Exchange Agent to the tendering holders (or, in the case of
Original Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below, such unaccepted or non-exchanged Original
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility), unless otherwise provided in the Letter of Transmittal designated
for such Original Notes, as soon as practicable following the applicable
Expiration Date.
By tendering Original Notes in the Exchange Offer, each registered holder
will represent to the issuer of such Original Notes that, among other things,
(i) the Exchange Notes to be acquired by the holder and any beneficial
owner(s) of such Original Notes ("Beneficial Owner(s)") in connection with the
Exchange Offer are being acquired by the holder and any Beneficial Owner(s) in
the ordinary course of business of the holder and any Beneficial Owner(s),
(ii) the holder and each Beneficial Owner are not participating, do not intend
to participate, and have no arrangement or understanding with any person to
participate, in a distribution of the Exchange Notes, (iii) the holder and
each Beneficial Owner acknowledge and agree that (x) any person participating
in an Exchange Offer for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction with respect
to the Exchange Notes acquired by such person and cannot rely on the position
of the Staff of the Commission set forth in no-action letters that are
discussed herein under "--Resales of the Exchange Notes," and (y) any
Participating Broker-Dealer that receives Exchange Notes for its own account
in exchange for Original Notes pursuant to an Exchange Offer must deliver a
prospectus in connection with any resale of such Exchange Notes, but by so
acknowledging, the holder shall not be deemed to admit that, by delivering a
prospectus, it is an "underwriter" within the meaning of the Securities Act,
(iv) neither the holder nor any Beneficial Owner is an "affiliate," as defined
under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing, and (v) the holder and each Beneficial
Owner understands that a secondary resale transaction described in clause
(iii) above should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K of the Commission.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Notes at the Book-Entry Transfer Facility, for purposes of the
Exchange Offers, within two business days after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Original Notes by causing
the Book-Entry Transfer Facility to transfer such Original Notes into the
Exchange Agent's account at the
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Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Original
Notes may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the applicable Letter of Transmittal, with any required signature
guarantees and any other documents, must be transmitted to and received by the
Exchange Agent at the address set forth below under "--Exchange Agent" on or
prior to the applicable Expiration Date or the guaranteed delivery procedures
described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original Notes
are not immediately available, or (ii) who cannot deliver their Original
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the applicable Expiration Date, may effect a tender
if:
(1) The tender is made through an Eligible Institution;
(2) Prior to the applicable Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by mail, hand delivery or facsimile
transmission) setting forth the name and address of the holder, the
certificate number(s) of such Original Notes and the principal amount of
the Original Notes being tendered, stating that the tender is being made
thereby and guaranteeing that, within five business days after the
applicable Expiration Date, the applicable Letter of Transmittal together
with the certificate(s) representing the Original Notes (or a Book-Entry
Confirmation) and any other documents required by the applicable Letter of
Transmittal will be delivered by the Eligible Institution to the Exchange
Agent; and
(3) Such properly completed and executed Letter of Transmittal, as well
as the certificate(s) representing all tendered Original Notes in proper
form for transfer (or a Book-Entry Confirmation) and all other documents
required by the Letter of Transmittal are received by the Exchange Agent
within five business days after the applicable Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes pursuant to
an Exchange Offer may be withdrawn, unless theretofore accepted for exchange
as provided in the applicable Exchange Offer, at any time prior to the
Expiration Date of that Exchange Offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the Exchange Agent at its address set forth herein prior
to the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Original Notes to be withdrawn (the
"Depositor"), (ii) identify the Original Notes to be withdrawn (including the
certificate number or numbers and aggregate principal amount of such Original
Notes), and (iii) be signed by the holder in the same manner as the original
signature on the applicable Letter of Transmittal (including any required
signature guarantees). All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company
in its sole respective discretion, which determination shall be final and
binding on all parties. Any Original Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Original Notes so
withdrawn are retendered. Properly withdrawn Original Notes may be retendered
by following one of the procedures described above under""--Procedures for
Tendering" at any time prior to the applicable Expiration Date.
Any Original Notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the
prior termination of the applicable Exchange Offer, or which have been validly
withdrawn, will be returned to the holder thereof (unless otherwise provided
in the Letter of Transmittal), as soon as practicable following the applicable
Expiration Date
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or, if so requested in the notice of withdrawal, promptly after receipt by the
issuer of the Original Notes of notice of withdrawal without cost to such
holder.
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is subject to the condition that the Exchange Offer, or
the making of any exchange by a holder, does not violate applicable law or any
applicable interpretation of the staff of the Commission. If there has been a
change in commission policy such that in the reasonable opinion of Counsel to
the Company there is a substantial question whether the Exchange Offer is
permitted by applicable federal law, the Company has agreed to seek a no-
action letter or other favorable decision from the Commission allowing the
Company to consummate the Exchange Offer.
If the Company determines, in its reasonable discretion, that the Exchange
Offer is not permitted by applicable Federal law, it may terminate the
Exchange Offer. In connection therewith the Company may (i) refuse to accept
any Original Notes and return any Original Notes that have been tendered by
the holders thereof, (ii) extend the Exchange Offer and retain all Original
Notes tendered prior to the Expiration of the Exchange Offer, subject to the
rights of such holders of tendered Original Notes to withdraw their tendered
Original Notes, or (iii) waive such termination event with respect to the
Exchange Offer and accept all properly tendered Original Notes that have not
been withdrawn. If such waiver constitutes a material change in the Exchange
Offer, the Company will disclose such change by means of a supplement to this
Prospectus that will be distributed to each registered holder of Original
Notes, and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the
manner of disclosure to the registered holders of the Original Notes, if the
Exchange Offer would otherwise expire during such period.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as "Exchange Agent" for the
Exchange Offer. Questions and request for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and other documents
should be directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail or Hand or Overnight Delivery:
The Chase Manhattan Bank
55 Water Street
Room 234, North Building
New York, New York 10041
Attention: Carlos Esteves
Confirm By Telephone:
Carlos Esteves: (212) 638-0828
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
Carlos Esteves: (212) 638-7375 or (212) 344-9367
Delivery to other than the above addresses or facsimile numbers will not
constitute a valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
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No dealer-manager has been retained in connection with the Exchange Offer
and no payments will be made to brokers, dealers or others soliciting
acceptance of the Exchange Offer. However, reasonable and customary fees will
be paid to the Exchange Agent for its service and it will be reimbursed for
its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
[$ .] Such expenses include fees and expenses of the Exchange Agent and the
Trustee under the Indenture, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Original Notes pursuant to the Exchange Offer. If, however, a transfer
tax is imposed for any reason other than the exchange of the Original Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
ACCOUNTING TREATMENT
The carrying values of the Original Notes are not expected to be materially
different from the fair value of the Exchange Notes at the time of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the Exchange Notes.
RESALES OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by any holder thereof (other than (i) a
broker-dealer who purchased such Original Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that the holder is acquiring the Exchange Notes in its ordinary course of
business and is not participating, and has no arrangement or understanding
with any person to participate, in the distribution of the Exchange Notes.
Holders of Original Notes wishing to accept the Exchange Offer must represent
to the Company that such conditions have been met. In the event that the
Company's belief is inaccurate, holders of Exchange Notes who transfer
Exchange Notes in violation of the prospectus delivery provisions of the
Securities Act and without an exemption from registration thereunder may incur
liability under the Securities Act. The Company does not assume or indemnify
holders against such liability.
Each affiliate of the Company must acknowledge that such person will comply
with the registration and prospectus delivery requirements of the Securities
Act to the extent applicable. Each Participating Broker-Dealer that receives
Exchange Notes in exchange for Original Notes held for its own account, as a
result of market-making or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Notes. Although a Participating Broker-Dealer may be an "underwriter" within
the meaning of the Securities Act, the Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Original Notes.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
associated with the receipt, ownership, and disposition of the Exchange Notes
by holders who exchange original Notes for Exchange Notes. The following
summary does not discuss all of the aspects of federal income taxation that
may be relevant to a prospective holder of the Exchange Notes in light of his
or her particular circumstances, or to certain types of holders (including
dealers in securities, insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, S corporations, and except as
discussed below, foreign corporations, persons who are not citizens or
residents of the United States and persons who hold the Notes as part of a
hedge, straddle, "synthetic security" or other integrated investment) which
are subject to special treatment under the federal income tax laws. This
discussion also does not address the tax consequences to nonresident aliens or
foreign corporations that are subject to United States federal income tax on a
net basis on income with respect to an Exchange Note because such income is
effectively connected with the conduct of a U.S. trade or business. Such
holders generally are taxed in a similar manner to U.S. Holders (as defined
below); however, certain special rules apply. In addition, this discussion is
limited to holders who hold the Exchange Notes as capital assets within the
meaning of Section 1221 of the Code. This summary also does not describe any
tax consequences under state, local, or foreign tax laws.
The discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings
and pronouncements and judicial decisions all in effect as of the date hereof,
all of which are subject to change at any time by legislative, judicial or
administrative action. Any such changes may be applied retroactively in a
manner that could adversely affect a holder of the Exchange Notes. The Company
has not sought and will not seek any rulings or opinions from the IRS or
counsel with respect to the matters discussed below. There can be no assurance
that the IRS will not take positions concerning the tax consequences of the
purchase, ownership or disposition of the Exchange Notes which are different
from those discussed herein.
PROSPECTIVE HOLDERS OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES THAT MAY APPLY TO
THEM, AS WELL AS THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
A U.S. Holder is any holder who or which is (i) a citizen or resident of the
United States; (ii) a domestic corporation or domestic partnership; (iii) an
estate other than a "foreign estate" as defined in Section 7701(a)(31) of the
Code; or (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of the trust.
Exchange of Original Notes for Exchange Notes. The exchange by a U.S. Holder
of an Original Note for an Exchange Note pursuant to the Exchange Offer will
not constitute a taxable exchange of the Original Note if the economic terms
of the Exchange Note (including the interest rate) are identical to the
economic terms of the Original Note. Under the Section 1001 Regulations
relating to modifications and exchanges of debt instruments, with certain
exceptions, an alteration of a legal right or obligation that occurs by
operation of the terms of a debt instrument is not a modification of the debt
instrument and thus does not result in a taxable exchange. Therefore, even if
Liquidated Damages were payable with respect to the Original Notes but not
with respect to the Exchange Notes, the exchange of an Original Note for an
Exchange Note would not be treated as a taxable exchange. Accordingly, the
Company intends to take the position that in the circumstances described in
the preceding sentence, the exchange will not constitute a taxable exchange of
the Original Notes. As a
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result, there should be no U.S. Federal income tax consequences to Holders
exchanging the Original Notes for the Exchange Notes.
TAXATION OF STATED INTEREST. In general, U.S. Holders of the Notes will be
required to include interest received thereon in taxable income as ordinary
income at the time it accrues or is received, in accordance with the holder's
regular method of accounting for federal income tax purposes.
SALE OR OTHER TAXABLE DISPOSITION OF THE NOTES. The sale, exchange,
redemption, retirement or other taxable disposition of a Note will result in
the recognition of gain or loss to a U.S. Holder in an amount equal to the
difference between (a) the amount of cash and fair market value of property
received in exchange therefor (except to the extent attributable to the
payment of accrued but unpaid stated interest) and (b) the holder's adjusted
tax basis in such Note.
A holder's initial tax basis in a Note purchased by such holder will be
equal to the price paid for the Note.
Any gain or loss on the sale or other taxable disposition of a Note
generally will be capital gain or loss and will be long-term capital gain or
loss if the Note had been held for more than one year (the maximum rate of tax
on any such long-term capital gain being further reduced if the Note were held
for more than eighteen months). If the Note has been held for one year or
less, the gain or loss will be short-term capital gain or loss. Payments on
such disposition for accrued interest not previously included in income will
be treated as ordinary interest income.
BACKUP WITHHOLDING. The backup withholding rules require a payor to deduct
and withhold a tax if (i) the payee fails to furnish a taxpayer identification
number ("TIN") in the prescribed manner, (ii) the IRS notifies the payor that
the TIN furnished by the payee is incorrect, (iii) the payee has failed to
report properly the receipt of "reportable payments" and the IRS has notified
the payor that withholding is required, or (iv) the payee fails to certify
under the penalty of perjury that such payee is not subject to backup
withholding. If any one of the events discussed above occurs with respect to a
holder of Notes, the Company, its paying agent or other withholding agent will
be required to withhold a tax equal to 31% of any "reportable payment" made in
connection with the Notes of such holder. A "reportable payment" includes,
among other things, amounts paid in respect of interest or original issue
discount on a Note. Any amounts withheld from a payment to a holder under the
backup withholding rules will be allowed as a refund or credit against such
holder's federal income tax, provided that the required information is
furnished to the IRS. Certain holders (including, among others, corporations
and certain tax-exempt organizations) are not subject to backup withholding.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS
This section discusses special rules applicable to a Non-U.S. Holder of
Notes. This summary does not address the tax consequences to stockholders,
partners or beneficiaries in a Non-U.S. Holder. For purposes hereof, a "Non-
U.S. Holder" is any person who is not a U.S. Holder and is not subject to U.S.
federal income tax on a net basis on income with respect to a Note because
such income is effectively connected with the conduct of a U.S. trade or
business.
INTEREST. Payments of interest to a Non-U.S. Holder that do not qualify for
the portfolio interest exception discussed below will be subject to
withholding of U.S. federal income tax at a rate of 30% unless a U.S. income
tax treaty applies to reduce the rate of withholding. To claim a treaty
reduced rate, the Non-U.S. Holder must provide a properly executed Form 1001.
Interest that is paid to a Non-U.S. Holder on a Note will not be subject to
U.S. income or withholding tax if the interest qualified as "portfolio
interest." Generally, interest on the Notes that is paid by the Company will
qualify as portfolio interest if (i) the Non-U.S. Holder does not own,
actually
88
<PAGE>
or constructively, 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote; (ii) the Non-U.S. Holder is
not a controlled foreign corporation that is related to the Company actually
or constructively through stock ownership for U.S. federal income tax
purposes; (iii) the Non-U.S. Holder is not a bank receiving interest on a loan
entered into in the ordinary course of business; and (iv) either (x) the
beneficial owner of the Note provides the Company or its paying agent, a
properly executed certification on IRS Form W-8 (or a suitable substitute
form) signed under penalties of perjury that the beneficial owner is not a
"U.S. person" for U.S. federal income tax purposes and that provides the
beneficial owner's name and address, or (y) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its business holds the Note and certifies
to the Company or its agent under penalties of perjury that the IRS Form W-8
(or a suitable substitute) has been received by it from the beneficial owner
of the Note or a qualifying intermediary and furnishes the payor a copy
thereof.
SALE, EXCHANGE OR RETIREMENT OF NOTES. Any gain realized by a Non-U.S.
Holder on the sale, exchange or retirement of the Notes, will generally not be
subject to U.S. federal income tax or withholding unless (i) the Non-U.S.
Holder is an individual who was present in the U.S. for 183 days or more in
the taxable year of the disposition and meets certain other requirements; or
(ii) the Non-U.S. Holder is subject to tax pursuant to certain provisions of
the Code applicable to certain individuals who renounce their U.S. citizenship
or terminate long-term U.S. residency. If a Non-U.S. Holder falls under (ii)
above, the holder will be taxed on the net gain derived from the sale under
the graduated U.S. federal income tax rates that are applicable to U.S.
citizens and resident aliens, and may be subject to withholding under certain
circumstances. If a Non-U.S. Holder falls under (i) above, the holder
generally will be subject to U.S. federal income tax at a rate of 30% on the
gain derived from the sale (or reduced treaty rate) and may be subject to
withholding in certain circumstances.
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. Back-up withholding
and information reporting generally will not apply to a Note issued in
registered form that is beneficially owned by a Non-U.S. Holder if the
certification of Non-U.S. Holder status is provided to the Company or its
agent as described above in "Certain Federal Income Tax Consequences to Non-
U.S. Holders -- Interest", provided that the payor does not have actual
knowledge that the holder is a U.S. person. The Company may be required to
report annually to the IRS and to each Non-U.S. Holder the amount of interest
paid to, and the tax withheld, if any, with respect to each Non-U.S. Holder.
If payments of principal and interest are made to the beneficial owner of a
Note by or through the foreign office of a custodian, nominee or other agent
of such beneficial owner, or if the proceeds of the sale of Notes are paid to
the beneficial owner of a Note through a foreign office of a "broker" (as
defined in the pertinent Regulations), the proceeds will not be subject to
backup withholding (absent actual knowledge that the payee is a U.S. person).
Information reporting (but not backup withholding) will apply, however, to a
payment by a foreign office of a custodian, nominee, agent or broker that is
(i) a U.S. person, (ii) a controlled foreign corporation for U.S. federal
income tax purposes, or (iii) derives 50% or more of its gross income from the
conduct of a U.S. trade or business for a specified three-year period; unless
the broker has in its records documentary evidence that the holder is a Non-
U.S. Holder and certain conditions are met (including that the broker has no
actual knowledge that the holder is a U.S. Holder) or the holder otherwise
establishes an exemption. Payment through the U.S. office of a custodian,
nominee, agent or broker is subject to both backup withholding at a rate of
31% and information reporting, unless the holder certifies that it is a Non-
U.S. Holder under penalties of perjury or otherwise establishes an exemption.
Any amount withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a credit against, or refund of, such
holder's U.S. federal income tax liability, provided that certain information
is provided by the holder to the IRS.
89
<PAGE>
The IRS released proposed Treasury regulations on April 22, 1996 which would
make substantial revisions to the procedures for withholding tax on interest,
and the associated backup withholding and information reporting rules
described above. In particular, the proposed regulations would change the
procedures by which Non-U.S. Holders may obtain an exemption from withholding
and backup withholding with respect to interest. The proposed regulations are
generally to be effective for payments of income made after December 31, 1997,
although the effective date could be extended under proposed transition rules
in particular circumstances. Non-U.S. Holders should consult their tax
advisors to determine whether and how the proposed regulation will affect
their particular circumstances.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by
Participating Broker-Dealers for their own account pursuant to the Exchange
Offers may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the Exchange Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
the purchaser or to or through brokers or dealers who may receive compensation
in the form of commissions or concessions from any such Participating Broker-
Dealer and/or the purchasers of any such Exchange Notes. Any Participating
Broker-Dealer that resells the Exchange Notes that were received by it for its
own account pursuant to the Exchange Offers and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the Exchange Notes offered hereby
will be passed upon for the Company by Ropes & Gray, One International Place,
Boston, Massachusetts 02110. Certain legal matters in connection with the
Exchange Notes offered hereby will be passed upon for the Subsidiary Guarantor
by Nyemaster, Goode, Voigts, West, Hansel & O'Brien P.C., 700 Walnut Street,
Suite 1600, Des Moines, Iowa 50309.
EXPERTS
The consolidated financial statements of Omega Cabinets, Ltd. as of December
28, 1996 and December 30, 1995 and for each of the years then ended and for
the period from June 17, 1994 through December 31, 1994, and the financial
statements of the Predecessor for the period from January 1, 1994 through June
16, 1994, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The statements of income and cash flows of Home-Crest Corporation for the
year ended December 31, 1994 and for the period from January 1, 1995 through
May 25, 1995, included in this Prospectus have been audited by Crowe, Chizek
and Company LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
90
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements of Omega Cabinets, Ltd. and Predecessor
Report of Independent Auditors.......................................... F-2
Consolidated Balance Sheets as of December 30, 1995, December 28, 1996
and June 28, 1997 (unaudited).......................................... F-3
Consolidated Statements of Income for the period from January 1, 1994
through
June 16, 1994 (Predecessor), period from June 17, 1994 through December
31, 1994
and years ended December 30, 1995 and December 28, 1996 and for the six
months ended June 29, 1996 and June 28, 1997 (unaudited) .............. F-4
Consolidated Statements of Stockholder's Equity (Deficit) for the period
from January 1, 1994 through June 16, 1994 (Predecessor), period from
June 17, 1994 through
December 31, 1994 and years ended December 30, 1995 and December 28,
1996 and for the six months ended June 28, 1997 (unaudited) ........... F-5
Consolidated Statements of Cash Flows for the period from January 1,
1994 through
June 16, 1994 (Predecessor), period from June 17, 1994 through December
31, 1994
and years ended December 30, 1995 and December 28, 1996 and for the six
months ended June 29, 1996 and June 28, 1997 (unaudited) .............. F-6
Notes to Consolidated Financial Statements.............................. F-7
Financial Statements of Home-Crest Corporation
Report of Independent Auditors.......................................... F-16
Statements of Income for the year ended December 31, 1994 and period
from
January 1, 1995 through May 25, 1995................................... F-17
Statements of Cash Flows for the year ended December 31, 1994 and period
from
January 1, 1995 through May 25, 1995................................... F-18
Notes to Financial Statements........................................... F-19
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Omega Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Omega
Cabinets, Ltd. (a wholly-owned subsidiary of Omega Holdings, Inc.) as of
December 28, 1996 and December 30, 1995, and the related consolidated
statements of income, stockholder's equity (deficit), and cash flows for the
years then ended and for the period from June 17, 1994 through December 31,
1994, and the statements of income, stockholder's equity, and cash flows of
the Predecessor for the period from January 1, 1994 through June 16, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Omega
Cabinets, Ltd. at December 28, 1996 and December 30, 1995, and the
consolidated results of its operations and its cash flows for the years then
ended and for the period from June 17, 1994 through December 31, 1994 and of
the Predecessor for the period from January 1, 1994 through June 16, 1994, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Des Moines, Iowa
February 28, 1997,
except for Note 9,
as to which the date
is June 13, 1997
F-2
<PAGE>
OMEGA CABINETS, LTD.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28, JUNE 28,
1995 1996 1997
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (Note 4)
Current assets:
Cash.............................. $ 5,247 $ 3,797 $ 3,797
Accounts receivable, less allow-
ance for doubtful
accounts of $1,534,000 in 1995,
$1,628,000
in 1996 and $1,728,000 in 1997... 8,555,847 10,766,086 15,327,799
Inventories (Note 3).............. 8,487,059 9,295,879 10,930,360
Prepaid expenses and other........ 233,305 332,027 2,408,999
Deferred income taxes (Note 6).... 625,000 1,005,000 1,235,000
------------ ------------ ------------
Total current assets................ 17,906,458 21,402,789 29,905,955
Property, plant, and equipment, at
cost:
Land and improvements............. 857,560 931,330 931,330
Buildings......................... 14,171,820 14,269,945 14,289,236
Machinery and equipment........... 10,853,305 13,297,860 13,910,716
Construction in progress.......... 2,285,995 1,053,331 1,737,990
------------ ------------ ------------
28,168,680 29,552,466 30,869,272
Less accumulated depreciation..... (1,479,958) (3,283,729) (4,272,426)
------------ ------------ ------------
26,688,722 26,268,737 26,596,846
Deferred financing costs, less
accumulated
amortization of $574,279 in 1995,
$1,132,077
in 1996 and $10,078 in 1997........ 2,201,674 1,812,041 2,677,502
Goodwill, less accumulated
amortization of
$1,681,906 in 1995, $3,013,847 in
1996
and $3,696,486 in 1997............. 51,196,742 51,455,741 53,223,042
Deferred income taxes (Note 6)...... 3,500,000 1,790,000 1,265,000
Other assets........................ 712,152 847,438 749,204
------------ ------------ ------------
Total assets........................ $102,205,748 $103,576,746 $114,417,549
============ ============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT)
Current liabilities:
Accounts payable.................. $ 4,091,989 $ 4,917,090 $ 5,901,826
Accrued interest.................. 929,429 564,127 680,732
Other accrued expenses............ 4,855,898 7,771,431 6,240,229
Current portion of long-term debt
(Note 4)......................... 10,000,000 9,000,000 2,500,000
------------ ------------ ------------
Total current liabilities........... 19,877,316 22,252,648 15,322,787
Noncurrent accrued interest (Note
4)................................. 4,092,533 5,780,414 --
Long-term debt, excluding current
portion (Notes 4 and 9):
Related parties................... 29,439,167 27,426,145 10,000,000
Other............................. 53,100,000 45,210,000 134,170,000
------------ ------------ ------------
82,539,167 72,636,145 144,170,000
Other liabilities................... 50,936 60,203 70,003
Deferred compensation (Note 8)...... -- 57,268 2,173,000
Commitments (Note 5)
Stockholder's equity (deficit)
(Notes 4, 8 and 9):
Common stock, $.01 par value;
10,000 shares
authorized; 1,000 shares issued
and outstanding.................. 10 10 10
Additional paid-in capital........ 2,649,915 2,638,163 62,248,425
Predecessor basis adjustment (Note
2)............................... (11,031,662) (11,031,662) (11,031,662)
Retained earnings (deficit)....... 4,027,533 11,183,557 (98,535,014)
------------ ------------ ------------
Total stockholder's equity (defi-
cit)............................... (4,354,204) 2,790,068 (47,318,241)
------------ ------------ ------------
Total liabilities and stockholder's
equity (deficit)................... $102,205,748 $103,576,746 $114,417,549
============ ============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
--------------- ------------------------------------------------------------------
PERIOD FROM PERIOD FROM YEAR ENDED SIX MONTHS ENDED
JANUARY 1, 1994 JUNE 17, 1994 ------------------------ -----------------------
THROUGH THROUGH DECEMBER 30 DECEMBER 28 JUNE 29 JUNE 28
JUNE 16, 1994 DECEMBER 31, 1994 1995 1996 1996 1997
--------------- ----------------- ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $24,916,530 $33,892,913 $97,958,492 $136,225,643 $65,607,013 $76,539,863
Cost of goods sold...... 17,563,224 22,485,237 72,690,674 97,287,215 47,582,982 55,469,851
----------- ----------- ----------- ------------ ----------- -----------
Gross profit............ 7,353,306 11,407,676 25,267,818 38,938,428 18,024,031 21,070,012
Selling, general and ad-
ministrative expenses
(Notes 7 and 8)........ 5,235,033 3,707,537 10,964,260 15,309,281 7,597,279 12,978,986
Amortization of
goodwill............... -- 518,918 1,162,988 1,331,941 661,921 682,639
----------- ----------- ----------- ------------ ----------- -----------
Operating income........ 2,118,273 7,181,221 13,140,570 22,297,206 9,764,831 7,408,387
Interest expense........ 22,321 4,123,344 9,700,914 10,441,182 5,247,818 6,604,809
----------- ----------- ----------- ------------ ----------- -----------
Income before income
taxes and extraordinary
item................... 2,095,952 3,057,877 3,439,656 11,856,024 4,517,013 803,578
Income tax expense (Note
6)..................... -- 1,110,000 1,360,000 4,700,000 1,763,000 530,000
----------- ----------- ----------- ------------ ----------- -----------
Income before
extraordinary item..... 2,095,952 1,947,877 2,079,656 7,156,024 2,754,013 273,578
Extraordinary loss on
debt refinancing, net
of income tax benefit
of $607,000 (Note 9)... -- -- -- -- -- (947,443)
----------- ----------- ----------- ------------ ----------- -----------
Net income (loss)....... $ 2,095,952 $ 1,947,877 $ 2,079,656 $ 7,156,024 $ 2,754,013 $ (673,865)
=========== =========== =========== ============ =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
PREDECESSOR
ADDITIONAL BASIS RETAINED
COMMON PAID-IN ADJUSTMENT EARNINGS
STOCK CAPITAL (NOTE 2) (DEFICIT) TOTAL
------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PREDECESSOR
Balance at January 1,
1994................... $15,000 $ -- $ -- $ 13,893,532 $ 13,908,532
Net income for period
ended June 16, 1994... -- -- -- 2,095,952 2,095,952
Distributions to
stockholders.......... -- -- -- (1,814,216) (1,814,216)
------- ----------- ------------ ------------ ------------
Balance at June 16,
1994................... $15,000 $ -- $ -- $ 14,175,268 $ 14,190,268
======= =========== ============ ============ ============
THE COMPANY
Initial capitalization
of Company............. $ 10 $ 1,874,990 $ -- $ -- $ 1,875,000
Adjustment for cost in
excess of predecessor
basis attributable to
continuing ownership
interest (Note 2)...... -- -- (11,031,662) -- (11,031,662)
------- ----------- ------------ ------------ ------------
Balance at inception,
June 17, 1994.......... 10 1,874,990 (11,031,662) -- (9,156,662)
Issuance of common
stock at parent-level
credited to the
Company............... -- 125,000 -- -- 125,000
Net income for period
ended December 31,
1994................... -- -- -- 1,947,877 1,947,877
------- ----------- ------------ ------------ ------------
Balance at December 31,
1994................... 10 1,999,990 (11,031,662) 1,947,877 (7,083,785)
Issuance of common
stock at parent-level
credited to the
Company............... -- 756,862 -- -- 756,862
Redemption of common
stock at parent-level
charged to the
Company............... -- (106,937) -- -- (106,937)
Net income for 1995.... -- -- -- 2,079,656 2,079,656
------- ----------- ------------ ------------ ------------
Balance at December 30,
1995................... 10 2,649,915 (11,031,662) 4,027,533 (4,354,204)
Common stock issued for
stock options
exercised at parent-
level credited to the
Company............... -- 3,879 -- -- 3,879
Redemption of common
stock at parent-level
charged to the
Company............... -- (15,631) -- -- (15,631)
Net income for 1996.... -- -- -- 7,156,024 7,156,024
------- ----------- ------------ ------------ ------------
Balance at December 28,
1996................... 10 2,638,163 (11,031,662) 11,183,557 2,790,068
Capital contribution by
parent (Note 9)....... 10 62,248,425 -- -- 62,248,435
Dividend to parent to
redeem common stock at
parent-level (Note 9). (10) (2,638,163) -- (109,044,706) (111,682,879)
Net loss for period
ended June 28, 1997... -- -- -- (673,865) (673,865)
------- ----------- ------------ ------------ ------------
Balance at June 28, 1997
(unaudited)............ $ 10 $62,248,425 $(11,031,662) $(98,535,014) $(47,318,241)
======= =========== ============ ============ ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
--------------- ------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 1, 1994 JUNE 17, 1994 YEAR ENDED SIX MONTHS ENDED
THROUGH THROUGH DECEMBER 30, DECEMBER 28, JUNE 29, JUNE 28,
JUNE 16, 1994 DECEMBER 31, 1994 1995 1996 1996 1997
--------------- ----------------- ------------ ------------ ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....... $ 2,095,952 $ 1,947,877 $ 2,079,656 $ 7,156,024 $ 2,754,013 $ (673,865)
Adjustments to reconcile
net income (loss) to
net cash provided
(used) by operating
activities:
Extraordinary loss..... -- -- -- -- -- 947,443
Depreciation........... 524,697 293,016 1,195,909 1,840,936 866,979 991,226
Amortization........... 13,658 670,753 1,585,432 1,889,739 935,037 943,578
Noncash compensation
expense............... -- -- -- 57,268 -- 4,894,000
Deferred income taxes.. -- 535,000 1,545,000 1,330,000 665,000 295,000
Changes in operating
assets and
liabilities:
Accounts receivable.. (1,263,001) (264,453) 2,737,200 (2,210,239) (3,274,562) (4,561,713)
Inventories.......... (752,631) 17,168 2,040,271 (808,820) (1,099,607) (1,634,481)
Prepaid expenses and
other............... (6,859) 179,779 (24,494) (98,722) (133,715) (19,602)
Other assets......... 68,584 16,470 (534,685) (135,286) 38,023 98,234
Accounts payable..... 1,303,084 382,895 (1,032,173) 825,101 1,042,990 984,736
Accrued interest..... -- 1,940,470 3,081,492 1,322,579 1,626,792 (5,663,809)
Other accrued
expenses............ 1,647,127 367,419 (3,602,518) 2,084,487 3,318,252 (93,156)
Other liabilities.... 4,325 2,102 5,886 9,267 5,264 7,952
----------- ----------- ----------- ------------ ----------- -------------
Net cash provided (used)
by operating
activities............. 3,634,936 6,088,496 9,076,976 13,262,334 6,744,466 (3,484,457)
INVESTING ACTIVITIES
Purchases of property,
plant, and equipment... (1,726,625) (2,565,301) (3,044,655) (1,420,951) (461,171) (1,319,335)
Payment for acquisition
of businesses, net of
cash acquired (Note 2). -- (55,076,328) (29,812,853) -- -- --
Additions to goodwill... -- (956,802) (317,425) (759,894) -- (3,281,046)
----------- ----------- ----------- ------------ ----------- -------------
Net cash used in
investing activities... (1,726,625) (58,598,431) (33,174,933) (2,180,845) (461,171) (4,600,381)
FINANCING ACTIVITIES
Proceeds from long-term
debt................... -- 57,162,574 31,139,167 1,000,000 -- 146,670,000
Payments for deferred
financing costs........ -- (1,689,865) (1,086,088) (168,165) (160,321) (2,677,502)
Payments for deferred
bridge loan fees....... -- -- -- -- -- (2,057,370)
Payments of long-term
debt................... (319,971) (4,562,574) (6,600,000) (11,903,022) (6,113,022) (81,636,145)
Capital contribution by
parent................. -- 1,600,000 756,862 3,879 -- 62,248,435
Payment to parent to
redeem common stock and
options at parent-
level.................. -- -- (106,937) (15,631) (11,752) (114,462,580)
Distributions to
stockholders........... (1,814,216) -- -- -- -- --
----------- ----------- ----------- ------------ ----------- -------------
Net cash provided (used)
by financing
activities............. (2,134,187) 52,510,135 24,103,004 (11,082,939) (6,285,095) 8,084,838
----------- ----------- ----------- ------------ ----------- -------------
Net increase (decrease)
in cash................ (225,876) 200 5,047 (1,450) (1,800) --
Cash at beginning of
period................. 535,759 -- 200 5,247 5,247 3,797
----------- ----------- ----------- ------------ ----------- -------------
Cash at end of period... $ 309,883 $ 200 $ 5,247 $ 3,797 $ 3,447 $ 3,797
=========== =========== =========== ============ =========== =============
SUPPLEMENTAL DISCLOSURES
Interest paid in cash... $ 23,928 $ 2,010,952 $ 6,215,915 $ 8,533,032 $ 3,347,910 $ 12,007,679
Income taxes paid in
cash................... -- $ 437,500 $ 673,466 $ 2,809,445 249,099 2,026,104
Noncash investing and
financing activities
(Note 2):
Securities issued for
acquisition of
business:
Long-term debt....... $15,400,000 $ -- $ -- $ -- $ --
Common stock of
parent.............. $ -- $ 400,000 $ -- $ -- $ -- $ --
Accrued goodwill
addition for
additional purchase
price payment......... $ -- $ 892,000 $ -- $ 831,046 $ -- $ --
</TABLE>
See accompanying notes.
F-6
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 1994 THROUGH JUNE 16, 1994
(PREDECESSOR) AND PERIOD FROM JUNE 17, 1994 THROUGH DECEMBER 31, 1994 AND
YEARS ENDED DECEMBER 30, 1995 AND DECEMBER 28, 1996 AND SIX MONTHS ENDED JUNE
29, 1996 (UNAUDITED) AND JUNE 28, 1997 (UNAUDITED)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Omega Cabinets, Ltd. commenced operations in 1994 upon acquiring the former
Omega Cabinets, Ltd. ("Predecessor"--see Note 2). Omega Cabinets, Ltd.
individually or collectively with the Predecessor is hereafter referred to as
"the Company." The Company manufactures custom, semi-custom and stock
cabinetry for the home, including primarily kitchen and bath cabinets, for
sale to independent dealers, home centers and lumber yards throughout the
United States.
The Company is a wholly-owned subsidiary of Omega Holdings, Inc.
("Holdings"). Holdings has no operations and its sole asset is its investment
in the common stock of the Company. Certain junior subordinated notes issued
by Holdings to its stockholders have been "pushed down" to the Company for
financial reporting purposes. Holdings' acquisition cost of acquiring the
Predecessor and HomeCrest Corporation ("HomeCrest")--see Note 2, including a
predecessor basis adjustment, have been reflected in the accounts of the
Company.
FISCAL YEAR
The Company follows a 52/53 week fiscal year. Both fiscal 1995 and 1996
consisted of 52 weeks.
INTERIM FINANCIAL INFORMATION
The consolidated financial statements as of June 28, 1997 and for the six
months ended June 29, 1996 and June 28, 1997 and related disclosures in these
notes have not been audited. The interim financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended June 28, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 27, 1997.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements for periods since June 17, 1994
include the accounts of the Company and its wholly-owned subsidiaries,
HomeCrest and Panther Transport, Inc. ("Panther"). Significant intercompany
accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-7
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ACCOUNTS RECEIVABLE
Concentrations of credit risk with respect to trade receivables are limited
due to the number of customers and their geographic dispersion. The Company
performs initial and periodic credit evaluations of its customers and
generally does not require collateral.
INVENTORIES
The Company states inventories at the lower of cost or market using the
first-in, first-out (FIFO) method.
The Predecessor stated inventory cost on the last-in, first-out (LIFO)
method. At June 16, 1994, current cost exceeded the LIFO value by
approximately $198,000.
PROPERTY, PLANT AND EQUIPMENT
Depreciation is provided on the straight-line method over the estimated
useful lives of the assets, including 40 years for buildings and 5-10 years
for machinery and equipment.
DEFERRED FINANCING COSTS AND GOODWILL
Deferred financing costs are amortized over the term of the related loans
ranging primarily from 6 to 10 years. Goodwill, representing the excess of
purchase price over the underlying net assets of businesses acquired, is
amortized on the straight-line method over 40 years. The carrying value of
goodwill is reviewed continually to determine whether any impairment has
occurred. This review takes into consideration the recoverability of the
unamortized amounts based on the estimated undiscounted cash flows of the
related business.
INCOME TAXES
The Company files a consolidated income tax return with Holdings. All income
taxes allocated to the Company have been computed on a separate return basis.
The Company follows the liability method of accounting for income taxes,
under which deferred income tax assets and liabilities are determined based on
the difference between financial reporting and income tax bases of assets and
liabilities using the enacted marginal tax rates. Deferred income tax expense
is based on the changes in the asset or liability from period to period.
Temporary differences result primarily from goodwill basis differences,
amortization of goodwill, depreciation, inventory valuation, stock option
expense, and certain reserves and accruals.
See Note 6 regarding Predecessor's accounting for income taxes.
ADVERTISING
The Company expenses advertising costs as incurred. Advertising expense was
approximately $366,000 for the period from January 1, 1994 through June 16,
1994 (Predecessor), $570,000 for the period from June 17, 1994 through
December 31, 1994, $1,297,000 in 1995, $1,677,000 in 1996, and $1,239,000 and
$913,000 in the six months ended June 29, 1996 and June 28, 1997,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments include accounts receivable, accounts payable, and
long-term debt. Management believes the fair value of accounts receivable and
accounts payable approximate their
F-8
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
carrying value in the balance sheet as of each balance sheet date. The fair
value of the long-term debt is estimated based on anticipated interest rates
which management believes would currently be available to the Company for
similar issues of debt, taking into account the current credit risk of the
Company and other market factors. The fair value of the senior bank loans and
junior subordinated notes is estimated to approximate the carrying amount in
the December 28, 1996 balance sheet. The estimated fair value of other long-
term debt at December 28, 1996 is as follows:
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
----------- -----------
<S> <C> <C>
Senior subordinated note......................... $ 5,000,000 $ 5,700,000
Subordinated notes............................... 11,000,000 13,500,000
</TABLE>
The fair value of the Company's long-term debt at December 30, 1995 was
estimated to approximate its carrying amount in the balance sheet.
EMERGING ACCOUNTING ISSUES
The Company is not aware of any accounting standards which have been issued
and which will require the Company to change current accounting policies or
adopt new policies, the effect of which would be material to the consolidated
financial statements.
2. ACQUISITIONS
On May 26, 1995, the Company acquired the operating assets of HomeCrest in a
transaction accounted for as a purchase. The cash purchase price was
$29,000,000, subject to certain defined adjustments which had not yet been
finalized as of December 30, 1995. The aggregate purchase price, including
fees and expenses of $812,853, was allocated based on fair value as follows:
<TABLE>
<S> <C>
Accounts receivable.......................................... $ 6,140,077
Inventories.................................................. 6,551,831
Prepaids and other assets.................................... 184,902
Property, plant, and equipment............................... 11,276,265
Goodwill..................................................... 12,710,201
Accounts payable............................................. (2,826,199)
Accrued expenses............................................. (4,224,224)
-----------
$29,812,853
===========
</TABLE>
The adjusted purchase price for HomeCrest was finalized in 1996 resulting in
additional purchase price of $759,894, which was allocated to goodwill.
The results of operations of HomeCrest from the date of purchase are
included in the accompanying consolidated statements of income. Pro forma
amounts for 1995, assuming that the purchase occurred at the beginning of the
period, are as follows:
<TABLE>
<S> <C>
Net sales.................................................... $123,988,000
Net income................................................... $ 1,470,000
</TABLE>
F-9
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On June 17, 1994, the Company acquired all of the outstanding common stock
of the Predecessor in a transaction accounted for as a purchase. The aggregate
purchase price of $71,137,709, including fees and expenses of $967,709,
consisted of cash of $55,337,709, notes to the sellers of $13,000,000, and
issuance of $400,000 of Holdings common stock and $2,400,000 of junior
subordinated debt. The purchase price was allocated, based on fair values, as
follows:
<TABLE>
<S> <C>
Cash......................................................... $ 261,381
Accounts receivable.......................................... 4,888,517
Inventories.................................................. 3,992,667
Property, plant, and equipment............................... 11,291,426
Goodwill..................................................... 38,894,220
Deferred income taxes........................................ 6,205,000
Other assets................................................. 397,625
Liabilities assumed.......................................... (5,824,789)
Predecessor basis adjustment to equity....................... 11,031,662
-----------
$71,137,709
===========
</TABLE>
Certain additional purchase price amounts, up to a maximum of $7 million,
may be due each year through 1999 based on whether specified levels of
operating income are achieved. Additional amounts, if earned, are recorded as
goodwill when they become due ($892,000, none, and $831,046 earned in 1994,
1995 and 1996, respectively). In June 1997, the Company's obligation to pay
any future contingent amounts was terminated in exchange for a final purchase
price payment of $2,450,000.
The former owners of the Predecessor acquired a 20% continuing ownership
interest in Holdings. Generally accepted accounting principles require
Holdings and the Company to record a reduction to stockholder's equity
representing the cost in excess of the predecessor basis attributable to the
continuing ownership interest. Accordingly, a predecessor basis adjustment of
$11,031,662 has been reflected in Holdings and the Company's stockholder's
equity.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 30 DECEMBER 28 JUNE 28
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Raw materials......................... $3,700,929 $3,857,984 $ 4,674,106
Work-in-process....................... 2,836,554 3,398,280 3,846,837
Finished goods........................ 1,949,576 2,039,615 2,409,417
---------- ---------- -----------
$8,487,059 $9,295,879 $10,930,360
========== ========== ===========
</TABLE>
F-10
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 30 DECEMBER 28 JUNE 28
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
Senior bank loans; interest at LIBOR plus
2.625% (8.25% at December 28, 1996)..... $58,100,000 $49,210,000 $ --
Senior subordinated note; interest at
13.5%, partially deferred............... 5,000,000 5,000,000 --
Senior bank revolving loan, due December
2002, interest at LIBOR plus 2.5% (8.2%
at June 28, 1997)....................... -- -- 6,850,000
Senior bank term loan, payable in
increasing quarterly installments
through December 2003; interest at LIBOR
plus 2.5% (8.2% at June 28, 1997)....... -- -- 36,820,000
Subordinated notes to related parties;
interest at 15.458%, partially deferred. 11,000,000 11,000,000 --
Junior subordinated notes to common
stockholders of Holdings; interest at
14%, deferred to June 1997.............. 16,439,167 16,426,145 --
Bridge loans; interest at 11.0% to
11.1875%; subsequently refinanced (Note
10)..................................... -- -- 100,000,000
Other.................................... 2,000,000 -- 3,000,000
----------- ----------- ------------
92,539,167 81,636,145 146,670,000
Less amounts due within one year......... 10,000,000 9,000,000 2,500,000
----------- ----------- ------------
Long-term debt, excluding current
portion................................. $82,539,167 $72,636,145 $144,170,000
=========== =========== ============
</TABLE>
Concurrent with the OMC Merger described in Note 9, the Company repaid all
of its existing long-term debt as of June 13, 1997 and entered into an
agreement with a bank syndicate providing for a New Bank Credit Facility,
consisting of a Term Facility of up to $40 million and a Revolving Facility of
up to $20 million. The New Bank Credit Facility is permitted by the terms of
certain new senior subordinated notes (see Note 10) to be increased to a total
borrowing capacity of $120 million. The New Bank Credit Facility is guaranteed
by Holdings and is secured by all of the stock and assets of the Company.
The Term Facility is payable in graduated quarterly installments increasing
from approximately $600,000 in 1997 to $2,300,000 in 2002 with the balance due
in the two quarters after September 2003. The Term Facility matures December
2003. The Revolving Facility matures December, 2002 and has no scheduled
interim payments. Amounts are drawn against the Term and Revolving facilities
in the form of term and revolver loans with various maturity dates. Interest
on both the term and revolver loans is payable at the maturity date of each of
the individual loans. Additional loan payments are due each year based on 75%
of the Company's defined excess cash flow, if any. These mandatory payments
will be applied first to repay the term loan and then to the permanent
reduction of the revolving loan. In addition, the Company is required to make
prepayments on the term and revolving loans under certain other circumstances,
including certain sales of assets or issuance of debt or equity securities.
The agreement contains various restrictive covenants including requirements to
meet certain financial covenants.
In November 1996, the Company voluntarily paid all cumulative deferred
interest on its senior subordinated note and subordinated notes to related
parties. Interest expense incurred on these
F-11
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
related party notes was approximately $996,000 for the period ended December
31, 1994, $1,776,000 in 1995, $1,824,000 in 1996, and $881,000 and $778,000 in
the six months ended June 29, 1996 and June 28, 1997, respectively. Interest
expense on the junior subordinated notes to Holdings' stockholders was
approximately $873,000 for the period from June 17, 1994 through December 31,
1994, $2,162,000 in 1995, $2,715,000 in 1996, and $1,276,000 and $1,359,000 in
the six months ended June 29, 1996 and June 28, 1997, respectively.
As of June 28, 1997, aggregate future maturities of long-term debt (after
giving effect to refinancing of the bridge loans--see Note 10) are as follows:
<TABLE>
<S> <C>
1997............................................................ $ 2,500,000
1998............................................................ 4,000,000
1999............................................................ 5,500,000
2000............................................................ 6,000,000
2001............................................................ 7,500,000
Thereafter...................................................... 121,170,000
------------
$146,670,000
============
</TABLE>
5. COMMITMENTS
The Company leases transportation equipment, facilities and equipment under
noncancelable operating leases with lease terms of 3 to 8 years. The Company
expects that generally leases will be renewed under renewal options or the
leased assets will be replaced in the normal course of business. Total rental
expense under operating leases was approximately $543,000 for the period from
January 1, 1994 through June 16, 1994 (Predecessor) and $646,000 for the
period from June 17, 1994 through December 31, 1994, $1,335,000 in 1995,
$1,686,000 in 1996, and $843,000 and $750,000 in the six months ended June 29,
1996 and June 28, 1997, respectively.
F-12
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Minimum future rental commitments applicable to operating leases at December
28, 1996 are as follows:
<TABLE>
<S> <C>
1997.............................. $1,196,000
1998.............................. 876,000
1999.............................. 501,000
2000.............................. 289,000
2001.............................. 78,000
----------
$2,940,000
==========
</TABLE>
The Company incurred management fees to an affiliate of the majority
stockholder of Holdings of approximately $125,000 for the period from June 17,
1994 through December 31, 1994, $308,000 in 1995, $350,000 in 1996, and
$175,000 and $162,000 in the six months ended June 29, 1996 and June 28, 1997,
respectively. In June 1997, the Company entered into a management agreement
with an affiliate of the new majority stockholder of Holdings. The agreement
requires the Company to pay $325,000 per year for management services
provided, plus certain fees and expenses.
6. INCOME TAXES
The Predecessor had elected to be taxed as an S Corporation under federal
and state income tax laws. Accordingly, its taxable income was includable in
the individual income tax returns of the stockholders and the Predecessor
generally was not subject to tax and therefore did not report a provision for
income taxes.
Components of income tax expense (benefit), including amount relating to
extraordinary loss in 1997, are as follows:
<TABLE>
<CAPTION>
PERIOD FROM SIX MONTHS ENDED
JUNE 17, 1994 --------------------
THROUGH DECEMBER 30 DECEMBER 28 JUNE 29 JUNE 28
DECEMBER 31, 1994 1995 1996 1996 1997
----------------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Current expense
(benefit).............. $ 575,000 $ (185,000) $3,370,000 $1,098,000 $(372,000)
Deferred expense........ 535,000 1,545,000 1,330,000 665,000 295,000
---------- ---------- ---------- ---------- ---------
$1,110,000 $1,360,000 $4,700,000 $1,763,000 $ (77,000)
========== ========== ========== ========== =========
</TABLE>
A reconciliation of income tax expense with the amount computed by applying
the statutory federal income tax rate to pretax income is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JUNE 17, 1994 SIX MONTHS ENDED
THROUGH --------------------
DECEMBER 31, DECEMBER 30 DECEMBER 28 JUNE 29 JUNE 28
1994 1995 1996 1996 1997
------------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Amount based on federal
statutory rate......... $1,040,000 $1,169,000 $4,031,000 $1,536,000 $(255,000)
State income taxes, net
of federal benefit..... 61,000 187,000 615,000 217,000 178,000
Other................... 9,000 4,000 54,000 10,000 --
---------- ---------- ---------- ---------- ---------
Income tax expense
(benefit).............. $1,110,000 $1,360,000 $4,700,000 $1,763,000 $ (77,000)
========== ========== ========== ========== =========
</TABLE>
F-13
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Components of the net deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 30, 1995 DECEMBER 28, 1996 JUNE 28, 1997
------------------- --------------------- ----------------------
CURRENT NONCURRENT CURRENT NONCURRENT CURRENT NONCURRENT
-------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Deferred tax assets:
Goodwill.............. $ -- $3,800,000 $ -- $2,645,000 $ -- $ 2,107,000
Accruals and reserves. 579,000 -- 909,000 -- 1,140,000 --
Stock option expense.. -- -- -- 21,000 -- 300,000
Other................. 46,000 117,000 96,000 106,000 95,000 --
-------- ---------- ---------- ---------- ---------- -----------
625,000 3,917,000 1,005,000 2,772,000 1,235,000 2,407,000
Deferred tax liability:
Depreciation.......... -- (417,000) -- (982,000) -- (1,142,000)
-------- ---------- ---------- ---------- ---------- -----------
Net deferred tax asset.. $625,000 $3,500,000 $1,005,000 $1,790,000 $1,235,000 $ 1,265,000
======== ========== ========== ========== ========== ===========
</TABLE>
7. EMPLOYEE BENEFIT PLANS
The Company has profit-sharing and 401(k) plans covering substantially all
full-time employees. Under the terms of one plan, participants may contribute
up to 12% of their salary to the plan and the Company will make a matching
contribution equal to 50% of the participant's contribution up to a maximum of
3% of their salary. In addition, the Company may elect to contribute an
additional amount to the plan at the discretion of the Company's Board of
Directors. Expense related to the plans was $181,000 for the period from
January 1, 1994 through June 16, 1994 (Predecessor) and $113,000 for the
period from June 17, 1994 through December 31, 1994, $210,000 in 1995,
$233,000 in 1996, and $131,000 and $212,000 in the six months ended June 29,
1996 and June 28, 1997, respectively.
In the period ended June 16, 1994, the Predecessor paid discretionary
employee bonuses totaling $2,231,405 which are included in selling, general
and administrative expenses in the consolidated statement of income.
8. STOCK OPTION PLAN
Holdings has an incentive stock option plan pursuant to which key employees
may be granted options to purchase shares of its Class A common stock. Options
are granted at the discretion of the board of directors and are fully vested
and exercisable as of the grant date. Holdings accounts for stock options in
accordance with Accounting Principles Board Opinion No. 25. Compensation
expense relating to Holdings stock option plan and reflected in the financial
statements of the Company amounted to: none in 1994 or 1995; $57,000 in 1996,
none in the six months ended June 29, 1996 and $4,894,000 in the six months
ended June 28, 1997.
Under FASB Statement No. 123, certain pro forma information is required as
if Holdings had accounted for options under the alternative fair value method
of Statement 123. Holdings used a Minimum Valuation model to determine the per
share fair value of the options at the grant date. The following assumptions
were used in the valuation:
<TABLE>
<S> <C>
Risk-free interest rate.............. 5.63%
Expected dividend yield.............. None
Expected volatility.................. None
Expected life of option.............. 5 years
</TABLE>
F-14
<PAGE>
OMEGA CABINETS, LTD. AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The estimated fair value of the options at the date of grant was $948 per
share and $11,338 per share for options granted in 1995 and 1996,
respectively, and $93,165 per share for options granted in the six months
ended June 28, 1997.
For purposes of pro forma disclosures, the estimated fair value of the
options at the grant date is expensed, net of related pro forma tax benefits,
in the year of the grant since the options are fully vested at the grant date.
Pro forma net income (loss) of the Company is $2,067,146 in 1995, $7,150,643
in 1996, and $(863,079) for the six months ended June 28, 1997.
9. MERGER AND REFINANCING
Pursuant to an Agreement and Plan of Merger (the "OMC Merger") dated as of
April 28, 1997 among the Company's parent, Omega Holdings, Inc. ("Holdings"),
the stockholders of Holdings, and Omega Merger Corp. ("OMC"), OMC merged on
June 13, 1997 into Holdings, with Holdings as the surviving entity. Concurrent
with the OMC Merger, certain investors affiliated with Butler Capital
Corporation ("BCC") invested approximately $61.9 million in the voting equity
stock of Holdings. This investment plus the proceeds from $100 million in
bridge loans and $48.3 million borrowed under a new senior credit facility
were used to repay debt of approximately $89.3 million (representing all of
the Company's outstanding long-term debt at that date), to repurchase the
majority of Holding's voting equity stock outstanding prior to the OMC Merger
at an aggregate cost of approximately $112.3 million, and to pay transaction
fees and expenses. As a result of the OMC Merger and related transactions
described above, BCC owned 88.4% of Holdings subsequent to the OMC Merger.
The OMC Merger was accounted for as a recapitalization and, accordingly, did
not impact the historical basis of the Company's assets or liabilities. All
OMC Merger and recapitalization transactions of Holdings have been pushed down
and reflected in the accounts of the Company. The Company paid an aggregate of
$114.5 million to Holdings, representing the parent's cost to redeem common
stock and stock options and to pay merger expenses. The Company recorded the
$114.5 million as a charge to deferred compensation for $2.8 million to redeem
stock options, and the balance representing a dividend to parent of $111.7
million was charged to stockholder's equity.
As a result of the OMC Merger and related debt refinancing, the Company
wrote off existing unamortized deferred financing costs of $1,554,443 in June
1997, resulting in an extraordinary loss of $947,443 (net of related income
tax benefit of $607,000).
10. SUBSEQUENT EVENT
On July 24, 1997, the Company issued $100 million of 10 1/2% senior
subordinated notes due 2007. The proceeds from the sale of the notes were used
to refinance the bridge loans described in Notes 4 and 9.
11. GUARANTEE OF SENIOR SUBORDINATED NOTES
The senior subordinated notes described in Note 10 are guaranteed jointly
and severally, fully and unconditionally, by Panther, the Company's wholly-
owned subsidiary.
Separate financial statements or summarized financial information for
Panther have not been presented since its operations are inconsequential and
its stock does not represent a significant portion of the collateral securing
the notes. Panther's accounts and transactions represent less than 1% of the
consolidated total assets, liabilities, equity, net sales, operating income,
and net income of the Company. Management believes that the separate financial
statements of Panther are not material to investors.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Home-Crest Corporation and Home-Crest Acquisition Corp.
Goshen, Indiana
We have audited the accompanying statements of income and cash flows of
Home-Crest Corporation for the period ended May 25, 1995 and for the year
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows for Home-
Crest Corporation for the period ended May 25, 1995 and for the year ended
December 31, 1994 in conformity with generally accepted accounting principles.
Crowe, Chizek and Company LLP
Elkhart, Indiana
June 28, 1995
F-16
<PAGE>
HOME-CREST CORPORATION
STATEMENTS OF INCOME
PERIOD ENDED MAY 25, 1995 AND YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net sales............................................. $26,029,065 $65,371,682
Cost of goods sold.................................... 20,412,030 50,562,837
----------- -----------
Gross margin.......................................... 5,617,035 14,808,845
Operating expenses.................................... 5,784,674 11,267,540
----------- -----------
Income (loss) from operations......................... (167,639) 3,541,305
Other income (expense)
Interest expense (Note 3)........................... (129,850) (438,813)
Interest income..................................... 54,730 143,985
----------- -----------
(75,120) (294,828)
----------- -----------
Net income (loss) (Note 4)............................ $ (242,759) $ 3,246,477
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-17
<PAGE>
HOME-CREST CORPORATION
STATEMENTS OF CASH FLOW
PERIOD ENDED MAY 25, 1995 AND YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................. $ (242,759) $ 3,246,477
Adjustments to reconcile net income (loss) to net
cash from operating activities....................
Depreciation..................................... 685,659 1,602,531
Loss (gain) on sale of equipment................. 3,221 (18,766)
Provision for losses on accounts receivable...... 675,000 102,384
Pension expense.................................. 97,652 295,200
Change in assets and liabilities.................
Accounts and notes receivable.................. (2,446,803) 620,882
Inventories.................................... (963,689) 218,793
Other current assets........................... 20,095 (44,447)
Other assets................................... -- 14,774
Accounts payable............................... 863,586 (143,169)
Other current liabilities...................... 614,642 825,236
----------- -----------
Net cash from operating activities........... (693,396) 6,719,895
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of equipment................ 5,200 54,852
Advance on note receivable......................... (15,000) (85,000)
Advance to shareholders............................ (101,674) --
Capital expenditures............................... (1,205,784) (2,408,393)
Increase in cash surrender value................... (24,732) (52,934)
----------- -----------
Net cash from investing activities........... (1,341,990) (2,491,475)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under term line credit.................. 3,200,000 3,200,000
Checks written in excess of bank balance........... 463,392 79,122
Payments under term line of credit................. (100,000) (5,500,000)
Payments on other long-term debt................... (197,273) (222,727)
Dividends paid..................................... (1,271,444) (1,741,841)
----------- -----------
Net cash from financing activities........... 2,094,675 (4,185,446)
----------- -----------
Net change in cash................................... 59,289 42,974
Cash at beginning of period.......................... 138,713 95,739
----------- -----------
CASH AT END OF PERIOD................................ $ 198,002 $ 138,713
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during the period for interest........... $ 195,710 $ 389,352
</TABLE>
See accompanying notes to financial statements.
F-18
<PAGE>
HOME-CREST CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 25, 1995 AND DECEMBER 31, 1994
NOTE 1--NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: The Company manufactures cabinets primarily for
residential cabinet distributors and dealers throughout the United States. The
Company maintains its primary checking account at a local bank which is
insured up to $100,000 by an agency of the federal government.
BASIS OF PRESENTATION: The Company's fiscal year end is December 31. These
financial statements include the period from January 1, 1995 to May 25, 1995
and the year ended December 31, 1994.
INVENTORIES: Inventories are stated at the lower of cost (last-in, first-out
method) or market value.
PROPERTY, PLANT AND EQUIPMENT: Assets are recorded at cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets.
NOTE 2--EMPLOYEE BENEFIT PLANS
The Company has a defined benefit plan which covers substantially all full-
time employees. Benefits under the plan are based on employees' average
compensation during the five consecutive calendar years when compensation was
highest, or a fixed monthly dollar amount based on years of service. Plan
assets are invested in fixed income and equity securities. Prior service costs
are amortized on a straight-line basis over the average remaining expected
employee service period.
Net pension expense for the period ended May 25, 1995 and for the year end
December 31, 1994 included the following components:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Service cost benefits earned during the period........ $129,583 $359,364
Interest cost on projected benefit obligation......... 141,438 270,765
Expected return on plan assets........................ (151,746) 34,679
Net amortization and deferral......................... (21,623) (369,608)
-------- --------
$ 97,652 $295,200
======== ========
</TABLE>
Assumptions used by the Company in the determination of the pension plan
information consisted of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Discount rate................................................. 7.75% 7.75%
Expected long-term rate of return on plan assets.............. 8.00% 8.00%
</TABLE>
The Company has a profit sharing plan containing Internal Revenue Code
Section 401(k) provisions. The plan covers substantially all employees.
Company contributions are discretionary. During the period ended May 25, 1995,
the Company contributions to the plan were $25,001. There were no
contributions to the plan for the year ended December 31, 1994.
F-19
<PAGE>
HOME-CREST CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MAY 25, 1995 AND DECEMBER 31, 1994
NOTE 3--INTEREST EXPENSE
The Company had bank notes payable totaling $6,410,000 and $3,170,000 at May
25, 1995 and December 31, 1994, respectively at interest rates ranging from 7%
to 10%. For the period ended May 25, 1995, the Company capitalized interest of
$44,062 on fixed asset projects in process.
NOTE 4--INCOME TAXES
The Company, with the consent of its shareholders, elected to have its
income taxed under Section 1362 (S Corporation) of the Internal Revenue Code
and similar sections of the Indiana income tax laws. These sections provide
that, in lieu of corporate income taxes, the shareholders are taxed on their
proportionate share of the Company's taxable income.
NOTE 5--LEASE COMMITMENTS
The Company leases certain warehouses, delivery equipment and automobiles,
under several noncancelable long-term operating leases, with expiring terms
ranging through 2000. Total rental expense for all operating leases for the
period ended May 25, 1995 and the year ended December 31, 1994 was $154,089
and $468,839, respectively.
NOTE 6--SUBSEQUENT EVENTS
Effective May 26, 1995, the Company sold substantially all of its assets. In
addition, certain liabilities were assumed by the purchaser and all notes
payable were paid in full. The transaction resulted in a gain.
In addition, management plans to liquidate the pension plan and distribute
all assets to the participants. No gain or loss is expected upon liquidation.
F-20
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 4
Risk Factors............................................................... 14
Recent Developments........................................................ 19
Use of Proceeds............................................................ 19
Capitalization............................................................. 20
Selected Historical Consolidated
Financial Data............................................................ 21
Unaudited Pro Forma Condensed Consolidated Financial Data.................. 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................................................. 26
Business................................................................... 32
Management................................................................. 40
Principal Stockholders..................................................... 45
Certain Relationships and Related
Transactions.............................................................. 46
Description of New Bank Credit Facility.................................... 47
Description of Exchange Notes.............................................. 48
Certain Federal Income Tax
Consequences.............................................................. 87
Plan of Distribution....................................................... 90
Legal Matters.............................................................. 90
Experts.................................................................... 90
Index to Consolidated Financial Statements................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OMEGA CABINETS, LTD.
EXCHANGE OFFER
$100,000,000
10 1/2% SENIOR
SUBORDINATED
NOTES DUE 2007
--------------
LOGO
--------------
-----------------
PROSPECTUS
-----------------
NOVEMBER , 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Omega's Certificate of Incorporation, as amended, and its By-laws provide
that Omega shall indemnify its directors and officers to the fullest extent
permitted by the DGCL as in effect at the time of incorporation and as amended
to the extent such amendment provides broader indemnification rights.
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding whether civil, criminal or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or such other court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to unlawful payment of dividends and unlawful stock
purchase and redemption) or (iv) for any transaction from which the director
derived an improper personal benefit.
The directors and officers of Omega and Panther are covered under directors'
and officers' liability insurance policies maintained by Holdings.
As permitted by the Iowa Business Corporation Act (the "IBCA"), Panther's
Articles of Incorporation provide that a director of the corporation shall not
be personally liable to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for a breach of the director's duty of loyalty to the corporation or its
shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for a transaction
from which the director derives an improper personal benefit; or (iv) for an
unlawful distribution under section 833 of the IBCA.
II-1
<PAGE>
Panther's By-laws provide that the company shall indemnify its directors,
officers, employees and agents to the fullest extent permitted by the Iowa
Business Corporation Act. The IBCA requires a company to indemnify officers
and directors against reasonable expenses incurred in connection with any
proceeding in which they are wholly successful, on the merits or otherwise, to
which the person may be a part because of the person's position with the
company. Further, the IBCA provides that a company may, as a permissive
matter, indemnify its officers and directors if (i) the person acted in good
faith, and (ii) the person reasonably believed, in the case of conduct in the
person's official capacity with the company, that the conduct was in the
company's best interests, and in all other cases, that the person's conduct
was at least not opposed to the company's best interests, and (iii) in the
case of any criminal proceeding, the person had no reasonable cause to believe
the person's conduct was unlawful. Any such person may not be indemnified in
respect of any proceeding that charges improper personal benefit to the
person, in which the person shall have been adjudged to be liable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Omega Certificate of Incorporation, as amended.
3.2 Omega By-laws.
3.3. Panther Articles of Incorporation, as amended.
3.4. Panther By-laws.
4.1 Indenture dated as of July 24, 1997.
4.2 Registration Rights Agreement dated as of July 24, 1997.
5.1 Opinion of Ropes & Gray re: legality.
5.2 Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien re:
legality.
10.1 New Bank Credit Facility dated as of June 13, 1997.
10.2 Panther Security Agreement.
10.3 Omega Security Agreement.
10.4 Pledge Agreement.
10.5 Collateral Assignment of Trademarks.
10.6 Management Agreement dated June 13, 1997.
10.7 Financing Agreement dated June 13, 1997.
10.8 Deferred Compensation Plan dated June 13, 1997.
10.9 Rabbi Trust Agreement dated June 13, 1997.
10.10 Key Employment Agreement dated September 16, 1994.
10.11 Key Severance Agreement dated April 24, 1997.
10.12 Moran Employment Agreement dated September 11, 1995,
as amended June 13, 1997.
10.13 Moran Severance Agreement dated April 24, 1997.
10.14 Erlick Employment Agreement dated July 11, 1994.
10.15 Erlick Severance Agreement dated April 24, 1997.
10.16 Goebel Employment Agreement dated April 10, 1995,
as amended June 13, 1997.
10.17 Goebel Severance Agreement dated April 24, 1997.
10.18 Hagan Employment Agreement dated April 10, 1995.
10.19 Hagan Severance Agreement dated April 24, 1997.
10.20 Schmidt Employment Agreement dated April 10, 1995.
10.21 Schmidt Severance Agreement dated April 24, 1997.
10.22 Deferred Non-Qualified Compensation Agreement dated June 28, 1987.
10.23 Company Bonus Plan.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
12.1 Statement regarding computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Crowe, Chizek and Company LLP.
23.4 Consent of Ropes & Gray (included in Exhibit 5.1).
24.1 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility on Form T-1 of The Chase Manhattan Bank as Trustee under
the Indenture.
27.1 Financial Data Schedules.
99.1* Form of Letter of Transmittal used in connection with the Exchange Offer.
99.2* Form of Notice of Guaranteed Delivery used in connection with The Exchange Offer.
99.3* Exchange Agent Agreement.
</TABLE>
- --------
* To be filed separately by amendment.
(B) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES OF THE COMPANY OR ITS
PREDECESSOR FOR THE THREE YEARS ENDED DECEMBER 28, 1996 ARE INCLUDED IN
THIS REGISTRATION STATEMENT.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants, pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by any such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether or not such indemnification is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
The undersigned registrants hereby undertake:
(1) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.
(2) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum
II-3
<PAGE>
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(3) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Omega Cabinets, Ltd. has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Waterloo, State of Iowa,
on the 30th day of September, 1997.
OMEGA CABINETS, LTD.
/s/ Henry P. Key
By: __________________________________
NAME: HENRY P. KEY
TITLE: PRESIDENT, CHAIRMAN OF THE
BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the 30th day of September, 1997.
KNOW ALL MEN BY THESE PRESENTS that each officer and director of Omega
Cabinets, Ltd. whose signature appears below constitutes and appoints Henry P.
Key, Lance E. Erlick and Donald E. Cihak, and each of them, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to execute any and all amendments, or any post-effective
amendments and supplements to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-
fact and agent full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE
/s/ Henry P. Key President, Chairman of the Board of
- ------------------------------------ Directors and Chief Executive Officer
HENRY P. KEY (principal executive officer)
/s/ Lance E. Erlick Vice President, Chief Financial and
- ------------------------------------ Accounting Officer and Treasurer
LANCE E. ERLICK (principal financial and accounting
officer)
/s/ Robert J. Bertch Director
- ------------------------------------
ROBERT J. BERTCH
/s/ Gilbert Butler Director
- ------------------------------------
GILBERT BUTLER
/s/ Donald E. Cihak Director
- ------------------------------------
DONALD E. CIHAK
/s/ Costa Littas Director
- ------------------------------------
COSTA LITTAS
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Panther Transport, Inc.
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Waterloo, State of Iowa,
on the 30th day of September, 1997.
PANTHER TRANSPORT, INC.
/s/ Henry P. Key
By: _________________________________
NAME: HENRY P. KEY
TITLE: PRESIDENT, CHAIRMAN OF THE
BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the 30th day of September, 1997.
KNOW ALL MEN BY THESE PRESENTS that each officer and director of Panther
Transport, Inc. whose signature appears below constitutes and appoints Henry P.
Key, Lance E. Erlick and Donald E. Cihak, and each of them, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities, to execute any and all amendments, or any post-effective
amendments and supplements to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-
fact and agent full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE
/s/ Henry P. Key President, Chairman of the Board of
- ------------------------------------- Directors and Chief Executive Officer
HENRY P. KEY (principal executive officer)
/s/ Lance E. Erlick Vice President, Chief Financial and
- ------------------------------------- Accounting Officer and Treasurer
LANCE E. ERLICK (principal financial and accounting
officer)
/s/ Robert J. Bertch Director
- -------------------------------------
ROBERT J. BERTCH
/s/ Gilbert Butler Director
- -------------------------------------
GILBERT BUTLER
/s/ Donald E. Cihak Director
- -------------------------------------
DONALD E. CIHAK
/s/ Costa Littas Director
- -------------------------------------
COSTA LITTAS
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
3.1 Omega Certificate of Incorporation, as amended.
3.2 Omega By-laws.
3.3. Panther Articles of Incorporation, as amended.
3.4. Panther By-laws.
4.1 Indenture dated as of July 24, 1997.
4.2 Registration Rights Agreement dated as of July 24, 1997.
5.1 Opinion of Ropes & Gray re: legality.
5.2 Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien
re: legality.
10.1 New Bank Credit Facility dated as of June 13, 1997.
10.2 Panther Security Agreement.
10.3 Omega Security Agreement.
10.4 Pledge Agreement.
10.5 Collateral Assignment of Trademarks.
10.6 Management Agreement dated June 13, 1997.
10.7 Financing Agreement dated June 13, 1997.
10.8 Deferred Compensation Plan dated June 13, 1997.
10.9 Rabbi Trust Agreement dated June 13, 1997.
10.10 Key Employment Agreement dated September 16, 1994.
10.11 Key Severance Agreement dated April 24, 1997.
10.12 Moran Employment Agreement dated September 11, 1995,
as amended June 13, 1997.
10.13 Moran Severance Agreement dated April 24, 1997.
10.14 Erlick Employment Agreement dated July 11, 1994.
10.15 Erlick Severance Agreement dated April 24, 1997.
10.16 Goebel Employment Agreement dated April 10, 1995, as amended
June 13, 1997.
10.17 Goebel Severance Agreement dated April 24, 1997.
10.18 Hagan Employment Agreement dated April 10, 1995.
10.19 Hagan Severance Agreement dated April 24, 1997.
10.20 Schmidt Employment Agreement dated April 10, 1995.
10.21 Schmidt Severance Agreement dated April 24, 1997.
10.22 Deferred Non-Qualified Compensation Agreement dated June 28,
1987.
10.23 Company Bonus Plan.
12.1 Statements regarding computation of ratio of earnings to fixed
charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Crowe, Chizek and Company LLP.
23.4 Consent of Ropes & Gray (included in Exhibit 5.1).
24.1 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility on Form T-1 of The Chase Manhattan
Bank as Trustee under the Indenture.
27.1 Financial Data Schedules.
99.1* Form of Letter of Transmittal used in connection with the
Exchange Offer.
99.2* Form of Notice of Guaranteed Delivery used in connection with
The Exchange Offer.
99.3* Exchange Agent Agreement.
</TABLE>
- --------
* To be filed separately by amendment.
<PAGE>
Exhibit 3.1
State of Delaware
Office of the Secretary of State
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:
"OMEGA CABINETS, LTD.", A IOWA CORPORATION,
WITH AND INTO "OMEGA MERGER CORP." UNDER THE NAME OF "OMEGA CABINETS,
LTD.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE SEVENTEENTH DAY OF JUNE, A.D.
1994, AT 10:01 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
--------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: 7153167
DATE: 06-17-94
<PAGE>
CERTIFICATE OF MERGER
OF
OMEGA CABINETS, LTD.
(an Iowa corporation)
INTO
OMEGA MERGER CORP.
(a Delaware corporation)
------------------------
Pursuant to Section 252(c)
of the General Corporation
Law of the State of Delaware
------------------------
It is hereby certified that :
1. The constituent business corporations participating in the merger
herein certified are:
(i) Omega Merger Corp., which is incorporated under the laws of the
State of Delaware ("Omega Mergerco"); and
(ii) Omega Cabinets, Ltd., which is incorporated under the laws of the
State of Iowa ("Omega").
2. A Plan of Merger has been approved, adopted, certified, executed and
acknowledged by each of the aforesaid constituent corporations in accordance
with the provisions of Section 252(c) of the General Corporation Law of the
State of Delaware ("GCL"), to wit, by Omega Mergerco in the same manner as
provided in Section 251 of the Delaware GCL and by Omega in accordance with the
laws of the State of Iowa.
3. The name of the surviving corporation in the merger herein certified is
Omega Merger Corp., which will continue its existence as the surviving
corporation under the name Omega Cabinets, Ltd. upon the Effective Date of said
merger pursuant to the provisions of the laws of the State of Delaware.
4. That as of the Effective Date of the merger Article FIRST of the
Certificate of Incorporation of Omega Mergerco shall be amended in its entirety
to read "The name of the corporation is Omega Cabinets, Ltd." Except as so
amended, the Certificate of Incorporation
-2-
<PAGE>
of Omega Mergerco, as in effect immediately prior to the Effective Date of the
merger, shall be the Certificate of Incorporation of the Surviving Corporation
from and after the Effective Date of the merger, until amended as provided
therein and in accordance with the GCL.
5. An executed copy of the Plan of Merger is on file at the principal
place of business of Omega Cabinets, Ltd. (1205 Peter Drive, Waterloo, Iowa
50703).
6. A copy of the Plan of Merger will be furnished by the surviving
corporation, on request and without cost, to any stockholder of each of the
aforesaid constituent corporations.
7. The effective date of the merger herein certified in the State of
Delaware, insofar as the provisions of the GCL govern such effective date, shall
be the date of filing of the Certificate of Merger with the Secretary of State
(the "Effective Date").
IN WITNESS WHEREOF, Omega Mergerco has caused this Certificate to be
executed this 17th day of June, 1994.
OMEGA MERGER CORP
By: /s/ Thomas J. Formolo
------------------------------------
Thomas J. Formolo, Vice President
ATTEST:
/s/ S. Michael Peck
- ------------------------------------
S. Michael Peck, Assistant Secretary
-3-
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "OMEGA MERGER CORP.", FILED IN THIS OFFICE ON THE TWENTY-THIRD
DAY OF MAY, A.D. 1994, AT 12:45 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
--------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: 7127719
DATE: 05-23-94
-4-
<PAGE>
CERTIFICATE OF INCORPORATION
OF
OMEGA MERGER CORP.
FIRST: The name of the corporation is: OMEGA MERGER CORP.
SECOND: The address of its registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, 19901,
County of Kent. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware as the
same may be amended from time to time ("GCL").
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is 10,000 shares of Common Stock,
$0.01 par value.
FIFTH: The name and mailing address of the incorporation is
S. Michael, c/o Altheimer & Gray, 10 South Wacker Drive, Suite 4000, Chicago,
Illinois 60606.
SIXTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter or
repeal the by-laws of the corporation.
SEVENTH: The election of directors need not be by written ballot.
EIGHT: Indemnification.
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(a) Right to Indemnification. Each person who was or is made a
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party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "Proceeding"), by reason of the fact that he or
she, or a person for whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer or trustee of another Corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action or inaction in an official capacity as a director, officer, or
trustee or in any other capacity while serving as a director, officer or
trustee, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists as of the date hereof or as may hereafter be
amended (but, in the case of any such amendment, only
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to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide both
prior to such amendment and as of the date hereof), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer or trustee and shall inure to the benefit of his or her heirs, executors
and administrators; provided however, that, except as provided in paragraph (b)
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hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a Proceeding (or part thereof) initiated by such person only
if such Proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this ARTICLE EIGHTH shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
connection with any such Proceeding in advance of its final disposition;
provided, however, that, if the General Corporation Law of the State of
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Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including without limitation, service to an employee benefit plan) in
advance of the final disposition of a Proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified under the
ARTICLE EIGHTH or otherwise. The Corporation may, by action of the Board,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors, officers and
trustee.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
--------------------------------
of this ARTICLE EIGHTH is not paid in full by the Corporation within thirty days
after written notice thereof has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in connection with any Proceeding in advance of its
final disposition where the required undertaking, if any is required, has been
tendered to the Corporation and as to any such other action as to which it shall
not be a defense) that the claimant has not met the standards of conduct which
make it permissible under the General Corporation Law of the State of Delaware
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including the Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct under the General
Corporation Law of the State of Delaware, nor an actual determination by the
Corporation (including the Board, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
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shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The rights to indemnification and
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the payment of expenses incurred in connection with a Proceeding in advance of
its final disposition conferred in this ARTICLE EIGHTH shall not be (and they
shall not be deemed to be) exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of this Certificate of
Incorporation, By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) Insurance. The Corporation may purchase and maintain insurance,
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at its expense, to protect itself and any director, officer, trustee, employee
or agent of the Corporation or another Corporation, or of a partnership, joint
venture, trust or other enterprise against any expense, liability or loss (as
such terms are used in this ARTICLE EIGHTH), whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.
(e) Impairment of Existing Rights. Any repeal or modification of
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this ARTICLE EIGHTH shall not impair or otherwise affect any rights, or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought
based in whole or in part upon any such state of the facts.
(f) Construction and Presumption. This ARTICLE EIGHTH shall be
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liberally construed in favor of indemnification and the payment of expenses
incurred in connection with a Proceeding in advance of its final disposition and
there shall be a rebuttable presumption that a claimant under this ARTICLE
EIGHTH is entitled to such indemnification and the Corporation shall bear the
burden of proving by a preponderance of the evidence that such claimant is not
so entitled to indemnification.
(g) Confidentiality. Any finding that a person asserting a claim
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for indemnification pursuant to this ARTICLE EIGHTH is not entitled to such
indemnification, and any information which may support such finding, shall be
held in confidence to the extent permitted by law and shall to be disclosed to
any third party.
(h) Severability. If any provision of this ARTICLE EIGHTH shall be
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deemed invalid or unenforceable, the Corporation shall remain obligated to
indemnification and advance expenses subject to all those provisions of this
ARTICLE EIGHTH which are not invalid or unenforceable.
NINTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this ARTICLE NINTH shall not
eliminate or limit the
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liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of this ARTICLE NINTH shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
THE UNDERSIGNED, being the incorporator hereinabove named, for the
purposes of forming a corporation pursuant to the GCL, does hereunto set his
hand this 23rd day of May, 1994.
/s/ S. Michael Peck
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S. Michael Peck, Incorporator
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Exhibit 3.2
BY-LAWS
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OF
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OMEGA CABINETS, LTD.
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ARTICLE I
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Offices
Section 1. The registered office shall be in the City of Dover, County of
Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
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Meetings of Stockholders
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Section 1. All meetings of the stockholders shall be held at such place as
may be fixed from time to time by the board of directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the first
Monday of May of each year if not a legal holiday, and if a legal holiday, then
on the next business day following, at 10:00 a.m., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting or in a duly executed waiver of
<PAGE>
notice thereof, at which the stockholders shall elect by a plurality vote a
board of directors, and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president, and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
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Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express
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provision of statute or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Each stockholder shall, at every meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the proxy provides for
a longer period.
Section 11. Any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
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Directors
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Section 1. The number of directors which shall constitute the whole
board shall be not less one (1) nor more than nine (9). The number of directors
of the corporation may be increased or decreased from time to time within this
range of one (1) to nine (9) directors, without further amendment to this
section, by the affirmative vote of a majority of directors then entitled to
vote thereon. The directors shall be elected at the annual meeting of the
stockholders, except
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as provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified or until his earlier
resignation or removal. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by the sole
remaining director, and each director so chosen shall hold office until his
successor is elected and qualified, or until his earlier resignation or removal.
If there are no directors in office, then an election of directors may be held
in the manner provided by statute.
Section 3. The business of the corporation shall be managed by or
under the direction of the board of directors which may exercise all such powers
of the corporation and do all such lawful acts as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Meetings of the Board of Directors
----------------------------------
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the
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meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver of notice signed by all of the
directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
president on two (2) days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president in like manner
and on like notice on the written request of two or more directors.
Section 8. At all meetings of the board a majority of the total
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
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Section 10. Compensation of Directors. The directors may be paid
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their expenses, if any, of attendance at each meeting of the board of directors
and may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
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Notices
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Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
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Officers
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Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a chairman of the board, a president, a vice-
president, a secretary and a treasurer. The board of directors may elect
additional vice-presidents and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board, a
president, one or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation may be filled by the board of directors.
Section 6. The Chairman of the Board. The chairman of the board, if
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there be a chairman, shall preside at all meetings of the stockholders, of the
board of directors and of the executive committee, if any, and he shall have
such other powers and duties as the board of directors may from time to time
prescribe. He may execute contracts in the name of the corporation. He may
sign, with the secretary, assistant secretary, treasurer or assistant treasurer,
certificates for shares of the corporation, and may sign any policies, deeds,
mortgages, bonds, contracts, or other instruments which the board of directors
have
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authorized to be executed except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these by-
laws to some other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed.
Section 7. The President. The president shall be the chief executive
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officer of the corporation and shall have the general direction of the affairs
of the corporation except as otherwise prescribed by the board of directors. In
the absence of the chairman of the board, he shall preside at all meetings of
the stockholders, of the board of directors and of the executive committee, if
any, and shall designate the acting secretary for such meetings to take the
minutes thereof for delivery to the secretary. He may execute contracts in the
name of the corporation and appoint and discharge agents and employees of the
corporation. He may sign, with the secretary, assistant secretary, treasurer or
assistant treasurer, certificates for shares of the corporation, and may sign
any policies, deeds, mortgages, bonds, contracts, or other instruments which the
board of directors have authorized to be executed except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; appoint and
discharge agents and employees of the corporation, and in general, shall perform
all duties incident to the office of president. The president shall be ex-
officio a member of all committees.
Section 8. The Vice-Presidents. In the absence of the president or in the
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event of his inability or refusal to act, the vice-president, if there be any,
(or in the event there be more than one vice-president, the vice-presidents in
the order designated, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
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The Secretary and Assistant Secretary
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Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
The Treasurer and Assistant Treasurers
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Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
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Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an. account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the board of directors
for the faithful performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
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ARTICLE VI
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Certificate of Stock
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Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by the
president or a vice president and the treasurer or an assistant treasurer, or
the secretary or an assistant secretary of the corporation, certifying the
number of shares owned by him in the corporation.
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If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish without charge to each stockholder
who so requests the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 2. Where a certificate is countersigned (i) by a transfer
agent other than the corporation or its employee, or (ii) by a registrar other
than the corporation or its employee, any of or all the signatures of the
officers of the corporation may be a facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be an officer before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer at the date
of issue.
Section 3. Lost Certificates. The board of directors may direct a
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new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to
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advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 4. Transfers of Stock. Upon surrender to the corporation or
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the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. Fixing Record Date. In order that the corporation may
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determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
Section 6. Registered Stockholders. The corporation shall be
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entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
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ARTICLE VII
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Indemnification
---------------
Section 1. Right to Indemnification. Each person who was or is made
------------------------
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "Proceeding"), by reason of the fact that he or
she, or a person for whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer or trustee of another Corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action or inaction in an official capacity as a director, officer or
trustee or in any other capacity while serving as a director, officer or
trustee, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists as of the date hereof or as may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide both prior to such amendment and
as of the date hereof), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) actually and reasonably incurred or suffered
by such person in connection therewith and such indemnification shall continue
as to a person who has ceased to be a director, officer or trustee and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in paragraph (b) hereof, the
- -----------------
Corporation shall indemnify any such person seeking indemnification in
connection with a Proceeding (or part thereof) initiated by such person only if
such Proceeding (or part thereof) was authorized by the Board.
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<PAGE>
The right to indemnification conferred in this Article VU shall be a contract
right and shall include the right to be paid by the Corporation' the expenses
incurred in connection with any such Proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law of the
-----------------
State of Delaware requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a Proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Article VII or otherwise. The Corporation may, by action of the Board,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors, officers and
trustees.
Section 2. Right of Claimant to Bring Suit. If a claim under
-------------------------------
paragraph (a) of this Article VII is not paid in full by the Corporation within
thirty days after written notice thereof has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in connection with any Proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation, and as to any such other action
as to which it shall not be a defense) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including the Board,
independent legal counsel, or its
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<PAGE>
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct under the General
Corporation Law of the State of Delaware, nor an actual determination by the
Corporation (including the Board, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights. The rights to indemnification
-------------------------
and the payment of expenses incurred in connection with a Proceeding in advance
of its final disposition conferred in this Article VII shall not be (and they
shall not be deemed to be) exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain
---------
insurance, at its expense, to protect itself and any director, officer, trustee,
employee or agent of the Corporation or another Corporation, or of a
partnership, joint venture, trust or other enterprise against any expense,
liability or loss (as such terms are used in this Article VII), whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the General Corporation Law of the State of
Delaware.
Section 5. Construction and Presumption. This Article VII shall be
----------------------------
liberally construed in favor of indemnification and the payment of expenses
incurred in connection with a Proceeding in advance of its final disposition and
there shall be a rebuttable presumption that a claimant under this Article VII
is entitled to such indemnification and the Corporation shall bear the burden of
proving by a preponderance of the evidence that such claimant is not so entitled
to indemnification.
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<PAGE>
Section 6. Confidentiality. Any finding that a person asserting a
---------------
claim for indemnification pursuant to this Article VII is not entitled to such
indemnification, and any information which may support such finding, shall be
held in confidence to the extent permitted by law and shall not be disclosed to
any third party.
Section 7. Severability. If any provision of this Article VII shall
------------
be deemed invalid or unenforceable, the Corporation shall remain obligated to
indemnification and advance expenses subject to all those provisions of this
Article VII which are not invalid or unenforceable.
Section 8. No Diminution by Amendment of By-laws; Non-exclusive
----------------------------------------------------
Effect. The foregoing provisions of this Article VII shall be deemed
- -------
to be a contract between the corporation and each director and officer who
serves in such capacity at any time while this by-law is in effect, any repeal
or modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts. The foregoing rights of indemnification shall not
be deemed exclusive of any other rights to which any director or officer may be
entitled apart from the provisions of this Article VII. The board of directors
in its discretion shall have power on behalf of the corporation to indemnify any
person, other than a director or officer, made a party to any action, suit or
proceeding by reason of the fact that he, his testator or intestate is or was an
employee of the corporation.
Section 9. Exculpation. No director of the Corporation shall be
-----------
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director; provided, however, that this Article
VII shall not eliminate or limit the liability of a director (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
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<PAGE>
Corporation Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit. No amendment to or repeal of
this Article VII shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
ARTICLE VIII
------------
Amendments
----------
These By-Laws may be amended, altered, or repealed and new By-Laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the By-Laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
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<PAGE>
Exhibit 3.3
ARTICLES OF INCORPORATION
OF
PANTHER TRANSPORT, INC.
The undersigned does hereby act as incorporator of PANTHER TRANSPORT,
INC., under the provisions of Chapter 490, Code of Iowa (1991), and does hereby
adopt the following Articles of Incorporation, to-wit:
ARTICLE I
The name of the corporation shall be PANTHER TRANSPORT, INC.
ARTICLE II
The corporation is authorized to issue One Hundred Thousand (100,000)
shares of common stock.
ARTICLE III
The street address of the corporation's initial registered office is 1205
Peters Drive, Waterloo, Iowa 50703, and the name of its initial registered agent
at said office is Robert J. Bertch.
ARTICLE IV
The name and address of the incorporator is as follows:
Robert J. Bertch
1205 Peters Drive
Waterloo, Iowa 50703
ARTICLE V
The effective date of the corporation's existence shall be January 1, 1993.
Signed and executed this 17th Day of November, 1992, in Waterloo, Iowa.
/s/ Robert J. Bertch
-------------------------------
Robert J. Bertch, Incorporator
<PAGE>
ARTICLES OF AMENDMENT
OF
PANTHER TRANSPORT, INC.
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to section 1006 of the Iowa Business Corporation Act, the
undersigned adopts the following Articles of Amendment:
1. The name of the corporation is Panther Transport, Inc.
2. The Articles of Incorporation shall be amended by inserting Article VI as
set forth herein:
ARTICLE VI
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for a breach of the
director's duty of loyalty to the corporation or its shareholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) for a transaction from which the
director derives an improper personal benefit; or (iv) under section
490.833 of the Iowa Business Corporation Act. If the Iowa Business
Corporation act is hereafter amended to authorized the further elimination
or limitation of the liability of directors, then the liability of a
director of the corporation, in addition to the limitation on personal
liability provided herein, shall be eliminated or limited to the extent of
such amendment, automatically and without any further action, to the
maximum extent permitted by law. Any repeal or modification of this
Article by the shareholders of the corporation shall be prospective only
and shall not adversely affect any limitation on the personal liability or
any other right or protection of a director of the corporation with respect
to any state of facts existing at or prior to the time of such repeal or
modification.
3. The amendment was adopted by the sole shareholder effective September 23,
1997.
4. The amendment was approved by the sole shareholder. The designation,
number of outstanding shares, number of votes entitled to be case by each
voting group entitled to vote separately on the amendment, and the number
of votes of each voting group undisputably represented at the meeting is as
follows:
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<PAGE>
<TABLE>
<CAPTION>
VOTES
DESIGNATION SHARES ENTITLED VOTES REPRESENTED
OF GROUP OUTSTANDING TO BE CAST AT MEETING
-------- ----------- ---------- ----------
<S> <C> <C> <C>
Common 1,000 1,000 1,000
</TABLE>
5. The total number of undisputed votes cast for the amendment by the only
voting group was 1,000. The number of votes cast for the amendment by each
voting group was sufficient for approval by that voting group.
DATED THIS 23RD DAY OF SEPTEMBER, 1997.
PANTHER TRANSPORT, INC.
By: /s/ Henry P. Key
---------------------------
Henry P. Key, President
-3-
<PAGE>
Exhibit 3.4
BY-LAWS
OF
PANTHER TRANSPORT, INC.
ARTICLE I
SHAREHOLDERS
------------
Section 1. ANNUAL MEETING: The annual meeting of the shareholders of
------------
the Corporation shall be held at the registered office of the Corporation, or
elsewhere as called by the President, on March 15 of each year at 9:00 o'clock
A.M., if not a legal holiday, but if a legal holiday, then on the next secular
day following. No notice to the shareholders of the annual meeting shall be
required.
Section 2. SPECIAL MEETINGS. (a) Special meetings of the
------------
shareholders may be held at any time and at any place, either upon a call of the
President, or the Secretary, or an order of the Board of Directors, or upon a
written request of the shareholders owning one-tenth (1/10) or more of the
outstanding voting shares.
(b) Notice of such special meetings shall be written or printed, stating
the time and place, the object thereof, and shall be prepared and delivered,
either personally or mailed, by regular mail, to the last know post office
address of each shareholder entitled to vote at said meeting, not less than ten
(10) nor more than fifty (50) days before any such meeting.
(c) Notice of any special meeting may be waived by any shareholder.
Section 3. VOTING: Only shareholders of record, as of the close of
------------
business on the sixth (6th) day preceding any meeting, shall be entitled to vote
at the regular and special meetings of the shareholders. Each shareholder shall
be entitled to one (1) vote for each share held in his name.
Section 4. QUORUM: A quorum at any meeting of the shareholders shall
------------
consist of a majority of the shares then outstanding. Shares at any meeting may
be represented in person or by proxy. If the holders of the amount of shares
necessary to constitute a quorum shall fail to attend, in person or by proxy, at
the time and place fixed for any meeting, the majority of shares present, in
person or by proxy, may adjourn from time to time without notice other than by
announcement at the meeting, until the holders of the required amount of shares
necessary to constitute a quorum shall attend. At any such meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called. The majority of shares present,
a quorum being present, shall decide any question that may come before such
meeting.
<PAGE>
Section 5. PROXY: Any shareholder entitled to vote may be represented
------------
at any regular or special meeting of the shareholders by a duly executed proxy.
The proxy shall be in writing and properly signed, but shall require no other
attestation. Proxies shall be effective for no longer than one year from the
date of execution unless specifically authorized by the Board of Directors.
Section 6. ELECTION OF DIRECTORS: At each annual meeting of the
------------
shareholders of the Corporation, two or more directors, as otherwise provided in
these By-Laws, shall be elected who shall serve for one year and until the
election and qualification of their duly qualified successors. Each shareholder
entitled to vote at the election of directors shall have the right to vote, in
person or in proxy, the number of shares owned by him for as many persons as
there are directors to be elected, and for whose election he has a right to
vote, or to cumulate his votes, by giving one candidate as many votes as the
number of such directors, multiplied by the number of his shares shall equal, or
by distributing such votes on the same principle among any number of candidates.
The candidates to the number to be elected receiving the largest sum of votes
shall be declared elected. At the request of any shareholder, voting for
directors shall be by ballot. If, for any reason, directors are not elected at
the regular meeting of the shareholders, a special meeting shall be called for
that purpose, within thirty (30) days thereafter, at which meeting directors
shall be elected in all respects as at the annual meeting.
Section 7. PROCEDURE AND ORDER OF BUSINESS. Robert's Rules of Order,
------------
as revised from time to time, shall govern all matters of procedure at all
meetings of the shareholders. The order of business at the annual meeting, and
insofar as is practicable, at all other meetings of the shareholders, shall be
as follows:
1. Call the roll.
2. Proof of due notice of meeting, if required.
3. Reading and disposal of any unapproved minutes.
4. Reports of officers and committees.
5. Election of directors.
6. Unfinished business.
7. New business.
8. Adjournment.
Section 8. VOTING OF SHARES BY CERTAIN HOLDERS: Shares standing in
------------
the name of another corporation may be voted by such officer, agent or proxy as
the By-Laws of such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no
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<PAGE>
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so be
contained in an appropriate order of the Court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledges shall be entitled to vote the shares so transferred.
Neither treasury shares not shares held by another corporation, if a
majority of the shares entitled to vote for the election of directors of such
other corporation is held by this Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given time.
Section 9. INFORMAL ACTION BY SHAREHOLDERS: Any action required to be
------------
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 10. MEETINGS OF ALL SHAREHOLDERS: If all of the shareholders
-------------
shall meet at any time and place, either within or without the State of Iowa,
and consent to the holding of a meeting at such time and place, such meeting
shall be valid without call or notice, and at such meeting any corporate action
may be taken.
ARTICLE II
DIRECTORS
Section 1. NUMBER AND AUTHORITY: The business and property of the
------------
Corporation shall be managed by a Board of Directors of not less than two (2)
members elected by the voting shareholders of the Corporation. Each Director
shall hold office until the next annual meeting of the shareholders and until a
successor shall have been duly elected and qualified. The Board of Directors
shall have entire charge of the property, interest, business and transactions of
the Corporation, with full power and authority to manage and conduct the same.
Section 2. REGULAR MEETINGS: The annual organizational meeting shall
------------
immediately follow the annual meeting of the shareholders at the registered
office of the Corporation. No notice shall be required for any annual
organizational meeting.
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<PAGE>
Section 3. SPECIAL MEETINGS: (a) Special meetings of the Board of
------------
Directors may be held at any time and at any place upon a call of any member of
the Board; or may be held without call, by written consent of all of the
members; or by the presence of all of the members at said meeting.
(b) Notice of special meetings of the Board of Directors shall be mailed,
by regular mail, to each member of the Board at his last known post office
address, or delivered to him personally not less than two (2) days before such
meeting. Notice of special meetings shall state the time, place and objects
thereof.
(c) Notice of any special meeting may be waived by any director.
Section 4. QUORUM: The quorum at any meeting of the Board of Directors
------------
shall consist of a majority of the members of the Board. A majority of the
Directors present, a quorum being present, shall decide any question that may
come before the meeting. If at any regular meeting or special meeting of the
Board of Directors there be less than a quorum, the majority of those present
may adjourn from time to time without notice other than by announcement at the
meeting, until the number of Directors necessary to constitute a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 5. VACANCIES: Any vacancy occurring in the Board of Directors
------------
shall be filled for the unexpired term by a majority vote of the remaining
Directors. In the event of the membership of the Board of Directors falling
below the number necessary for a quorum, a special meeting of the shareholders
may be called and such number of Directors shall be elected thereat as may be
necessary to restore the membership of the Board to its full number. In the
event that the number of Directors be increased or decreased by amendment to
these By-Laws, the Board of Directors shall fill such directorship or
directorships until the next annual meeting of the shareholders.
Section 6. ELECTION OF OFFICERS: At the annual organizational meeting
------------
of the Board of Directors, a President, a Vice President, a Secretary and a
Treasurer shall be elected to serve for the ensuing year and until the election
and qualification of their respective successors. Upon the request of any
Director, the election shall be by ballot and the majority of the votes cast
shall be necessary to elect. The Board of Directors may also appoint such other
officers and agents necessary for the convenient transaction of the business of
the Corporation. The Directors shall fix the compensation of the officers. Any
vacancy in an office may be filled for the unexpired term by the Board of
Directors. The Board shall have any right to remove any officer by vote of two-
thirds of the entire membership of the Board.
Section 7. COMPENSATION OF DIRECTORS: By resolution of the Board of
------------
Directors, the Directors may pay their expenses, if any, of attendance of each
meeting of the Board of Directors, and may be paid a fixed sum for attendance at
each meeting of the Board
-4-
<PAGE>
of Directors, or a salary as directed. No such payment shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 8. PROCEDURE AND ORDER OF BUSINESS: Robert's Rules of Order, as
------------
revised from time to time, shall govern all matters of procedure at all meetings
of the Board of Directors, except as may be otherwise provided in these By-Laws.
The order of business at the annual meeting, and, insofar as is practicable, at
all other meetings of the Board of Directors, shall be as follows:
1. Call the roll.
2. Proof of due notice of meeting, if required.
3. Reading and disposal of any unapproved minutes.
4. Reports of officers and committees.
5. Election of officers.
6. Unfinished business.
7. New business.
8. Adjournment.
Section 9. INFORMAL ACTION BY DIRECTORS: Any action required to be
------------
taken at a meeting of the Directors, or any other action which may be taken at a
meeting of the Directors, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof.
Section 10. PRESUMPTION OF ASSENT: A Director of the Corporation who is
-------------
present at a meeting of the Board of Directors or a Committee thereof at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment thereof.
Such right to dissent shall not apply to a Directors who voted in favor of such
action.
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS: The officers of the Corporation shall be a
------------
President, a Vice President, a Secretary and a Treasurer, and such assistant
officers as the Board of Directors may determine. They shall hold offices for
the term of one year and until their respective successors are duly elected and
qualified. One person may hold two or more offices at the same time.
Section 2. DUTIES OF THE PRESIDENT: The President shall be the chief
------------
executive officer of the Corporation. He shall preside at all meetings of the
shareholders of
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<PAGE>
the Corporation and at all meetings of the Board of Directors; shall have
general supervision and management of the affairs of the Corporation; shall sign
or countersign, as may be necessary, all such bills, notes, checks, and
contracts and other instruments as may pertain to the ordinary course of the
Corporation's business and sign, when duly authorized thereto, all contracts,
bonds, deeds, liens, licenses, leases and other such instruments of a special
nature. He may also endorse checks, drafts and other negotiable instruments for
deposit and collection.
Section 3. DUTIES OF THE VICE PRESIDENT: The Vice President, in the
------------
absence, disability, or refusal of the President to act, shall have all of the
powers and perform all of the duties of that officer.
Section 4. DUTIES OF THE SECRETARY: The Secretary shall keep full
------------
minutes of all meetings of the shareholders and the Board of Directors, shall
read such minutes at the proper subsequent meeting, shall issue all calls for
meetings and notify all officers and Directors of their election.
He shall keep the share certificates, checks and other usual Corporation
books and shall prepare, record, transfer, issue and cancel certificates of
shares as required by the transactions of the Corporation and its shareholders.
He shall also sign all contracts, deeds, licenses and other instruments when so
ordered.
He shall make such reports to the Board of Directors as they may require
and shall perform all other duties as are incident to his office or as are
properly required of him by the Board of Directors.
Section 5. DUTIES OF THE TREASURER: The Treasurer shall have custody
------------
of and be responsible for all monies and securities of the Corporation. He
shall keep full and accurate records and accounts in books belonging to the
Corporation, showing the transactions of the Corporation, its accounts,
liabilities, and financial condition, and shall see that all expenditures are
duly authorized and are evidenced by proper receipts and vouchers. He shall
deposit the monies of the Corporation as the same may come into his hands in
such depository or depositories as may be designated by the Board of Directors.
Such deposits shall be made in the name of the Corporation and may be withdrawn
therefrom only by such checks signed by officers or employees of the Corporation
as may be designated by the Board of Directors. His books and accounts shall be
open at all times during the business hours to the inspection of any Directors
of the Corporation.
The Treasurer shall also endorse, for collection or deposit, all bills,
checks and all negotiable instruments of the Corporation and shall pay out money
as may be necessary in the transactions of the Corporation, either by specific
or general direction of the Board of Directors or the President, and shall
generally have supervision of the finances of the Corporation.
-6-
<PAGE>
He shall also make a full report of the financial condition of the
Corporation at the annual meeting of the shareholders and shall also make such
other reports and statements and perform such other duties as may be properly
required of him by the Board of Directors.
Section 6. SALARIES: The salaries of the officers shall be fixed from
------------
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE IV
SHARES
------
Section 1. CERTIFICATES OF SHARES: Each shareholder of the Corporation
------------
whose share has been paid in full shall be entitled to a certificate or
certificates showing the amount of the shares of the Corporation outstanding on
the books in his name. Each certificate shall be numbered, bearing the signature
of the President or Vice President and the Secretary or Treasurer and be issued
in numerical order from the share certificate book. A full record of each
certificate share, as issued, must be entered on the corresponding stub of the
share certificate book.
Section 2. ISSUANCE OF SHARES: Shares shall be issued as directed by
------------
the Board of Directors.
Section 3. TRANSFERS OF SHARES: Transfers of shares shall be made upon
------------
the proper book of the Corporation and must be accompanied by the surrender of
the duly endorsed certificate or certificates representing the transferred
shares. Surrendered certificates shall be canceled and attached to the
corresponding stubs in the certificate books and new certificates issued to the
parties entitled thereto.
Section 4. LOST CERTIFICATES: The Board of Directors may order a new
------------
certificate or certificates to be issued in place of any certificate or
certificates of the Corporation alleged to be lost or destroyed. However, in
every such case the owner of the lost certificate or certificates shall first
cause to be given to the Corporation a bond, in such sum, not less than the par
value of such lost or destroyed certificate or certificates as the Board may
direct, as indemnity against any loss or claim the Corporation may incur by
reason of issuance of such certificates. However, the Board of Directors may,
in their discretion, refuse to replace any lost certificates except upon the
order of some Court having jurisdiction of such matter.
Section 5. DEATH OF A SHAREHOLDER: Upon the death of a shareholder, the
------------
successor in interest of the deceased shareholder shall offer the shares to the
Corporation in accordance with Section 6 of this Article, except that if a
shareholder dies, the stock may be owned by or held for the benefit of the
deceased shareholder's surviving spouse, or held for
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<PAGE>
the benefit for the deceased shareholder's minor child or children. Upon the
death of such a surviving spouse or the attainment of majority by such minor
child, the shares shall be offered to the Corporation in accordance with Section
6 of this Article.
Section 6. RESTRICTIONS ON THE SALE OF STOCK: Except as provided in
------------
Section 5 of this Article, no share of stock may be sold, transferred or
assigned to any person, firm, corporation or entity without complying with this
Section. The shares must first be offered for sale to the Corporation, which
shall have forty-five (45) days from the receipt of such offer to accept all or
any part of said offer. Unless accepted or rejected sooner, the offer to sell
shall be considered rejected by the Corporation at the expiration of the said
forty-five (45) days. The price at which said shares shall be offered and at
which the Corporation shall have the right to purchase the shares shall be the
price agreed upon by three-fourths (3/4) of the Board of Directors, but in no
event, less than the book value as of the end of the fiscal year immediately
preceding the offer. Book value shall be determined in accordance with usual
and customary accounting practices, and shall not include any value for good
will. The Corporation shall have the right to defer payment for up to one-half
of the shares it elects to buy for twelve (12) months from the date of accepting
the offer, but shall pay six (6) percent interest on the amount so deferred, and
shall pay for the balance of the accepted stock within sixty (60) days of
accepting the offer. When the Corporation tenders at least one-half of the
purchase price, the shares shall be surrendered to the Corporation. The offer
to sell shall be made by certified mail, and shall not be deemed made until
received by the Corporation, or the Corporation may in writing acknowledge
receipt of the offer. If the Corporation rejects the offer, the shares shall
then be offered to the other shareholders on the same terms and conditions as
offered to the Corporation. If more than one shareholder accepts the offer so
that acceptances to buy exceed the total shares being offered, each acceptor
shall have the rights to buy that proportion of the offered shares as his
holdings at the time of acceptance by all those shareholders accepting all or
part of the offer. Those shares not accepted by the Corporation, or other
shareholders, may be held by or sold to anyone, except that any succeeding
shareholder shall then be subject to these restrictions on sale.
Section 7. STOCK REGULATIONS: The Board of Directors shall have the
------------
power and authority to make all such further rules and regulations not
inconsistent with the Statutes of Iowa as they may deem expedient concerning the
issue, transfer and registration of certificates representing shares of the
Corporation, and a minute of any such rules and regulations shall be endorsed or
printed upon each such certificate.
Section 8. STOCK LIEN: The Corporation shall have a lien on the stock
------------
held by any shareholder for any and all sums owed the Corporation by the
shareholder, and no stock shall be transferred on the books of the Corporation
until any such debts shall be paid the Corporation without the written consent
of three-fourths (3/4) of the Board of Directors.
ARTICLE V
-8-
<PAGE>
MISCELLANEOUS PROVISIONS
------------------------
Section 1. EXECUTION OF INSTRUMENTS: All deeds, mortgages, leases, and
------------
all other instruments affecting real estate executed by this Corporation shall
be executed in the name of the Corporation by either the President or Vice
President and the Secretary or Treasurer. Conditional bills of sale or security
agreements, satisfaction of mortgage, judgments or other liens may be executed
or made by any officers of the Corporation.
Section 2. DIVIDENDS: Dividends shall be declared only from the surplus
------------
of the Corporation at such times as the Board of Directors shall order and no
dividends shall be declared that shall impair the capital of the Corporation.
Section 3. EXECUTIVE COMMITTEE: The Board of Directors may, by
------------
resolution, designate two or more of its members as an executive committee,
which committee shall have and may exercise all or so much thereof as may be
provided by said resolution, of the authority of the Board of Directors in the
management of the Corporation.
Section 4. AMENDMENT: The Board of Directors shall have power to amend,
------------
alter or repeal, in whole or in part, these By-Laws at any regular meeting of
the Directors or at any special meeting when such action has been announced in
the call and notice for such meeting.
Section 5. CORPORATE SEAL: The Board of Directors may, by resolution,
------------
adopt a corporate seal and alter the same from time to time in their discretion.
Section 6. TRANSFER RESTRICTIONS: No shareholder shall transfer any
------------
shares of the corporation except as may be provided in any buy and sell
agreement among the shareholders or as all of the shareholders may otherwise
agree.
ARTICLE VI
INDEMNIFICATION
---------------
Section 1. INDEMNITY: The Corporation shall indemnify and advance
------------
expenses to any person who was or is a party to or is threatened to be made a
party to any threatened, pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative (including a grand jury
proceeding) and whether formal or informal, by reason of the fact that such
person (a) is or was a director or officer of the Corporation, or (b) while a
director or officer of the Corporation, is or was serving at the request of the
Corporation as a director officer, employee, agent, partner or trustee (or in a
similar capacity) of another corporation, partnership, joint venture, trust,
other enterprise, or employee benefit plan, to the maximum extent it is
empowered to indemnify and advance expenses to a directors by Part E of Division
VIII of the Iowa Business Corporation Act as the same exists or may hereafter be
-9-
<PAGE>
amended or changed (but, in the case of any such amendment or change, only to
the extent that such amendment or change empowers the Corporation to provide
broader indemnification than said law empowered the Corporation to provide prior
to such amendment or change), against reasonable expenses (including attorneys'
fees), judgments, fines, penalties, including an excise tax assessed with
respect to an employee benefit plan, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such claim, action, suit
or proceeding or any appeal thereof; provided, however, that entitlement to such
indemnification shall be conditional upon the Corporation being afforded the
opportunity to participate directly on behalf of such person in such claim,
action, suit or proceeding or any settlement discussions relating thereto, and
with respect to any settlement or other nonadjudicated disposition of any
threatened or pending claim, action, suit or proceeding, entitlement to
indemnification shall be further conditional upon the prior approval by the
Corporation of the proposed settlement or nonadjudicated disposition. Such
approval shall be made (a) by the board of directors by majority vote of a
quorum consisting of directors not at the time parties to the claim, action,
suit or proceeding, or (b) by special legal counsel selected by the board of
directors by majority vote, of a quorum consisting of directors not at the time
parties to the claim, action or proceeding, or if the requisite quorum of the
full board cannot be obtained therefor, by a majority vote of the full board, in
which selection of counsel directors who are parties may participate. Approval
or disapproval by the Corporation of any proposed settlement or other
nonadjudicated disposition shall not subject the Corporation to any liability to
or required indemnification or reimbursement of any party whom the Corporation
would not otherwise have been required to indemnify or reimburse. The right to
indemnification conferred in this Article shall include the right to payment or
reimbursement by the Corporation of reasonable expenses incurred in connection
with any such claim, action, suit or proceeding in advance of its final
disposition; provided, however, that the payment or reimbursement of such
expense in advance of the final disposition of such claim, action suit or
proceeding shall be made only upon (a) delivery to the Corporation of a written
undertaking, by or on behalf of the person claiming indemnification under this
Article to repay all amounts so advanced if it shall ultimately be determined
that such person is not entitled to be indemnified under this Article or
otherwise, or (b) delivery to the Corporation of a written affirmation of such
person's good faith belief that such person has met the applicable standard of
conduct necessary to require indemnification by the Corporation pursuant to this
Article or otherwise, or (c) a determination that the facts then known to those
making the determination would not preclude indemnification under this Article.
I certify that the foregoing Bylaws of Panther Transport, Inc., were duly
adopted by the Board of Directors on December 21, 1992.
/s/ Mary H. Bertch
-------------------------------------------
Mary H. Bertch, Secretary
-10-
<PAGE>
Exhibit 4.1
================================================================================
OMEGA CABINETS, LTD.
HOMECREST CORPORATION
PANTHER TRANSPORT, INC.
10-1/2% SENIOR SUBORDINATED NOTES DUE 2007
-----------------------
INDENTURE
Dated as of July 24, 1997
-----------------------
-----------------------
The Chase Manhattan Bank
-----------------------
Trustee
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5)................................................... 7.10
(b)...................................................... 7.10
(c)...................................................... N.A.
311 (a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312 (a)...................................................... 2.05
(b)...................................................... 12.03
(c)...................................................... 12.03
313 (a)...................................................... 7.06
(b)(1)................................................... 10.03
(b)(2)................................................... 7.07
(c)...................................................... 7.06; 12.02
(d)...................................................... 7.06
314 (a)...................................................... 4.03; 12.02
(b)...................................................... 10.02
(c)(1)................................................... 12.04
(c)(2)................................................... 12.04
(c)(3)................................................... N.A.
(d)...................................................... N.A.
(e)...................................................... 12.05
(f)...................................................... N.A.
315 (a)...................................................... 7.01
(b)...................................................... 7.05; 12.02
(c)...................................................... 7.01
(d)...................................................... 7.01
(e)...................................................... 6.11
316 (a)(last sentence)....................................... 2.09
(a)(1)(A)................................................ 6.05
(a)(1)(B)................................................ 6.04
(a)(2)................................................... N.A.
(b)...................................................... 6.07
(c)...................................................... 2.12
317 (a)(1)................................................... 6.08
(a)(2)................................................... 6.09
(b)...................................................... 2.04
318 (a)...................................................... 12.01
(b)...................................................... N.A.
(c)...................................................... 12.01
N.A. means not applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<TABLE>
<S> <C> <C>
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 17
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 17
Section 1.04. Rules of Construction....................................... 18
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................. 18
Section 2.02. Execution and Authentication................................ 19
Section 2.03. Registrar and Paying Agent.................................. 20
Section 2.04. Paying Agent to Hold Money in Trust......................... 20
Section 2.05. Holder Lists................................................ 20
Section 2.06. Transfer and Exchange....................................... 21
Section 2.07. Replacement Notes........................................... 32
Section 2.08. Outstanding Notes........................................... 32
Section 2.09. Treasury Notes.............................................. 33
Section 2.10. Temporary Notes............................................. 33
Section 2.11. Cancellation................................................ 33
Section 2.12. Defaulted Interest.......................................... 33
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.......................................... 34
Section 3.02. Selection of Notes to Be Redeemed........................... 34
Section 3.03. Notice of Redemption........................................ 34
Section 3.04. Effect of Notice of Redemption.............................. 35
Section 3.05. Deposit of Redemption Price................................. 35
Section 3.06. Notes Redeemed in Part...................................... 36
Section 3.07. Optional Redemption......................................... 36
Section 3.08. Mandatory Redemption........................................ 36
Section 3.09. Offer to Purchase by Application of Excess Proceeds......... 36
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................ 38
Section 4.02. Maintenance of Office or Agency............................. 38
Section 4.03. Reports..................................................... 39
Section 4.04. Compliance Certificate...................................... 39
Section 4.05. Taxes....................................................... 40
Section 4.06. Stay, Extension and Usury Laws.............................. 40
Section 4.07. Restricted Payments......................................... 40
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................ 43
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.. 44
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.10. Asset Sales................................................. 46
Section 4.11. Transactions with Affiliates................................ 47
Section 4.12. Liens....................................................... 48
Section 4.13. Corporate Existence......................................... 48
Section 4.14. Offer to Repurchase Upon Change of Control.................. 48
Section 4.15. No Senior Subordinated Debt................................. 49
Section 4.16. Limitation on Sales of Capital Stock of Wholly Owned
Restricted Subsidiaries..................................... 49
Section 4.17. Additional Guarantees....................................... 50
Section 4.18. Payments for Consent........................................ 50
Section 4.19. Money for Payments to Be Held In Trust...................... 50
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.................... 51
Section 5.02. Successor Corporation Substituted........................... 52
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................... 52
Section 6.02. Acceleration................................................ 54
Section 6.03. Other Remedies.............................................. 55
Section 6.04. Waiver of Past Defaults..................................... 55
Section 6.05. Control by Majority......................................... 55
Section 6.06. Limitation on Suits......................................... 55
Section 6.07. Rights of Holders of Notes to Receive Payment............... 56
Section 6.08. Collection Suit by Trustee.................................. 56
Section 6.09. Trustee May File Proofs of Claim............................ 56
Section 6.10. Priorities.................................................. 57
Section 6.11. Undertaking for Costs....................................... 57
Section 6.12. Notice to Certain Holders of Senior Debt.................... 57
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................... 58
Section 7.02. Rights of Trustee........................................... 59
Section 7.03. Individual Rights of Trustee................................ 59
Section 7.04. Trustee's Disclaimer........................................ 59
Section 7.05. Notice of Defaults.......................................... 60
Section 7.06. Reports by Trustee to Holders of the Notes.................. 60
Section 7.07. Compensation and Indemnity.................................. 60
Section 7.08. Replacement of Trustee...................................... 61
Section 7.09. Successor Trustee by Merger, etc............................ 62
Section 7.10. Eligibility; Disqualification............................... 62
Section 7.11. Preferential Collection of Claims Against Company........... 62
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.... 62
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 8.02. Legal Defeasance and Discharge.............................. 62
Section 8.03. Covenant Defeasance......................................... 63
Section 8.04. Conditions to Legal or Covenant Defeasance.................. 63
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions....................... 64
Section 8.06. Repayment to Company........................................ 65
Section 8.07. Reinstatement............................................... 65
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes......................... 66
Section 9.02. With Consent of Holders of Notes............................ 66
Section 9.03. Compliance with Trust Indenture Act......................... 68
Section 9.04. Revocation and Effect of Consents........................... 68
Section 9.05. Notation on or Exchange of Notes............................ 68
Section 9.06. Trustee to Sign Amendments, etc............................. 68
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.................................... 69
Section 10.02. Liquidation; Dissolution; Bankruptcy........................ 69
Section 10.03. Default on Designated Senior Debt........................... 70
Section 10.04. Acceleration of Notes....................................... 72
Section 10.05. When Distribution Must Be Paid Over......................... 72
Section 10.06. Notice by Company........................................... 72
Section 10.07. Subrogation................................................. 72
Section 10.08. Relative Rights............................................. 73
Section 10.09. Subordination May Not Be Impaired by the Company or any
Guarantor................................................... 73
Section 10.10. Distribution or Notice to Representative.................... 73
Section 10.11. Rights of Trustee and Paying Agent.......................... 73
Section 10.12. Authorization to Effect Subordination....................... 74
Section 10.13. Amendments.................................................. 74
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees....................................... 74
Section 11.02. Execution and Delivery of Subsidiary Guarantees............. 76
Section 11.03. Limitation on Guarantor Liability........................... 76
Section 11.04 Stay of Acceleration........................................ 76
Section 11.05 Consolidation or Merger of Guarantors....................... 77
Section 11.06 Releases Following Sale of Assets........................... 77
ARTICLE 12
SATISFACTION AND DISCHARGE
Section 12.01 Satisfaction and Discharge of Indenture..................... 77
Section 12.02 Application of Trust Money.................................. 78
</TABLE>
iii
<PAGE>
ARTICLE 13
MISCELLANEOUS
<TABLE>
<S> <C> <C>
Section 13.01. Trust Indenture Act Controls............................... 79
Section 13.02. Notices.................................................... 79
Section 13.03. Communication by Holders of Notes with Other Holders of
Notes...................................................... 80
Section 13.04. Certificate and Opinion as to Conditions Precedent......... 80
Section 13.05. Statements Required in Certificate or Opinion.............. 81
Section 13.06. Rules by Trustee and Agents................................ 81
Section 13.07. No Personal Liability of Directors, Officers, Employees
and Stockholders........................................... 81
Section 13.08. Governing Law.............................................. 81
Section 13.09. No Adverse Interpretation of Other Agreements.............. 81
Section 13.10. Successors................................................. 81
Section 13.11. Severability............................................... 82
Section 13.12. Counterpart Originals...................................... 82
Section 13.13. Table of Contents, Headings, etc........................... 82
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S NOTE
Exhibit B-1 FORM OF CERTIFICATE OF TRANSFER
Exhibit B-2 FORM OF CERTIFICATE OF EXCHANGE
Exhibit C FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
iv
<PAGE>
INDENTURE dated as of July 24, 1997 among Omega Cabinets, Ltd., a Delaware
corporation (the "Company"), HomeCrest Corporation, a Delaware corporation
("HomeCrest"), Panther Transport, Inc., an Iowa corporation ("Panther," and
together with HomeCrest, the "Guarantors") and The Chase Manhattan Bank, as
trustee (the "Trustee").
The Company and the Guarantors jointly, and each of them severally, and
the Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 10-1/2% Senior Subordinated Notes due 2007
of the Company (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of the Voting Stock, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments, excluding all amounts
required to be paid on account of maintenance, repairs, taxes, insurance and
similar items, during the remaining term of the lease included in such sale and
leaseback transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"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.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
<PAGE>
"Board of Directors" means the Board of Directors of the Company, Holdings
or a Guarantor, as context requires, or any authorized committee of such Board
of Directors.
"Bridge Loans" means Indebtedness pursuant to that certain Senior
Subordinated Bridge Loan Agreement, dated as of June 13, 1997, by and among the
Company, the Guarantors, Holdings, West Street Fund I, L.L.C., a Delaware
limited liability company, and Citicorp USA, Inc., a Delaware corporation.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability or obligation that is required to be
accounted for as a capital lease for financial reporting purposes in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the full faith and credit of the
United States government or any agency or instrumentality thereof having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the New Bank Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition, or (vi) money market mutual funds
investing at least 95% of their assets in Investments of the types permitted in
clauses (i)-(v), above.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (i)
prior to the first public offering of Voting Stock of the Company or Holdings,
as the case may be, the Permitted Holders cease to be the "beneficial owners"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of majority voting power of the Voting Stock of Holdings or Holdings
shall cease to own, directly or indirectly, 100% of the issued and outstanding
Voting Stock of the Company, whether as a result of issuance of securities of
the Company or Holdings, as the case may be, any merger, consolidation,
liquidation or dissolution of the Company or Holdings, as the case may be, any
direct or indirect transfer of securities by any Permitted Holder or otherwise
(for purposes of this clause (i) and clause (ii) below, the Permitted Holders
will be deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation") so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, a majority of the Voting Stock of the parent
corporation); and (ii) following the first public offering of Voting Stock of
the Company or Holdings, as the case may be, any "person" (as such term is used
in Sections 13(d) and
<PAGE>
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that a
person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of the Company or
Holdings, as the case may be; provided that Permitted Holders beneficially own
(as defined in clause (i) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the Company
or Holdings, as the case may be, than such other person and do not have the
right or ability, by voting power, contract or otherwise, to elect or designate
for election a majority of the Board of Directors of the Company or Holdings, as
the case may be (for purposes of this clause (ii), such other person shall be
deemed to beneficially own any Voting Stock of a specified corporation held by a
parent corporation if such other person "beneficially owns" (as defined in this
clause (ii)), directly or indirectly, more than 50% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders "beneficially
own" (as defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of such parent corporation).
"Company" means Omega Cabinets, Ltd., a Delaware corporation, and any and
all successors thereto.
"Consolidated EBITDA" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes on income or profits of
such Person and its Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income, plus
(iii) Consolidated Interest Expense of such Person for such period, to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges (excluding
any such non-cash charge to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries for
such period to the extent that such depreciation, amortization and other non-
cash charges were deducted in computing such Consolidated Net Income, plus (v)
in the case of the Company's Consolidated Net Income, non-cash compensation
charges arising from the grant of stock options to employees under Holdings'
1996 Stock Option Plan to the extent such non-cash compensation charges are
deducted in determining the Company's Consolidated Net Income for such period,
minus (vi) non-cash items increasing such Consolidated Net Income for such
period, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and other non-cash
charges of, a Subsidiary of a Person shall be added to Consolidated Net Income
to compute Consolidated EBITDA only to the extent (and in the same proportion)
that the Net Income of such Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividended to such Person by
such Subsidiary without prior approval (that has not been obtained), pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
3
<PAGE>
"Consolidated EBITDA Ratio" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person for such period to
the Consolidated Interest Expense of such Person for such period. In the event
that such Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for which
the Consolidated EBITDA Ratio is being calculated but prior to the date on which
the event for which the calculation of the Consolidated EBITDA Ratio is being
made (the "Calculation Date"), then the Consolidated EBITDA Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by such Person or any of its
Restricted Subsidiaries (including any Person which became a Restricted
Subsidiary during such period), including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated EBITDA for such reference period shall be
calculated on a pro forma basis giving effect to any adjustments (including
adjustments for cost savings) relating to such transaction that would be
permitted or required pursuant to Regulation S-X to be reflected in any pro
forma financial statements that would be included in a registration statement on
Form S-1 under the Securities Act and without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated EBITDA attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Consolidated Interest Expense
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the referent Person or
any of its Restricted Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) but excluding amortization of deferred
financing and debt issuance costs on such Person's balance sheet on the date
hereof and (ii) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period, and (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) all cash dividend payments,
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests (other than Disqualified Stock) of such Person, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
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"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) except as provided in clause (i) above, the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded, (iv) the cumulative effect of
a change in accounting principles shall be excluded and (v) the Net Income (but
not loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date hereof in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Contingent Promissory Note" means the contingent promissory note, dated
June 13, 1997 in the principal amount of $3.0 million, as in effect on the date
hereof, issued in connection with the merger on June 13, 1997, of Omega Merger
Corp. with and into Holdings.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any
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and all successors thereto appointed as depositary hereunder and having become
such pursuant to the applicable provision of this Indenture.
"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 aggregate principal amount of which is
$10.0 million or more and that has been designated in writing by the Company as
"Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or (ii) is redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that a class of Capital Stock
shall not be Disqualified Stock hereunder solely as the result of any maturity
or redemption that is conditioned upon, and subject to, compliance with the
provisions of Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and the
Guarantors (other than Indebtedness under the New Bank Credit Facility) in
existence on the date hereof, until such amounts are repaid.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f).
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement by the Company to exchange Restricted Notes for
Unrestricted Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"GAAP" means generally accepted accounting principles set forth in the
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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
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"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto
issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f)
hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means (i) HomeCrest and Panther and (ii) each of the
Subsidiaries of the Company that executes a Subsidiary Guarantee in accordance
with the provisions of this Indenture.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate and/or currency swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means Omega Holdings, Inc., a Delaware corporation.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon, that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
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"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Interest Payment Date" shall have the meaning given to such term in the
form of Note attached hereto as Exhibit A.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including guarantees of Indebtedness), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If such Person or any Subsidiary of such
Person sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of such Person such that, after giving effect to any such
sale or disposition, such Subsidiary is no longer a Subsidiary of the referent
Person, the referent Person shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.07 hereof.
"Junior Subordinated Notes" means Indebtedness evidenced by those certain
11% payment-in-kind junior subordinated notes due December 13, 2007 of Holdings
in an initial aggregate principal amount of $10,000,000, which are guaranteed by
the Company pursuant to a junior subordinated guarantee.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means, at any time of determination, all liquidated
damages then owing pursuant to the terms of the Registration Rights Agreement.
"Management Agreement" means the Management Agreement among BCC Industrial
Services, Inc. (a management consulting company wholly owned by investment funds
managed by Butler Capital Corporation), Holdings and the Company, dated as of
June 13, 1997, as in effect on the date hereof.
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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate proceeds in cash or Cash Equivalents
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and brokerage and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under the New
Bank Credit Facility) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP.
"New Bank Credit Facility" means, collectively, (i) that certain Credit
Agreement, dated as of June 13, 1997, by and among the Company, HomeCrest and
Panther, 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)
and (ii) each of the other "Loan Documents" under and as defined in the Credit
Agreement referenced in the preceding clause (i); provided that in no event will
the aggregate principal amount outstanding under the New Bank Credit Facility
(with letters of credit 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, supplement, refinance or replace
any Indebtedness under the New Bank Credit Facility, at any time exceed $120.0
million.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. Person.
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"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto, as provided in Section 2.01.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the President, the Chief
Financial Officer, the Controller or the Secretary of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the President or
Chief Financial Officer of the Company, that meets the requirements of Section
13.05 hereof.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means Indebtedness of the Company or any of its
Restricted Subsidiaries that ranks pari passu in right of payment to the Notes
or any Guarantee thereof.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person who
has an account with DTC, Euroclear or Cedel, respectively (and, with respect to
DTC, shall include Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Permitted Holders" means Butler Capital Corporation, any Person controlled
by Butler Capital Corporation or under common control with Butler Capital
Corporation and any other Person during the period in which such Person is
acting as an underwriter in connection with a public offering of the Capital
Stock of Holdings or the Company.
"Permitted Hedging Obligation" means any Hedging Obligation entered into
in the ordinary course of business and not for speculation or trading purposes.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Guarantor in a Person, if as a result of such
Investment (i) such Person becomes a Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Guarantor; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
provisions of Section 4.10 hereof; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company; (f) other Investments in any
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Person having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (f)
that are at the time outstanding, not to exceed $2.0 million; (g) any Investment
existing on the date of the Indenture and any extension or renewals thereof, in
each case, on terms that are substantially similar to those in effect on the
date hereof with respect to such Investment; (h) Permitted Hedging Obligations;
(i) loans and advances to customers or vendors in the ordinary course of
business; and (j) loans to officers, directors and employees in the ordinary
course of business.
"Permitted Junior Securities" means (i) Equity Interests (other than
Disqualified Stock, including 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 any
debt securities issued in exchange for 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.
"Permitted Liens" means (i) Liens on assets of the Company or any of its
Subsidiaries securing Senior Debt that was permitted by the terms of this
Indenture to be incurred; (ii) Liens in favor of the Company or a Restricted
Subsidiary of the Company; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property or assets existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such acquisition
and do not extend to any assets other than those of the Person merged into or
consolidated with the Company; (v) Liens to secure the performance of statutory
or regulatory obligations, leases, surety or appeal bonds, performance bonds,
carriers', warehousemans', mechanics', landlords', materialmans' or repairmans'
Liens or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clauses (iv) and (x) of the second paragraph of
Section 4.09 hereof covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the date hereof; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (ix)
Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (x)
Liens on assets of Guarantors to secure Senior Debt of such Guarantors that was
permitted by this Indenture to be incurred; and (xi) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness of the Company or any of its Restricted Subsidiaries;
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provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith including
premiums paid, if any, to the holders thereof); (ii) such Permitted Refinancing
Indebtedness has a final maturity date at or later than the final maturity date
of, and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded, or, in the
case of the New Bank Credit Facility, such Indebtedness is incurred by the
Company or any Subsidiary of the Company, provided that any such Subsidiary that
is not a Guarantor prior to the incurrence of such Indebtedness shall execute a
supplemental indenture and deliver an Opinion of Counsel in the manner described
in Article 11 hereof.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof (including
any subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is disallowed in such
Insolvency or Liquidation Proceeding.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except Unrestricted Global
Notes and Unrestricted Definitive Notes as permitted by the provisions of this
Indenture.
"Public Equity Offering" means an underwritten public offering of common
stock (other than Disqualified Stock) of Holdings or the Company, pursuant to an
effective registration statement filed with the SEC in accordance with the
Securities Act, other than an offering pursuant to Form S-8 (or any successor
thereto).
"Offering Circular" means the Company's Offering Circular dated July 18,
1997 relating to the offer, issuance and sale of the Notes.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
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"Rabbi Trust" means the irrevocable trust created by that certain Rabbi
Trust Agreement, dated as of June 13, 1997, by and between Holdings and American
National Bank & Trust Company of Chicago, as Trustee.
"Record Date" shall have the meaning given to such term in the form of
Note attached hereto as Exhibit A.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of July 24, 1997, by and among the Company and the other parties named
on the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.
"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.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means (a) a Regulation S Global Note or a Rule
144A Global Note bearing the Private Placement Legend and (b) any other Global
Note bearing the Private Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Note" means a Restricted Definitive Note or a Restricted
Global Note.
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"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means the global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 144A.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"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.
"Senior Lenders" means the banks and other lenders from time to time party
to the New Bank Credit Facility.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on, or any other payments with respect to, any series of Indebtedness,
the date on which such payment of interest or principal or other payment
(including any sinking fund payment) is scheduled or required to be paid, and
shall not include any acceleration of such payment or any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company or any
of its Restricted Subsidiaries which is by its terms expressly subordinated in
right of payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as amended and as in effect on the date on which this Indenture is
qualified under the TIA.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Note" means an Unrestricted Global Note or an Unrestricted
Definitive Note.
"Unrestricted Subsidiary" means, with respect to any Person, (i) any
Subsidiary of such Person (other than Panther or HomeCrest, in the case of the
Company) that is designated by the Board of Directors of such Person as an
Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not, when designated as an Unrestricted Subsidiary, party to any agreement,
contract, arrangement or understanding with the referent Person or any
Restricted Subsidiary of such Person unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to such Person or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the referent Person; (c) is a Person with
respect to which neither the referent Person nor any of its Restricted
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Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve any specified levels
of operating results; (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the referent Person or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the referent Person or
any of its Restricted Subsidiaries and has at least one executive officer that
is not a director or executive officer of the referent Person or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors of such
Person shall be evidenced to the Trustee by filing with the Trustee a certified
copy of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.07 hereof. If, at any time, any
Unrestricted Subsidiary of the Company would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary of the Company for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the terms of Section 4.09 hereof,
a Default shall have occurred hereunder). The Board of Directors of any Person
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary of such Person; provided that such designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of such Person of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted by the terms of
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (ii) no
Default or Event of Default would be in existence following such designation.
If, at any time, any Unrestricted Subsidiary of the Company would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary of the Company for purposes of this
Indenture, and such Subsidiary shall execute a Subsidiary Guarantee and deliver
an Opinion of Counsel, in accordance with the terms of this Indenture.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is then outstanding and at the time is entitled to vote in the
election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
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Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"........... 4.11
"Asset Sale"...................... 4.10
"Asset Sale Offer"................ 4.10
"Change of Control Offer"......... 4.14
"Change of Control Payment"....... 4.14
"Change of Control Payment Date".. 4.14
"Covenant Defeasance"............. 8.03
"Event of Default"................ 6.01
"Excess Proceeds"................. 4.10
"Guaranteed Obligations".......... 11.01
"incur"........................... 4.09
"Legal Defeasance"................ 8.02
"Offer Amount".................... 3.09
"Offer Period".................... 3.09
"Paying Agent".................... 2.03
"Payment Blockage Notice"......... 10.03
"Payment Default"................. 10.03
"Permitted Debt".................. 4.09
"Purchase Date"................... 3.09
"Registrar"....................... 2.03
"Restricted Payments"............. 4.07
"Subsidiary Guarantees"........... 11.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
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Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof and shall be limited to
$100.0 million in aggregate principal amount.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of Exhibits
A-1 or A-2 attached hereto (including the Global Note Legend and the "Schedule
of Exchanges in the Global Note" attached thereto). Notes issued in definitive
form shall be substantially in the form of Exhibit A-1 attached hereto (but
without the Global Note Legend and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be
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made by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a Rule 144A
Global Note bearing a Private Placement Legend, all as contemplated by Section
2.06(b) hereof), and (ii) an Officers' Certificate from the Company. Following
the termination of the Restricted Period, beneficial interests in the Regulation
S Temporary Global Note shall be exchanged for beneficial interests in
Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by the
Agent Members through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so.
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Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee promptly in writing of the name and address of any Agent not
a party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
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Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes shall be exchanged
by the Company for Definitive Notes if (i) the Company delivers to the Trustee
written notice from the Depositary that it is unwilling or unable to continue to
act as Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule 903
under the Securities Act. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee in writing. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to Section 2.07 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. The Trustee
shall have no obligation to ascertain the Depositary's compliance with any such
restrictions. Transfers and exchanges of beneficial interests in the Global
Notes also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth
in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred only
to Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial
interests (other than a transfer of a beneficial interest in a Global Note to
a Person who takes delivery thereof in the form of a beneficial interest in
the same Global Note), the transferor of such beneficial interest must
deliver to the Registrar either
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(A)(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in another
specified Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B)(1) a written order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to cause to be issued
a Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to the
Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (B)(1) above; provided that in no event shall Definitive Notes
be issued upon the transfer or exchange of beneficial interests in the
Regulation S Temporary Global Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes. Upon satisfaction (or, if at any time the
Trustee ceases to be the Registrar, upon receipt by the Trustee of written
notification from the Registrar with respect to the satisfaction) of all of
the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture, the Notes and otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transferor complies with the
requirements of clause (ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the Rule 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B-1 hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Note or the Regulation S
Permanent Global Note, then the transferor must deliver a certificate in
the form of Exhibit B-1 hereto, including the certifications in item (2)
thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, is not (1)
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a broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit B-2 hereto, including the certifications in item
(1)(a) thereof;
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B-1 hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Registrar to the effect
that such exchange or transfer is in compliance with the Securities Act,
and that the restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Company shall execute and deliver
and the Trustee shall authenticate and deliver to the Depositary one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraph
(B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in
the form of a Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note,
a certificate from such holder in the form of Exhibit B-2 hereto,
including the certifications in item (2)(a) thereof;
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(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B-1 hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B-1 hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B-1 hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B-1 hereto, including the certifications, certificates and
Opinion of Counsel required by item (3)(d) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B-1 hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B-1 hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall (or, in the event the Trustee is not the Registrar, shall
upon receipt from the Registrar of written notification that the foregoing
documentation has been received by the Registrar) cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in such name
or names and in such authorized denomination or denominations as the holder
of such beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such Notes
are so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be (A) exchanged
for a Definitive Note prior to (x) the expiration of the Restricted Period
and (y) the receipt by the Registrar of any certificates required pursuant to
Rule 903 under the Securities Act or (B) transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to the conditions set
forth in clause (A) above or
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unless the transfer is pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding Section 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
that does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B-2 hereto, including the certifications in
item (1)(b) thereof;
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder in the form
of Exhibit B-1 hereto, including the certifications in item (4) thereof;
and
(3) in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Company, to the effect
that such exchange or transfer is in compliance with the Securities Act,
and that the restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act.
(iv) If any holder of a beneficial interest in an Unrestricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in
the form of a Definitive Note, then, upon satisfaction of the conditions (and
the receipt of notification from the Registrar, if applicable), as set forth
in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in such
authorized
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denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered
(or, if the Trustee is not the Registrar, the Trustee shall make such
delivery upon receipt of written notification from the Registrar of such
information). Any Definitive Note issued in exchange for a beneficial
interest pursuant to Section 2.06(c)(iii) and this Section 2.06(c)(iv) shall
not bear the Private Placement Legend. A beneficial interest in an
Unrestricted Global Note cannot be exchanged for a Definitive Note bearing
the Private Placement Legend or transferred to a Person who takes delivery
thereof in the form of a Definitive Note bearing the Private Placement
Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit B-2 hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B-1 hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or Rule
904 under the Securities Act, a certificate to the effect set forth in
Exhibit B-1 hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to
an exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B-1 hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
institution that is an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the effect
set forth in Exhibit B-1 hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof, if
applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B-1 hereto, including the certifications in item (3)(b)
thereof; or
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(G) if such Restricted Definitive Note is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B-1 hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall (or, if at any time the Trustee ceases to be the Registrar,
shall upon receipt from the Registrar of written notification that the
foregoing documentation has been received by the Registrar) cancel the
Definitive Note, increase or cause to be increased the aggregate principal
amount of, in the case of clause (A) above, the appropriate Restricted Global
Note, in the case of clause (B) above, the Rule 144A Global Note, and in the
case of clause (C) above, the Regulation S Global Note.
(ii) A Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B-2 hereto,
including the certifications in item (1)(c) thereof;
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B-1 hereto, including
the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that
such exchange or transfer is in compliance with the Securities Act, that
the restrictions on transfer contained herein and in the Private Placement
Legend are not required in order to maintain compliance with the
Securities Act, and such Restricted Definitive Notes are being exchanged
or transferred in compliance with any applicable blue sky securities laws
of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall (or, if at any time the Trustee ceases
to be the Registrar, upon receipt from the
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Registrar of written notification that any such condition has been met, the
Trustee shall) cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time. Upon receipt
of a request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Company shall execute and the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of beneficial interests transferred
pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered in
the name of Persons who take delivery thereof if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B-1 hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then
the transferor must deliver a certificate in the form of Exhibit B-1
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor
must deliver to the Company and the Registrar a certificate in the form of
Exhibit B-1 hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged by the Holder thereof
for an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
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(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B-2 hereto, including the
certifications in item (1)(d) thereof;
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B-1 hereto, including the certifications in item (4)
thereof; and
(3) in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that
such exchange or transfer is in compliance with the Securities Act, that
the restrictions on transfer contained herein and in the Private Placement
Legend are not required in order to maintain compliance with the
Securities Act, and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities laws of
any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request for such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof. Unrestricted Definitive Notes cannot
be exchanged for or transferred to Persons who take delivery thereof in the
form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by persons that
are not (x) broker-dealers, (y) Persons participating in the distribution of the
Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the
Company and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrent with the issuance of such Exchange Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and
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the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and
each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS."
(B) Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE
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INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration
of transfer or exchange of Global Notes or Definitive Notes shall be the
valid obligations of the Company, evidencing the
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same debt, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a Record Date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered by the Holder to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by an Officer of the Company, and
subject to the following sentence, shall authenticate a replacement Note. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
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If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special
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record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 33
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 30 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
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Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes prior to June 15, 2002. On and
after such date, the Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on June 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2002.........................................105.25%
2003.........................................103.50%
2004.........................................101.75%
2005 and thereafter..........................100.00%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time on or prior to June 15, 2000, the Company may (but shall not have the
obligation to) redeem, on one or more occasions, up to an aggregate of $35.0
million in aggregate principal amount of Notes at a redemption price equal to
110.5% of the principal amount thereof, plus accrued and unpaid interest, and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings by Holdings or the Company (to
the extent that the net proceeds therefrom are contributed by Holdings to the
Company as common equity); provided that at least $65.0 million in aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of such redemption; and provided further, that the notice of redemption with
respect to any such redemption shall be mailed within 60 days of the date of the
receipt by the issuer of the proceeds of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.14 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to make an Asset Sale Offer, it shall follow the procedures specified
below.
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The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary,
if appointed by the Company, or a Paying Agent at the address specified in
the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Note purchased;
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(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company, shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location,
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of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) definitive reports containing all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K, if the Company were required to file such forms, including
a "Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries (showing in reasonable detail,
either on the face of the financial statements or in the footnotes thereto and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, the financial condition and results of operations of the Company and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company) and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K, if the Company were required to file such
reports, in each case within the time periods set forth in the SEC's rules and
regulations; provided, however, that the first such report under clause (i) with
respect to the quarter ended June 28, 1997 will not be required to be furnished
until August 31, 1997. In addition, whether or not required by the rules and
regulations of the SEC, at any time after the consummation of the Exchange
Offer, the Company shall file a copy of all such information and reports with
the SEC for public availability within the time periods set forth in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA (S) 314(a).
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this
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<PAGE>
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
such
40
<PAGE>
payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or to the Company or any of its Restricted Subsidiaries);
(ii) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, any such payment in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or any
direct or indirect parent of the Company (other than any such Equity Interests
owned by the Company or any Wholly Owned Restricted Subsidiary of the Company);
(iii) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes, except a payment at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated EBITDA Ratio test set forth in the first paragraph Section 4.09
hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date hereof (including only Restricted Payments permitted by
clauses (i), (v) and (xi) of the next succeeding paragraph), does not exceed
the sum (without duplication) of (i) 50% of the aggregate amount of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the date hereof to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds received by the Company from the issue or sale since the date
hereof of Equity Interests of the Company (other than Disqualified Stock) or
of Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (iii) 100% of the
aggregate amounts contributed as equity to the Company from the date hereof,
plus (iv) the amount by which Indebtedness of the Company or its Restricted
Subsidiaries is reduced on the Company's consolidated balance sheet upon the
conversion or exchange subsequent to the date hereof of any Indebtedness of
the Company or its Restricted Subsidiaries issued after the date hereof that
is convertible into or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash or other
property distributed by the Company or any Restricted Subsidiary upon such
conversion or exchange), plus (v) to the extent that any Restricted
Investment that was made after the date hereof is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment, plus (vi) 50%
of any dividends received by the Company or a Wholly Owned Restricted
Subsidiary after the date hereof from an Unrestricted Subsidiary of the
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Company to the extent that such dividends were not otherwise included in
Consolidated Net Income of the Company for such period.
The foregoing provisions shall not prohibit, without duplication, (i) the
payment of any dividend within 60 days after the date of declaration thereof, if
at said date of declaration such payment would have complied with the provisions
of this Section 4.07; (ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests
of the Company (other than any Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded (to
the extent otherwise included) from clause (c) (ii) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) payments to Holdings or by the Company, in
either case, for the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of Holdings, the Company or any of the
Company's Restricted Subsidiaries held by any director, officer, employee or
consultant or any of such Persons' heirs, estates or assigns pursuant to or in
connection with any management, employee or consultant agreement, equity
subscription agreement, stock option agreement or stockholders agreement;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $1.5 million in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; (vi) cash payments to Holdings
or by the Company, in either case, in lieu of fractional shares issuable as
dividends on preferred securities of the Company or any of its Restricted
Subsidiaries; provided that such cash payments shall not exceed $20,000 in the
aggregate in any twelve-month period and no Default or Event of Default shall
have occurred and be continuing immediately after such transaction; (vii)
payments to Holdings or by the Company, in either case, to fund the repurchase,
redemption, retirement or other acquisition of the Contingent Promissory Note or
payments to the Company to permit such payments; (viii) cash dividends on any
series of Disqualified Stock of the Company or any of its Restricted
Subsidiaries to the extent included in Consolidated Interest Expense; provided
that the Company would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated EBITDA Ratio
test set forth in the first paragraph of Section 4.09 hereof; (ix) payments to
Holdings in amounts equal to the amounts required to pay its franchise taxes and
other fees required to maintain its corporate existence and to provide for other
operating costs in an amount not to exceed $250,000 per fiscal year; (x)
payments to Holdings in amounts required for Holdings to pay federal, state and
local taxes to the extent such taxes are actually owed by Holdings and are
attributable to the Company and its Subsidiaries; (xi) so long as no Default or
Event of Default shall have occurred and be continuing, other Restricted
Payments in an amount not to exceed $2.0 million; (xii) payments to Holdings in
the amounts required for Holdings to make payments pursuant to the Rabbi Trust
in existence on the date hereof and established for the benefit of officers and
employees pursuant to the 1997 Omega Holdings, Inc. Deferred Compensation Plan,
in accordance with the terms thereof as in effect on such date; (xiii) payments
to Holdings of amounts required to enable Holdings to satisfy its obligations
under the purchase price adjustment provisions of the Merger Agreement; and
(xiv) payments to Holdings to repay interest and principal in respect of the
Junior Subordinated Notes and the Bridge Loans. To the extent that any
Restricted Payment is permitted by any one of the foregoing clauses (i) through
(xiv), such
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Restricted Payment shall not be taken into account for purposes of calculating
the amount of Restricted Payments permitted by any other such clauses.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed,
together with a copy of any fairness opinion or appraisal required by this
Indenture.
The Board of Directors of the Company may designate any Restricted
Subsidiary (other than Panther or HomeCrest) to be an Unrestricted Subsidiary if
such designation would not cause a Default. For purposes of making such
determination, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation and shall reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. All such outstanding Investments
shall be deemed to constitute Investments in an amount equal to the greatest of
(x) the net book value of such Investments at the time of such designation, (y)
the fair market value of such Investments at the time of such designation and
(z) the original fair market value of such Investments at the time they were
made. Such designation shall only be permitted if such Restricted Payment would
be permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (i)(a) pay dividends or
make any other distributions to the Company or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest
or participation in, or measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness and Liens with respect thereto as in effect
or entered into on the date hereof, (b) the New Bank Credit Facility as in
effect as of the date hereof, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Bank Credit Facility as in effect on the date hereof,
(c) this Indenture, the Notes and the Subsidiary Guarantees, (d) applicable law,
(e) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of
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Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in (A) leases, licenses,
encumbrances, contracts or similar assets entered into or acquired in the
ordinary course of business, (B) any agreement to transfer, or option or right
with respect to the transfer of, any property or assets of the Company or any of
its Restricted Subsidiaries not otherwise prohibited by this Indenture or (C) by
virtue of provisions of security agreements or mortgages securing Indebtedness
of a Restricted Subsidiary that is not otherwise prohibited by this Indenture to
the extent that such provisions restrict the transfer of the property or assets
subject to the Lien created thereby, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
of the Capital Stock or assets of such Restricted Subsidiary or (i) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company or any of its Restricted Subsidiaries may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock or preferred stock if the
Consolidated EBITDA Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.0 to
1.0, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock or preferred stock had been issued, as the case may be,
at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) Indebtedness of the Company and its Restricted Subsidiaries under
the New Bank Credit Facility;
(ii) Existing Indebtedness;
(iii) Indebtedness represented by the Notes and the Subsidiary
Guarantees;
(iv) Indebtedness represented by Capital Lease Obligations in an
aggregate principal amount not to exceed $5.0 million at any time
outstanding;
(v) Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness that
was permitted by this Indenture to be incurred;
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(vi) intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary of the Company and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company
or a Restricted Subsidiary of the Company shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that is not permitted by this
clause (vi);
(vii) Indebtedness consisting of Permitted Hedging Obligations;
(viii) Indebtedness in respect of performance, surety and similar bonds
provided by the Company in the ordinary course of business;
(ix) the guarantee of Indebtedness of the Company or a Restricted
Subsidiary that was permitted to be incurred by another provision of this
Section 4.09;
(x) Indebtedness in respect of industrial revenue bonds or other
similar governmental and municipal bonds, mortgage financings or purchase
money obligations in an aggregate amount not to exceed $5.0 million;
(xi) Indebtedness in respect of (A) letters of credit (other than
letters of credit issued under the New Bank Credit Facility) incurred in the
ordinary course of business for the purpose of securing foreign trade credit
obligations of the Company or a Restricted Subsidiary of the Company and (B)
Acquired Debt in connection with the acquisition of new assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to the acquisition by the Company or
one of its Restricted Subsidiaries and was not incurred in connection with,
or in contemplation of, such acquisition by the Company or such Restricted
Subsidiary; and provided further that the aggregate principal amount (or
accreted value, as applicable) of all Indebtedness incurred pursuant to this
clause (xi) shall not exceed $5.0 million at any one time outstanding;
(xii) additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (xii), not to exceed $10.0
million; and
(xiii) Non-Recourse Debt of an Unrestricted Subsidiary, provided,
however, that if any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness that is not permitted by this clause (xiii).
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiii) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
shall be treated as having been incurred pursuant
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to only one of such clauses or pursuant to the first paragraph of this Section
4.09. Accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.09.
Section 4.10. Asset Sales and Sales of Subsidiary Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to: (i) sell, lease, convey or otherwise dispose of any assets or
rights (including by way of a sale-and-leaseback) other than in the ordinary
course of business consistent with past practices (provided that the sale,
lease, conveyance or other distribution of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole, or the merger of
the Company with or into a Wholly Owned Restricted Subsidiary of the Company, or
the merger of a Wholly Owned Restricted Subsidiary of the Company with or into
another Wholly Owned Restricted Subsidiary of the Company, shall be governed by
the provisions of Sections 4.14 and 5.01 hereof), or (ii) issue or sell equity
securities of any of the Company's Subsidiaries, in the case of either clause
(i) or (ii) above, whether in a single transaction or a series of related
transactions, (a) that have a fair market value (as determined in good faith by
the Board of Directors of the Company) in excess of $1.0 million or (b) for net
proceeds in excess of $1.0 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (y) at least 75% of the
consideration received therefor by the Company or such Restricted Subsidiary is
in the form of cash; provided, however, that the amount of (A) any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto) of the Company or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability and
(B) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash within 90 days of receipt
thereof by the Company or such Restricted Subsidiary (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Notwithstanding the foregoing: (i) a transfer of assets, including the sale,
lease, conveyance or other disposition of any assets, by the Company to a
Guarantor or by a Guarantor to the Company or to another Guarantor, (ii) an
issuance of Equity Interests by a Guarantor to the Company or to another
Guarantor, (iii) the incurrence of Permitted Liens, (iv) any Restricted Payment
that is permitted by Section 4.07 hereof, and (v) a disposition of goods held
for sale or obsolete equipment in the ordinary course of business of the Company
or a Restricted Subsidiary, shall not be deemed to be Asset Sales.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior
Debt, or (b) to the acquisition of a controlling interest in another business,
the making of a capital expenditure or the acquisition of other long-term assets
(i.e., assets that would not be considered short-term assets under GAAP) or (c)
to an investment in properties or assets that replace the properties or assets
that are the subject of such Asset Sale. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce Senior Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by the provisions
of this Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph shall be deemed to
constitute "Excess Proceeds." When the aggregate amount
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of Excess Proceeds exceeds $5.0 million, the Company shall be required to make
an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest, and Liquidated Damages, if any,
thereon to the date of purchase, in accordance with the procedures set forth in
Section 3.09 hereof. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to or Investment in, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
of such Affiliate Transaction to the Company from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; provided that (i) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries which provides for aggregate annual
payments not in excess of $350,000, (ii) transactions between or among the
Company and/or its Restricted Subsidiaries, (iii) Restricted Payments that are
permitted by the provisions of Section 4.07 hereof, (iv) existing transactions
and arrangements described in the Offering Circular including, without
limitation, those transactions described under the captions "Use of Proceeds,"
"Certain Relationships and Related Transactions" and "The Transactions," (v)
reasonable and customary fees, indemnification and similar arrangements for
directors and officers, (vi) collective bargaining agreements, employee and
director benefit plans, related trust agreements or other similar arrangements
entered into in the ordinary course of business, (vii) payment of compensation
to employees, officers, directors or consultants who are not otherwise
Affiliates of the Company in the ordinary course of business, (viii) any
transaction between the Company and a Wholly Owned Restricted Subsidiary of the
Company, (ix) the payment of fees and obligations under the Management Agreement
in accordance with its terms as in effect on the date hereof, or as the same may
be amended from time to time (except any such amendment that would increase the
fees and obligations thereunder) and (x) payments to reimburse Holdings for
costs, fees and expenses incident to a public offering of Equity Securities of
Holdings, provided that the proceeds therefrom (other than any such proceeds
used to redeem Notes as described above in the second paragraph in Section 3.07
hereof), are contributed to the Company, in each case, shall not be deemed
Affiliate Transactions.
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Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien (other than Permitted Liens) securing Pari Passu Indebtedness or
Subordinated Indebtedness on any asset now owned or hereafter acquired by the
Company or any of its Restricted Subsidiaries, or any income or profits
therefrom or assign or convey any right to receive income therefrom, unless the
Notes are equally and ratably secured with the obligations so secured until such
time as such obligations are no longer secured by a Lien; provided that in any
case involving a Lien securing Subordinated Indebtedness, such Lien is
subordinated to the Lien securing the Notes on a basis no less favorable than
such Subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the its business of the Company, together with its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.14. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control (unless notice of the redemption of the Notes has been given
as provided under Section 3.02 hereof), the Company shall mail a notice to each
Holder stating: (1) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Notes tendered will be accepted for payment; (2)
the purchase price and the purchase date, which shall be no earlier than 30 and
no later than 60 Business Days from the date such notice is mailed (the "Change
of Control Payment Date"); (3) that any Note not tendered will continue to
accrue interest; (4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date; (5) that Holders electing to have any Notes purchased pursuant to
a Change of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is
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withdrawing his election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.14, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations hereunder by
virtue thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Paying Agent the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder
of Notes so tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided that each such new Note will
be in a principal amount of $1,000 or an integral multiple thereof.
(c) Prior to complying with the provisions of this Section 4.14, but in
any event within 40 days following a Change of Control, if the terms of the
Senior Debt restrict or prohibit the repurchase of Notes under this Section
4.14, the Company shall either repay all outstanding Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Notes required by this Section 4.14. The
Company shall announce the results of the Change of Control Offer on or as soon
as practicably after the Change of Control Payment Date.
Section 4.15. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Notes, and (ii) no
Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
Senior Debt of such Guarantor and senior in any respect in right of payment to
the Subsidiary Guarantees.
Section 4.16. Limitation on Sales of Capital Stock of Wholly Owned Restricted
Subsidiaries.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (a) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock of such Wholly
Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof, and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting
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directors' qualifying shares) to any Person other than to the Company or a
Wholly Owned Restricted Subsidiary of the Company.
Section 4.17. Additional Guarantees.
In the event that the Company or any of its Subsidiaries shall acquire or
create another Subsidiary after the date hereof, then such newly acquired or
created Subsidiary shall execute a supplemental indenture, the form of which is
attached as Exhibit C hereto, and deliver to the Trustee an Opinion of Counsel,
in accordance with Section 13.05 hereof; provided that this Section 4.17 shall
not apply to any Subsidiaries that have properly been designated as Unrestricted
Subsidiaries in accordance with the provisions hereof for so long as they
continue to constitute Unrestricted Subsidiaries.
Section 4.18. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.19. Money for Payments to Be Held In Trust.
If the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the principal of, premium, if any, or interest on any of
the Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest or
Liquidated Damages, if any, so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes, it
will, on or before each due date of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Notes, deposit with a Paying
Agent a sum in same day funds (or New York Clearing House funds if such deposit
is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal, premium, if any, or interest or Liquidated
Damages, if any, so becoming due (or at the option of the Company, payment of
interest may be mailed by check to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; provided that all
payments with respect to Notes represented by one or more permanent global Notes
will be paid by wire transfer of immediately available funds to the account of
the Depository Trust Company or any successor thereto) such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or
interest or Liquidated Damages, if any, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
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(a) hold all sums held by it for the payment of the principal of, premium, if
any, or interest or Liquidated Damages, if any, on Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal,
premium, if any, or interest or Liquidated Damages, if any;
(c) at any time during the continuance of any such default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and
obligations of such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or direct any
Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to the Company at the
request of the Company or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense of the Company cause notice to
be promptly sent to each Holder that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification any unclaimed balance of such money then remaining
will be repaid to the Company.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or Person
formed by or surviving any such consolidation or merger or the entity or Person
to which such sale, assignment, transfer, lease,
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conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee that is executed in
accordance with the provisions of Section 9.01 hereof; (iii) immediately after
such transaction no Default or Event of Default exists; and (iv) except in the
case of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) shall
have a Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated EBITDA Ratio test set forth
in the first paragraph of Section 4.09 hereof. Notwithstanding the foregoing,
any Restricted Subsidiary of the Company shall be permitted to consolidate with,
merge with or into or transfer all or part of its properties or assets to the
Company or another Restricted Subsidiary.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, and
Liquidated Damages, if any, with respect to, the Notes and such default
continues for a period of 30 days, whether or not such payment is
prohibited by Article 10 hereof;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes, upon redemption (including in connection
with an offer to purchase) or otherwise, whether or not such payment is
prohibited by Article 10 hereof;
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(c) the Company or any of its Subsidiaries fails to comply with any of
the provisions of Section 4.07, 4.09, 4.10, 4.14 or 5.01 hereof and the
continuance of such failure for a period of 30 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Notes
then outstanding;
(d) the Company or any of its Restricted Subsidiaries fails to observe
or perform any other covenant, representation, warranty or other agreement
in this Indenture or the Notes for 60 days after notice to the Company by
the Trustee or by the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or payment of which is guaranteed by the Company
or any of the Company's Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, which default results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other
such Indebtedness the maturity of which has been so accelerated,
aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Restricted Subsidiaries and such judgment or judgments
remain undischarged and unstayed for a period of 60 days, provided that
the aggregate of all such undischarged judgments exceeds $5.0 million;
(g) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee;
(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
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(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of
the property of the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof) with respect to the Company occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof occurs with respect to the Company, all
outstanding Notes shall be due and payable immediately without further action or
notice. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after June 15, 2002 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding.
If an Event of Default occurs prior to June 15, 2002 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then, upon acceleration of the Notes, the amount payable for purposes
of this paragraph, for each of the years beginning on June 15 of the years set
forth below, shall be as set forth below (expressed as a percentage of the
principal amount of such payment that would otherwise be due but for the
provisions of this sentence), plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of payment:
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1997 ............................ 114.00%
1998 ............................ 112.25%
1999 ............................ 110.50%
2000 ............................ 108.75%
2001 ............................ 107.00%
</TABLE>
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes rescind an acceleration and waive an existing Default or Event
of Default and its consequences hereunder, except a continuing Default or Event
of Default in the payment of the principal of, interest on and premium and
Liquidated Damages, if any, with respect to, the Notes (including in connection
with an offer to purchase) (provided, however, that the Holders of a majority in
aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 6.05. Control by Majority.
Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
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(b) the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason,
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payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties that
the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
Section 6.12. Notice to Certain Holders of Senior Debt.
Upon receipt of notice from the Company or any Holder of an Event of
Default, the Trustee shall provide a copy of such notice to the Bank Agent at
the address set forth in Section 13.02 hereof; provided, that the Trustee shall
not be liable to the Company, the Bank Agent or any holder of Senior Debt as the
result of the failure to comply with the foregoing.
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ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
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Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, interest on and
premium and Liquidated Damages, if any, with respect to, any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S)313(a) (but if no event described in TIA
(S)313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA
(S)313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S)313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA (S)313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
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To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become
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effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders of the Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness
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represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13 and 4.15 hereof with respect to the outstanding Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that,
with respect to the outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof (as the provision
of such Sections apply to the Company but not to its Subsidiaries) shall not
constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of Notes, (i) cash in United States
dollars, (ii) non-callable Government Securities or (iii) a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of,
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premium and Liquidated Damages, if any, and interest on the outstanding
Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound;
(e) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company
or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this
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Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Company on its written request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, any supplemental indenture
executed pursuant to Article 11 hereof or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely
affect any Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor corporation;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the receipt of an Officers' Certificate accompanied by a resolution
of the Company's Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the other
documents described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.14
hereof), any supplemental indenture executed pursuant to Article 11 hereof and
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).
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Upon the receipt of an Officers' Certificate accompanied by a resolution
of the Company's Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the other documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected,
an amendment or waiver may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes (except as provided above with respect to Sections 3.09, 4.10 and
4.14 hereof);
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes;
(g) make any changes to the provisions of Article 10 hereof that
adversely affects the rights of any Holder; or
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(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
In addition, any amendment, supplement or waiver of the provisions of
Article 10 shall (i) require the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding if such amendment,
supplement or waiver would adversely affect the rights of such Holders, and (ii)
be subject to Section 10.13 hereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
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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,
interest on and premium and Liquidated Damages, if any, with respect to, 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, interest on and premium and Liquidated Damages, if any, with
respect to, 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 in cash of all Obligations (including, without limitation,
Post-Petition Interest) due or to become due in respect of such Senior Debt
before Holders of the Notes shall be entitled to receive any payment with
respect to the Notes, and until all Obligations with respect to Senior Debt
are paid in full in cash, any distribution to which the Holders of Notes
would be entitled shall be made to holders of Senior Debt (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 (a)(1)
above) is paid in full in cash, 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 provided above in (1) 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).
(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:
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(1) holders of Senior Debt of such Guarantor shall be entitled to receive
payment in full in cash of all Obligations (including, without limitation,
Post-Petition Interest) due or to become due in respect of such Senior Debt
before Holders of the Notes shall be entitled to receive any payment with
respect to the Notes, and until all Obligations with respect to Senior Debt
are paid in full in cash, any distribution to which the Holders of Notes
would be entitled shall be made to holders of Senior Debt (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
(b)(1) above) is paid in full in cash, 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 provided above in (1) 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 in cash if:
(i) a 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 Trustee 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(a)(ii) that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice; 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 the original 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:
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(1) the date upon which the event of default is cured or waived in
accordance with the terms of the applicable Designated Senior Debt, or
(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 in cash 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 the Trustee receives 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(b)(ii) that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice; 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 the original 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 in
accordance with the terms of the applicable Designated Senior Debt, or
(2) in the case of an event of default referred to in Section 10.03(b)(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.
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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 of any
Obligations 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 hereof or if the Trustee has actual knowledge of such prohibition at any
time prior to distributing such payment to 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 of any Obligations 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
Pari Passu Indebtedness) 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.
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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.
Section 10.09. Subordination May Not Be Impaired by the 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. Rights 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
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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 the 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.
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees.
(a) The Guarantors and each future Subsidiary of the Company that becomes
a Guarantor hereunder, jointly and severally, hereby absolutely, unconditionally
and irrevocably guarantees (the "Subsidiary Guarantees") the full and punctual
payment (whether at Stated Maturity, upon acceleration, redemption or otherwise)
of the principal of and interest, and premium and Liquidated Damages, if any, on
the Notes, and the full and punctual payment of all other obligations of the
Company to the Holders or the Trustee, including all reasonable costs of
collection and enforcement thereof and interest thereon which would be owing by
the Company or another Guarantor but for the effect of any Bankruptcy Law
(collectively, the "Guaranteed Obligations"). Each of the Guarantors
understands, agrees and confirms that each of the Holders may enforce the
provisions of this Article 11 and each of the Subsidiary Guarantees up to the
full amount guaranteed by the Guarantors hereunder against any and all of the
Guarantors without proceeding against any other obligor, against any security
for the Guaranteed Obligations or against any other Guarantor under any other
Guarantee covering the Guaranteed Obligations. All payments made by any
Guarantor under this Section 11.01 shall be paid at the place and in the manner
specified in Article 2. Each Guarantor agrees that this is a continuing
Guarantee of payment and not merely a Guarantee of collection.
74
<PAGE>
(b) The obligations of each Guarantor hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company or any Guarantor hereunder, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to this Indenture,
the Notes, the Registration Rights Agreement or the Bridge Loan Agreement;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for, or any other Person's Guarantee of, any of the
Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership of
the Company or any Guarantor, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or any Guarantor or its
respective assets or any resulting release or discharge of any obligation of
the Company or any Guarantor hereunder;
(v) the existence of any claim, set-off or other rights which any
Guarantor may have at any time against the Company or any Guarantor or any
other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability of this Indenture or the Notes,
any invalidity or unenforceability against or relating to the Company or
other Guarantor for any reason of this Indenture or the Notes, or any
provision of applicable law or regulation purporting to prohibit the payment
by the Company or any Guarantor of the principal of, interest, premium or
Liquidated Damages, if any, on the Notes payable by the Company or any
Guarantor under this Indenture; or
(vii) any other act or omission to act or delay of any kind by the
Company or any Guarantor or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute
a legal or equitable discharge of the Guaranteed Obligations of any Guarantor
hereunder.
(c) Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company or any Guarantor, any right to require a proceeding first against
the Company or another Guarantor, protest, notice and all demands whatsoever and
covenants that, subject to this Article 11, no Subsidiary Guarantee shall be
discharged except by complete payment and performance of all Guaranteed
Obligations.
(d) If any Holder is required by any court or otherwise to return to the
Company or any Guarantor, or any custodian for the Company or any Guarantor or
their respective assets, any amount paid to any Holder, then to the extent of
the amount so returned, each Subsidiary Guarantee shall be reinstated in full
force and effect.
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<PAGE>
(e) Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guaranteed Obligations
until payment in full of all Guaranteed Obligations. Each Guarantor further
agrees that, as between the Guarantors, on the one hand, and the Holders, on the
other hand, (i) the maturity of the Guaranteed Obligations may be accelerated as
provided in Section 6.02 notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guaranteed
Obligations and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Section 6.02, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Section 11.01 and its respective Subsidiary
Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of any of the Holders under this Section 11.01.
Section 11.02. Execution and Delivery of Subsidiary Guarantees.
To evidence its acceptance of and agreement to the provisions set forth in
Section 11.01, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee shall be included on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of each Guarantor.
Section 11.03. Limitation on Guarantor Liability.
Each Guarantor and the Trustee hereby confirms, and each of the Holders by
its acceptance of a Note confirms, that it is the intention of all such parties
that the provisions of this Article 11 and the execution, delivery and
performance of each Subsidiary Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Holders and the Guarantors hereby irrevocably agree that the
Guaranteed Obligations of each Guarantor under this Article 11 and any
Subsidiary Guarantee shall be limited to the maximum amount as will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
Guaranteed Obligations of such other Guarantor hereunder or under any Subsidiary
Guarantee, result in the Guaranteed Obligations of such Guarantor hereunder or
under any Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
Section 11.04 Stay of Acceleration.
In the event that acceleration of the time for payment of any Guaranteed
Obligation is stayed upon insolvency, bankruptcy or reorganization of the
Company or any Guarantor, all such amounts otherwise subject to acceleration
under the terms of this Indenture or any of the Notes shall nonetheless by
payable by each Guarantor forthwith on demand by any Holder.
76
<PAGE>
Section 11.05 Consolidation or Merger of Guarantors.
Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety, to the Company or another Guarantor.
Section 11.06 Releases Following Sale of Assets.
Subject to Section 7.07 hereof, concurrently with any sale of assets
(including, if applicable, all of the capital stock of any Guarantor), any Liens
in favor of the Trustee in the assets sold thereby shall be released; provided
that in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of Section 4.10
hereof. In the event of a sale or other disposition of all or substantially all
of the assets of any Guarantor, by way of merger, consolidation or otherwise, or
a sale or other disposition of all of the capital stock of any Guarantor, then
such Guarantor (in the event of a sale or other disposition, by way of such
merger, consolidation or otherwise, of all of the capital stock of such
Guarantor in accordance with the provisions of this Indenture) or the
corporation acquiring the property or assets of such Guarantor (in the event of
a sale or other disposition of all or substantially all of the assets of such
Guarantor), shall be released and relieved of its obligations under its
Subsidiary Guarantee or Section 11.05 hereof, as the case may be; provided that
in the event of an Asset Sale, the Net Proceeds form such sale or other
disposition are treated in accordance with the provisions of Section 4.10
hereof. Upon delivery by the Company and the Guarantors to the Trustee of an
Officers' Certificate and an Opinion of Counsel to the effect that such sale or
other disposition was made by the Company and the Guarantors in accordance with
the provisions of this Indenture, including without limitation Section 4.10
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Subsidiary
Guarantee. Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11. The release of any Guarantor pursuant to this
Section 11.06 shall be effective whether or not such release shall be noted on
any Note then outstanding or thereafter authenticated and delivered.
ARTICLE 12
SATISFACTION AND DISCHARGE
Section 12.01 Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and will cease to be of further effect as
to all Notes issued hereunder, when either
(a) all such Notes theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee for
cancellation; or
(b) (i) all such Notes not theretofore delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become
77
<PAGE>
due and payable within one year and the Company or a Guarantor has
irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust an amount of money sufficient to pay and discharge the
entire Indebtedness on such Notes not theretofore delivered to the Trustee
for cancellation for principal, premium, if any, and accrued interest and
Liquidated Damages, if any, to the date of maturity or redemption;
(ii) no Default or Event of Default with respect to this Indenture or the
Notes shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company or a Guarantor is a party or by which the
Company or a Guarantor is bound;
(iii) the Company or a Guarantor has paid or caused to be paid all sums
payable by it under this Indenture; and
(iv) the Company has delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the payment of
such Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
Section 12.02 Application of Trust Money
Subject to the provisions of the last paragraph of Section 4.19 hereof, all
money deposited with the Trustee pursuant to Section 12.01 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
Persons entitled thereto, of the principal (and premium, if any) and interest
and Liquidated Damages, if any, for whose payment such money has been deposited
with the Trustee.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 12.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though such deposit had occurred pursuant to Section 12.01 hereof;
provided that if the Company has made any payment of principal of, premium, if
any, or interest or Liquidated Damages, if any, on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.
78
<PAGE>
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 13.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company or any Guarantor:
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Telecopier No.: (319) 235-5827
Attention: Chief Financial Officer
With a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telecopier No.: (617) 951-7050
Attention: Lauren Norton
If to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Telecopier No.: (212) 946-8158
Attention: Glenn McKeever
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
79
<PAGE>
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Any notice or communication by the Trustee to the Bank Agent pursuant to
Section 6.12 is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
following address:
First Bank National Association
First Bank Place - MPFP 0702
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Telecopier No.: (612) 973-0825
Attention: Mark Olmon
The Bank Agent, by notice to the Trustee, may designate a different
address for subsequent notices or communications.
Section 13.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
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<PAGE>
Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 13.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 13.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
Section 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 13.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
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<PAGE>
Section 13.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 13.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 13.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
82
<PAGE>
SIGNATURES
Dated as of July 24, 1997
OMEGA CABINETS, LTD.
By: /s/ Henry P. Key
----------------------------------------
Name: Henry P. Key
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
HOMECREST CORPORATION
By: /s/ Henry P. Key
----------------------------------------
Name: Henry P. Key
Title: CHIEF EXECUTIVE OFFICER
PANTHER TRANSPORT, INC.
By: /s/ Henry P. Key
----------------------------------------
Name: Henry P. Key
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ G.M. McFarlane
Name: G.M. McFarlane
Title: VICE PRESIDENT
<PAGE>
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP/CINS ____________
10-1/2% Senior Subordinated Notes due 2007
No. __ $__________________
OMEGA CABINETS, LTD.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of
Dollars on June 15, 2007.
Interest Payment Dates: Semi-annually on each June 15 and December 15
Record Dates: June 1 and December 1
Dated:
OMEGA CABINETS, LTD.
By:______________________________
Name:
Title:
Certificate of Authentication
- -----------------------------
This is one of the Global
Notes referenced to in the
within-mentioned Indenture:
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________________
(Authorized Officer)
================================================================================
A-1-1
<PAGE>
(Back of Note)
10-1/2% Senior Subordinated Notes due 2007
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY."
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS."
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Omega Cabinets, Ltd., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10-
1/2% per annum from the date of issuance until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to the terms of the Registration
Rights Agreement. The Company shall pay interest and Liquidated Damages, if
any, semi-annually in arrears on June 15 and December 15, commencing on December
15, 1997, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
A-1-2
<PAGE>
2. Method of Payment. The Company shall pay interest and Liquidated
Damages, if any, on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the June 1 and December
1 next preceding the June 15 and December 15 Interest Payment Dates,
respectively, even if such Notes are cancelled after such Record Date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. The Notes shall be payable as to
principal, premium and Liquidated Damages, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds shall be required with respect to
principal of and interest, premium and Liquidated Damages, if any, on all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent on or before the Record Date.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Notes are issued under the Indenture dated as of July
__, 1997 (the "Indenture") among the Omega Cabinets, Ltd., as issuer, Panther
Transport, Inc. and HomeCrest Corporation, as Guarantors, and The Chase
Manhattan Bank, as trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $100.0 million in aggregate principal
amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Section 5, the
Notes shall not be redeemable at the Company's option prior to June 15, 2002.
On and after such date, the Notes shall be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on June 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2002...................................... 105.25%
2003...................................... 103.50%
2004...................................... 101.75%
2005 and thereafter....................... 100.00%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Section
5, at any time on or prior to June 15, 2000, the Company may (but shall not have
the obligation to) redeem, on one or
A-1-3
<PAGE>
more occasions, up to an aggregate of $35.0 million in principal amount of Notes
at a redemption price equal to 110.5% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings by Holdings or the Company (to the extent that the net proceeds
therefrom are contributed by Holdings to the Company as common equity); provided
that at least $65.0 million in aggregate principal amount of Notes remains
outstanding immediately after the occurrence of such redemption; and provided
further, that the notice of redemption with respect to any such redemption shall
be mailed within 60 days of the date of the receipt by the issuer of the
proceeds of such Public Equity Offering.
6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
7. Repurchase at Option of Holder. If there is a Change of Control, the
Company shall be required to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
each Holder's Notes at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control (unless notice of the redemption of the Notes has been given as provided
under Section 3.02 of the Indenture), the Company shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
8. Notice of Redemption. Notice of redemption shall be mailed at least
30 business days but not more than 60 business days before the redemption date
to each Holder whose Notes are to be redeemed at its registered address. Notes
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. Subsidiary Guarantees. As set forth in the Indenture, this Note is
entitled to the benefits of an unconditional and irrevocable, joint and several,
guarantee by HomeCrest Corporation, a Delaware corporation, and Panther
Transport, Inc., an Iowa corporation, and any future Restricted Subsidiary of
the Company, of the payment of principal and interest, and premium and
Liquidated Damages, if any, on the Notes.
11. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in
A-1-4
<PAGE>
principal amount of the then outstanding Notes, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger, consolidation or successor
corporation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
13. Defaults and Remedies. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
14. Trustee Dealings with Company. Subject to the provisions of the TIA,
the Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights and Obligations of Holders of Restricted Global
Notes and Restricted Definitive Notes. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of July 24, 1997, between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement"), including the right to exchange the Notes for Exchange Notes
pursuant to the Exchange Offer as provided in the Registration Rights Agreement.
THE RIGHTS OF THE HOLDER OF THIS NOTE PURSUANT TO THE REGISTRATION RIGHTS
AGREEMENT ARE SUBJECT TO THE PERFORMANCE BY THE HOLDERS OF NOTES OF CERTAIN
OBLIGATIONS CONTAINED THEREIN.
A-1-5
<PAGE>
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Subordination. The obligations of the Company and the Guarantors
under this Note and the Indenture are subordinated to the rights of the holders
from time to time of Senior Debt of the Company and the Guarantors. The terms
of such subordination are set forth in the Indenture.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Attention: Chief Financial Officer
A-1-6
<PAGE>
Assignment Form
To assign this Note, fill in a Certificate of Transfer and the form
below: (I) or (we) assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
-------------------------------------------------------------
Your Signature:
----------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-1-7
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.14 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
-------------- -----------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
-----------------
Signature Guarantee.
A-1-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal
Amount
Amount of Amount of [at
decrease in increase in maturity] of
Principal Principal this Global Signature
Amount Amount Note of
[at [at following authorized
maturity] maturity] such officer of
of of decrease Trustee or
this this (or Note
Date of Exchange Global Note Global Note increase) Custodian
---------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
</TABLE>
A-1-9
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS __________
10-1/2% Senior Subordinated Notes due 2007
No. ___ $_____________________
OMEGA CABINETS, LTD.
promises to pay to ____________________________________________________
or registered assigns,
the principal sum of
Dollars on June 15, 2007.
Interest Payment Dates: Semi-annually on each June 15 and December 15
Record Dates: June 1 and December 1
Dated: ______________
OMEGA CABINETS, LTD.
By:______________________________
Name:
Title:
Certificate of Authentication
- -----------------------------
This is one of the Global
Notes referenced to in the
within-mentioned Indenture:
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________________
(Authorized Officer)
================================================================================
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
10-1/2% Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
A-2-2
<PAGE>
1. Interest. Omega Cabinets, Ltd., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 10-1/2% per
annum from the date of issuance until maturity and shall pay the Liquidated
Damages, if any, payable pursuant to the terms of the Registration Rights
Agreement. The Company shall pay interest and Liquidated Damages, if any, semi-
annually in arrears on June 15 and December 15, commencing on December 15, 1997,
or if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Notes shall accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
Until this Regulation S Temporary Global Note is exchanged for one or more
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Senior Subordinated Notes under the Indenture.
2. Method of Payment. The Company shall pay interest and Liquidated Damages,
if any, on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on June 1 and December 1
preceding the June 15 and December 15 Interest Payment Dates, respectively, even
if such Notes are cancelled after such Record Date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes shall be payable as to principal,
premium, interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders at their addresses
set forth in the register of Holders, and provided that payment by wire transfer
of immediately available funds shall be required with respect to principal of
and interest, premium and Liquidated Damages, if any, on all Global Notes and
all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent on or before the Record Date.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar. Initially, The Chase Manhattan Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Notes are issued under the Indenture dated as of July 24,
1997 (the "Indenture") among the Omega Cabinets, Ltd., as issuer, Panther
Transport, Inc. and HomeCrest Corporation, as Guarantors, and The Chase
Manhattan Bank, as trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $100.0 million in aggregate principal
amount.
A-2-3
<PAGE>
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Section 5, the
Notes shall not be redeemable at the Company's option prior to June 15, 2002.
On and after such date, the Notes shall be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on June 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2002 ..................................... 105.25%
2003 ..................................... 103.50%
2004 ..................................... 101.75%
2005 and thereafter ...................... 100.00%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Section 5, at any time on or prior to June 15, 2000, the Company may (but shall
not have the obligation to) redeem, on one or more occasions, up to an aggregate
of $35.0 million in principal amount of Notes at a redemption price equal to
110.5% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings by Holdings or the Company (to
the extent that the net proceeds therefrom are contributed by Holdings to the
Company as common equity); provided that at least $65.0 million in aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of such redemption; and provided further, that the notice of redemption with
respect to any such redemption shall be mailed within 60 days of the date of the
receipt by the issuer of the proceeds of such Public Equity Offering.
6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
7. Repurchase at Option of Holder. If there is a Change of Control, the
Company shall be required to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
each Holder's Notes at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control (unless notice of the redemption of the Notes has been given as provided
under Section 3.02 of the Indenture), the Company shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
8. Notice of Redemption. Notice of redemption shall be mailed at least
30 business days but not more than 60 business days before the redemption date
to each Holder whose Notes are to be redeemed at its registered address. Notes
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may
A-2-4
<PAGE>
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S and (ii) upon presentation
of certificates (accompsnied by an option of Councel, if applicable) required by
Srticle 2 of the Indenture. Upon exchange of this Regulation S Temporary Global
Note for one or more Global notes, the Trustee shall cancel this Regulation S
Temporary Global Note.
10. Subsidiary Guarantees. As set forth in the Indenture, this Note is
entitled to the benefits of an unconditional and irrevocable, joint and several,
guarantee by HomeCrest Corporation, a Delaware corporation, and Panther
Transport, Inc., an Iowa corporation, and any future Restricted Subsidiary of
the Company, of the payment of principal and interest, and premium and
Liquidated Damages, if any, on the Notes.
11. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger, consolidation or successor corporation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
13. Defaults and Remedies. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
14. Trustee Dealings with Company. Subject to the provisions of the TIA,
the Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services
A-2-5
<PAGE>
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights and Obligations of Holders of Restricted Global
Notes and Restricted Definitive Notes. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of July 24, 1997, between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement"), including the right to exchange the Notes for Exchange Notes
pursuant to the Exchange Offer as provided in the Registration Rights Agreement.
THE RIGHTS OF THE HOLDER OF THIS NOTE PURSUANT TO THE REGISTRATION RIGHTS
AGREEMENT ARE SUBJECT TO THE PERFORMANCE BY THE HOLDERS OF NOTES OF CERTAIN
OBLIGATIONS CONTAINED THEREIN.
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Subordination. The obligations of the Company and the Guarantors
under this Note and the Indenture are subordinated to the rights of the holders
from time to time of Senior Debt of the Company and the Guarantors. The terms
of such subordination are set forth in the Indenture.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Attention: Chief Financial Officer
A-2-6
<PAGE>
Assignment Form
To assign this Note, fill in a Certificate of Transfer and the form
below: (I) or (we) assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
-------------------------------
Your Signature:
---------------------------
(Sign exactly as your name
appears on the face of this Note)
Signature Guarantee.
A-2-7
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.14 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
---------------------- --------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
------------------------
Signature Guarantee.
A-2-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Amount of Amount of Principal
decrease in increase in Amount
Principal Principal [at Signature
Amount Amount maturity] of of
[at [at this Global authorized
maturity] maturity] Note officer of
of of following such Trustee or
this this decrease (or Note
Date of Exchange Global Note Global Note increase) Custodian
- ------------------- ----------- ----------- ------------ ----------
A-2-9
<PAGE>
Exhibit B-1
FORM OF CERTIFICATE OF TRANSFER
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
[Registrar address block]
Re: Omega Cabinets, Ltd. 10-1/2% Senior Subordinated Notes due June 15,
-------------------------------------------------------------------
2007
----
Reference is hereby made to the Indenture, dated as of July 24, 1997 (the
"Indenture"), among Omega Cabinets, Ltd., as issuer (the "Company"), HomeCrest
--------- -------
Corporation and Panther Transport, Inc., as Guarantors, and The Chase Manhattan
Bank, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the Notes
----------
or interest in such Note[s] specified in Annex A hereto, in the principal amount
of $___________ in such Notes or interests (the "Transfer"), to __________ (the
--------
"Transferee"), as further specified in Annex A hereto. In connection with the
----------
Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
Rule 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
- ----------------------------------------------------------------
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
--------------
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note shall be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Rule 144A Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
2. [_] Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
Temporary Regulation S Global Note, the Regulation S Global Note or a Definitive
- --------------------------------------------------------------------------------
Note pursuant to Regulation S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of
B-1-1
<PAGE>
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the 40-
day restricted period required pursuant to Regulation S, the transfer is not
being made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note shall be subject to the restrictions on Transfer enumerated
in the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. [_] Check and complete if Transferee will take delivery of a beneficial
-------------------------------------------------------------------
interest in the Definitive Note pursuant to any provision of the Securities Act
- -------------------------------------------------------------------------------
other than Rule 144A or Regulation S. The Transfer is being effected in
- ------------------------------------
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any state of the United States, and accordingly the Transferor hereby further
certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note shall be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Definitive Notes and in the Indenture and the
Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial interest in an
---------------------------------------------------------------------
Unrestricted Global Note or of an Unrestricted Definitive Note.
- --------------------------------------------------------------
(a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation
B-1-2
<PAGE>
of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note shall no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(b) [_] Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note shall no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note shall not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------
[Insert Name of Transferor]
By:
-------------------------
Name:
Title:
Dated: _________________, ______
B-1-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] Rule 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________);
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] Rule 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP ________), or
(iii)[_] Unrestricted Global Note (CUSIP ______________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-1-4
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE OF EXCHANGE
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
[Registrar address block]
Re: Omega Cabinets, Ltd. 10-1/2% Senior Subordinated Notes due June
---------------------------------------------------------------
15, 2007
--------
(CUSIP _____________________)
Reference is hereby made to the Indenture, dated as of July 24, 1997
(the "Indenture"), between Omega Cabinets, Ltd., as issuer (the "Company"),
--------- -------
HomeCrest Corporation and Panther Transport, Inc., as Guarantors, and The Chase
Manhattan Bank, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
______________, (the "Owner") owns and proposes to exchange the
-----
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [_] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to beneficial interest in an Unrestricted Global Note. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions in the Indenture
applicable to the Restricted Global Notes and pursuant to and in accordance with
the United States Securities Act of 1933, as amended (the "Securities Act"),
--------------
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global Note
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
(b) [_] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions in the Indenture
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
B-2-1
<PAGE>
(c) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in an Unrestricted Global Note. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions in the
Indenture applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions in the Indenture applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) [_] Check if Exchange is from beneficial interest in a Restricted
-------------------------------------------------------------
Global Note to Restricted Definitive Note. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [_] Check if Exchange is from Restricted Definitive Note to
-------------------------------------------------------
beneficial interest in a Restricted Global Note. In connection with the
- -----------------------------------------------
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] [_] Rule 144A Global Note, [_] Regulation S Global Note, with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
B-2-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
--------------------------------
[Insert Name of Owner]
By:
-----------------------------
Name:
Title:
Dated: _________________, _____
B-2-3
<PAGE>
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
Supplemental Indenture (this "Supplemental Indenture"), dated as of
___________, among Omega Cabinets, Ltd., a Delaware corporation (the "Company"),
[Guarantor] (the "New Guarantor"), a subsidiary of the Company and The Chase
Manhattan Bank, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of July 24, 1997, providing for the
issuance of an aggregate principal amount of $100,000,000 of 10-1/2% Senior
Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Company may or must cause certain of its Subsidiaries to execute and deliver to
the Trustee a supplemental indenture pursuant to which such Subsidiaries shall
unconditionally guarantee all of the Company's obligations under the Notes
pursuant to an Subsidiary Guarantee on the terms and conditions set forth
herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the New Guarantor and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Notes Guarantee. The New Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company's
obligations under the Notes and the Indenture on the terms and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
3. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Guarantor, as such,
shall have any liability for any obligations of the Company or any Guarantor
under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
C-1
<PAGE>
6. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Guarantor.
C-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: Omega Cabinets, Ltd.
----------------
By:
------------------------------
Name:
Title:
Dated: [Name of New Guarantor]
----------------
By:
------------------------------
Name:
Title:
Dated: The Chase Manhattan Bank,
---------------- as Trustee
By:
------------------------------
Name:
Title:
C-3
<PAGE>
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of July 24, 1997
by and among
Omega Cabinets, Ltd.
as Issuer
HomeCrest Corporation
Panther Transport, Inc.
as Guarantors
and
Goldman, Sachs & Co.
Citicorp Securities, Inc.
Montgomery Securities
as Initial Purchasers
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of July 24, 1997, by and among Omega Cabinets, Ltd., a Delaware
corporation (the "Company"), HomeCrest Corporation, an Iowa corporation, and
Panther Transport, a Delaware corporation (each a "Guarantor" and collectively,
the "Guarantors"), and Goldman, Sachs & Co., Citicorp Securities, Inc. and
Montgomery Securities (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the Company's 10-1/2%
Senior Subordinated Notes due 2007 (the "Subordinated Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated July 18,
1997, (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Subordinated Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial Purchasers set forth
in Section 3 of the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Business Day: Any day except a Saturday, Sunday or other day in the City
------------
of New York, or in the city of the Corporate Trust Office (as defined in the
Indenture) of the Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Broker-Dealer Transfer Restricted Securities: Exchange Notes that are
--------------------------------------------
acquired by a Broker-Dealer in the Exchange Offer in exchange for Subordinated
Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Subordinated Notes
acquired directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
-----------------------
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Subordinated Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5.
-------------------------
2
<PAGE>
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Notes: The Company's 10-1/2% Senior Subordinated Notes due 2007
--------------
to be issued pursuant to the Indenture in the Exchange Offer.
Exchange Offer: The registration by the Company under the Act of the
--------------
Exchange Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Subordinated Notes (i) to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act or (ii) in an offshore
transaction complying with Rule 903 or 904 of Regulation S under the Act.
Global Noteholder: As defined in the Indenture.
-----------------
Holders: As defined in Section 2(b) hereof.
-------
Indenture: The Indenture, dated the Closing Date, among the Company, the
---------
Guarantors and Wilmington Trust Company, as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Notes: The Subordinated Notes and the Exchange Notes.
-----
Person: An individual, partnership, limited liability company,
------
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Record Holder: Each Person who is a Holder of Notes on the record date in
-------------
respect of the Interest Payment Date.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Default Period: As defined in Section 5 hereof.
---------------------------
3
<PAGE>
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantors relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) which is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
------------------------
Transfer Restricted Securities.
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
------------------------------
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
-----------------------------------------
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a) below have been
complied with), the Company and the Guarantors shall (i) cause to be filed with
the Commission as soon as practicable after the Closing Date, but in no event
later than 120 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 180 days after the date on which such Exchange Offer Registration
Statement is filed with the Commission, (iii) in connection with the foregoing,
(A) file all pre-effective amendments to such Exchange Offer Registration
Statement as may be necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) file, if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the Exchange Notes to be made under the
Blue Sky laws of such jurisdictions as are necessary to permit Consummation of
the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and
4
<PAGE>
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the Exchange Notes to be offered in exchange for
the Subordinated Notes that are Transfer Restricted Securities and to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-
Dealers as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously until the Exchange Offer has
been Consummated, and shall keep the Exchange Offer open for the period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such period be less than 20
Business Days. The Company and the Guarantors shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No securities
other than the Notes shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.
(c) The Company and the Guarantors shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer Registration Statement
and indicate therein that any Restricted Broker-Dealer who holds Subordinated
Notes that are Transfer Restricted Securities and that were acquired for the
account of such Broker-Dealer as a result of market-making activities or other
trading activities, may exchange such Subordinated Notes (other than Transfer
Restricted Securities acquired directly from the Company or any affiliate of the
Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with its
initial sale of each Exchange Note received by such Broker-Dealer in the
Exchange Offer, which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company and the Guarantors are not
------------------
required to file an Exchange Offer Registration Statement with respect to the
Exchange Notes because the Exchange Offer is not permitted by applicable law
(after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange Offer
upon advice of outside counsel that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds
Subordinated Notes acquired directly from the Company or one of its affiliates,
then the Company and the Guarantors shall (x) use their respective best efforts
to cause to be filed on or prior to 30 days after the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement pursuant to clause (i) above or 30 days after the date on which the
Company receives the notice specified in clause (ii) above a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement) (in either event, the "Shelf Registration
5
<PAGE>
Statement"), relating to all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 4(b) hereof,
and shall (y) use their respective best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the date on which the
Company becomes obligated to file such Shelf Registration Statement. The Company
and the Guarantors shall use their respective best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by and subject to the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefits as provided under
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the Closing Date or such shorter period
that will terminate when all Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in item 507 of Regulation S-K under the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such information. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has
not been Consummated within 30 Business Days after the Effectiveness Target Date
or (iv) subject to the provisions of Section 6(c)(i) below, any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective immediately (each such event referred to in clauses (i) through (iv),
a "Registration Default" and each period during which a Registration Default has
occurred and is continuing, a "Registration Default Period"), the Liquidated
Damages, in addition to the base interest that would otherwise accrue on the
Notes, shall accrue at a per annum rate of 0.25% for the first 90 days of the
Registration Default Period, at a per annum rate of 0.50% for the second 90 days
of the Registration Default Period, at a per annum rate of 0.75% for the third
90 days of the Registration Default Period and at a per annum rate of 1.0%
thereafter for the remaining portion of the Registration Default Period. All
accrued liquidated damages shall be paid by the Company by wire transfer of
immediately available funds or by federal funds check on the next succeeding
June 15 or December 15, as the case may be, to the Holders of record on the
relevant record dates for the payment of interest as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of liquidated damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a
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<PAGE>
Transfer Restricted Security shall survive until such time as all such
obligations set forth in the preceding paragraph with respect to such security
shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company and the Guarantors hereby
agree to either (A) seek a no-action letter or other favorable decision
from the Commission allowing the Company and the Guarantors to Consummate
an Exchange Offer for such Subordinated Notes or (B) file the Shelf
Registration Statement and take all other actions required by Section 4(a)
hereof. In the event that the Company elects to seek a no-action letter or
other favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer, the Company and the Guarantors
hereby agree to pursue the issuance of such a decision to the Commission
staff level and to take all such other actions as are requested by the
Commission or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an affiliate of the Company, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Exchange Notes to
be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes
in its ordinary course of business. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission enunciated in
Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
---------------------------- -------------
Holdings Corporation (available May 13, 1988), as interpreted in the
--------------------
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration
and prospectus delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary resale transaction
must be covered by an effective registration statement (which may be the
Exchange Offer Registration Statement) containing the selling security
holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Exchange Notes obtained by such Holder
in
7
<PAGE>
exchange for Subordinated Notes acquired by such Holder directly from the
Company or an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and,
----------------------------
if applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that neither the Company nor any Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Exchange Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Exchange Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Exchange Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement
------------------
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Company and the Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation thereunder,
financial statements of the Guarantors) for the period specified in
Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any
event that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission or (B)
not to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company and the
Guarantors shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B) use
their respective best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter. Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that it is in the best interests of the
Company and the Guarantors not to disclose the existence of or facts
surrounding any proposed or pending material corporate transaction or other
material development involving the Company or the Guarantors, the Company
and the Guarantors may allow the Shelf Registration Statement to fail to be
effective and usable as a result of such nondisclosure for up to 90 days
during the two-year period of effectiveness required by Section 4 hereof,
provided, that in the event the Exchange Offer is Consummated, the
8
<PAGE>
Company and the Guarantors shall not allow the Exchange Offer Registration
Statement to fail to be effective and usable for a period in excess of 30
days during the one year period of effectiveness required by Section 3
hereof;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the method or methods of distribution by the sellers
thereof as provided above and as set forth in such Registration Statement
or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirming such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable,
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of any
fact or the happening of any event that makes any statement of a material
fact made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, including,
without limitation, under circumstances described in Section 6(c)(i) above.
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, under state securities or Blue Sky laws, the Company and the
Guarantors shall use their respective best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) furnish to each selling Holder named in any Registration
Statement or Prospectus and each of the underwriter(s) in connection with
such sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement) and will provide such Holders and underwriters, if
any, a reasonable opportunity to review copies of all such documents, and
the Company will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which the selling Holders of the Transfer Restricted
9
<PAGE>
Securities or a Holder of Broker-Dealer Transfer Restricted Securities, as
applicable, covered by such Registration Statement or the underwriter(s) in
connection with such sale, if any, shall reasonably object;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's and
the Guarantors' representatives available for discussion of such document
and other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) if a Shelf Registration Statement is filed, make available at
reasonable times for inspection by the selling Holders, any underwriter
participating in any disposition pursuant to such Registration Statement
and any attorney or accountant retained by such selling Holders or any of
such underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and the Guarantors and cause the
Company's and the Guarantors' officers, directors and employees to supply
all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement or
any post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
(vii) if a Shelf Registration Statement is filed, and if requested
by any selling Holders or the underwriter(s) in connection with such sale,
if any, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, information with respect to the principal amount of Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, to be sold in such offering; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included in
such Prospectus supplement or post-effective amendment;
(viii) if a Shelf Registration Statement is filed, furnish to each
selling Holder and each of the underwriter(s) in connection with such sale,
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(ix) if a Shelf Registration Statement is filed, deliver to each
selling Holder and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may request;
the Company and the Guarantors hereby consent to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
10
<PAGE>
(x) if a Shelf Registration Statement is filed, enter into such
agreements (including an underwriting agreement) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Shelf Registration
Statement contemplated by this Agreement as may be reasonably requested by
any Holder of Transfer Restricted Securities or underwriter in connection
with any sale or resale pursuant to any Shelf Registration Statement
contemplated by this Agreement, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an Underwritten Registration, the Company and the Guarantors shall:
(A) furnish to each selling Holder and each underwriter, if
any, upon the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf
of the Company and each Guarantor by (x) the President or any
Vice President and (y) a principal financial or accounting
officer of the Company and such Guarantor, containing
certifications substantially similar, as of the date thereof,
to the matters set forth in paragraphs (d) and (e) of
Section 7 of the Purchase Agreement and such other additional
certifications as are customarily delivered in a public
offering of debt securities;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for
the Company and the Guarantors covering matters similar to
those set forth in paragraph (b) of Section 7 of the Purchase
Agreement and such other matter as the Holders, underwriters
and/or Restricted Broker Dealers may reasonably request (it
being agreed that the matters subject to such opinion may be
subject to customary qualifications and exceptions), and in
any event including a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of the Company and the Guarantors and
representatives of the independent public accountants for the
Company and the Guarantors and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified
the accuracy, completeness or fairness of such statements;
and that such counsel advises that, on the basis of the
foregoing (relying as to materiality to a certain extent upon
facts provided to such counsel by officers and other
representatives of the Company and the Guarantors and without
independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that
the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment
thereto became effective, and, in the case of the Exchange
Offer Registration Statement, as of the date of Consummation,
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated the date
of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order
to make the statements therein, in light of the circumstances
under which
11
<PAGE>
they were made, not misleading. Without limiting the
foregoing, such counsel may state further that such counsel
assumes no responsibility for, has not independently verified
and expresses no opinion with respect to, the accuracy,
completeness or fairness of the financial statements, notes
and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date
of effectiveness of the Shelf Registration Statement or the
date of Consummation of the Exchange Offer, as the case may
be, from the Company's and the Guarantors' independent
accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to
underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 7 of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Restricted Broker Dealers, if any, to evidence compliance
with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company and the Guarantors pursuant to this clause (x).
The above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company and the Guarantors contemplated in
(A)(1) above cease to be true and correct, the Company and the Guarantors shall
so advise the underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall confirm such
advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities or Broker-Dealer
transfer Restricted Securities, as applicable, under the securities or Blue
Sky laws of such jurisdictions as the selling Holders or underwriter(s), if
any, may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that neither the Company nor any Guarantor shall be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xii) issue, upon the request of any Holder of Transfer Restricted
Securities covered by any Shelf Registration Statement contemplated by this
Agreement, Exchange Notes having an aggregate principal amount equal to the
aggregate principal amount of Transfer Restricted Securities surrendered to
the Company by such Holder in exchange therefor or being sold by such
Holder; such Exchange Notes to be registered in the name of such Holder or
in the name of the
12
<PAGE>
purchaser(s) of such Notes, as the case may be; in return, the Transfer
Restricted Securities held by such Holder shall be surrendered to the
Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities or Broker-Dealer transfer Restricted
Securities, as applicable, covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities or Broker-Dealer transfer Restricted Securities, as
applicable, subject to the proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with The Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter"), if any,
that is required to be retained in accordance with the rules and
regulations of the NASD, and use their respective best efforts to cause
such Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xviii) otherwise use their respective best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith,
13
<PAGE>
cooperate with the Trustee and the Holders of Notes to effect such changes
to the Indenture as may be required for such Indenture to be so qualified
in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be required
to effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified in a
timely manner;
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act; and
(xxi) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Notes covered thereby or the underwriters, if any.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company (the "Advice") that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or
shall have received the Advice.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel) that may be required by the rules and regulations of the NASD);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the Exchange Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties),
14
<PAGE>
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Holders of Transfer Restricted Securities being tendered in
the Exchange Offer and/or resold pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel chosen by the Holders of a majority in principal amount of
the Transfer Restricted Securities for whose benefit such Registration Statement
is being prepared.
8. INDEMNIFICATION
(a) The Company and the Guarantors will, jointly and severally, indemnify
and hold harmless each Holder against any losses, claims, damages or
liabilities, joint or several, to which it may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of material fact contained in any Registration Statement or
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, and will reimburse each Holder
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor any of the Guarantors
shall be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Registration
Statement or Prospectus, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company or any of
the Guarantors by or on behalf of any of the Holders expressly for inclusion
therein.
(b) Each Holder will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company or any of the Guarantors may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of material fact contained in any
Registration Statement or Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Registration Statement or Prospectus, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company or any of the Guarantors by such Holder expressly for use therein; and
will reimburse the Company and the Guarantors for any legal or other expenses
reasonably incurred by the Company or the Guarantors in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
15
<PAGE>
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought (whether
or not the indemnified party is an actual or potential party to such action or
claim) thereunder unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors from the Company's sale of the Subordinated
Notes, on the one hand, and any Holder, on the other, from such Holder's sale of
Transfer Restricted Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantors, on the one hand, and of such Holder, on the other, in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and any Holder, on the other, shall be deemed to be
in the same proportion as the total net proceeds from the sale of the
Subordinated Notes (before deducting expenses) received by the Company bear to
the total proceeds received by such Holder upon its sale of Subordinated Notes.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors on the one hand or the Holders on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Guarantors and each Holder of Transfer Restricted Securities agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Holder shall be required to contribute any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Subordinated Notes pursuant to a Registration
Statement exceeds the sum of (a) the amount paid by such Holder for such
Subordinated Notes plus (b) the amount of any damages which such Holder has
otherwise been required to pay by reason of
16
<PAGE>
such untrue or alleged untrue statement or omission or alleged omission. The
Holders' obligations in this subsection (d) to contribute are several in
proportion to the respective principal amount of Notes held by each of the
Holders hereunder and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 8 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of such Holder, if any, and to each
person, if any, who controls any Holder within the meaning of the Act. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to indemnification from any person who was
not guilty of such fraudulent misrepresentation.
9. RULE 144A
The Company and each Guarantor hereby agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding, to make available to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in customary underwriting arrangements entered into in
connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
For any Underwritten Offering which is registered under a Shelf
Registration Statement, the investment banker or investment bankers and manager
or managers for any such Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering. Such
investment bankers and managers are referred to herein as the "underwriters."
12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
--------
rights provided herein, in the Indenture or granted by law, including recovery
of liquidated or other damages, will be entitled to specific performance of its
rights under this Agreement. The Company and the Guarantors agree that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by them of the provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
--------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the
17
<PAGE>
rights granted to the holders of the Company's and the Guarantors' securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any
-------------------------------
Guarantor will take any action, or voluntarily permit any change to occur, with
respect to the Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, IA 50703-9691
Telecopier No.: (319) 235-5775
Attention: Chief Financial Officer
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Telecopier No.: (617) 951-7050
Attention: Lauren I. Norton
(iii) If to the Initial Purchasers:
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
18
<PAGE>
Telecopier No.: (212) 902-3000
Attention: Registration Department
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[signature page follows]
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
OMEGA CABINETS, LTD.
By:
-------------------------------
Name:
Title:
HOMECREST CORPORATION
By:
-------------------------------
Name:
Title:
PANTHER TRANSPORT, INC.
By:
-------------------------------
Name:
Title:
20
<PAGE>
Accepted and agreed to as of the
date first above written:
GOLDMAN, SACHS & CO.
CITICORP SECURITIES, INC.
MONTGOMERY SECURITIES
By:
------------------------------
(Goldman, Sachs & Co.)
21
<PAGE>
Exhibit 5.1
October 3, 1997
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Omega Cabinets, Ltd., a Delaware corporation
(the "Company") in connection with a Registration Statement on Form S-4 (the
"Registration Statement") to be filed by the Company and its subsidiary Panther
Transport, Inc., an Iowa corporation (the "Subsidiary Guarantor") with the
Securities Exchange Commission relating to (i) the proposed issuance by the
Company of up to $100,000,000 aggregate principal amount of its new 10-1/2%
Senior Subordinated Notes due 2007 registered under the Securities Act of 1933,
as amended (the "Securities Act"), in exchange for a like principal amount of
the Company's outstanding 10-1/2% Senior Subordinated Notes due 2007, which have
not been so registered (the "Original Notes") and (ii) the Subsidiary
Guarantor's guarantee of the Exchange Notes.
The Exchange Notes will be issued under an Indenture dated as of July 24,
1997 (the "Indenture") among the Company, the Subsidiary Guarantor and The
Chase Manhattan Bank, as indenture trustee.
We have examined and relied upon the information set forth in the
Registration Statement and such other documents and records as we have deemed
necessary. In addition, as to questions of fact material to our opinions, we
have relied upon certificates of officers of the Company, the Subsidiary
Guarantee and public officials.
In the course of our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company or the
Subsidiary
<PAGE>
Omega Cabinets, Ltd. -2- October 3, 1997
Guarantor, we have assumed that such parties had the power, corporate or other,
to enter into and perform all obligations thereunder and have also assumed the
due authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereof on such parties.
We express no opinion as to the laws of any jurisdiction other than
those of The Commonwealth of Massachusetts, the General Corporation Law of the
State of Delaware and the federal laws of the United States of America. We call
your attention to the fact that each of the Indenture and the Exchange Notes
provides that it is to be governed by the laws of the State of New York. for
purposes of the opinion provided herein, we have assumed with your permission
that the Indenture and the Exchange Notes would be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice of law or conflict of laws
rule or provision that would cause the application of the domestic substantive
laws of any other jurisdiction.
Based upon the foregoing, we are of the opinion that:
The Exchange Notes have been duly authorized by all requisite corporate
action of the Company and, when executed and authenticated in the manner
provided for in the Indenture and delivered against surrender and cancellation
of a like aggregate principal amount of Original Notes as contemplated in the
Registration Rights Agreement, dated as of July 24, 1997, among the Company,
the Subsidiary Guarantor and the Initial Purchasers named therein, the Exchange
Notes will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principle
(regardless of whether considered in a proceeding in equity or at law).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" contained in the prospectus included therein.
It is understood that this opinion is to be used only in connection with
the Exchange Offer while the Registration Statement is in effect.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
Exhibit 5.2
October 3, 1997
Panther Transport, Inc.
1205 Peters Drive
Waterloo, Iowa 50703
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as special Iowa counsel to Panther Transport, Inc., an Iowa
corporation (the "Subsidiary Guarantor"), in connection with a Registration
Statement on Form S-4 (the "Registration Statement") to be filed by the
Subsidiary Guarantor and its parent, Omega Cabinets, Ltd., a Delaware
corporation (the "Company"), with the Securities Exchange Commission relating
to (i) the proposed issuance by the Company of up to $100,000,000 aggregate
principal amount of its new 10 1/2% Senior Subordinated Notes due 2007 (the
"Exchange Notes") registered under the Securities Act of 1933, as amended (the
"Securities Act"), in exchange for a like principal amount of the Company's
outstanding 10 1/2% Senior Subordinated Notes due 2007 which have not been so
registered (the "Original Notes") and (ii) the Subsidiary Guarantor's guarantee
of the Exchange Notes (the "Guarantee"). The terms of the Guarantee are
contained in the Indenture, dated as of July 24, 1997 (the "Indenture"), between
the Company, the Subsidiary Guarantor and The Chase Manhattan Bank, as indenture
trustee, and the Guarantee will be issued pursuant to the Indenture.
In rendering our opinion, we have examined and relied upon the information
set forth in the Registration Statement, the Indenture and such other documents
and records as we have deemed necessary. In addition, as to questions of fact
material to our opinions, we have relied upon certificates of officers of the
Company, the Subsidiary Guarantor and public officials.
In the course of our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Subsidiary
Guarantor, we have assumed that such parties had the power, corporate or other,
to enter into and perform all obligations thereunder and have also assumed the
due authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereon on such parties.
We call your attention to the fact that each of the Indenture and the
Guarantee provides that it is to be governed by the laws of the State of New
York. For purposes of the opinion provided herein, we have assumed with your
permission that the Indenture and the Guarantee would be governed by and
construed in accordance with the domestic substantive laws of the State of Iowa
without giving effect to any choice of law or conflict of laws rule or provision
that would cause the application of the domestic substantive laws of any other
jurisdiction.
<PAGE>
Based upon the foregoing, and subject to the qualifications hereinafter set
forth, we are of the opinion that:
1. The Guarantee has been duly authorized by all requisite corporate
action of the Subsidiary Guarantor.
2. Upon the due issuance of the Exchange Notes in accordance with the
terms of the Indenture and the exchange offer as set forth in the Registration
Statement, such Exchange Notes shall be entitled to the benefits of the
Guarantee which will constitute a valid and binding obligation of the Subsidiary
Guarantor, enforceable against the Subsidiary Guarantor in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether considered in a proceeding in equity
or at law).
Our opinions expressed herein are subject to the following qualifications:
A. We express no opinion as to whether the Subsidiary Guarantor may
guarantee or otherwise become liable for indebtedness incurred by the Company
(including, without limitation, indebtedness evidenced by the Exchange Notes)
except to the extent the Subsidiary Guarantor may be determined to have received
a benefit from the incurrence of such indebtedness by the Company, or as to
whether such benefit may be measured other than by the extent to which the
proceeds of the indebtedness incurred by the Company are directly or indirectly
made available to the Subsidiary Guarantor for its corporate purposes.
B. We express no opinion as to the laws of any jurisdiction other than
those of the State of Iowa and the federal laws of the United States of America
(except that we express no opinion herein concerning the applicability of the
Iowa Securities Act or the federal securities laws to the issuance of the
Guarantee by the Subsidiary Guarantor).
C. Except to the extent expressly set forth herein, we express no opinion
in connection with the matters contemplated by the Registration Statement or the
Indenture, and no opinion may be implied or inferred.
D. The opinions expressed herein are made as of the date hereof and we do
not undertake to update this opinion with respect to any changes of which we may
later become aware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our Firm under the caption "Legal
Matters" contained in the Prospectus included therein.
It is understood that this opinion is to be used only in connection with
the Guarantee while the Registration Statement is in effect.
Very truly yours,
NYEMASTER, GOODE, VOIGTS, WEST,
HANSELL & O'BRIEN, P.C.
By: /s/ Mark Dickenson
-2-
<PAGE>
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
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
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................................................. 38
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 2.24 Capital 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
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
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
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
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
</TABLE>
-iv-
<PAGE>
LIST OF EXHIBITS
- ----------------
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
-v-
<PAGE>
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
---------
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following
-------------
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
------------------------
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
-------
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
---------
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.
<PAGE>
"Agent": As defined in the opening paragraph hereof.
-----
"Aggregate Revolving Commitment Amounts": As of any date, the sum of
--------------------------------------
the Revolving Commitment Amounts of all the Banks.
"Applicable Lending Office": For each Bank and for each type of
-------------------------
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
-----------------
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:
<TABLE>
<CAPTION>
Cash Flow Eurodollar Base
Leverage Ratio Rate Advances Rate Advances
-------------- ------------- -------------
<S> <C> <C>
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%
</TABLE>
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.
-2-
<PAGE>
"Assignee": As defined in Section 9.6(c).
--------
"Bank": As defined in the opening paragraph hereof.
----
"Base Rate": As of any date of determination, the greater of: (i) the
---------
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
-----------------
rate is determined by reference to the Base Rate.
"Board": The Board of Governors of the Federal Reserve System or any
-----
successor thereto.
"Borrower Loan Documents": This Agreement, the Notes and any of the
-----------------------
Security Documents to be executed by one or more Borrowers.
"Borrowers": As defined in the opening paragraph hereof.
---------
"Business Day": Any day (other than a Saturday, Sunday or legal
------------
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.
"Butler Subordinated Bridge Loan Documents": Collectively, the Merger
-----------------------------------------
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
--------------------
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
-3-
<PAGE>
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
-----------------
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
-----------------------------
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
------------------------
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
-----------------
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.
------------
"Code": The Internal Revenue Code of 1986, as amended.
----
"Collateral Assignments": Collectively, the Omega Collateral
----------------------
Assignment (Trademarks) and the HomeCrest Collateral Assignment (Trademarks).
-4-
<PAGE>
"Commitments": The Revolving Commitments and the Term Loan
-----------
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
--------------
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
-------
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).
------------
"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
------
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
- -----------------
in connection with this Agreement or the transactions pursuant to the Merger
Agreements, the Butler 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
-5-
<PAGE>
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
-----
amended.
"ERISA Affiliate": Any trade or business (whether or not
---------------
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
-----------------------
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
---------------
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
-----------------------
interest rate is determined by reference to the Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage
-----------------------------
(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.
----------------
-6-
<PAGE>
"Excess Cash Flow": As of each Fiscal Year End, beginning with the
----------------
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
-----
(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 Butler 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,
--------
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
----------
of the Banks hereunder.
"First Chicago Letter of Credit": An irrevocable Standby Letter of
------------------------------
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.
-7-
<PAGE>
"Fiscal Year End": With respect to any calendar year, the day in
---------------
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
---------------------------
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
----
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-
<PAGE>
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 Goldman 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 Butler 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-
<PAGE>
"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 1002 North Eisenhower Drive, Goshen, Indiana, 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-
<PAGE>
"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-
<PAGE>
(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 1205 Peters Drive and 1001 Linden Avenue, Waterloo, Iowa,
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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
"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 Butler 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 1709 Lake City Highway (or Highway 25 West, North), Clinton,
Tennessee, 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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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
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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
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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
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<PAGE>
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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<PAGE>
(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
Butler 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
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<PAGE>
Butler 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
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<PAGE>
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
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<PAGE>
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;
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<PAGE>
(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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<PAGE>
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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<PAGE>
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 Butler 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
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<PAGE>
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)
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<PAGE>
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
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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.
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<PAGE>
(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 Butler 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).
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<PAGE>
(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-Kaiser 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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<PAGE>
(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
Butler 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 Butler 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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<PAGE>
(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 Butler 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. Gobel
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 & Gray, special counsel to the Borrowers and Holdings, Nyemaster,
Goode, McLaughlin, special Iowa counsel to the Banks, Voigts, West, Hansel
& O'Brien, Tuke, Yopp & Sweeney and Wooden & McLaughlin 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 Butler 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
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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
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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.
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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
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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
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<PAGE>
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,
----------
Butler Capital Corporation, certain Affiliates of Butler 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.
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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
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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
Butler 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 Butler 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.
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<PAGE>
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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<PAGE>
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
-56-
<PAGE>
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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<PAGE>
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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<PAGE>
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 grant a Lien 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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<PAGE>
(iv) dividends to Holdings to fund the payment of principal, interest
and other amounts payable under the Butler 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 Butler
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
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<PAGE>
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 Butler 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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<PAGE>
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:
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Coverage Ratio
--------------------- --------------
<S> <C>
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
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
before September 27, 2003
After September 27, 2003 2.7 to 1.0.
</TABLE>
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:
<TABLE>
<CAPTION>
Maximum Cash
Period: Flow Leverage Ratio.
------ -------------------
<S> <C>
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.
</TABLE>
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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<PAGE>
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 Butler 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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<PAGE>
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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<PAGE>
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 Butler
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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<PAGE>
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 Butler 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
of-pocket expenses paid or incurred by the Agent (including filing and recording
costs and reasonable fees and expenses of Dorsey & Whitney 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 RAMSEY 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
bill 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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<PAGE>
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
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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
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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
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<PAGE>
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:
1205 Peters Drive
Waterloo, Iowa 50703-9691
Telecopier No.: (319) 235-5827
SIGNATURE PAGE TO CREDIT AGREEMENT
S-1
<PAGE>
Commitment Amount
- -----------------
Revolving Term
- --------- ----
$20,000,000 $40,000,000
FIRST BANK NATIONAL ASSOCIATION
In its individual corporate capacity and
as Agent
By ___________________________________
Mark Olmon
Vice President
Address:
First Bank Place
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Mark Olmon, MPFP 0702
Telecopier No.: (612) 973-0825
SIGNATURE PAGE TO CREDIT AGREEMENT
S-2
<PAGE>
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
<PAGE>
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
<PAGE>
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 & Virden's 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. 24, Township No. 89 North, Range 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 Cowin's 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-Burton 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, Peters Drive and Janet Drive as shown on the plat of Airline-
Burton Industrial Park.
PARCEL 4:
1.1-2-1
<PAGE>
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 &
Virden's Plat, Waterloo, Iowa," which lies North of Wilby Street and West of
Linden Avenue, as created by Warranty Deed from Construction Machinery Company
to Robert J. Bertch, d/b/a Bertch Wood 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
<PAGE>
EXHIBIT 1.1-3
TO CREDIT AGREEMENT
REVOLVING NOTE
$[ ]
June 13, 1997
Minneapolis, Minnesota
FOR VALUE RECEIVED, each of OMEGA CABINETS, LTD., a Delaware corporation
("Omega"), HOMECREST CORPORATION, a Delaware corporation ("HomeCrest"), PANTHER
TRANSPORT, INC., an Iowa corporation ("Panther" and, collectively with Omega,
HomeCrest and any other party that becomes a party hereto pursuant to Section
6.5 of the Credit Agreement hereinafter referred to [the "Credit Agreement"],
the "Borrowers"), hereby jointly, severally and unconditionally, in accordance
with the terms of the Credit Agreement, promises to
pay to the order of [ ] (the "Bank") at the main office of First Bank National
Association in Minneapolis, Minnesota, in lawful money of the United States of
America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Credit Agreement) on the Revolving
Commitment Ending Date, the principal amount of [ ] AND NO/100 DOLLARS ($[ ])
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
<PAGE>
OMEGA CABINETS, LTD.
By _____________________
Name ___________________
Title __________________
HOMECREST CORPORATION
By _____________________
Name ___________________
Title __________________
PARTHER TRANSPORT, INC.
By _____________________
Name ___________________
Title __________________
1.1-3-2
<PAGE>
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/o Butler 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
<PAGE>
to Omega (the "Junior Bridge Loan") provided by Mezzanine Lending Associates
III, L.P., (the "Butler Fund", together with the Initial Lenders, the "Other
Financing Sources") and (4) approximately $70 million in equity contributed to
Omega by management and the Butler 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
<PAGE>
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 Butler Capital
Corporation (the "Butler Projections," Exhibit A.2; the Management
Projections and the Butler 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
<PAGE>
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
<PAGE>
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
<PAGE>
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 Butler Capital Corporation and inquired of the
management of Omega, the Borrowers and Butler 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
<PAGE>
(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
<PAGE>
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
<PAGE>
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")
James T. Budyak
Vice President and Principal
9
<PAGE>
EXHIBIT 1.1-5
TO CREDIT AGREEMENT
CERTIFICATE OF
CHIEF FINANCIAL OFFICER
-----------------------
TO: First Bank National Association, as Agent First Bank Place
601 Second Avenue South
Minneapolis, MN 55402
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, Lance Erlick, 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 Butler 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
<PAGE>
cash flow generated by the operation of the Borrowers, except for the payment of
the Indebtedness outstanding under the Butler 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 Butler 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 Butler 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
<PAGE>
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
<PAGE>
EXHIBIT 1.1-6(a)
[FIRST BANK NATIONAL ASSOCIATION LETTERHEAD]
June 13, 1997
Andrew W. Code, Thomas J. Formolo, and Henry P. Key, as members of The
Stockholders' Committee, as attorney-in-
fact for the former stockholders of Omega
Holdings, Inc., a Delaware corporation (the "Company")
10 South Wacker
Suite 3175
Chicago, Illinois 60606
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 Andrew W. Code, Thomas J. Formolo, and Henry P.
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."
<PAGE>
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, 10th Floor, Minneapolis, Minnesota 55402-4302 (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. 18241859, ABA No. 071000770, or in
immediately available funds credited to an account designated by you which is
maintained by you with us.
<PAGE>
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.
<PAGE>
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_________________________________
<PAGE>
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 ___________________________________
<PAGE>
Name______________________________
A Member
<PAGE>
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________________________________
<PAGE>
EXHIBIT 1.1-6(b)
[FIRST BANK NATIONAL ASSOCIATION LETTERHEAD]
June 6, 1997
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
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;
<PAGE>
(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, 10th Floor, Minneapolis, Minnesota 55402-4302 (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:
<PAGE>
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: Julie A. Adams
By _____________________________________
Its Assistant Vice President
Name: Dawn Johnston
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT B TO
IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 76670
DESCRIPTION OF OUTSTANDING LETTERS OF CREDIT
<TABLE>
<CAPTION>
- -------------------------------------------------------------
L/C No. Beneficiary Expiry Date Amount
- -------------------------------------------------------------
<C> <S> <C> <C>
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
- -------------------------------------------------------------
</TABLE>
<PAGE>
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: ______________________________
<PAGE>
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: _____________________________
<PAGE>
EXHIBIT 1.1-7
TO CREDIT AGREEMENT
Legal Description of Tennessee Facility
SITUATED in District No. One (1) of Anderson 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 Henson Road; thence leaving the CSX Railroad right of way with the said
southern margin of Henson 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
<PAGE>
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 Anderson 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 Henson 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 Henson 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 Kevin A. King, RLS No. 1433, of ETE Consulting
Engineering, Inc., 311 Oak Ridge Turnpike, Oak Ridge, TN 37830 dated May 27,
1997, and bearing Job No. 97-402-216.
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 Dorothy A. and Nolan McAfee as recorded in Deed
Book F-18, page 883, of the Anderson 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 Kevin
1.1-7-2
<PAGE>
A. King, RLS No. 1433, of ETE Consulting Engineering, Inc., 311 Oak Ridge
Turnpike, Oak Ridge, TN 37830 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 Dorothy A. and Nolan McAfee as recorded in Deed
Book F-18, page 883, in the Anderson 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 Kevin A. King, RLS No. 1433, of ETE Consulting Engineering, Inc.,
311 Oak Ridge Turnpike, Oak Ridge, TN 37830 dated May 27, 1997, and bearing Job
No. 97-402-216.
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 Dorothy A. and
Nolan McAfee as recorded in Deed Book F-18, page 883, of the Anderson 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 Robert P. and Cheryl L. Copeland as recorded in Deed Book M-17, pages 275 and
278 of the Anderson County Register's Office;
1.1-7-3
<PAGE>
thence continuing and with the line of Copeland, 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 Kevin A. King, RLS No. 1433, of ETE Consulting Engineering, Inc., 311
Oak Ridge Turnpike, Oak Ridge, TN 37830 dated May 27, 1997, and bearing Job No.
97-402-216.
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 Anderson County Register's Office.
1.1-7-4
<PAGE>
EXHIBIT 1.1-8 TO
CREDIT AGREEMENT
TERM NOTE
June 13, 1997
Minneapolis, Minnesota
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
<PAGE>
By ____________________________________
Name __________________________________
Title _________________________________
HOMECREST CORPORATION
By ____________________________________
Name __________________________________
Title _________________________________
PANTHER TRANSPORT, INC.
By ____________________________________
Name __________________________________
Title _________________________________
1.1-8-2
<PAGE>
EXHIBIT 2.2
FORM OF LOAN REQUEST
____________, 199_
First Bank National Association,
as Agent
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
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
<PAGE>
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
<PAGE>
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 Robert J. Bertch, Mary H. Bertch, the Gregory Bertch
Trust and the Jeffrey Bertch 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
<PAGE>
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
- -----
<TABLE>
<CAPTION>
Registered Trademarks Reg. No. Country Expiration
--------------------- -------- ------- ----------
<S> <C> <C> <C> <C>
1. OMEGA 1,623,711 U.S. November 20, 2000
2. HomeCrest 1,552,925 U.S. August 22, 2009
</TABLE>
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.
<PAGE>
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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE
JURISDICTION SHARES OWNERSHIP
OF CLASS OF BENEFICIALLY OF SUCH
BORROWER INCORPORATION STOCK SHAREHOLDER OWNED SUBSIDIARY
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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%
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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 Robert J. Bertch and Omega for premises
located at 1103 Peters Drive, Waterloo, Iowa.
2. Lease dated March 10, 1994 between HomeCrest and Jack G. Sourwine and Patsy
R. Sourwine d/b/a Sourwine Company for premises located at 4040 East 82nd
Street, Indianapolis, Indiana.
3. Lease dated October 18, 1991 between First Industrial, L.P., successor-in-
interest to Kern County Pension Fund, and HomeCrest for premises located at
8520 and 8530 East 33rd Street, Indianapolis, Indiana.
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 4040 East 82nd Street,
Indianapolis, Indiana.
2. Oral sublease between HomeCrest and HCI Cabinetry at 8520 and 8530 East
33rd Street, Indianapolis, Indiana.
3. Sublease dated July 1, 1996 between HomeCrest and Western Waterproofing,
Inc. at 8520 and 8530 East 33rd Street, Indianapolis, Indiana.
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.
<PAGE>
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.
<PAGE>
EXHIBIT 4.26
List of all policies of insurance for the Borrowers in effect as of the Closing
Date.
See Attached Schedule 4.26.
----
<PAGE>
OMEGA CABINETS, LTD. Schedule 4.2.6
Policy Period: Various
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
LINE OF COVERAGE LIMIT CARRIER
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
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
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------
<S> <C> <C>
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
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
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
<PAGE>
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 Butler
Subordinated Bridge Loan Documents, the West Street
Subordinated Bridge Loan Documents, the West Street
Subordinated Permanent Loan Documents $________
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 Butler 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
<PAGE>
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 Butler
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-
<PAGE>
23. Excess Cash Flow for year (line $__________
21 minus line 22)
23. Prepayment due under Section $__________
2.6(c) (75% of line 23)
-3-
<PAGE>
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
<PAGE>
(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
<PAGE>
By:________________________
Name:______________________
Title:_____________________
FIRST BANK NATIONAL ASSOCIATION,
as Agent
By:________________________
Name:______________________
Title:_____________________
6.5-3
<PAGE>
EXHIBIT 6.8
Permissible transactions with Affiliates.
1. Lease dated June 17, 1997 between Robert J. Bertch and Omega.
2. Senior Management Non-Competition Agreement dated as of June 13, 1997
between Omega Merger Corp. and each of Henry P. Key and John A. Goebel.
3. Management Non-Competition Agreement dated as of June 13, 1997 between
Omega Merger Corp. and each of Douglas J. Conley, Lance E. Erlick, Michael
J. Hagan, Thomas J. Schmidt, Henry T. Wellnitz and Robert J. Moran.
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 Henry
P. Key and John Goebel.
11. Letter dated September 16, 1994 to Henry P. Key relating to employment with
Omega.
12. Letter dated July 11, 1994 to Lance E. Erlick relating to employment with
Omega.
13. Letter dated September 11, 1995 to Robert L. Moran relating to employment
with Omega.
<PAGE>
14. Letter dated November 11, 1996 to Terry Goerdt relating to employment with
Omega.
15. Employment and Noncompetition Agreement dated as of June 17, 1994 between
Omega and Robert J. Bertch.
16. Letter dated April 10, 1995 to John A. Goebel, Douglas J. Conley, Michael
J. Hagan and Thomas J. Schmidt relating to employment with HomeCrest.
17. Butler 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
<PAGE>
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 Henry
P. Key and John Goebel.
<PAGE>
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 Henry T. Wellnitz, James C. McCarty, Charles J. Becker
and Nathan J. Beving.
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.
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
Borrower Name Secured Party Collateral Filing Office, Number and Date
- ------------------------------- ---------------- ------------------ ------------------------------
<S> <C> <C> <C>
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 Ervin Leasing Specific Leased Indiana SOS
Company Equipment 2101600 - 1/30/97
HomeCrest Corporation Ervin Leasing Specific Leased Elkhart County Recorder
Company Equipment 03112 - 1/28/97
HomeCrest Corporation Ervin Leasing Specific Leased Indiana SOS
Company Equipment 2127483 - 5/29/97
HomeCrest Corporation Ervin Leasing Specific Leased Elkhart County Recorder
Company Equipment 04286 - 5/5/97
</TABLE>
<PAGE>
EXHIBIT 6.15
List of permissible Contingent Obligations of Holdings and each of the
Borrowers.
1. Deferred compensation arrangements between Omega and each of Henry T.
Wellnitz, James C. McCarty, Charles J. Becker and Nathan J. Beving.
2. 1997 Omega Holdings, Inc. Deferred Compensation Plan dated June 13, 1997,
and the related Rabbi Trust Agreement dated June 13, 1997.
3. Butler 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.
<PAGE>
12. The Transition Severance Agreements dated April 24, 1997 between Omega or
HomeCrest, as the case may be, and each of Henry P. Key, Lance E. Erlick,
Henry T. Wellnitz, Robert L. Moran, John A. Goebel, Michael J. Hagan,
Douglas J. Conley and Thomas J. Schmidt.
13. Put-right Agreements dated June 13, 1997 between Holdings and each of Henry
P. Key and John Goebel.
2
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Title:__________________________
PANTHER TRANSPORT, INC.
By:_____________________________
Name:___________________________
Title:__________________________
9.6-5
<PAGE>
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,
<PAGE>
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
<PAGE>
(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
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(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
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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.
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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
<PAGE>
Exhibit 10.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of June 13,1997, is made and given
by PANTHER TRANSPORT, INC., a Iowa corporation (the "Grantor"), to FIRST BANK
NATIONAL ASSOCIATION, a national banking association, as "Agent" under, and for
the benefit of the "Banks" as defined in, the "Credit Agreement," as that term
is defined below (the "Secured Party").
RECITALS
--------
A. The Grantor, together with certain Affiliates, certain financial
institutions and First Bank National Association, as Agent, have entered into a
Credit Agreement dated as of June 13, 1997 (as the same may hereafter be
amended, supplemented, extended, restated, or otherwise modified from time to
time, the "Credit Agreement") pursuant to which the Banks have agreed to extend
to the Grantor certain credit accommodations.
B. It is a condition precedent to the obligation of the Banks to
extend credit accommodations pursuant to the terms of the Credit Agreement that
this Agreement be executed and delivered by the Grantor.
C. The Grantor finds it advantageous, desirable and in its best
interests to comply with the requirement that it execute and deliver this
Security Agreement to the Secured Party.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to enter into the Credit Agreement and to extend credit accommodations to
the Grantor thereunder, the Grantor hereby agrees with the Secured Party, for
the benefit of the Banks and the Agent, as follows:
Section 1. Defined Terms.
-------------
1(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"Account" shall mean the rights of the Grantor to payment for goods
-------
sold or leased or for services rendered which is not evidenced by an
Instrument or Chattel Paper, whether or not such right has been earned by
performance, all guaranties and security therefor, and all interests in the
goods the sale or lease of which gave rise thereto, including the right to
stop such goods in transit.
<PAGE>
"Account Debtor" shall mean a Person who is obligated on or under any
--------------
Account, Chattel Paper, Instrument or General Intangible.
"Affiliate": When used with reference to any Person, (a) each Person
---------
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.
"Affiliate Debt" shall mean indebtedness owing to the Grantor from any
--------------
Affiliate.
"Agent" shall mean First Bank National Association, acting as agent
-----
for the benefit of itself and the other Banks, or such other institution as
may be appointed as "Agent" under the Credit Agreement.
"Banks" shall mean the institutions that are from time to time party
-----
to the Credit Agreement as lenders.
"Chattel Paper" shall mean a writing or writings which evidence both a
-------------
monetary obligation and a security interest in or lease of specific goods;
when a transaction is evidenced by both a security agreement or a lease and
by an Instrument or a series of Instruments, the group of writings taken
together constitutes Chattel Paper.
"Collateral" shall mean all property and rights in property now owned
----------
or hereafter at any time acquired by the Grantor in or upon which a
Security Interest is granted to the Secured Party by the Grantor under this
Agreement.
"Credit Agreement" shall have the meaning given in Recital A.
----------------
"Document" shall mean any bill of lading, dock warrant, dock receipt,
--------
warehouse receipt or order for the delivery of goods, together with any
other document or receipt which in the regular course of business or
financing is treated as adequately evidencing that the Person in possession
of it is entitled to receive, hold and dispose of the document and the
goods it covers.
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<PAGE>
"Equipment" shall mean all machinery, equipment, furniture,
---------
furnishings and fixtures, including all accessions, accessories and
attachments thereto, and any guaranties, warranties, indemnities and other
agreements of manufacturers, vendors and others with respect to such
Equipment.
"Event of Default" shall have the meaning given to such term in
----------------
Section 18 hereof.
"Financing Statement" shall have the meaning given to such term in
-------------------
Section 4 hereof.
"General Intangibles" shall mean any personal property (other than
-------------------
goods, Accounts, Chattel Paper, Documents, Instruments and money) including
choses in action, causes of action, contract rights, corporate and other
business records, inventions, designs, patents, patent applications,
service marks, trademarks, tradenames, trade secrets, engineering drawings,
good will, registrations, copyrights, licenses, franchises, customer lists,
tax refund claims, royalties, licensing and product rights, rights to the
retrieval from third parties of electronically processed and recorded data
and all rights to payment resulting from an order of any court.
"Instrument" shall mean a draft, check, certificate of deposit, note,
----------
bill of exchange, security or any other writing which evidences a right to
the payment of money and is not itself a security agreement or lease and is
of a type which is transferred in the ordinary course of business by
delivery with any necessary endorsement or assignment.
"Inventory" shall mean any and all goods owned or held by or for the
---------
account of the Grantor for sale or lease, or for furnishing under a
contract of service, or as raw materials, work in process, materials
incorporated in or consumed in the production of any of the foregoing and
supplies, in each case wherever the same shall be located, whether in
transit, on consignment, in retail outlets, warehouses, terminals or
otherwise, and all property the sale, lease or other disposition of which
has given rise to an Account and which has been returned to the Grantor or
repossessed by the Grantor or stopped in transit.
"Lien" shall mean any security interest, mortgage, pledge, lien,
----
charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of the lessors under capitalized leases),
in, of or on any assets or properties of the Person referred to.
"Obligations" shall mean (a) all indebtedness, liabilities and
-----------
obligations of the Grantor to the Banks and Agent of every kind, nature or
description under the Credit Agreement for which the Grantor is liable,
including without limitation the Grantor's
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<PAGE>
obligation on any promissory note or notes under the Credit Agreement and
any note or notes hereafter issued in substitution or replacement thereof
and any letter of credit reimbursement obligations and fees, (b) all
liabilities of the Grantor under this Agreement, and (c) any and all other
liabilities and obligations of the Grantor to the Banks and the Agent of
every kind, nature and description, whether direct or indirect or hereafter
acquired by the Banks, or the Agent from any Person, absolute or
contingent, regardless of how such liabilities arise or by what agreement
or instrument they may be evidenced, and in all of the foregoing cases
whether due or to become due, and whether now existing or hereafter arising
or incurred.
"Person" shall mean any individual, corporation, partnership, limited
------
liability company or partnership, 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.
"Security Interest" shall have the meaning given such term in Section
-----------------
2 hereof.
1(b) All other terms used in this Agreement which are not specifically
defined herein shall have the meaning assigned to such terms in the Uniform
Commercial Code in effect in the State of Minnesota as of the date of this
Agreement to the extent such other terms are defined therein.
1(c) Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular, the plural and "or"
has the inclusive meaning represented by the phrase "and/or." The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." The words "hereof," "herein," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. References to Sections are
references to Sections in this Security Agreement unless otherwise provided.
Section 2. Grant of Security Interest. As security for the payment
--------------------------
and performance of all of the Obligations, the Grantor hereby grants to the
Secured Party, for the benefit of the Banks and the Agent, a security interest
(the "Security Interest") in all of the Grantor's right, title, and interest in
and to the following, whether now or hereafter owned, existing, arising or
acquired and wherever located:
2(a) All Accounts.
2(b) All Chattel Paper.
2(c) All Documents.
2(d) All Equipment.
-4-
<PAGE>
2(e) All General Intangibles, including, without limitation, Affiliate
Debt.
2(f) All Instruments.
2(g) All Inventory.
2(h) To the extent not otherwise included in the foregoing, (i) all
other rights to the payment of money, including rents and other sums
payable to the Grantor under leases, rental agreements and other Chattel
Paper and insurance proceeds; (ii) all books, correspondence, credit files,
records, invoices, bills of lading, and other documents relating to any of
the foregoing, including, without limitation, all tapes, cards, disks,
computer software, computer runs, and other papers and documents in the
possession or control of the Grantor or any computer bureau from time to
time acting for the Grantor; (iii) all rights in, to and under all policies
insuring the life of any officer, director, stockholder or employee of the
Grantor, the proceeds of which are payable to the Grantor; and (iv) all
accessions and additions to, parts and appurtenances of, substitutions for
and replacements of any of the foregoing.
2(i) To the extent not otherwise included, all proceeds and products
of any and all of the foregoing.
Notwithstanding Sections 2(a) through 2(i), the payment and performance of
the Obligations shall not be secured by (i) any Instrument, contract, license or
other agreement, or permit or franchise that validly prohibits the creation by
the Grantor of a security interest in such Instrument, contract, license or
other agreement, permit or franchise (or in any rights or property obtained by
the Grantor under such contract, license or other agreement, or permit or
franchise); provided, however, that nothing in this clause (i) shall apply to
--------
any Account, or (ii) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property prohibits
the creation of a security interest therein. In addition, in the event the
Grantor disposes of assets to third parties in a transaction permitted by
Section 6.2 of the Credit Agreement, such assets, but not the proceeds or
products thereof, shall be released from the Lien of the Security Interest.
Section 3. Grantor Remains Liable. Anything herein to the contrary
----------------------
notwithstanding, (a) the Grantor shall remain liable under the Accounts, Chattel
Paper, General Intangibles and other items included in the Collateral to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by the Secured Party of any of the rights hereunder shall not release the
Grantor from any of its duties or obligations under any items included in the
Collateral, and (c) the Secured Party, the Banks and the Agent shall have no
obligation or liability under Accounts, Chattel Paper, General Intangibles and
other items included in the Collateral by reason of this Agreement, nor shall
the Secured Party, the Banks or the Agent be
-5-
<PAGE>
obligated to perform any of the obligations or duties of the Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
Section 4. Title to Collateral. The Grantor has (or will have at the
-------------------
time it acquires rights in Collateral hereafter acquired or arising) and will
maintain so long as the Security Interest may remain outstanding, title to each
item of Collateral (including the proceeds and products thereof), free and clear
of all Liens except the Security Interest and except Liens permitted by the
Credit Agreement. The Grantor will defend the Collateral against all claims or
demands of all Persons (other than the Secured Party) claiming the Collateral or
any interest therein. As of the date of execution of this Security Agreement,
no effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction (a "Financing
Statement") covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed (a) in favor of the Secured
Party relating to this Agreement, or (b) to perfect Liens permitted by the
Credit Agreement.
Section 5. Disposition of Collateral. The Grantor will not sell,
-------------------------
lease or otherwise dispose of, or discount or factor with or without recourse,
any Collateral, except sales of items of Inventory in the ordinary course of
business and other sales of assets permitted under the Credit Agreement.
Section 6. Names, Offices, Locations. The Grantor does business
-------------------------
solely under its own name and the trade names and styles, if any, set forth on
Schedule II hereto. Except as noted on said Schedule, no such trade names or
styles and no trademarks or other similar marks owned by the Grantor are
registered with any governmental unit. The chief place of business and chief
executive office and the office where it keeps its books and records concerning
the Accounts and General Intangibles and the originals of all Chattel Paper,
Documents and Instruments are located at its address set forth on the signature
page hereof. All items of Equipment and Inventory existing on the date of this
Agreement are located at the places specified on Schedule I hereto. The Grantor
will promptly notify the Secured Party of any additional state in which any item
of Inventory or Equipment is hereafter located. The Grantor will from time to
time at the request of the Secured Party provide the Secured Party with current
lists as to the locations of the Equipment and Inventory. The Grantor will not
permit any Inventory, Equipment, Chattel Paper or Documents or any records
pertaining to Accounts and General Intangibles to be located in any state or
area in which, in the event of such location, a financing statement covering
such Collateral would be required to be, but has not in fact been, filed in
order to perfect the Security Interest. The Grantor will not change its name or
the location of its chief place of business and chief executive office or use
any trade name or trade style in any state other than as indicated on Schedule
II unless the Secured Party has been given at least 30 days prior written notice
thereof and the Grantor has executed and delivered to the Secured Party such
Financing Statements and other instruments required or appropriate to continue
the perfection of the Security Interest.
-6-
<PAGE>
Section 7. Rights to Payment. Except as the Grantor may otherwise
-----------------
advise the Secured Party in writing, to the knowledge of the Grantor, each
Account, Chattel Paper, Document, General Intangible and Instrument constituting
or evidencing Collateral is (or, in the case of all future Collateral, will be
when arising or issued) the valid, genuine and legally enforceable obligation of
the Account Debtor or other obligor named therein or in the Grantor's records
pertaining thereto as being obligated to pay or perform such obligation. Without
the Secured Party's prior written consent, the Grantor will not agree to any
modifications, amendments, subordinations, cancellations or terminations of
material obligations of any Account Debtors or other obligors except in the
ordinary course of business. The Grantor will perform and comply in all
material respects with all its obligations under any items included in the
Collateral and exercise promptly and diligently its rights thereunder. The
Grantor does not currently hold any Instrument or Document evidencing amounts
owed to the Grantor by any Subsidiary.
Section 8. Further Assurances; Attorney-in-Fact.
------------------------------------
8(a) The Grantor agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or that the Secured
Party may reasonably request, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral (but any failure to request or assure that the
Grantor execute and deliver such instrument or documents or to take such
action shall not affect or impair the validity, sufficiency or
enforceability of this Agreement and the Security Interest, regardless of
whether any such item was or was not executed and delivered or action taken
in a similar context or on a prior occasion). Without limiting the
generality of the foregoing, the Grantor will, promptly and from time to
time at the request of the Secured Party: (i) mark, or permit the Secured
Party to mark, conspicuously its books, records, and accounts showing or
dealing with the Collateral, and each item of Chattel Paper included in the
Collateral, with a legend, in form and substance reasonably satisfactory to
the Secured Party, indicating that each such item of Collateral and each
such item of Chattel Paper is subject to the Security Interest granted
hereby; (ii) deliver and pledge to the Secured Party, all Instruments and
Documents (specifically including any Instrument or Document evidencing
amounts owed to the Grantor by any Subsidiary), duly indorsed or
accompanied by duly executed instruments of transfer or assignment, with
full recourse to the Grantor, all in form and substance satisfactory to the
Secured Party; (iii) execute and file such Financing Statements or
continuation statements in respect thereof, or amendments thereto, and such
other instruments or notices (including fixture filings with any necessary
legal descriptions as to any goods included in the Collateral which the
Secured Party determines might be deemed to be fixtures, and instruments
and notices with respect to vehicle titles), as may be necessary or
desirable, or as the Secured Party may request, in order to perfect,
preserve, and enhance the Security Interest granted or purported to
-7-
<PAGE>
be granted hereby; and (iv) use reasonable efforts to obtain waivers, in
form satisfactory to the Secured Party, of any claim to any Collateral from
any landlords or mortgagees of any property where any Inventory or
Equipment is located.
8(b) The Grantor hereby authorizes the Secured Party to execute
and file one or more Financing Statements or continuation statements in
respect thereof, and amendments thereto, in the event that the Secured
Party reasonably believes that prompt action would be necessary to protect
its rights in all or any part of the Collateral. The Secured Party may
file such Financing Statements or continuation statements without the
signature of the Grantor where permitted by law. A photocopy or other
reproduction of this Agreement or any Financing Statement covering the
Collateral or any part thereof shall be sufficient as a Financing Statement
where permitted by law.
8(c) The Grantor will furnish to the Secured Party from time to
time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Secured Party may reasonably request, all in reasonable detail and in form
and substance reasonably satisfactory to the Secured Party.
Section 9. Taxes and Claims. The Grantor will promptly pay all taxes
----------------
and other governmental charges levied or assessed upon or against any Collateral
or upon or against the creation, perfection or continuance of the Security
Interest, as well as all other claims of any kind (including claims for labor,
material and supplies) against or with respect to the Collateral, except to the
extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger
of the sale, forfeiture or loss of any of the Collateral or any interest therein
and (c) such taxes, charges or claims are adequately reserved against on the
Grantor's books in accordance with generally accepted accounting principles.
Section 10. Books and Records. The Grantor will keep and maintain at
-----------------
its own cost and expense satisfactory and complete records of the Collateral,
including a record of all payments received and credits granted with respect to
all Accounts, Chattel Paper and other items included in the Collateral.
Section 11. Inspection, Reports, Verifications. Upon one day's
----------------------------------
advance notice, the Grantor will at all reasonable times during normal business
hours permit the Secured Party or its representatives to examine or inspect any
Collateral, any evidence of Collateral and the Grantor's books and records
concerning the Collateral, wherever located. The Grantor will from time to time
when requested by the Secured Party furnish to the Secured Party a report on its
Accounts, Chattel Paper, General Intangibles and Instruments, naming the Account
Debtors or other obligors thereon, the amount due and the aging thereof. Upon
the occurrence and during the continuance of an Event of Default, the Secured
Party or
-8-
<PAGE>
its designee is authorized to contact Account Debtors and other Persons
obligated on any such Collateral from time to time to verify the existence,
amount and/or terms of such Collateral; provided that nothing in this sentence
--------
shall restrict or limit in any manner right of the Secured Party or any Bank to
contact such Account Debtors or other Persons during the course of any audit
conducted in accordance with the "Loan Documents" (as defined in the Credit
Agreement).
Section 12. Notice of Loss. The Grantor will promptly notify the
--------------
Secured Party of any loss of or material damage to any material item of
Collateral or of any substantial adverse change, known to Grantor, in any
material item of Collateral or the prospect of payment or performance thereof.
Section 13. Insurance. The Grantor will keep the Equipment and
---------
Inventory insured against "all risks" for the full replacement cost thereof
subject to a deductible, and with an insurance company or companies,
satisfactory to the Secured Party, the policies to protect the Secured Party, as
Agent for the Banks, as its interests may appear, with such policies or
certificates with respect thereto to be delivered to the Secured Party at its
request. Each such policy or the certificate with respect thereto shall provide
that such policy shall not be cancelled or allowed to lapse unless at least 30
days prior written notice is given to the Secured Party.
Section 14. Lawful Use; Fair Labor Standards Act. The Grantor will
------------------------------------
use and keep the Collateral, and will require that others use and keep the
Collateral, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance. All Inventory of the Grantor as of the date of
this Agreement that was produced by the Grantor or with respect to which the
Grantor performed any manufacturing or assembly process was produced by the
Grantor (or such manufacturing or assembly process was conducted) in compliance
in all material respects with all requirements of the Fair Labor Standards Act,
and all Inventory produced, manufactured or assembled by the Grantor after the
date of this Agreement will be so produced, manufactured or assembled, as the
case may be.
Section 15. Action by the Secured Party; Power of Attorney.
----------------------------------------------
Effective upon and during the continuance of an Event of Default, if the Grantor
at any time fails to perform or observe any of the foregoing agreements, the
Secured Party shall have (and the Grantor hereby grants to the Secured Party)
the right, power and authority (but not the duty) to perform or observe such
agreement on behalf and in the name, place and stead of the Grantor (or, at the
Secured Party's option, in the Secured Party's name) and to take any and all
other actions which the Secured Party may reasonably deem necessary to cure or
correct such failure (including, without limitation, the payment of taxes, the
satisfaction of Liens, the procurement and maintenance of insurance, the
execution of assignments, security agreements and Financing Statements, and the
indorsement of instruments); and the Grantor shall thereupon pay to the Secured
Party on demand the amount of all monies expended and all reasonable costs and
expenses (including reasonable attorneys' fees and legal expenses) incurred by
the
-9-
<PAGE>
Secured Party in connection with or as a result of the performance or observance
of such agreements or the taking of such action by the Secured Party, together
with interest thereon from the date expended or incurred at the highest lawful
rate then applicable to any of the Obligations, and all such monies expended,
costs and expenses and interest thereon shall be part of the Obligations secured
by the Security Interest. The Grantor hereby appoints the Secured Party the
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Secured Party's good-faith discretion, to take any action and to execute any
instrument that the Secured Party may reasonably believe is necessary or
advisable to accomplish the purposes of this Agreement, in a manner consistent
with the terms hereof and the terms of the Credit Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable to the
Grantor representing any Collateral or any part thereof and to give full
discharge for the same; provided that the Secured Party shall not exercise such
--------
power of attorney hereunder prior to the occurrence and continuance of an Event
of Default except to the extent necessary to exercise its rights under Section
8(b) and Section 16 hereof. The Grantor agrees that the foregoing may be done
by the Secured Party in its own name (to the same extent and with the same force
and effect as could have been done by the Grantor had this Agreement not been
made) or in the name of the Grantor. The foregoing power of attorney is coupled
with an interest and is therefore irrevocable by the Grantor.
Section 16. Insurance Claims. As additional security for the payment
----------------
and performance of the Obligations, the Grantor hereby assigns to the Secured
Party any and all monies (including proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Grantor with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business
records or valuable papers pertaining thereto. The Secured Party may (but need
not), in the Secured Party's name or in Grantor's name, execute and deliver
proofs of claim, receive all such monies, indorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or release
any claim against the issuer of any such policy (a) for any loss from which
insurance proceeds for such loss are in excess of $100,000 whether or not a
Default or Event of Default has occurred or (b) for any reason upon the
occurrence and during the continuance of any Event of Default. Notwithstanding
any of the foregoing, so long as no Event of Default exists the Grantor shall be
entitled to all insurance proceeds with respect to any of the Collateral;
provided that any proceeds received in respect of Equipment and Inventory are
- --------
applied to the cost of replacement of such Equipment or Inventory.
Section 17. The Secured Party's Duties. The powers conferred on the
--------------------------
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Secured
Party shall be deemed to have exercised reasonable care in the safekeeping of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to the safekeeping which the Secured Party accords its own
property of like kind. Except for the safekeeping of any Collateral in its
possession and the accounting for monies and for other properties actually
received by it hereunder, the
-10-
<PAGE>
Secured Party shall have no duty, as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not the Secured Party
has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any Persons or any other rights
pertaining to any Collateral. The Secured Party will take action in the nature
of exchanges, conversions, redemptions, tenders and the like requested in
writing by the Grantor with respect to the Collateral in the Secured Party's
possession if the Secured Party in its reasonable judgment determines that such
action will not impair the Security Interest or the value of the Collateral, but
a failure of the Secured Party to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care.
Section 18. Default. Each of the following occurrences shall
-------
constitute an Event of Default under this Agreement: (a) the Grantor shall fail
to observe or perform any covenant or agreement applicable to the Grantor under
this Agreement and such failure to comply shall continue for thirty (30)
calendar days after the earlier to occur of (i) the date the Grantor gives
written notice of such failure to the Secured Party, or (ii) the date the
Secured Party gives notice of such failure to the Grantor; or (b) any
representation or warranty made by the Grantor in this Agreement or any
schedule, exhibit, supplement or attachment hereto or in any reports or
certificates heretofore or at any time hereafter submitted by or on behalf of
the Grantor to the Secured Party shall prove to have been materially false or
misleading when made; or (c) any Event of Default shall occur under the Credit
Agreement beyond the applicable cure period specified therein.
Section 19. Remedies on Default. Upon the occurrence of an Event of
-------------------
Default and at any time thereafter:
19(a) The Secured Party may exercise and enforce any and all
rights and remedies available upon default to a secured party under the
Uniform Commercial Code.
19(b) The Secured Party shall have the right to enter upon and
into and take possession of all or such part or parts of the properties of
the Grantor, including lands, plants, buildings, Equipment, Inventory and
other property as may be necessary or appropriate in the judgment of the
Secured Party to permit or enable the Secured Party to manufacture,
produce, process, store or sell or complete the manufacture, production,
processing, storing or sale of all or any part of the Collateral, as the
Secured Party may elect, and to use and operate said properties for said
purposes and for such length of time as the Secured Party may deem
necessary or appropriate for said purposes without the payment of any
compensation to Grantor therefor. The Secured Party may require the
Grantor to, and the Grantor hereby agrees that it will, at its expense and
upon request of the Secured Party forthwith, assemble all or part of the
Collateral as directed by the Secured Party and make it available to the
Secured Party at a place or places to be designated by the Secured Party.
-11-
<PAGE>
19(c) Any sale of Collateral may be in one or more parcels at
public or private sale, at any of the Secured Party's offices or elsewhere,
for cash, on credit, or for future delivery, and upon such other terms as
the Secured Party may reasonably believe are commercially reasonable. The
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given, and the Secured Party may
adjourn any public or private sale from time to time by announcement made
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
19(d) The Secured Party is hereby granted a license or other
right to use, without charge, all of the Grantor's property, including,
without limitation, all of the Grantor's labels, trademarks, copyrights,
patents and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for
sale and selling any Collateral, and the Grantor's rights under all
licenses and all franchise agreements shall inure to the Secured Party's
benefit until the Obligations are paid in full.
19(e) If notice to the Grantor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given in
the manner specified for the giving of notice in Section 24 hereof at least
ten calendar days prior to the date of intended disposition or other
action, and the Secured Party may exercise or enforce any and all other
rights or remedies available by law or agreement against the Collateral,
against the Grantor, or against any other Person or property.
Section 20. Remedies as to Certain Rights to Payment. Upon the
----------------------------------------
occurrence of an Event of Default and at any time thereafter the Secured Party
may notify any Account Debtor or other Person obligated on any Accounts or other
Collateral that the same have been assigned or transferred to the Secured Party
and that the same should be performed as requested by, or paid directly to, the
Secured Party, as the case may be. The Grantor shall join in giving such
notice, if the Secured Party so requests. The Secured Party may, in the Secured
Party's name or in the Grantor's name, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of, or securing,
any such Collateral or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the obligation of any
such Account Debtor or other Person. If any payments on any such Collateral are
received by the Grantor after an Event of Default has occurred, such payments
shall be held in trust by the Grantor as the property of the Secured Party and
shall not be commingled with any funds or property of the Grantor and shall be
forthwith remitted to the Secured Party for application on the Obligations.
Section 21. Application of Proceeds. All cash proceeds received by
-----------------------
the Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Secured Party, be held by the Secured Party
-12-
<PAGE>
as collateral for, or then or at any time thereafter be applied in whole or in
part by the Secured Party against, all or any part of the Obligations
(including, without limitation, any expenses of the Secured Party payable
pursuant to Section 22 hereof).
Section 22. Costs and Expenses; Indemnity. The Grantor will pay or
-----------------------------
reimburse the Secured Party on demand for all reasonable out-of-pocket expenses
(including in each case all filing and recording fees and taxes and all
reasonable fees and expenses of counsel and of any experts and agents) incurred
by the Secured Party in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Security Interest. The Grantor shall indemnify and hold the
Secured Party harmless from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) resulting from this Agreement
and the Security Interest hereby created (including enforcement of this
Agreement) or the Secured Party's actions pursuant hereto, except claims, losses
or liabilities resulting from the Secured Party's gross negligence or willful
misconduct. Any liability of the Grantor to indemnify and hold the Secured
Party harmless pursuant to the preceding sentence shall be part of the
Obligations secured by the Security Interest. The obligations of the Grantor
under this Section shall survive any termination of this Agreement.
Section 23. Waivers; Remedies; Marshalling. Notwithstanding any
------------------------------
provisions to the contrary herein, any term of this Agreement may be amended
with the written consent of the Grantor; provided that no amendment,
modification or waiver of any provision of this Agreement or consent to any
departure herefrom by the Grantor or other party thereto shall in any event be
effective unless the same shall be in writing and signed by the Secured Party,
and then such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. The Security
Interest can be released, only explicitly in a writing signed by the Secured
Party. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to the Secured Party. All
rights and remedies of the Secured Party shall be cumulative and may be
exercised singly in any order or sequence, or concurrently, at the Secured
Party's option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. To the extent permitted by applicable law, the Grantor hereby waives all
requirements of law, if any, relating to the marshalling of assets which would
be applicable in connection with the enforcement by the Secured Party of its
remedies hereunder, absent this waiver.
Section 24. 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 of the Credit Agreement, or at such other address as such
party shall have specified to the other party hereto in writing. All periods of
-13-
<PAGE>
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.
Section 25. Grantor Acknowledgments. The Grantor hereby acknowledges
-----------------------
that (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, (b) the Secured Party and the Banks have no
fiduciary relationship to the Grantor, the relationship being solely that of
debtor and creditor, and (c) no joint venture exists between the Grantor, the
Secured Party and the Banks.
Section 26. Continuing Security Interest; Assignments under Credit
------------------------------------------------------
Agreement. This Agreement shall (a) create a continuing security interest in
- ---------
the Collateral and shall remain in full force and effect until payment in full
of the Obligations and the expiration of the obligations, if any, of the Banks
to extend credit accommodations to the Grantor, (b) be binding upon the Grantor,
its successors and assigns, and (c) inure to the benefit of the Banks and the
Agent, and be enforceable by, the Secured Party, and their respective
successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (c), the Banks or the Agent may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement to
any other Persons to the extent and in the manner provided in the Credit
Agreement and may similarly transfer all or any portion of its rights under this
Security Agreement to such Persons.
Section 27. Termination of Security Interest. Upon payment in full
--------------------------------
of the Obligations (except for contingent indemnity and other contingent
Obligations not yet due and payable) and the expiration of any obligation of the
Banks to extend credit accommodations to the Grantor, the Security Interest
granted hereby shall terminate. Upon any such termination, the Secured Party
will return to the Grantor such of the Collateral then in the possession of the
Secured Party as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination. Any reversion or
return of Collateral upon termination of this Agreement and any instruments of
transfer or termination shall be at the expense of the Grantor and shall be
without warranty by, or recourse on, the Secured Party. As used in this
Section, "Grantor" includes any assigns of Grantor, any Person holding a
subordinate security interest in any of the Collateral or whoever else may be
lawfully entitled to any part of the Collateral.
Section 28. Affiliate Debt. The Grantor represents and warrants that
--------------
there are no Instruments evidencing Affiliate Debt in favor of or assigned to
the Grantor. The Grantor hereby covenants and agrees that upon receipt of any
such Instrument the Grantor shall promptly execute documents, which shall be
satisfactory in form and substance to the Secured Party, and which in any event,
shall not contain any term or provision which prohibits or restricts the
creation by the Grantor of a security interest therein in favor of the Banks,
which
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<PAGE>
pledge such Instrument to the Secured Party, for the benefit of the Banks, and
deliver such documents, together with such Instrument, to the Secured Party for
the purpose of securing payment of the Obligations.
Section 29. Ownership of Vehicles. The Grantor represents and
---------------------
warrants that it owns no tractors or trailers or other cartage vehicles. The
Grantor hereby covenants and agrees that upon any such vehicle being owned by
the Grantor, the Grantor shall promptly execute documents, which shall be
satisfactory in form and substance to the Secured Party, which pledge such
vehicles to the Secured Party, for the benefit of the Banks, and deliver such
documents, together with the certificate of title, to the Secured Party for the
purpose of securing payment of the Obligations.
Section 30. Compliance with Pledge Agreement Covenants. The Grantor
------------------------------------------
shall perform or comply with all covenants made by Omega Cabinets, Ltd.
("Omega") pertaining to the Grantor in Omega's Pledge Agreement, including but
not limited to the provisions of Section 7(b) of Omega's Pledge Agreement which
prohibit the issuance of stock or other securities in addition to or in
substitution of the "Pledged Shares" (as defined in the Pledge Agreement),
except to the Omega.
SECTION 31. GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF MINNESOTA. Whenever possible, each provision of this Agreement and any
other statement, instrument or transaction contemplated hereby or relating
hereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto
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 or any other statement, instrument or
transaction contemplated hereby or relating hereto.
SECTION 32. CONSENT TO JURISDICTION. AT THE OPTION OF THE SECURED
-----------------------
PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY OR RAMSEY COUNTY, MINNESOTA; AND THE GRANTOR
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 THE GRANTOR COMMENCES
ANY ACTION IN ANOTHER
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<PAGE>
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY 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 33. WAIVER OF NOTICE AND HEARING. THE GRANTOR HEREBY WAIVES
----------------------------
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL
PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT
PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.
SECTION 34. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
--------------------
SECURED PARTY, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 35. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 36. General. All representations and warranties contained in
-------
this Agreement or in any other agreement between the Grantor and the Secured
Party shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations. The Grantor waives notice of
the acceptance of this Agreement by the Secured Party. Captions in this
Agreement are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
PANTHER TRANSPORT, INC.
By ______________________
Name ____________________
Title ___________________
Address for Grantor:
1205 Peters Drive
Waterloo, Iowa 50703
Address for the Secured Party:
First Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mark R. Olmon, MPFP0702
Telecopier No.: (612) 973-0825
S-1
<PAGE>
SCHEDULE I TO
PANTHER SECURITY
AGREEMENT
Locations of Equipment and Inventory as of Date of Security Agreement.
1. 1205 Peters Drive, Waterloo, Black Hawk County, Iowa (leased trucks).
<PAGE>
SCHEDULE II TO
PANTHER SECURITY
AGREEMENT
Trade Names and Trade Styles.
None.
<PAGE>
Exhibit 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of June 13,1997, is made and given
by OMEGA CABINETS, LTD., a Delaware corporation (the "Grantor"), to FIRST BANK
NATIONAL ASSOCIATION, a national banking association, as "Agent" under, and for
the benefit of the "Banks" as defined in, the "Credit Agreement," as that term
is defined below (the "Secured Party").
RECITALS
--------
A. The Grantor, together with certain Affiliates, certain financial
institutions and First Bank National Association, as Agent, have entered into a
Credit Agreement dated as of June 13, 1997 (as the same may hereafter be
amended, supplemented, extended, restated, or otherwise modified from time to
time, the "Credit Agreement") pursuant to which the Banks have agreed to extend
to the Grantor certain credit accommodations.
B. It is a condition precedent to the obligation of the Banks to
extend credit accommodations pursuant to the terms of the Credit Agreement that
this Agreement be executed and delivered by the Grantor.
C. The Grantor finds it advantageous, desirable and in its best
interests to comply with the requirement that it execute and deliver this
Security Agreement to the Secured Party.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to enter into the Credit Agreement and to extend credit
accommodations to the Grantor thereunder, the Grantor hereby agrees with the
Secured Party, for the benefit of the Banks and the Agent, as follows:
Section 1. Defined Terms.
-------------
1(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"Account" shall mean the rights of the Grantor to payment for
-------
goods sold or leased or for services rendered which is not evidenced by an
Instrument or Chattel Paper, whether or not such right has been earned by
performance, all guaranties and security therefor, and all interests in the
goods the sale or lease of which gave rise thereto, including the right to
stop such goods in transit.
"Account Debtor" shall mean a Person who is obligated on or under
--------------
any Account, Chattel Paper, Instrument or General Intangible.
<PAGE>
"Affiliate": When used with reference to any Person, (a) each Person
---------
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.
"Affiliate Debt" shall mean indebtedness owing to the Grantor from any
--------------
Affiliate.
"Agent" shall mean First Bank National Association, acting as agent
-----
for the benefit of itself and the other Banks, or such other institution as
may be appointed as "Agent" under the Credit Agreement.
"Bank" shall mean the institutions that are from time to time party to
----
the Credit Agreement as lenders.
"Chattel Paper" shall mean a writing or writings which evidence both a
-------------
monetary obligation and a security interest in or lease of specific goods;
when a transaction is evidenced by both a security agreement or a lease and
by an Instrument or a series of Instruments, the group of writings taken
together constitutes Chattel Paper.
"Collateral" shall mean all property and rights in property now owned
----------
or hereafter at any time acquired by the Grantor in or upon which a
Security Interest is granted to the Secured Party by the Grantor under this
Agreement.
"Credit Agreement" shall have the meaning given in Recital A.
----------------
"Document" shall mean any bill of lading, dock warrant, dock receipt,
--------
warehouse receipt or order for the delivery of goods, together with any
other document or receipt which in the regular course of business or
financing is treated as adequately evidencing that the Person in possession
of it is entitled to receive, hold and dispose of the document and the
goods it covers.
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<PAGE>
"Equipment" shall mean all machinery, equipment, furniture,
---------
furnishings and fixtures, including all accessions, accessories and
attachments thereto, and any guaranties, warranties, indemnities and other
agreements of manufacturers, vendors and others with respect to such
Equipment.
"Event of Default" shall have the meaning given to such term in
----------------
Section 18 hereof.
"Financing Statement" shall have the meaning given to such term in
-------------------
Section 4 hereof.
"General Intangibles" shall mean any personal property (other than
-------------------
goods, Accounts, Chattel Paper, Documents, Instruments and money) including
choses in action, causes of action, contract rights, corporate and other
business records, inventions, designs, patents, patent applications,
service marks, trademarks, tradenames, trade secrets, engineering drawings,
good will, registrations, copyrights, licenses, franchises, customer lists,
tax refund claims, royalties, licensing and product rights, rights to the
retrieval from third parties of electronically processed and recorded data
and all rights to payment resulting from an order of any court.
"Instrument" shall mean a draft, check, certificate of deposit, note,
----------
bill of exchange, security or any other writing which evidences a right to
the payment of money and is not itself a security agreement or lease and is
of a type which is transferred in the ordinary course of business by
delivery with any necessary endorsement or assignment.
"Inventory" shall mean any and all goods owned or held by or for the
---------
account of the Grantor for sale or lease, or for furnishing under a
contract of service, or as raw materials, work in process, materials
incorporated in or consumed in the production of any of the foregoing and
supplies, in each case wherever the same shall be located, whether in
transit, on consignment, in retail outlets, warehouses, terminals or
otherwise, and all property the sale, lease or other disposition of which
has given rise to an Account and which has been returned to the Grantor or
repossessed by the Grantor or stopped in transit.
"Lien" shall mean any security interest, mortgage, pledge, lien,
----
charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of the lessors under capitalized leases),
in, of or on any assets or properties of the Person referred to.
"Obligations" shall mean (a) all indebtedness, liabilities and
-----------
obligations of the Grantor to the Banks and Agent of every kind, nature or
description
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<PAGE>
under the Credit Agreement, including without limitation the Grantor's
obligation on any promissory note or notes under the Credit Agreement and
any note or notes hereafter issued in substitution or replacement thereof
and any letter of credit reimbursement obligations and fees, (b) all
liabilities of the Grantor under this Agreement, and (c) any and all other
liabilities and obligations of the Grantor to the Banks and the Agent of
every kind, nature and description, whether direct or indirect or hereafter
acquired by the Banks, or the Agent from any Person, absolute or
contingent, regardless of how such liabilities arise or by what agreement
or instrument they may be evidenced, and in all of the foregoing cases
whether due or to become due, and whether now existing or hereafter arising
or incurred.
"Person" shall mean any individual, corporation, partnership, limited
------
liability company or partnership, 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.
"Security Interest" shall have the meaning given such term in Section
-----------------
2 hereof.
1(b) All other terms used in this Agreement which are not specifically
defined herein shall have the meaning assigned to such terms in the Uniform
Commercial Code in effect in the State of Minnesota as of the date of this
Agreement to the extent such other terms are defined therein.
1(c) Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular, the plural and
"or" has the inclusive meaning represented by the phrase "and/or." The
words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The words "hereof," "herein,"
"hereunder," and similar terms in this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. References
to Sections are references to Sections in this Security Agreement unless
otherwise provided.
Section 2. Grant of Security Interest. As security for the payment
--------------------------
and performance of all of the Obligations, the Grantor hereby grants to the
Secured Party, for the benefit of the Banks and the Agent, a security
interest (the "Security Interest") in all of the Grantor's right, title,
and interest in and to the following, whether now or hereafter owned,
existing, arising or acquired and wherever located:
2(a) All Accounts.
2(b) All Chattel Paper.
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<PAGE>
2(c) All Documents.
2(d) All Equipment.
2(e) All General Intangibles, including, without limitation, Affiliate
Debt.
2(f) All Instruments.
2(g) All Inventory.
2(h) To the extent not otherwise included in the foregoing, (i) all
other rights to the payment of money, including rents and other sums payable to
the Grantor under leases, rental agreements and other Chattel Paper and
insurance proceeds; (h) all books, correspondence, credit files, records,
invoices, bills of lading, and other documents relating to any of the foregoing,
including, without limitation, all tapes, cards, disks, computer software,
computer runs, and other papers and documents in the possession or control of
the Grantor or any computer bureau from time to time acting for the Grantor;
(iii) all rights in, to and under all policies insuring the life of any officer,
director, stockholder or employee of the Grantor, the proceeds of which are
payable to the Grantor; and (iv) all accessions and additions to, parts and
appurtenances of, substitutions for and replacements of any of the foregoing.
2(i) To the extent not otherwise included, all proceeds and products
of any and all of the foregoing.
Notwithstanding Sections 2(a) through 2(i), the payment and
performance of the Obligations shall not be secured by (i) any Instrument,
contract, license or other agreement, or permit or franchise that validly
prohibits the creation by the Grantor of a security interest in such Instrument,
contract, license or other agreement, permit or franchise (or in any rights or
property obtained by the Grantor under such contract, license or other
agreement, or permit or franchise); provided, however, that nothing in this
--------
clause (i) shall apply to any Account, or (ii) any rights or property to the
extent that any valid and enforceable law or regulation applicable to such
rights or property prohibits the creation of a security interest therein. In
addition, in the event the Grantor disposes of assets to third parties in a
transaction permitted by Section 6.2 of the Credit Agreement, such assets, but
not the proceeds or products thereof, shall be released from the Lien of the
Security Interest.
Section 3. Grantor Remains Liable. Anything herein to the contrary
----------------------
notwithstanding, (a) the Grantor shall remain liable under the Accounts, Chattel
Paper, General Intangibles and other items included in the Collateral to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by the Secured Party of any of the rights hereunder shall not release the
Grantor from any of its duties or obligations under any items included in the
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<PAGE>
Collateral, and (c) the Secured Party, the Banks and the Agent shall have no
obligation or liability under Accounts, Chattel Paper, General Intangibles and
other items included in the Collateral by reason of this Agreement, nor shall
the Secured Party, the Banks or the Agent be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
Section 4. Title to Collateral. The Grantor has (or will have at the
-------------------
time it acquires rights in Collateral hereafter acquired or arising) and will
maintain so long as the Security Interest may remain outstanding, title to each
item of Collateral (including the proceeds and products thereof), free and clear
of all Liens except the Security Interest and except Liens permitted by the
Credit Agreement. The Grantor will defend the Collateral against all claims or
demands of all Persons (other than the Secured Party) claiming the Collateral or
any interest therein. As of the date of execution of this Security Agreement,
no effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction (a "Financing
Statement") covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed (a) in favor of the Secured
Party relating to this Agreement, or (b) to perfect Liens permitted by the
Credit Agreement.
Section 5. Disposition of Collateral. The Grantor will not sell,
-------------------------
lease or otherwise dispose of, or discount or factor with or without recourse,
any Collateral, except sales of items of Inventory in the ordinary course of
business and other sales of assets permitted under the Credit Agreement.
Section 6. Names, Offices, Locations. The Grantor does business
-------------------------
solely under its own name and the trade names and styles, if any, set forth on
Schedule II hereto. Except as noted on said Schedule, no such trade names or
styles and no trademarks or other similar marks owned by the Grantor are
registered with any governmental unit. The chief place of business and chief
executive office and the office where it keeps its books and records concerning
the Accounts and General Intangibles and the originals of all Chattel Paper,
Documents and Instruments are located at its address set forth on the signature
page hereof. All items of Equipment and Inventory existing on the date of this
Agreement are located at the places specified on Schedule I hereto. The Grantor
will promptly notify the Secured Party of any additional state in which any item
of Inventory or Equipment is hereafter located. The Grantor will from time to
time at the request of the Secured Party provide the Secured Party with current
lists as to the locations of the Equipment and Inventory. The Grantor will not
permit any Inventory, Equipment, Chattel Paper or Documents or any records
pertaining to Accounts and General Intangibles to be located in any state or
area in which, in the event of such location, a financing statement covering
such Collateral would be required to be, but has not in fact been, filed in
order to perfect the Security Interest. The Grantor will not change its name or
the location of its chief place of business and chief executive office or use
any trade name or trade style in any state other than as indicated on Schedule
II unless the Secured Party has been given at least 30 days prior written notice
thereof and the Grantor has executed and
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<PAGE>
delivered to the Secured Party such Financing Statements and other instruments
required or appropriate to continue the perfection of the Security Interest.
Section 7. Rights to Payment. Except as the Grantor may otherwise
-----------------
advise the Secured Party in writing, to the knowledge of the Grantor, each
Account, Chattel Paper, Document, General Intangible and Instrument constituting
or evidencing Collateral is (or, in the case of all future Collateral, will be
when arising or issued) the valid, genuine and legally enforceable obligation of
the Account Debtor or other obligor named therein or in the Grantor's records
pertaining thereto as being obligated to pay or perform such obligation. Without
the Secured Party's prior written consent, the Grantor will not agree to any
modifications, amendments, subordinations, cancellations or terminations of
material obligations of any Account Debtors or other obligors except in the
ordinary course of business. The Grantor will perform and comply in all
material respects with all its obligations under any items included in the
Collateral and exercise promptly and diligently its rights thereunder. The
Grantor does not currently hold any Instrument or Document evidencing amounts
owed to the Grantor by any Subsidiary.
Section 8. Further Assurances; Attorney-in-Fact.
------------------------------------
8(a) The Grantor agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or that the Secured
Party may reasonably request, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral (but any failure to request or assure that the
Grantor execute and deliver such instrument or documents or to take such
action shall not affect or impair the validity, sufficiency or
enforceability of this Agreement and the Security Interest, regardless of
whether any such item was or was not executed and delivered or action taken
in a similar context or on a prior occasion). Without limiting the
generality of the foregoing, the Grantor will, promptly and from time to
time at the request of the Secured Party: (i) mark, or permit the Secured
Party to mark, conspicuously its books, records, and accounts showing or
dealing with the Collateral, and each item of Chattel Paper included in the
Collateral, with a legend, in form and substance reasonably satisfactory to
the Secured Party, indicating that each such item of Collateral and each
such item of Chattel Paper is subject to the Security Interest granted
hereby; (ii) deliver and pledge to the Secured Party, all Instruments and
Documents (specifically including any Instrument or Document evidencing
amounts owed to the Grantor by any Subsidiary), duly indorsed or
accompanied by duly executed instruments of transfer or assignment, with
full recourse to the Grantor, all in form and substance satisfactory to the
Secured Party; (iii) execute and file such Financing Statements or
continuation statements in respect thereof, or amendments thereto, and such
other instruments or notices (including fixture filings with any necessary
legal descriptions as to any goods included in the Collateral which the
Secured Party
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<PAGE>
determines might be deemed to be fixtures, and instruments and notices with
respect to vehicle titles), as may be necessary or desirable, or as the
Secured Party may request, in order to perfect, preserve, and enhance the
Security Interest granted or purported to be granted hereby; and (iv) use
reasonable efforts to obtain waivers, in form satisfactory to the Secured
Party, of any claim to any Collateral from any landlords or mortgagees of
any property where any Inventory or Equipment is located.
8(b) The Grantor hereby authorizes the Secured Party to execute and
file one or more Financing Statements or continuation statements in respect
thereof, and amendments thereto, in the event that the Secured Party
reasonably believes that prompt action would be necessary to protect its
rights in all or any part of the Collateral. The Secured Party may file
such Financing Statements or continuation statements without the signature
of the Grantor where permitted by law. A photocopy or other reproduction of
this Agreement or any Financing Statement covering the Collateral or any
part thereof shall be sufficient as a Financing Statement where permitted
by law.
8(c) The Grantor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Secured
Party may reasonably request, all in reasonable detail and in form and
substance reasonably satisfactory to the Secured Party.
Section 9. Taxes and Claims. The Grantor will promptly pay all taxes
----------------
and other governmental charges levied or assessed upon or against any Collateral
or upon or against the creation, perfection or continuance of the Security
Interest, as well as all other claims of any kind (including claims for labor,
material and supplies) against or with respect to the Collateral, except to the
extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger
of the sale, forfeiture or loss of any of the Collateral or any interest therein
and (c) such taxes, charges or claims are adequately reserved against on the
Grantor's books in accordance with generally accepted accounting principles.
Section 10. Books and Records. The Grantor will keep and maintain at
-----------------
its own cost and expense satisfactory and complete records of the Collateral,
including a record of all payments received and credits granted with respect to
all Accounts, Chattel Paper and other items included in the Collateral.
Section 11. Inspection, Reports, Verifications. Upon one day's
----------------------------------
advance notice, the Grantor will at ail reasonable times during normal business
hours permit the Secured Party or its representatives to examine or inspect any
Collateral, any evidence of Collateral and the Grantor's books and records
concerning the Collateral, wherever located. The Grantor will from time to time
when requested by the Secured Party furnish to the
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<PAGE>
Secured Party a report on its Accounts, Chattel Paper, General Intangibles and
Instruments, naming the Account Debtors or other obligors thereon, the amount
due and the aging thereof. Upon the occurrence and during the continuance of an
Event of Default, the Secured Party or its designee is authorized to contact
Account Debtors and other Persons obligated on any such Collateral from time to
time to verify the existence, amount and/or terms of such Collateral; provided
--------
that nothing in this sentence shall restrict or limit in any manner right of the
Secured Party or any Bank to contact such Account Debtors or other Persons
during the course of any audit conducted in accordance with the "Loan Documents"
(as defined in the Credit Agreement).
Section 12. Notice of Loss. The Grantor will promptly notify the
--------------
Secured Party of any loss of or material damage to any material item of
Collateral or of any substantial adverse change, known to Grantor, in any
material item of Collateral or the prospect of payment or performance thereof.
Section 13. Insurance. The Grantor will keep the Equipment and
---------
Inventory insured against "all risks" for the full replacement cost thereof
subject to a deductible, and with an insurance company or companies,
satisfactory to the Secured Party, the policies to protect the Secured Party, as
Agent for the Banks, as its interests may appear, with such policies or
certificates with respect thereto to be delivered to the Secured Party at its
request. Each such policy or the certificate with respect thereto shall provide
that such policy shall not be cancelled or allowed to lapse unless at least 30
days prior written notice is given to the Secured Party.
Section 14. Lawful Use; Fair Labor Standards Act. The Grantor will
------------------------------------
use and keep the Collateral, and will require that others use and keep the
Collateral, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance. All Inventory of the Grantor as of the date of
this Agreement that was produced by the Grantor or with respect to which the
Grantor performed any manufacturing or assembly process was produced by the
Grantor (or such manufacturing or assembly process was conducted) in compliance
in all material respects with all requirements of the Fair Labor Standards Act,
and all Inventory produced, manufactured or assembled by the Grantor after the
date of this Agreement will be so produced, manufactured or assembled, as the
case may be.
Section 15. Action by the Secured Party; Power of Attorney.
----------------------------------------------
Effective upon and during the continuance of an Event of Default, if the Grantor
at any time fails to perform or observe any of the foregoing agreements, the
Secured Party shall have (and the Grantor hereby grants to the Secured Party)
the right, power and authority (but not the duty) to perform or observe such
agreement on behalf and in the name, place and stead of the Grantor (or, at the
Secured Party's option, in the Secured Party's name) and to take any and all
other actions which the Secured Party may reasonably deem necessary to cure or
correct such failure (including, without limitation, the payment of taxes, the
satisfaction of Liens, the procurement and maintenance of insurance, the
execution of assignments, security agreements and
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<PAGE>
Financing Statements, and the endorsement of instruments); and the Grantor shall
thereupon pay to the Secured Party on demand the amount of all monies expended
and all reasonable costs and expenses (including reasonable attorneys' fees and
legal expenses) incurred by the Secured Party in connection with or as a result
of the performance or observance of such agreements or the taking of such action
by the Secured Party, together with interest thereon from the date expended or
incurred at the highest lawful rate then applicable to any of the Obligations,
and all such monies expended, costs and expenses and interest thereon shall be
part of the Obligations secured by the Security Interest. The Grantor hereby
appoints the Secured Party the Grantor's attorney-in-fact, with full authority
in the place and stead of such Grantor and in the name of such Grantor or
otherwise, from time to time in the Secured Party's good-faith discretion, to
take any action and to execute any instrument that the Secured Party may
reasonably believe is necessary or advisable to accomplish the purposes of this
Agreement, in a manner consistent with the terms hereof and the terms of the
Credit Agreement, including, without limitation, to receive, indorse and collect
all instruments made payable to the Grantor representing any Collateral or any
part thereof and to give full discharge for the same; provided that the Secured
--------
Party shall not exercise such power of attorney hereunder prior to the
occurrence and continuance of an Event of Default except to the extent necessary
to exercise its rights under Section 8(b) and Section 16 hereof. The Grantor
agrees that the foregoing may be done by the Secured Party in its own name (to
the same extent and with the same force and effect as could have been done by
the Grantor had this Agreement not been made) or in the name of the Grantor.
The foregoing power of attorney is coupled with an interest and is therefore
irrevocable by the Grantor.
Section 16. Insurance Claims. As additional security for the payment
----------------
and performance of the Obligations, the Grantor hereby assigns to the Secured
Party any and all monies (including proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Grantor with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business
records or valuable papers pertaining thereto. The Secured Party may (but need
not), in the Secured Party's name or in Grantor's name, execute and deliver
proofs of claim, receive all such monies, indorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or release
any claim against the issuer of any such policy (a) for any loss from which
insurance proceeds for such loss are in excess of $100,000 whether or not a
Default or Event of Default has occurred or (b) for any reason upon the
occurrence and during the continuance of any Event of Default. Notwithstanding
any of the foregoing, so long as no Event of Default exists the Grantor shall be
entitled to all insurance proceeds with respect to any of the Collateral;
provided that any proceeds received in respect of Equipment and Inventory are
- --------
applied to the cost of replacement of such Equipment or Inventory.
Section 17. The Secured Party's Duties. The powers conferred on the
--------------------------
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Secured
Party shall be deemed to have exercised reasonable care in the safekeeping of
any Collateral in its possession if such Collateral is
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<PAGE>
accorded treatment substantially equal to the safekeeping which the Secured
Party accords its own property of like kind. Except for the safekeeping of any
Collateral in its possession and the accounting for monies and for other
properties actually received by it hereunder, the Secured Party shall have no
duty, as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any Persons or any other rights pertaining to any
Collateral. The Secured Party will take action in the nature of exchanges,
conversions, redemptions, tenders and the like requested in writing by the
Grantor with respect to the Collateral in the Secured Party's possession if the
Secured Party in its reasonable judgment determines that such action will not
impair the Security Interest or the value of the Collateral, but a failure of
the Secured Party to comply with any such request shall not of itself be deemed
a failure to exercise reasonable care.
Section 18. Default. Each of the following occurrences shall
-------
constitute an Event of Default under this Agreement: (a) the Grantor shall fail
to observe or perform any covenant or agreement applicable to the Grantor under
this Agreement and such failure to comply shall continue for thirty (30)
calendar days after the earlier to occur of (i) the date the Grantor gives
notice of such failure to the Secured Party, or (ii) the date the Secured Party
gives written notice of such failure to the Grantor; or (b) any representation
or warranty made by the Grantor in this Agreement or any schedule, exhibit,
supplement or attachment hereto or in any reports or certificates heretofore or
at any time hereafter submitted by or on behalf of the Grantor to the Secured
Party shall prove to have been materially false or misleading when made; or (c)
any Event of Default shall occur under the Credit Agreement beyond the
applicable cure period specified therein.
Section 19. Remedies on Default. Upon the occurrence of an Event of
-------------------
Default and at any time thereafter:
19(a) The Secured Party may exercise and enforce any and all rights
and remedies available upon default to a secured party under the Uniform
Commercial Code.
19(b) The Secured Party shall have the right to enter upon and into
and take possession of all or such part or parts of the properties of the
Grantor, including lands, plants, buildings, Equipment, Inventory and other
property as may be necessary or appropriate in the judgment of the Secured
Party to permit or enable the Secured Party to manufacture, produce,
process, store or sell or complete the manufacture, production, processing,
storing or sale of all or any part of the Collateral, as the Secured Party
may elect, and to use and operate said properties for said purposes and for
such length of time as the Secured Party may deem necessary or appropriate
for said purposes without the payment of any compensation to Grantor
therefor. The Secured Party may require the Grantor to, and the Grantor
hereby agrees that it will, at
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<PAGE>
its expense and upon request of the Secured Party forthwith, assemble all
or part of the Collateral as directed by the Secured Party and make it
available to the Secured Party at a place or places to be designated by the
Secured Party.
19(c) Any sale of Collateral may be in one or more parcels at public
or private sale, at any of the Secured Party's offices or elsewhere, for
cash, on credit, or for future delivery, and upon such other terms as the
Secured Party may reasonably believe are commercially reasonable. The
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given, and the Secured Party may
adjourn any public or private sale from time to time by announcement made
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
19(d) The Secured Party is hereby granted a license or other right to
use, without charge, all of the Grantor's property, including, without
limitation, all of the Grantor's labels, trademarks, copyrights, patents
and advertising matter, or any property of a similar nature, as it pertains
to the Collateral, in completing production of, advertising for sale and
selling any Collateral, and the Grantor's rights under all licenses and all
franchise agreements shall inure to the Secured Party's benefit until the
Obligations are paid in full.
19(e) If notice to the Grantor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given in
the manner specified for the giving of notice in Section 24 hereof at least
ten calendar days prior to the date of intended disposition or other
action, and the Secured Party may exercise or enforce any and all other
rights or remedies available by law or agreement against the Collateral,
against the Grantor, or against any other Person or property.
Section 20. Remedies as to Certain Rights to Payment. Upon the
----------------------------------------
occurrence of an Event of Default and at any time thereafter the Secured Party
may notify any Account Debtor or other Person obligated on any Accounts or
other Collateral that the same have been assigned or transferred to the Secured
Party and that the same should be performed as requested by, or paid directly
to, the Secured Party, as the case may be. The Grantor shall join in giving
such notice, if the Secured Party so requests. The Secured Party may, in the
Secured Party's name or in the Grantor's name, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of,
or securing, any such Collateral or grant any extension to, make any compromise
or settlement with or otherwise agree to waive, modify, amend or change the
obligation of any such Account Debtor or other Person. If any payments on any
such Collateral are received by the Grantor after an Event of Default has
occurred, such payments shall be held in trust by the Grantor as the property
of the Secured Party and shall not be commingled with any funds or property of
the Grantor and shall be forthwith remitted to the Secured Party for
application on the Obligations.
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<PAGE>
Section 21. Application of Proceeds. All cash proceeds received by
-----------------------
the Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Secured Party, be held by the Secured Party as collateral for, or then or at any
time thereafter be applied in whole or in part by the Secured Party against, all
or any part of the Obligations (including, without limitation, any expenses of
the Secured Party payable pursuant to Section 22 hereof).
Section 22. Costs and Expenses; Indemnity. The Grantor will pay or
-----------------------------
reimburse the Secured Party on demand for all reasonable out-of-pocket expenses
(including in each case all filing and recording fees and taxes and all
reasonable fees and expenses of counsel and of any experts and agents) incurred
by the Secured Party in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Security Interest. The Grantor shall indemnify and hold the
Secured Party harmless from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) resulting from this Agreement
and the Security Interest hereby created (including enforcement of this
Agreement) or the Secured Party's actions pursuant hereto, except claims, losses
or liabilities resulting from the Secured Party's gross negligence or willful
misconduct. Any liability of the Grantor to indemnify and hold the Secured
Party harmless pursuant to the preceding sentence shall be part of the
Obligations secured by the Security Interest. The obligations of the Grantor
under this Section shall survive any termination of this Agreement.
Section 23. Waivers; Remedies; Marshalling. Notwithstanding any
------------------------------
provisions to the contrary herein, any term of this Agreement may be amended
with the written consent of the Grantor; provided that no amendment,
modification or waiver of any provision of this Agreement or consent to any
departure herefrom by the Grantor or other party thereto shall in any event be
effective unless the same shall be in writing and signed by the Secured Party,
and then such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. The Security
Interest can be released, only explicitly in a writing signed by the Secured
Party. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to the Secured Party. All
rights and remedies of the Secured Party shall be cumulative and may be
exercised singly in any order or sequence, or concurrently, at the Secured
Party's option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. To the extent permitted by applicable law, the Grantor hereby waives all
requirements of law, if any, relating to the marshalling of assets which would
be applicable in connection with the enforcement by the Secured Party of its
remedies hereunder, absent this waiver.
-13-
<PAGE>
Section 24. 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 of the Credit Agreement, 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.
Section 25. Grantor Acknowledgments. The Grantor hereby acknowledges
-----------------------
that (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, (b) the Secured Party and the Banks have no
fiduciary relationship to the Grantor, the relationship being solely that of
debtor and creditor, and (c) no joint venture exists between the Grantor, the
Secured Party and the Banks.
Section 26. Continuing Security Interest; Assignments under Credit
------------------------------------------------------
Agreement. This Agreement shall (a) create a continuing security interest in
- ---------
the Collateral and shall remain in full force and effect until payment in full
of the Obligations and the expiration of the obligations, if any, of the Banks
to extend credit accommodations to the Grantor, (b) be binding upon the Grantor,
its successors and assigns, and (c) inure to the benefit of the Banks and the
Agent, and be enforceable by, the Secured Party, and their respective
successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (c), the Banks or the Agent may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement to
any other Persons to the extent and in the manner provided in the Credit
Agreement and may similarly transfer all or any portion of its rights under this
Security Agreement to such Persons.
Section 27. Termination of Security Interest. Upon payment in full
--------------------------------
of the Obligations (except for contingent indemnity and other contingent
Obligations not yet due and payable) and the expiration of any obligation of the
Banks to extend credit accommodations to the Grantor, the Security Interest
granted hereby shall terminate. Upon any such termination, the Secured Party
will return to the Grantor such of the Collateral then in the possession of the
Secured Party as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination. Any reversion or
return of Collateral upon termination of this Agreement and any instruments of
transfer or termination shall be at the expense of the Grantor and shall be
without warranty by, or recourse on, the Secured Party. As used in this
Section, "Grantor" includes any assigns of Grantor, any Person holding a
subordinate security interest in any of the Collateral or whoever else may be
lawfully entitled to any part of the Collateral.
-14-
<PAGE>
Section 28. Affiliate Debt. The Grantor represents and warrants that
--------------
there are no Instruments evidencing Affiliate Debt in favor of or assigned to
the Grantor. The Grantor hereby covenants and agrees that upon receipt of any
such Instrument, the Grantor shall promptly execute documents, which shall be
satisfactory in form and substance to the Secured Party, and which in any event,
shall not contain any term or provision which prohibits or restricts the
creation by the Grantor of a security interest therein in favor of the Banks,
which pledge such Instrument to the Secured Party, for the benefit of the Banks,
and deliver such documents, together with such Instrument, to the Secured Party
for the purpose of securing payment of the Obligations.
Section 29. Compliance with Pledge Agreement Covenants. The Grantor
------------------------------------------
shall perform or comply with all covenants made by Omega Holdings, Inc.
("Omega") pertaining to the Grantor in Omega's Pledge Agreement, including but
not limited to the provisions of Section 7(b) of Omega's Pledge Agreement which
prohibit the issuance of stock or other securities in addition to or in
substitution of the "Pledged Shares" (as defined in the Pledge Agreement),
except to the Omega.
SECTION 30. GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF MINNESOTA. Whenever possible, each provision of this Agreement and any
other statement, instrument or transaction contemplated hereby or relating
hereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto
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 or any other statement, instrument or
transaction contemplated hereby or relating hereto.
SECTION 31. CONSENT TO JURISDICTION. AT THE OPTION OF THE SECURED
-----------------------
PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY OR RAMSEY COUNTY, MINNESOTA; AND THE GRANTOR
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 THE GRANTOR COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
-15-
<PAGE>
THIS AGREEMENT, THE SECURED PARTY 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 32. WAIVER OF NOTICE AND HEARING. THE GRANTOR HEREBY WAIVES
----------------------------
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL
PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT
PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.
SECTION 33. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
--------------------
SECURED PARTY, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 34. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 35. General. All representations and warranties contained in
-------
this Agreement or in any other agreement between the Grantor and the Secured
Party shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations. The Grantor waives notice of
the acceptance of this Agreement by the Secured Party. Captions in this
Agreement are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
OMEGA CABINETS, LTD.
By __________________________
Name _______________________
Title ________________________
Address for Grantor:
1205 Peters Drive
Waterloo, Iowa 50703
Address for the Secured Party:
First Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mark R. Olmon, MPFP0702
Telecopier No.: (612) 973-0825
S-1
<PAGE>
SCHEDULE I TO
OMEGA CABINETS
SECURITY AGREEMENT
Locations of Equipment and Inventory as of Date of Security Agreement.
1. 1205 Peters Drive, Waterloo, Black Hawk County, Iowa.
2. 1001 Linden Avenue, Waterloo, Black Hawk County, Iowa.
3. Maintenance shed at 1103 Peters Drive, Waterloo, Black Hawk County, Iowa;
owner: Robert J. Bertch.
4. American Adhesives Codings Company, 12 Osgood Street, Lawrence, Essex
County, Massachusetts (raw material inventory).
<PAGE>
SCHEDULE II TO
OMEGA CABINETS
SECURITY AGREEMENT
Trade Names and Trade Styles.
1. Dynasty
2. Embassy
3. Omega Bath Collection
4. Affinity
<PAGE>
Exhibit 10.4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of June 13,1997, is made and given by
OMEGA HOLDINGS, INC., a Delaware corporation (the "Pledgor"), to FIRST BANK
NATIONAL ASSOCIATION, a national banking association, as "Agent" under, and for
the benefit of the "Banks" as defined in, the "Credit Agreement" as that term is
defined below (the "Secured Party").
RECITALS
--------
A. The Pledgor has executed, or will substantially contemporaneously
herewith execute a Guaranty dated as of the date hereof, guaranteeing
indebtedness of Omega Cabinets, Ltd., a Delaware corporation ("Omega Cabinets"),
HomeCrest Corporation, a Delaware corporation ("HomeCrest"), and Panther
Transport, Inc., an Iowa corporation ("Panther") (each a "Borrower" and
collectively, the "Borrowers"). Such guaranty, as the same may herewith be
amended, modified or supplemented and any guaranty given in replacement or
substitution therefor, is herein called the "Guaranty".
B. The Borrowers, certain financial institutions and First Bank
National Association, as Agent have entered into a Credit Agreement dated as of
June 13, 1997 (as the same may hereafter be amended, restated, or otherwise
modified from time to time, the "Credit Agreement") and the Borrowers'
obligations under the Credit Agreement are among the obligations guaranteed by
the Guaranty pursuant to which the Banks have agreed to extend to the Borrowers
certain credit accommodations .
C. The Pledgor is the owner of the shares (the "Pledged Shares") of
stock described in Part I of Schedule I hereto issued by the corporation or
corporations named therein.
D. It is a condition precedent to the obligation of the Banks to
extend credit accommodations pursuant to the terms of the Credit Agreement that
this Agreement be executed and delivered by the Pledgor.
E. Omega Cabinets is a wholly-owned subsidiary of the Pledgor.
F. HomeCrest and Panther are wholly-owned subsidiaries of Omega
Cabinets.
G. The Pledgor expects to derive benefits from the extension of
credit accommodations to the Borrowers and finds it advantageous, desirable and
in the best interests of the Pledgor to comply with the requirement that this
Agreement be executed and delivered to the Secured Party.
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to extend or continue credit accommodations to the Borrowers,
the Pledgor hereby agrees with the Secured Party, for the benefit of the Banks
and the Agent, as follows:
Section 1. Defined Terms.
-------------
1(a) As used in this Agreement, the following terms shall have
the meanings indicated:
"Affiliate": When used with reference to any Person, (a) each Person
---------
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.
"Affiliate Debt" shall mean indebtedness owing to the Pledgor from any
--------------
Affiliate.
"Agent" shall mean First Bank National Association, acting as agent
------
for the benefit of itself and the other Banks, or such other institution as may
be appointed as "Agent" under the Credit Agreement.
"Banks" shall mean the institutions that are from time to time party
-----
to the Credit Agreement as lenders.
"Collateral" shall have the meaning given to such term in Section 2.
----------
"Event of Default" shall have the meaning given to such term in
----------------
Section 11.
"Lien" shall mean any security interest, mortgage, pledge, lien,
----
charge, encumbrance, title retention agreement or analogous instrument or device
(including the interest of the lessors under capitalized leases), in, of or on
any assets or properties of the Person referred to.
"Obligations shall mean (a) all indebtedness, liabilities and
-----------
obligations of each Borrower to the Banks and the Agent of every kind, nature or
description under the Credit Agreement, including without limitation each
Borrower's obligation on any promissory note or
-2-
<PAGE>
notes under the Credit Agreement and any note or notes hereafter issued in
substitution or replacement thereof and any letter of credit reimbursement
obligations and fees, (b) all liabilities of the Pledgor under the Guaranty or
any guaranty heretofore, herewith or hereafter given by the Pledgor to the Banks
or the Agent with respect to any or all of each Borrower's liabilities and
obligations to the Banks and the Agent, and (c) all liabilities of the Pledgor
under this Agreement, and in all of the foregoing cases whether due or to become
due, and whether now existing or hereafter arising or incurred.
"Person" shall mean any individual, corporation, partnership, limited
------
partnership or 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.
"Pledged Shares" shall have the meaning given to such term in Recital
--------------
B above.
"Security Interest" shall have the meaning given to such term in
-----------------
Section 2.
1(b) Terms Defined in Uniform Commercial Code. All other terms
----------------------------------------
used in this Agreement that are not specifically defined herein or the
definitions of which are not incorporated herein by reference shall have
the meaning assigned to such terms in the Uniform Commercial Code in effect
in the State of Minnesota as of the date first above written to the extent
such other terms are defined therein.
1(c) Singular/Plural, Etc. Unless the context of this Agreement
--------------------
otherwise clearly requires, references to the plural include the singular,
the singular, the plural and "or" has the inclusive meaning represented-by
the phrase "and/or." The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The words
"hereof," "herein," "hereunder," and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections are references to Sections in this
Pledge Agreement unless otherwise provided.
Section 2. Pledge and Security Interest. As security for the payment
----------------------------
and performance of all of the Obligations, the Pledgor hereby pledges to the
Secured Party a security interest, for the benefit of the Banks and the Agent
(the "Security Interest") in the following (the "Collateral"):
2(a) The Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares.
-3-
<PAGE>
2(b) All additional shares of stock of any issuer of the Pledged
Shares from time to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares, and all dividends, cash,
' instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares.
2(c) Affiliate Debt.
2(d) All proceeds of any and all of the foregoing (including
proceeds that constitute property of types described above).
Notwithstanding Sections 2(a), (b), (c) and (d) above, the payment and
performance of the Obligations shall not be secured by more than sixty-six
percent (66%) of the outstanding stock or other equity interests in any foreign
corporation.
Section 3. Delivery of Collateral. All certificates and instruments
----------------------
representing or evidencing the Pledged Shares shall be delivered to the Secured
Party contemporaneously with the execution of this Agreement. All certificates
and instruments representing or evidencing Collateral received by the Pledgor
after the execution of this Agreement shall be delivered to the Secured Party
promptly upon the Pledgor's receipt thereof. All such certificates and
instruments shall be held by or on behalf of the Secured Party pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party. The Secured Party shall have the
right at any time, whether before or after an Event of Default, to cause any or
all of the Collateral to be transferred of record into the name of the Secured
Party or its nominee (but subject to the rights of the Pledgor under Section 6)
and to exchange certificates representing or evidencing Collateral for
certificates of smaller or larger denominations. Notwithstanding any of the
foregoing, as to any Collateral consisting of book-entry or uncertificated
securities or securities which are held by a third Person, the Pledgor shall
deliver to the Secured Party evidence satisfactory to the Secured Party that
such Collateral has been registered in the name of, or as pledged to, the
Secured Party. Such evidence shall include the acknowledgment of the issuer or
Person holding such Collateral that such issuer or Person holds such Collateral
as agent for the Secured Party and that such Collateral is identified on the
books of such issuer or third Person as belonging to or pledged to the Secured
Party.
Section 4. Certain Warranties and Covenants. The Pledgor makes the
--------------------------------
following warranties and covenants:
4(a) The Pledgor has title to the Pledged Shares and will have
title to each other item of Collateral hereafter acquired, free of all
Liens except the Security Interest.
-4-
<PAGE>
4(b) The Pledgor has full power and authority to execute this
Pledge Agreement, to perform the Pledgor's obligations hereunder and to
subject the Collateral to the Security Interest created hereby.
4(c) No financing statement covering all or any part of the
Collateral is on file in any public office (except for any financing
statements filed by the Secured Party).
4(d) The Pledged Shares have been duly authorized and validly
issued by the issuer thereof and are fully paid and non-assessable. The
certificates representing the Pledged Shares are genuine. Neither the
Pledged Shares are subject to any offset or similar right or claim of the
issuers thereof.
4(e) The Pledged Shares constitute the percentage of the issued
and outstanding shares of stock of the respective issuers thereof indicated
on Schedule I (if any such percentage is so indicated).
Section 5. Further Assurances. The Pledgor agrees that at any time
------------------
and from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be necessary or that the Secured Party may reasonably request,
in order to perfect and protect the Security Interest or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral (but any failure to request or assure that the Pledgor execute
and deliver such instruments or documents or to take such action shall not
affect or impair the validity, sufficiency or enforceability of this Agreement
and the Security Interest, regardless of whether any such item was or was not
executed and delivered or action taken in a similar context or on a prior
occasion).
Section 6. Voting Rights; Dividends; Etc.
-----------------------------
6(a) Subject to paragraph (d) of this Section 6, the Pledgor
shall be entitled to exercise or refrain from exercising any and all voting
and other consensual rights pertaining to the Pledged Shares or any other
stock that becomes part of the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that the Pledgor shall not exercise or
refrain from exercising any such right if such action could reasonably be
expected to have a material adverse effect on the value of the Collateral
or any material part thereof.
6(b) Subject to paragraph (e) of this Section 6, the Pledgor
shall be entitled to receive, retain, and use in any manner not prohibited
by the Credit Agreement any and all interest and dividends paid in respect
of the Collateral; provided, however, that any and all
-------- -------
-5-
<PAGE>
(i) dividends paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Collateral,
(ii) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Collateral,
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by the Pledgor, be received in trust for
the benefit of the Secured Party, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Secured Party as
Collateral in the same form as so received (with any necessary endorsement
or assignment). The Pledgor shall, upon request by the Secured Party,
promptly execute all such documents and do all such acts as may be
necessary or desirable to give effect to the provisions of this Section
6(b).
6(c) The Secured Party shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights that it is
entitled to exercise pursuant to Section 6(a) hereof and to receive the
dividends and interest that it is authorized to receive and retain pursuant
to Section 6(b) hereof.
6(d) Upon the occurrence and during the continuance of any Event
of Default, the Secured Party shall have the right in its sole discretion,
and the Pledgor shall execute and deliver all such proxies and other
instruments as may be necessary or appropriate to give effect to such
right, to terminate all rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 6(a) hereof, and all such
rights shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights; provided, however, that the Secured
Party shall not be deemed to possess or have control over any voting rights
with respect to any Collateral unless and until the Secured Party has given
written notice to the Pledgor that any further exercise of such voting
rights by the Pledgor is prohibited and that the Secured Party and/or its
assigns will henceforth exercise such voting rights; and provided, further,
that neither the registration of any item of Collateral in the Secured
Party's name nor the exercise of any voting rights with respect thereto
shall be deemed to constitute a retention by the
-6-
<PAGE>
Secured Party of any such Collateral in satisfaction of the Obligations or
any part thereof.
6(e) Upon the occurrence and during the continuance of any Event
of Default:
(i) all rights of the Pledgor to receive the dividends and interest
that it would otherwise be authorized to receive and retain pursuant
to Section 6(b) hereof shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have
the sole right to receive and hold such dividends as Collateral, and
(ii) all payments of interest and dividends that are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section
6(e) shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Secured Party as Collateral in the same
form as so received (with any necessary endorsement).
Section 7. Transfers and Other Liens; Additional Shares.
--------------------------------------------
7(a) Except as may be permitted by the Credit Agreement, the
Pledgor agrees that it will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to,
any of the Collateral, or (ii) create or permit to exist any Lien, upon or
with respect to any of the Collateral.
7(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares that it controls not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to the Pledgor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each issuer of the
Pledged Shares.
Section 8. Secured Party Appointed Attorney-in-Fact. Effective upon
----------------------------------------
and during the continuance of an Event of Default, the Pledgor hereby appoints
the Secured Party the Pledgor's attorney-in-fact, with full authority in the
place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in the Secured Party's good-faith discretion, to take any
action and to execute any instrument that the Secured Party may reasonably
believe necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of the Pledgor under Section 6 hereof), in a manner
consistent with the terms hereof, including, without limitation, to receive,
indorse and collect all instruments made payable to the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
-7-
<PAGE>
Section 9. Secured Par1y May Perform. Upon the occurrence and during
-------------------------
the continuance of an Event of Default, if the Pledgor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by the Pledgor under Section
14 hereof.
Section 10. The Secured Party's Duties. The powers conferred on the
--------------------------
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Secured Party
shall be deemed to have exercised reasonable care in the safekeeping of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to the safekeeping which the Secured Party accords its own
property of like kind. Except for the safekeeping of any Collateral in its
possession and the accounting for monies and for other properties actually
received by it hereunder, the Secured Party shall have no duty, as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral. The
Secured Party will take action in the nature of exchanges, conversions,
redemption, tenders and the like requested in writing by the Pledgor with
respect to any of the Collateral in the Secured Party's possession if the
Secured Party in its reasonable judgment determines that such action will not
impair the Security Interest or the value of the Collateral, but a failure of
the Secured Party to comply with any such request shall not of itself be deemed
a failure to exercise reasonable care.
Section 11. Default. Each of the following occurrences shall
-------
constitute an Event of Default under this Agreement: (a) the Pledgor shall fail
to observe or perform any covenant or agreement applicable to the Pledgor under
this Agreement within fifteen (15) days after the earlier to occur of (i) the
date the Pledgor gives notice of such failure to the Secured Party, or (ii) the
date the Secured -Party gives notice of such failure to the Pledgor; or (b) any
representation or warranty made by the Pledgor in this Agreement or in any
financial statements, reports or certificates heretofore or at any time
hereafter submitted by or on behalf of the Pledgor to the Secured Party shall
prove to have been false or materially misleading when made; or (c) any Event of
Default shall occur under the Credit Agreement (beyond the applicable cure
period specified therein).
Section 12. Remedies upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
12(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the Uniform Commercial Code of the State of Minnesota (the
"Code") in effect at that time (whether or not the Code then applies to the
affected Collateral), and may, without notice except
-8-
<PAGE>
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at
any of the Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Secured Party may
reasonably believe are commercially reasonable. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days'
prior notice to the Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, the Pledgor hereby
waives all requirements of law, if any, relating to the marshalling of
assets which would be applicable in connection with the enforcement by the
Secured Party of its remedies hereunder, absent this waiver.
12(b) The Secured Party may notify any Person obligated on any
of the Collateral that the same has been assigned or transferred to the
Secured Party and that the same should be performed as requested by, or
paid directly to, the Secured Party, as the case may be. The Pledgor shall
join in giving such notice, if the Secured Party so requests. The Secured
Party may, in the Secured Party's name or in the Pledgor's name, demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of, or securing, any such Collateral or grant any
extension to, make any compromise or settlement with or otherwise agree to
waive, modify, amend or change the obligation of any such Person.
12(c) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, or then or at any time thereafter be
applied in whole or in part by the Secured Party against, all or any part
of the Obligations (including any expenses of the Secured Party payable
pursuant to Section 14 hereof).
Section 13. Waiver of Certain Claims. The Pledgor acknowledges that
------------------------
because of present or future circumstances, a question may arise under the
Securities Act of 1933, as from time to time amended (the "Securities Act"),
with respect to any disposition of the Collateral permitted hereunder. The
Pledgor understands that compliance with the Securities Act may very strictly
limit the course of conduct of the Secured Party if the Secured Party were to
attempt to dispose of all or any portion of the Collateral and may also limit
the extent to which or the manner in which any subsequent transferee of the
Collateral or any portion thereof may dispose of the same. There may be other
legal restrictions or limitations affecting the Secured Party in any attempt to
dispose of all or any portion of the Collateral
-9-
<PAGE>
under the applicable Blue Sky or other securities laws or similar laws analogous
in purpose or effect. The Secured Party may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such Collateral for their own account for
investment only and not to engage in a distribution or resale thereof. The
Pledgor agrees that to the extent not in violation of applicable law, the
Secured Party shall not incur any liability, and any liability of the Pledgor
for any deficiency shall not be impaired, as a result of the sale of the
Collateral or any portion thereof at any such private sale in a manner that the
Secured Party reasonably believes is commercially reasonable (within the meaning
of Section 9-504(3) of the Uniform Commercial Code). The Pledgor hereby waives
any claims against the Secured Party arising by reason of the fact that the
price at which the Collateral may have been sold at such sale was less than the
price that might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Secured Party shall accept the
first offer received and does not offer any portion of the Collateral to more
than one possible purchaser. The Pledgor further agrees that to the extent not
in violation of applicable law (including federal and state securities laws),
the Secured Party has no obligation to delay sale of any Collateral for the
period of time necessary to permit the issuer of such Collateral to qualify or
register such Collateral for public sale under the Securities Act, applicable
Blue Sky laws and other applicable state and federal securities laws, even if
said issuer would agree to do so. Without limiting the generality of the
foregoing, the provisions of this Section would apply if, for example, the
Secured Party were to place all or any portion of the Collateral for private
placement by an investment banking firm, or if such investment banking firm
purchased all or any portion of the Collateral for its own account, or if the
Secured Party placed all or any portion of the Collateral privately with a
purchaser or purchasers.
Section 14. Costs and Expenses; Indemnity. The Pledgor will pay or
-----------------------------
reimburse the Secured Party on demand for all reasonable out-of-pocket expenses
(including in each case all filing and recording fees and taxes and all
reasonable fees and expenses of counsel and of any experts and agents) incurred
by the Secured Party in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Security Interest. The Pledgor shall indemnify and hold the
Secured Party harmless from and against any and all claims, losses and
Liabilities (including reasonable attorneys' fees) resulting from this Agreement
(including enforcement of this Agreement) or the Secured Party's actions
pursuant hereto, except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct. Any liability of the Pledgor to
indemnify and hold the Secured Party harmless pursuant to the preceding sentence
shall be part of the Obligations secured by the Security Interest. The
obligations of the Pledgor under this Section shall survive any termination of
this Agreement.
Section 15. Waivers and Amendments; Remedies. Notwithstanding any
--------------------------------
provisions to the contrary herein, any term of this Agreement may be amended
with the
-10-
<PAGE>
written consent of the Pledgor; provided that no amendment, modification or
waiver of any provision of this Agreement or consent to any departure herefrom
by the Pledgor or other party thereto shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the purpose for which given. The Security Interest
can be released, only explicitly in a writing signed by the Secured Party. A
waiver so signed shall be effective only in the specific instance and for the
specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured
Party. All rights and remedies of the Secured Party shall be cumulative and may
be exercised singly in any order or sequence, or concurrently, at the Secured
Party's option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other.
Section 16. Waiver of Defenses. The Pledgor waives the benefit of
------------------
any and all defenses and discharges available to a guarantor, surety, indorser
or accommodation party, dependent on its character as such. Without limiting
the generality of the foregoing, the Pledgor (in such capacity) waives
presentment, demand for payment, and notice of nonpayment or protest of the Note
or any other instrument evidencing any of the Obligations; and the Pledgor
agrees that the Pledgor's liability hereunder and the Security Interest hereby
created shall not be affected or impaired in any way by any of the following
acts and things (which the Secured Party may do from time to time without notice
to the Pledgor): (a) by any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification, or other disposition of any of the Obligations or any
evidence thereof or any collateral therefor, (b) by any acceptance or release of
collateral for or guarantors of any of the Obligations, (c) by any failure,
neglect or omission to realize upon or protect any of the Obligations or to
obtain, perfect, enforce or realize upon any collateral therefor or to exercise
any Lien upon or right of appropriation of any moneys, credits or property
toward the liquidation of any of the Obligations, or (d) by any application of
payments or credits upon any of the Obligations. The Secured Party shall not be
required, before exercising its rights under this Agreement, to first resort for
payment of any of the Obligations to any Borrower or any other Persons, its or
their properties or estates, or any collateral, property, Liens or other rights
or remedies whatsoever. The Pledgor agrees not to exercise any right of
contribution, recourse, subrogation or reimbursement available to the Pledgor
against any Borrower or any other Person or property, unless and until all
Obligations and all other debts, liabilities and obligations owed by each
Borrower and the Pledgor to the Banks and the Agent have been paid and
discharged. The Pledgor expects to derive benefits from the transactions
resulting in the creation of the Obligations. The Secured Party may rely
conclusively on the continuing warranty, hereby made, that the Pledgor continues
to be benefitted by the Banks' extension of credit accommodations to each
Borrower and the Secured Party shall have no duty to inquire into or confirm the
receipt of any such benefits, and this Agreement shall be effective and
enforceable by the Secured Party without regard to the receipt, nature or value
of any such benefits.
-11-
<PAGE>
Section 17. 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.
Section 18. Representations and Warranties. The Pledgor hereby
------------------------------
represents and warrants to the Secured Party that:
18(a) The Pledgor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal right
to own and operate its properties and to conduct the business in which it
is currently engaged.
18(b) The Pledgor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Agreement and has taken all necessary corporate action to
authorize such execution, delivery and performance.
18(c) This Agreement constitutes a legal, valid and binding
obligation of the Pledgor enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
18(d) The execution, delivery and performance of this
Agreement will not (i) 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 the Pledgor, (ii) violate or contravene any
provision of the Articles (Certificate) of Incorporation or bylaws of the
Pledgor, or (iii) 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 the Pledgor is a party or by which it or any of its
properties may be bound or result in the creation of any Lien thereunder.
The Pledgor is not 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
-12-
<PAGE>
or violation could have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the
Pledgor.
18(e) Except for any filings, recordings-and registrations to
perfect the Security Interest, 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 the Pledgor to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity,
binding effect or enforceability of, this Agreement.
18(f) There are no actions, suits or proceedings pending or,
to the knowledge of the Pledgor, threatened against or affecting the
Pledgor or any of its properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Pledgor, would have a material adverse effect
on the business, operations, property or condition (financial or otherwise)
of the Pledgor or on the ability of the Pledgor to perform its obligations
hereunder.
Section 19. Pledgor Acknowledgements. The Pledgor hereby
------------------------
acknowledges that (a) the Pledgor has been advised by counsel in the
negotiation, execution and delivery of this Agreement, (b) the Banks and the
Secured Party have no fiduciary relationship to the Pledgor, the relationship
being solely that of debtor and creditor, and (c) no joint venture exists
between the Pledgor, the Secured Party and the Banks.
Section 20. Continuing Security Interest; Assignments under Credit
------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
- ---------
Collateral and shall (a) remain in full force and effect until the payment in
full of the Obligations (except for contingent indemnity and other contingent
obligations not yet due and payable) and the expiration of the obligation, if
any, of the Banks to extend credit accommodations to any Borrower, (b) be
binding upon the Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of the Secured Party hereunder, to the benefit of
the Banks and the Agent, and be enforceable by, the Secured Party, and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), the Banks or the Agent may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement to any other Person to the extent and in the manner provided in the
Credit Agreement, and may transfer all or any portion of its rights under this
Pledge Agreement to such Persons in connection therewith.
Section 21. Termination of Security Interest. Upon payment in full
--------------------------------
of the Obligations (except for contingent indemnity and other contingent
Obligations not yet due and payable) and the expiration of any obligation of the
Banks to extend credit accommodations to any Borrower, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Pledgor. Upon any such termination, the Secured Party will
-13-
<PAGE>
return to the Pledgor such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination. Any reversion or return of the Collateral upon termination of this
Agreement and any instruments of transfer or termination shall be at the expense
of the Pledgor and shall be without warranty by, or recourse on, the Secured
Party. As used in this Section, "Pledgor" includes any assigns of Pledgor, any
Person holding a subordinate security interest in any part of the Collateral or
whoever else may be lawfully entitled to any part of the Collateral.
Section 22. Governing Law and Construction. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED
STATES APPLICABLE TO NATIONAL BANKS; PROVIDED, HOWEVER, THAT NO EFFECT SHALL BE
GIVEN TO CONFLICT OF LAWS PRINCIPLES OF THE STATE OF MINNESOTA, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF MINNESOTA.
Whenever possible, each provision of this Agreement and any other statement,
instrument or transaction contemplated hereby or relating hereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement or any other statement, instrument
or transaction contemplated hereby or relating hereto 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 or any other statement, instrument or transaction contemplated hereby
or relating hereto.
Section 23. Consent to Jurisdiction. AT THE OPTION OF THE BANK,
-----------------------
THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT
SITTING IN HENNEPIN COUNTY OR RAMSEY COUNTY, MINNESOTA; AND THE PLEDGOR 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 THE PLEDGOR COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANK 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.
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<PAGE>
Section 24. Waiver of July Trial. EACH OF THE PLEDGOR AND THE
--------------------
BANK, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREB Y.
Section 25. Counterparts. This Agreement may be executed in any
--------------
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 26. General. All representations and warranties contained
-------
in this Agreement or in any other agreement between the Pledgor and the Bank
shall survive the execution, delivery and performance of this Agreement and the
creation and payment of the Obligations. The Pledgor waives notice of the
acceptance of this Agreement by the Bank. Captions in this Agreement are for
reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
-15-
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PLEDGOR:
OMEGA HOLDINGS, INC.
By___________________________________
Name_________________________________
Title________________________________
Address for Pledgor:
1205 Peters Drive
Waterloo, Iowa 50703
Address for the Bank:
First Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mark R. Olmon, MPFP0702
Telecopier No.: (612) 973-0825
S-1
<PAGE>
SCHEDULE TO
HOLDINGS PLEDGE
AGREEMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
PERCENTAGE CLASS OF CERTIFICATE NUMBER OF
ISSUER OWNERSHIP STOCK NO.'S PAR VALUE SHARES
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Omega Cabinets, Ltd. 100% Common 2, 8 $.01 1000
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.5
COLLATERAL ASSIGNMENT OF TRADEMARKS
-----------------------------------
This COLLATERAL ASSIGNMENT OF TRADEMARKS (the "Assignment"), dated as
of June 13,1997, is made and given by OMEGA CABINETS, LTD., a Delaware
corporation (the "Assignor") to FIRST BANK NATIONAL ASSOCIATION, a national
banking association, as Agent (in such capacity, together with any successor in
such capacity, the "Assignee") for the Banks (the "Banks") party to the Credit
Agreement described below.
RECITALS
--------
A. The Assignor, together with certain of its affiliates, the
Assignee and the Banks have entered into a Credit Agreement dated as of June 13,
1997 (as the same may hereafter be amended, supplemented, extended, restated, or
otherwise modified from time to time, the "Credit Agreement") pursuant to which
the Banks agreed to extend to the Assignor certain credit accommodations.
B. The Assignor has pledged and granted to the Assignee a security
interest in the property described in a Security Agreement of even date herewith
(as the same may be amended, supplemented, extended, restated or otherwise
modified from time to time, the "Security Agreement") by and between Assignor
and Assignee, which property includes general intangibles, including, without
limitation, applications for patents, applications for trademarks, trademarks,
trade names, copyrights, patents, inventions and trade secrets.
C. In order to induce the Banks to enter into the Credit Agreement
and extend the credit accommodations to the Assignor thereunder, and in order to
secure the payment and performance of (i) all liabilities and obligations of the
Assignor to the Assignee and the Banks arising under the Credit Agreement,
whether now existing or hereafter arising; and (ii) all liabilities and
obligations of the Assignor to the Assignee and the Banks under the Security
Agreement or any other "Loan Document" (as defined in the Credit Agreement)
whether now existing or hereafter at any time arising; (the liabilities and
obligations set forth in the preceding clauses (i) and (ii) being hereinafter
referred to as the "Liabilities"), the Assignor is willing to enter into this
Assignment.
NOW, THEREFORE, in consideration of the premises and to induce the
Banks to extend credit accommodations under the Credit Agreement, the parties
hereto agree as follows:
1. The Assignor does hereby assign all of its right, title and
interest in and to all of the present registered trademarks and applications
therefor owned by the Assignor (the "Trademarks"), including but not limited to
those set forth on Exhibit A hereto, and
<PAGE>
including, without limitation, all proceeds thereof together with the right to
recover for past, present and future infringements, all rights corresponding
thereto throughout the world and all renewals and extensions thereof, together
with the goodwill of the business associated with said Trademarks, said
Trademarks to be held and enjoyed by the Assignee for the benefit of the Banks,
and for their legal representatives, successors and assigns, as fully and
entirely as the same would have been held by the Assignor had this Assignment
not been made. The foregoing assignment shall be effective only upon the
occurrence of an Event of Default under the Credit Agreement and upon written
notice by the Assignee to the Assignor of the acceptance by the Assignee of this
Assignment, which written notice shall constitute conclusive proof of the
matters set forth therein.
2. The Assignor hereby covenants and warrants that:
(a) to the best of the Assignor's knowledge, the Trademarks are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part;
(b) to the best of the Assignor's knowledge, each of the Trademarks
is valid and enforceable;
(c) except as set forth on Exhibit A hereto, no claim has been made
to the Assignor or, to the knowledge of the Assignor, to any other person,
that use of any of the Trademarks does or may violate the rights of any
third person and no claim has been made by the Assignor that any other
person is infringing upon the rights of the Assignor under the Trademarks;
(d) the Assignor has the power and authority to enter into this
Assignment and perform its terms;
(e) the Assignor will be, until the Liabilities shall have been
satisfied in full and the Loan Documents shall have been terminated, in
compliance with statutory notice requirements relating to its use of the
Trademarks;
(f) to the best of the Assignor's knowledge, except as set forth on
Exhibit A hereto, the Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of the
Trademarks, free and clear of any liens, charges and encumbrances,
including without limitation, licenses and covenants by the Assignor not to
sue third persons;
(g) the Trademarks are all of the Trademarks owned or used by the
Assignor; and
(h) the Assignor will, at any time upon request, communicate to the
Assignee, its successors and assigns, any facts relating to the Trademarks
or the history
-2-
<PAGE>
thereof as may be known to the Assignor or its officers, employees and
agents, and cause such officers, employees and agents to testify as to the
same in any infringement or other litigation at the request of the Assignee
without the Assignee's prior written consent.
3. The Assignor agrees that, until the rights of the Assignee in the
Trademarks are terminated pursuant to Section 6, it will not enter into any
agreement that is inconsistent with its obligations under this Assignment.
4. If, before the Liabilities shall have been satisfied in full, the
Assignor shall obtain rights to any new trademark, or become entitled to the
benefit of any trademark application or registration or any renewal or extension
of any trademark registration, such shall be included in the definition of
"Trademarks" as used in this Assignment. Section 1 hereof shall automatically
apply thereto and the Assignor shall give to the Assignee prompt notice thereof
in writing. The Assignor authorizes the Assignee to modify this Assignment,
without the consent of the Assignor, by amending Exhibit A hereto to include any
such future registered trademark or application therefor.
5. The Assignor agrees not to sell, assign or encumber its interest
in, or grant any license with respect to, any of the Trademarks, except for the
licenses, if any, listed on Exhibit B hereto or otherwise with the Assignee's
prior written consent.
6. The Assignor agrees that it will authorize, execute and deliver
to Assignee all documents reasonably requested by Assignee to facilitate the
purposes of this Assignment, including but not limited to documents required to
record Assignee's interest in any appropriate office in any domestic or foreign
jurisdiction. At such time as the Credit Agreement and the other Loan Documents
shall have been terminated in accordance with their terms, the Assignee shall on
demand of the Assignor execute and deliver to the Assignor all termination
statements and other instruments as may be necessary or proper to terminate this
Assignment and assign to the Assignor all the Assignee's rights in the
Trademarks, subject to any disposition thereof which may have been made by the
Assignee pursuant to this Assignment or the Loan Documents
7. The Assignor shall have the duty, through counsel reasonably
acceptable to the Assignee, (i) to prosecute diligently any pending Trademark
application as of the date of this Assignment or thereafter until the Credit
Agreement and the Loan Documents shall have been terminated in accordance with
their terms; provided, that, subject to the final sentence of this Section 7,
--------
the Assignor may abandon any such application upon thirty days' written notice
to the Assignee, (ii) to make application on those trademarks and tradenames
which are unregistered but capable of being registered and which a prudent
person would reasonably cause to be registered and (iii) to preserve and
maintain all rights in all Trademarks which a prudent person would reasonably
preserve and maintain. Any expenses incurred in connection with applications
that constitute Trademarks shall be borne by the Assignor. The Assignor
-3-
<PAGE>
shall not abandon any application presently pending that constitutes a Trademark
without the written consent of the Assignee.
8. Upon the occurrence and during the continuance of an Event of
Default, the Assignee shall have the right but shall in no way be obligated to
bring suit in its own name, the name of the Assignor, or the name of the Banks
to enforce or to defend the Trademarks and any license thereunder if the
Assignor has failed to bring such suit in circumstances in which a prudent
person would have brought such suit. The Assignor shall at the request of the
Assignee do any and all lawful acts and execute any and all proper documents
required by the Assignee in aid of such enforcement or defense (including
without limitation participation as a plaintiff or defendant in any proceeding)
and the Assignor shall promptly, upon demand, reimburse and indemnify the
Assignee for all reasonable costs and expenses incurred by the Assignee in the
exercise of its rights under this Section.
9. This Assignment shall also serve to evidence the security
interest in the registered Trademarks and applications therefor granted by the
Assignor to the Assignee pursuant to the Security Agreement.
10. No course of dealing with the Assignor and the Assignee, failure
to exercise, nor any delay in exercising, on the part of the Assignee, any
right, power or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
11. All of the Assignee's rights and remedies with respect to the
Trademarks, whether established hereby, by any other agreements or by law shall
be cumulative and may be exercised singularly or concurrently.
12. This Assignment is subject to modification only by a writing
signed by the parties, except as provided in Section 4 hereof.
13. This Assignment shall inure to the benefit of and be enforceable
by the Assignee and its successors, transferees and assigns, and be binding upon
the Assignor and its successors and assigns.
14. This Assignment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws
(without giving effect to the conflicts of law principles thereof) of (i) any
state as to rights or interests hereunder which arise under the laws of such
state, (ii) the United States of America as to rights and interests hereunder
which are registered or for the registration of which application is pending
with the United States Patent and Trademark Office and (iii) the State of
Minnesota in all other respects. Whenever possible, each provision of this
Assignment and any other statement, instrument or transaction contemplated
hereby or relating hereto shall be interpreted in such
-4-
<PAGE>
manner as to be effective and valid under applicable law, but if any provision
of this Assignment or any other statement, instrument or transaction
contemplated hereby or relating hereto shall be held to be prohibited or invalid
under 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 Assignment or any other statement,
instrument or transaction contemplated hereby or relating hereto. In the event
of any conflict within, between or among the provisions of this Assignment, any
other Loan Document or any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto, those provisions
giving the Assignee the greater right shall govern.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
-5-
<PAGE>
IN WITNESS WHEREOF, the Assignor has executed this instrument as of the
date first above written.
OMEGA CABINETS, LTD.
By____________________________________
Name__________________________________
Title_________________________________
Address for Assignee:
First Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mark R. Olmon, MPFP0702
Telecopier No.: (612) 973-0825
S-1
<PAGE>
EXHIBIT A TO OMEGA CABINETS
COLLATERAL ASSIGNMENT
OF TRADEMARKS
List of all present trademarks and trade names and the registrations and
applications therefor presently owned by the Assignor.
Registered Trademarks
- ---------------------
Trademark Reg. No. Country Expiration
--------- -------- ------- ----------
1. OMEGA 1,623,711 U.S. November 20, 2000
Trademark 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.
<PAGE>
EXHIBIT B TO OMEGA CABINETS
COLLATERAL ASSIGNMENT
OF TRADEMARKS
Licenses granted with respect to the Assignor's trademarks.
None.
<PAGE>
Exh. 10.6
OMEGA HOLDINGS, INC. MANAGEMENT AGREEMENT
- --------------------------------------------------------------------------------
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the 13th
day of June, 1997 by and between Omega Holdings, Inc., a Delaware corporation,
Omega Cabinets, Ltd., a Delaware corporation and a wholly-owned subsidiary of
Omega Holdings, Inc. (Omega Holdings, Inc. and Omega Cabinets, Ltd. are
hereinafter referred to collectively as the "Company"), and BCC Industrial
Services, Inc., a Delaware corporation (the "Advisor").
Whereas, Omega Merger Corp., a Delaware corporation, has been formed
for the purpose of merging with and into Omega Holdings, Inc. (such
transaction being referred to herein as the "Merger"), all on the terms and
subject to the conditions of that certain Agreement and Plan of Merger
dated as of April 28, 1997 (the "Merger Agreement") by and among Omega
Holdings, Inc, the stockholders of Omega Holdings, Inc. (the
"Stockholders") and Omega Merger Corp.;
Whereas, subject to the terms and conditions of this Agreement, the
Company desires to retain the Advisor to provide certain management and
advisory services to the Company, and the Advisor desire to provide such
services.
Now, therefore, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Services. The Advisor hereby agrees that, during the term of this Agreement
(the "Term"), it will provide the Company with financial, managerial and
operational advice in connection with its day-to-day operations, including,
without limitation:
i. advice with respect to the investment of funds; and
ii. advice with respect to the development and implementation of
strategies for improving the operating, marketing and financial
performance of the Company.
2. Payment of Fees. The Company hereby agrees to pay to the Advisor (or such
affiliates of the Advisor as are designated by it) a management fee in an
amount equal to $325,000 per annum and warrants to purchase an aggregate of
2,391.40 shares of the common stock of Omega Holdings, Inc. in
substantially the form attached as
<PAGE>
OMEGA HOLDINGS, INC. MANAGEMENT AGREEMENT
- --------------------------------------------------------------------------------
Exhibit 2, in exchange for the services provided to the Company by the
Advisor, as more fully described in Section 1 of this Agreement. The fee
will be payable by the Company quarterly in advance, the first such
installment being payable by the Company on demand at or after the closing
of the Merger. Each payment made pursuant to this Section 2 shall be paid
by wire transfer of immediately available federal funds to the account for
the Advisor specified on Schedule 1 hereto, or to such other account as the
Advisor may specify to the Company in writing prior to such payment. The
warrants shall be exercisable in full as of the date of the issue at an
exercise price equal to $1,000 per share of such common stock.
3. Term.
a. Except as expressly set forth in this Section 3, this Agreement shall
continue in full force and effect, unless and until terminated by
mutual consent of the parties, for so long as the Advisor (or any
successor or permitted assign of the Advisor, as the case may be)
continues to carry on the business of providing services of the type
described in Section 1 above.
b. The Advisor shall cease to be a party to this Agreement and, except as
set forth in Section 3(d), shall be released of all of its rights and
obligations hereunder upon any of the following events:
i. the Advisor (or a successor or permitted assign of the Advisor,
as the case may be) ceases to carry on the business of providing
services of the type described in Section 1 above; or
ii. the Advisor materially breaches the terms of this Agreement and
fails to cure such breach within 30 days following written notice
thereof; or
iii upon election of the Advisor in the event that the Company
materially breaches the terms of this Agreement and fails to cure
such breach within 30 days following written notice thereof.
c. This Agreement shall terminate in the event that the Advisor ceases to
be a party to this Agreement.
d. Each of (a) the obligations of the Company under Section 4 below, (b)
any and all accrued and unpaid obligations of the Company owed under
Section 2 above, and (c) the provisions of Section 7 shall survive any
termination or expiration of this Agreement to the maximum extent
permitted under applicable law.
-2-
<PAGE>
OMEGA HOLDINGS, INC. MANAGEMENT AGREEMENT
- --------------------------------------------------------------------------------
4. Expenses; Indemnification.
a. Expenses. The Company agrees to pay on demand all expenses incurred
by the Advisor or its affiliates (collectively, the "Advisor
Entities") in connection with the Merger or otherwise incurred in
connection with the Company, including but not limited to (i) the
fees and disbursements of: (A) Ropes & Gray, and (B) any accountants
or other consultants or advisors retained by the Advisor Entities
arising in connection therewith (including but not limited to the
preparation, negotiation and execution of this Agreement and any other
agreement executed in connection with the Merger (and any and all
amendments, modifications, restructurings and waivers, and exercises
and preservations of rights and remedies hereunder or thereunder) and
the operations of the Company and any of its subsidiaries), and (ii)
any out-of-pocket expenses incurred by the Advisor in connection with
the provision of services hereunder or the attendance at any meeting
of the board of directors (or any committee thereof) of the Company or
any of its affiliates.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by the Advisor, the Company hereby agrees
to indemnify, exonerate and hold each of the Advisor Entities, and
each of their respective partners, shareholders, directors, officers,
fiduciaries, employees, other affiliates and agents and each of the
partners, shareholders, directors, officers, fiduciaries, employees,
other affiliates and agents of each of the foregoing (collectively,
the "Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and
expenses in connection therewith, including without limitation
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnitees or any of them as a result
of, or arising out of, or relating to the Merger or any agreement
executed in connection with the Merger, except for any such
Indemnified Liabilities arising on account of such Indemnitee's
willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. None of the Indemnitees shall be
liable to the Company or any of its affiliates for any act or omission
suffered or taken by such Indemnitee that does not constitute willful
misconduct.
5. Assignment, etc. Except as provided below, none of the parties shall have
the right to assign this Agreement. Notwithstanding the foregoing, (a) the
Advisor may assign all or part of its rights and obligations hereunder to
any affiliate of such Advisor which
-3-
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
provides services similar to those called for by this Agreement, in which
event the Advisor shall be released of all of its rights and obligations
hereunder, and (b) the provisions hereof for the benefit of the Advisor
Entities shall inure to the benefit of their successors and assigns.
6. Amendments and Waivers. No amendment or waiver of any term, provision or
condition of this Agreement shall be effective, unless in writing and
executed by each of the Advisors and the Company. No waiver on any one
occasion shall extend to or effect or be construed as a waiver of any right
or remedy on any future occasion. No course of dealing of any person nor
any delay or omission in exercising any right or remedy shall constitute an
amendment of this Agreement or a waiver of any right or remedy of any party
hereto.
7. Miscellaneous.
a. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware
without giving effect to any choice or conflict of law provision or
rule that would cause the application of the domestic substantive laws
of any other jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof shall be brought and maintained exclusively
in the federal and state courts of the State of Delaware, provided
that the Advisor may bring any such action, suit or proceeding against
the Company in any jurisdiction in which the Company is subject to
personal jurisdiction. Each of the parties hereto by execution hereof
(i) hereby irrevocably submits to the jurisdiction of the federal and
state courts in the State of Delaware for the purpose of any action,
suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof, and (ii) hereby waives to the extent not
prohibited by applicable law, and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that
its property is exempt or immune from attachment or execution, that
any such action, suit or proceeding may not be brought or maintained
in one of the above-named courts, that any such action, suit or
proceeding brought or maintained in one of the above-named courts
should be dismissed on grounds of forum non conveniens, should be
----- --- ----------
transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit
or proceeding in any court other than one of the above-named courts,
or that this Agreement or the
-4-
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
subject matter hereof may not be enforced in or by any of the above-
named courts. Each of the parties hereto hereby consents to service of
process in any such suit, action or proceeding in any manner permitted
by the laws of the State of Delaware, agrees that service of process
by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 9 is reasonably calculated
to give actual notice and waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that service of process made in accordance with
Section 9 does not constitute good and sufficient service of process.
The provisions of this Section 7(b) shall not restrict the ability of
any party to enforce in any court any judgment obtained in a federal
or state court of the State of Delaware.
c. Waiver of Jury Trial. To the extent not prohibited by applicable law
which cannot be waived, each of the parties hereto hereby waives, and
covenants that it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any
issue, claim, demand, cause of action, action, suit or proceeding
arising out of or based upon this Agreement or the subject matter
hereof, in each case whether now existing or hereafter arising and
whether in contract or tort or otherwise. Any of the parties hereto
may file an original counterpart or a copy of this Agreement with any
court as written evidence of the consent of each of the parties hereto
to the waiver of its right to trial by jury.
d. Reliance. Each of the parties hereto acknowledges that it has been
informed by each other party that the provisions of this Section 7
constitute a material inducement upon which such party is relying and
will rely in entering into this Agreement and the transactions
contemplated hereby.
8. Merger/Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes any
prior communication or agreement with respect thereto.
9. Notice. Any notices and other communications required or permitted in this
Agreement shall be effective if in writing and delivered personally or sent
(i) by Federal Express, DHL or UPS, (ii) by telecopier or (iii) by
registered or certified mail, postage prepaid, in each case, addressed as
follows:
If to the Company:
Omega Holdings, Inc.
Omega Cabinets, Ltd.
-5-
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
1205 Peters Drive
Waterloo, IA 50703-9691
Attention: Chief Executive Officer
Telephone: 319-235-5700
Telecopier: 319-234-6482
If to the Advisor:
BCC Industrial Services, Inc.
767 Fifth Avenue, 6th Floor
New York, NY 10153
Attention: Donald E. Cihak
Telephone: 212-980-0606
Telecopier: 212-759-0876
Copy to:
-------
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: R. Newcomb Stillwell, Esq.
Telephone: 617-951-7000
Telecopier: 617-951-7050
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date received, if personally delivered, (b) the next
business day after being sent by Federal Express, DHL or UPS to an address for
which next day service is available, (c) the third business day after being sent
by Federal Express, DHL or UPS other than to an address for which next day
service is available, (c) the same business day, if sent by telecopier and (iv)
the third business day after being sent by registered or certified mail. Each
of the parties hereto shall be entitled to specify a different address or
telecopier number by giving notice as aforesaid to each of the other parties
hereto.
10. Severability. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then
such unenforceable provision shall be deemed eliminated from this Agreement
for the purpose of such proceedings to the extent necessary to permit the
remaining provisions to be enforced. To the full extent, however, that the
provisions of any applicable law may be waived, they are hereby waived to
the end that this Agreement be deemed to be valid and binding agreement
enforceable in accordance with its terms, and in the event that any
provision hereof shall be found to be invalid or unenforceable, such
provision shall be construed by
-6-
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
limiting it so as to be valid and enforceable to the maximum extent
consistent with and possible under applicable law.
11. Counterparts. This Agreement may be executed in any number of counterparts
and by each of the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
The Company: Omega Holdings, Inc.
By
-------------------------------
Title:
Omega Cabinets, Ltd.
By
-------------------------------
Title:
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
the Advisor: BCC Industrial Services, Inc.
By
-------------------------------
Name:
Title:
<PAGE>
Omega Holdings, Inc. Management Agreement
- --------------------------------------------------------------------------------
Schedule 1 to
Management Agreement
--------------------
Wire Transfer Instructions for
BCC Industrial Services, Inc.
CHASE MANHATTAN BANK, N.A.
ABA # 021000021
For: the account of United States Trust Co. of New York
Account # 920-1-073195
To Further Credit: BCC Industrial Services, Inc.
Attention: Roy Kasakove
Telephone Advice: 212-852-3492
Account # 479-16300
<PAGE>
Exhibit 10.7
================================================================================
Omega Merger Corp.
-----------------------------
Merger Financing Agreement
-----------------------------
Dated as of June 13, 1997
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Section Page
- ------- ----
<S> <C> <C>
Recital 1. The Merger.......................................................1
Recital 2. The Financing....................................................1
Recital 3. The Transaction Agreements.......................................1
Recital 4. The Closing Transactions.........................................3
4.1 Financing...............................................3
4.2 Merger..................................................3
1. Definitions...............................................................3
2. Sale or Transfer of Securities............................................4
2.1 Sale or Transfer............................................4
2.2 Use of Proceeds.............................................4
3. Representations and Warranties of the Purchasers..........................4
3.1 Investment Intent; Related Matters..........................4
3.2 Violation of Other Instruments, etc.........................5
3.3 Filings, etc................................................5
3.4 Authorization...............................................5
3.5 Organization................................................5
4. Representations and Warranties of.........................................5
4.1 Organization, Capitalization, etc...........................5
4.1.1 The Company.......................................5
-----------
4.1.2 Subsidiaries......................................6
------------
4.1.3 Qualification.....................................6
-------------
4.1.4 Governing Documents...............................6
-------------------
4.1.5 Capitalization....................................6
--------------
4.1.6 Certain Commitments...............................6
-------------------
4.2 Liabilities.................................................7
4.3.1 Charter and By-laws...............................7
-------------------
4.3.2 Transaction Agreements............................7
----------------------
4.3.3 Effect of Transactions............................7
----------------------
4.4 Litigation..................................................7
4.5 Violation of Other Instruments, etc.........................7
4.6 Filings, etc................................................8
4.7 Representations and Warranties of The Company and Omega.....8
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
5. Certain Fees.......................................................................8
5.1 Brokers Fees, etc....................................................8
5.2 Other Expenses of the Transactions...................................8
6. Closing Conditions.................................................................8
6.1 Transaction Agreements, etc..........................................8
6.2 Representations, Warranties and Conditions; Officers' Certificate....9
6.3 The Financing........................................................9
6.4 The Merger...........................................................9
6.5 Legality; Governmental Authorization; Consents, etc..................9
6.6 No Change in Law; Litigation, etc....................................9
6.7 Proper Proceedings..................................................10
6.8 General.............................................................10
7. Covenants.........................................................................10
7.1 Payment of Notes....................................................10
7.2 Certain Tax Matters.................................................10
7.2.1 Allocation of Purchase Price............................10
----------------------------
7.2.2 Additional Taxes........................................10
----------------
8. Information and Reports to be Furnished...........................................11
8.1 Reports.............................................................11
8.1.1 Annual Statements.......................................11
-----------------
8.1.2 Quarterly Reports.......................................12
-----------------
8.1.3 Monthly Reports.........................................12
---------------
8.1.4 Officers' Certificates..................................12
----------------------
8.1.5 Other Reports...........................................12
-------------
8.1.6 Notice of Litigation, Defaults, etc.....................13
-----------------------------------
8.1.7 Notices under Other Agreements..........................13
------------------------------
8.2 Other Information; Management Rights................................13
9. Defaults..........................................................................14
9.1 Events of Default; Remedies.........................................14
9.2 Annulment of Defaults...............................................16
9.3 Waivers.............................................................17
9.4 Course of Dealing, Waiver Procedure, etc............................17
10. Payment On Securities; Registration; Transfer.....................................17
10.1 Home Office Payment................................................17
10.2 Registration, Transfer and Exchange of Notes.......................18
10.2.1 Notes Register.........................................18
--------------
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
10.2.2 Transfer...............................................18
--------
10.2.3 Registration...........................................18
------------
10.3 Transfer and Exchange of Common Stock..............................18
10.4 Replacement of Securities..........................................19
11. Restrictions On Transfer..........................................................19
11.1 Restrictive Legend.................................................19
11.2 Notice of Proposed Transfer; Opinions of Counsel...................19
11.3 Termination of Restrictions........................................20
12. Definitions Reference Table.......................................................20
13. Additional Definitions............................................................21
14. Expenses, Etc.....................................................................26
15. Limited Liability of Partners.....................................................27
16. Notices...........................................................................27
17. Survival of Covenants.............................................................28
18. Amendments and Waivers............................................................28
19. Consent to Jurisdiction; Jury Trial Waiver........................................28
19.1 Consent to Jurisdiction............................................28
19.2 Waiver of Jury Trial...............................................29
20. Choice of Law; Miscellaneous......................................................29
</TABLE>
-iii-
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Schedule of Purchasers and Securities
Schedule II Schedule of Addresses and Home Office Payments
Exhibit 2.1(a) Form of Note
-iv-
<PAGE>
Merger Financing Agreement
This Merger Financing Agreement (the "Agreement") is made as of June 13,
1997, initially among Omega Merger Corp., a Delaware corporation (the"Company")
and each Person listed as a Purchaser on Schedule I hereto (the "Purchasers").
Recitals
Recital 1. The Merger. Omega Holdings, Inc., a Delaware corporation
- ----------
("Holdings") has entered into an Agreement and Plan of Merger dated as of April
28, 1997 (as amended, the "Merger Agreement") with the Company and the
stockholders of the Company.
Recital 2. The Financing. The Company and Holdings will obtain funds to
- ----------
finance the Merger (the "Financing") in part through the issuance and sale or
exchange hereunder to the Purchasers of the Securities referred to in this
Recital 2 (such securities being sold or transferred to the Purchasers hereunder
being referred to herein as the "Securities") for the aggregate amounts
indicated on Schedule I hereto:
(a) $10 million aggregate principal amount of the Company's 11%
notes due 2007, which shall be guaranteed by Omega Cabinets, Ltd. ("Omega")
as set forth therein (the "Notes"), in substantially the form of Exhibit
2.1(a) hereto.
(b) 61,865 shares of the common stock, $.01 par value per share
(the "Common Stock"), of the Company.
Recital 3. The Transaction Agreements. In order to effect certain of the
- ----------
transactions contemplated by this Agreement, the following agreements (together
with the Financing Agreements, collectively, the "Transaction Agreements") have
been, or will be, entered into by the Persons referred to below:
(a) The Stockholders Agreement of even date herewith (the
"Stockholders Agreement") among Holdings, the Purchasers, the Management
Stockholders named therein (the "Management Stockholders") and the other
parties thereto.
(b) The Non-Competition Agreements of even date herewith between
the Company and Persons included in the Senior Management Non-Competition
Agreement, the Management Non-Competition Agreement, the Moran Non-
Competition Agreement, the Stockholder Agreement for Protection of
Proprietary Interests with certain stockholders and former stockholders of
Holdings, and the Stockholder Non-Competition Agreement with Robert Bertch
and certain members of his family and trusts for their benefit,
respectively.
(c) The 1997 Stock Option Plan of the Company (the "Option Plan").
<PAGE>
(d) The stock options to be granted by the Company under the Option
Plan to certain Management Stockholders.
(e) The Credit Agreement of even date herewith (the "Credit
Agreement") among First Bank National Association, as agent and lender (the
"Bank"), the other lenders parties thereto, and Omega, Home Crest
Corporation and Panther Transport, Inc. as borrowers and the other Loan
Documents as defined therein.
(f) The Certificate of Merger of even date herewith (the "Merger
Certificate") of the Company and Holdings to be filed with the Secretary of
State of Delaware, pursuant to which the Company will be merged with and
into Holdings and following which Holdings shall be the surviving
corporation (the "Merger").
(g) The Merger Agreement.
(h) The promissory note of even date herewith in the principal amount
of $3,000,000 (the "Indemnity Note") issued by Holdings pursuant to the
Merger Agreement.
(i) The irrevocable standby letter of credit of even date herewith in
the stated amount of $3,000,000 (the "Indemnity Note Letter of Credit")
issued by the Bank pursuant to the Credit Agreement.
(j) The Senior Subordinated Bridge Loan Agreement (the "Bridge Loan
Agreement") of even date herewith and the Transaction Documents as defined
therein.
(k) The Management Investor Subscription Agreement of even date
herewith (the "Management Subscription Agreement") between Holdings and
each of Scott Anderson, Tim Carlson, Jeff Elenz, Terry Goerdt, Don
Hinsdale, Paul Kulas, Earl Lytle, Anita Rule, Brad Tilley, and James
Sundheimer.
(l) The Management Agreement of even date herewith among the
Holdings, Omega and BCC Industrial Services, Inc.
(m) The Goebel Put Agreement dated as of the 13th day of June, 1997
between Holdings and John A. Goebel, Jr.
(n) The Key Put Agreement dated as of the 13th day of June, 1997
between Holdings and Henry P. Key.
(o) The Common Stock Purchase Warrant dated June 13, 1997 issued by
Holdings to BCC Industrial Services, Inc.
-2-
<PAGE>
Recital 4. The Closing Transactions. Pursuant to the Transaction Agreements,
- ----------
the following transactions will occur, substantially contemporaneously, at the
closing (the "Closing") to be held on June 13, 1997, or such other date as may
be agreed upon by the parties hereto (the "Closing Date") at the offices of
Ropes & Gray, 885 Third Avenue, New York, NY, 02110, at 9:00 a.m. local time, or
at such other time or place as may be agreed upon by the parties hereto:
4.1 Financing. Pursuant to this Agreement, the Company or Holdings
will issue and sell the Securities, and the Company or Holdings will take such
other actions in connection therewith as may be necessary to consummate the
Financing.
4.2 Merger. Pursuant to the Merger Agreement and the Merger
Certificate, the Company will merge with and into Holdings, with Holdings, as
the surviving corporation. After giving effect to the Merger, the authorized
capital stock of Holdings will consist of 1,000,000 shares of common stock, par
value $.01 per share, of which 72,391.40 shares will be issued and outstanding,
7,322.01 shares will be reserved for issuance under the Option Plan, and
2,391.40 shares will be reserved for the warrant to be issued to BCC Industrial
Services, Inc. ("the ISI Warrant"), and the authorized capital stock of Omega
will consist of 10,000 shares of common stock, $.01 par value per share, all of
which will be issued and outstanding and held of record by the Company. After
giving effect to the Merger, by operation of law and the provisions of the
Merger Agreement and the Merger Certificate, Holdings, as the surviving
corporation of the Merger, will have succeeded to and assumed all the
obligations of, and have succeeded to and been assigned all the rights of, the
Company, and Holdings shall have ceased its separate existence.
Agreement
Now, therefore, the parties hereto hereby agree as follows:
1. Definitions. Certain terms are used in this Agreement as specifically
defined herein. These definitions are referred to in Section 12 hereof or set
forth in Section 13 hereof. Except as the context clearly otherwise requires:
1.1 All defined terms for securities issued or issuable by the Company
or the Company, including without limitation Securities, Notes, ISI Warrant and
Common Stock, shall include any securities issued upon transfer of the
securities in question, and any other securities issued in exchange for the
securities in question.
1.2 Except as the context otherwise specifically requires, following
the consummation of the Merger, the term the Company shall mean Holdings as the
surviving corporation of the Merger.
-3-
<PAGE>
1.3 The words "hereof," "herein" and "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and references to a particular Section
of this Agreement shall include all subsections thereof.
1.4 Definitions shall be equally applicable to both the singular and
plural forms of the terms defined herein.
2. Sale or Transfer of Securities.
2.1 Sale or Transfer. The Company agrees to sell or cause Holdings to
sell to each Purchaser, and, subject to compliance with all of the terms and
conditions of this Agreement and in reliance on the representations and
warranties set forth in this Agreement, each such Purchaser severally agrees to
purchase from the Company at the Closing, the respective types and amounts of
Securities specified opposite such Purchaser's name on Schedule I. At the
Closing, the Company will, unless otherwise requested, deliver or cause Holdings
to deliver to each Purchaser, with respect to each type of Security being
purchased from it by such Purchaser, a single note (in substantially the form of
Exhibit 2.1(a)) or certificate evidencing the amount of such Security being
- --------------
purchased from it by such Purchaser, registered in such Purchaser's name or the
name of any nominee specified by such Purchaser, against a contribution to the
Company or Holdings of the applicable amount of immediately available funds.
2.2 Use of Proceeds. The Company covenants that it will apply or cause
Holdings to apply the proceeds of the Securities to be issued by it on the
Closing Date to finance the Merger, with any balance to be applied to other
lawful corporate purposes. In no event shall the Company or Holdings, directly
or indirectly, apply any part of the proceeds from the sale of any Security
hereunder for the purpose, whether immediate, incidental or ultimate, of buying
or carrying any "margin stock" within the meaning of any regulation,
interpretation or ruling of the Board of Governors of the Federal Reserve
System, all as from time to time in effect or refunding of any Indebtedness
incurred for such purpose.
3. Representations and Warranties of the Purchasers. In order to induce
the Company to enter into this Agreement and to issue or cause Holdings to issue
the Securities, each Purchaser represents and warrants to the Company that:
3.1 Investment Intent; Related Matters. Such Purchaser is acquiring
the Securities to be acquired by it for investment, and not with a view to
selling or otherwise distributing any of such Securities in violation of the
Securities Act; provided, however, that nothing contained herein shall prevent
such Purchaser from transferring the Securities in compliance with Sections 10
and 11 hereof.
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3.2 Violation of Other Instruments, etc. Neither the execution and
delivery of this Agreement or any other Transaction Agreement, nor the
consummation of any of the transactions contemplated hereby or thereby, will (i)
constitute a breach of or a default under any Contractual Obligation of such
Purchaser, (ii) result in acceleration in the time for performance of any
obligation of such Purchaser, (iii) require any unobtained consent, waiver or
amendment to any such Contractual Obligation, or (iv) violate or constitute a
default under or give rise to any other right or cause of action under any Legal
Requirement, except for events or conditions described in clauses (i) through
(iv) above that do not and will not, individually or in the aggregate, have a
Material Adverse Effect.
3.3 Filings, etc. No approval, consent, authorization or other order of,
and no declaration, filing, registration, qualification or recording with, any
governmental authority is required to be made by or on behalf of such Purchaser
in connection with the execution, delivery or performance of this Agreement or
any other Transaction Agreement or the consummation of any of the transactions
contemplated hereby or thereby.
3.4 Authorization. Such Purchaser has the power and authority (including
full partnership power and authority) to execute and deliver this Agreement and
to perform his or its obligations hereunder. All actions or proceedings to be
taken by or on behalf of such Purchaser to authorize and permit the execution
and delivery by such Purchaser of this Agreement and the agreements, documents,
certificates and other instruments required to be executed and delivered by such
Purchaser pursuant hereto, performance by such Purchaser of its obligations
hereunder, and the consummation by such Purchaser of the transactions
contemplated herein, have been duly and properly taken. This Agreement has been
duly executed and delivered by such Purchaser and constitutes the legal, valid
and binding obligation of such Purchaser, enforceable in accordance with its
terms and conditions.
3.5 Organization. Such Purchaser is a partnership duly organized, validly
existing and in good standing under the laws of Delaware.
4. Representations and Warranties of The Company. In order to induce each
Purchaser to enter into this Agreement, and to purchase the Securities to be
purchased or acquired by such Purchaser hereunder, the Company hereby represents
and warrants to each Purchaser that:
4.1 Organization, Capitalization, etc.
4.1 The Company. The Company is a corporation duly organized,
-----------
validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite power and authority to execute,
deliver and perform this Agreement, each of the other Transaction
Agreements to which it is a party and the Securities to be issued by it, to
perform all the transactions contemplated hereby and thereby and to carry
on the business now conducted or currently proposed to be conducted by it.
The
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Company was formed solely for the purpose of effecting the transactions
contemplated hereby, and its sole business is, and has been from inception,
the effectuation of such transactions. The Company has duly executed and
delivered this Agreement, each other Transaction Agreement to which it is a
party and each Security being issued by it at the Closing, and has taken
all corporate action necessary to authorize each such Transaction Agreement
to which it is a party and each such Security. Each such Transaction
Agreement and each such Security issued by it is Enforceable against the
Company, and upon the consummation of the Merger will be Enforceable
against the Company.
4.1.2 Subsidiaries. Before giving effect to the Merger, the Company
------------
has no Subsidiaries.
4.1.3 Qualification. The Company is duly qualified to do business
-------------
as a foreign corporation or organization and is in good standing as such in
each jurisdiction in which it is required to be so qualified, except for
failures to be so qualified that could not in the aggregate have any
Material Adverse Effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company.
4.1.4 Governing Documents. Copies of the Certificate of
-------------------
Incorporation and By-laws of The Company have heretofore been delivered to
the Purchasers and are true, complete and correct. After giving effect to
the Merger, the Certificate of Incorporation of the Company as the
surviving corporation will contain only those provisions contained in the
Certificate of Incorporation of the Company as in effect immediately prior
to the Merger and the By-laws of the Company shall contain only those
provisions contained in the By-laws of the Company as in effect immediately
prior to the Merger.
4.1.5 Capitalization. After giving effect to the Merger, the
--------------
authorized, issued and outstanding capital stock of Holdings as the
surviving corporation will be as set forth in the Merger Certificate.
4.1.6 Certain Commitments. Except as explicitly provided for in
-------------------
this Agreement or the Merger Agreement, there is no warrant, right, option,
conversion privilege, stock purchase plan, Charter provision or other
Contractual Obligation that obligates the Company or Holdings to offer,
issue, purchase or redeem any shares of capital stock of the Company or
debt or other securities convertible into or exchangeable for capital stock
(now, in the future or upon the occurrence of any contingency) or that
provides for any stock appreciation or similar right. There is no warrant,
right, option, conversion privilege, stock purchase plan, Charter provision
or other Contractual Obligation that obligates the Company or Holdings to
offer, sell, transfer, exchange, pledge, hypothecate or encumber (now, in
the future or upon the occurrence of any contingency) any of the shares of
capital stock of any Subsidiary of
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the Company or Holdings, except as set forth in this Agreement or the
Merger Agreement.
4.2 Liabilities. The Company has not engaged in any business or entered
into or performed any Contractual Obligations or incurred any expenses or
liabilities since the date of its incorporation except for actions, expenses and
liabilities incident to its organization or carrying out the transactions
specifically contemplated by this Agreement.
4.3 Certain Other Matters
4.3.1 Charter and By-laws. The Company is not in violation of, or
-------------------
in default under, any provision of its Charter or By-laws or other similar
organizational documents.
4.3.2 Transaction Agreements. The Company has heretofore furnished
----------------------
to each Purchaser complete and correct copies of each of the Transaction
Agreements, including all exhibits, schedules and amendments hereto and
thereto.
4.3.3 Effect of Transactions. The execution and delivery of this
----------------------
Agreement and the other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
prohibited transaction within the meaning of ERISA.
4.4 Litigation. There is no litigation, at law or in equity, or any
proceeding before or investigation by any foreign, federal, state or municipal
board or other governmental or administrative agency or any arbitrator, pending
(nor, to the knowledge of the Company, threatened), nor any basis therefor,
against the Company, including without limitation any of the foregoing that
seeks rescission of, seeks to enjoin the consummation of, or that questions the
validity of, this Agreement or any other Transaction Agreement or any of the
transactions contemplated hereby or thereby. No judgment, decree or order of
any foreign, federal, state or municipal court, board or other governmental or
administrative agency or any arbitrator (i) has been issued against any Person
other than the Company that could have any Material Adverse Effect or (ii) has
been issued against the Company.
4.5 Violation of Other Instruments, etc. Neither the execution and
delivery of this Agreement or any other Transaction Agreement, nor the
consummation of any of the transactions contemplated hereby or thereby, will (i)
constitute a breach of or a default under any Contractual Obligation of the
Company, (ii) result in acceleration in the time for performance of any
obligation of the Company under any such Contractual Obligation, (iii) require
any unobtained consent, waiver or amendment to any such Contractual Obligation,
or (iv) violate or constitute a default under, or give rise to any other right
or cause of action under any Legal Requirement, except for events or conditions
described in clauses (i) through
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<PAGE>
(iv) above that do not and will not, individually or in the aggregate, have a
Material Adverse Effect.
4.6 Filings, etc. No approval, consent, authorization or other order of,
and no declaration, filing, registration, qualification or recording with, any
governmental authority is required to be made by or on behalf of the Company in
connection with the execution, delivery or performance of this Agreement or any
other Transaction Agreement or the consummation of any of the transactions
contemplated hereby or thereby, except for the filing of the Merger Certificate.
4.7 Representations and Warranties of The Company and Omega. Each
representation and warranty of the Company and/or Omega in any of the Merger
Agreement, the Credit Agreement or the Bridge Loan Agreement is hereby confirmed
as true and correct as fully as if set forth herein at length.
5. Certain Fees.
5.1 Brokers Fees, etc. Each party hereto represents and warrants to each
other party that, except for the fees payable to Goldman Sachs & Co. as
described in the Bridge Loan Agreement, no broker's, finder's or placement fee
or commission will be payable to any Person alleged to have been retained by
such representing and warranting party with respect to any of the transactions
contemplated by this Agreement or any of the other Transaction Agreements. Each
party hereto hereby indemnifies each other party against and agrees that it will
hold each other party harmless from any claim, demand or liability, including
reasonable attorneys' fees, for any broker's, finder's or placement fee or
commission alleged to have been incurred by such indemnifying party.
5.2 Other Expenses of the Transactions. The Company represents and
warrants that no expenses, Compensation, fees or commissions will be payable by
the Company or Holdings or its Subsidiaries in connection with the transactions
contemplated by this Agreement or any of the other Transaction Agreements,
except for the fees and expenses described in Sections 5.1 and 14 hereof and
other amounts disclosed in the Merger Agreement, Credit Agreement or Bridge Loan
Agreement.
6. Closing Conditions. The obligation of each Purchaser to purchase any
Securities pursuant to this Agreement shall be subject to the satisfaction,
prior to or substantially contemporaneously with the making of such purchase at
the Closing, of the following conditions, compliance with which, or the
occurrence of which, may be waived in writing in whole or in part by such
Purchaser:
6.1 Transaction Agreements, etc. The Transaction Agreements shall have
been executed in substantially the form previously supplied to the Purchasers,
which shall be reasonably satisfactory in form and substance to such Purchasers,
and each such Transaction
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<PAGE>
Agreement shall be in full force and effect, no term or condition thereof having
been amended, modified or waived except with the prior written consent of such
Purchasers. The Charter of the Company shall be in the form previously supplied
to the Purchasers.
6.2 Representations, Warranties and Conditions; Officers' Certificate.
The representations and warranties of the Company contained herein shall be true
and correct in all respects at and as of the Closing with the same force and
effect as though made at and as of the Closing, both before and after giving
effect to each of the Financing and the Merger; at or prior to the Closing, no
material adverse change shall have occurred in the business, operations, assets,
prospects or condition, financial or otherwise, of the Company or Holdings; at
the time of the Closing (and after giving effect to the Financing and the
Merger) no Default or Event of Default shall have occurred; and the Purchasers
shall have received on the Closing Date a certificate of the Company to these
effects and to the effect that the conditions specified in this Section 6 have
been satisfied and that the Company has performed and complied with all
agreements required by this Agreement or any other Transaction Agreement to be
performed or complied with by it prior to or at the Closing, signed by the
President of the Company.
6.3 The Financing. The Company shall have transferred or caused Holdings
to transfer to the Purchasers the Securities to be acquired by them hereunder.
The transactions contemplated by the Credit Agreement, the Bridge Loan Agreement
and the Management Subscription Agreement shall concurrently have been
consummated.
6.4 The Merger. The Merger shall concurrently have been consummated and
become effective in accordance with the terms of the Merger Agreement and the
Merger Certificate; and the Purchasers shall have received evidence, in form and
substance reasonably satisfactory to it, that the Merger Certificate has been
duly filed.
6.5 Legality; Governmental Authorization; Consents, etc. The purchase of,
and exchange or payment for, the Securities to be purchased by such Purchaser
shall not be prohibited by any Legal Requirement applicable to it, and shall not
subject it to any penalty, tax, liability or other onerous condition. All
necessary or advisable consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or any other Person, including without
limitation consents under and assignments of Contractual Obligations of the
Company or Holdings or its Subsidiaries, with respect to any of the transactions
contemplated by this Agreement or any of the other Transaction Agreements shall
have been obtained or made and shall be in full force and effect.
6.6 No Change in Law; Litigation, etc. No Legal Requirement shall have
been enacted or become effective, nor shall any legislation have been introduced
and favorably reported for passage to either house of Congress or any state
legislature, nor shall have any investigation by any governmental authority or
administrative body been commenced, nor shall
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<PAGE>
any decision of any court of competent jurisdiction have been rendered, nor
shall any litigation or other action or proceeding have been commenced, that in
such Purchaser's reasonable judgment could materially and adversely affect,
restrain, prevent or change the transactions contemplated by this Agreement or
any of the other Transaction Agreements or that could otherwise cause a material
adverse change in the business, operations, assets, prospects or condition,
financial or otherwise, of the Company or Holdings.
6.7 Proper Proceedings. All proper proceedings shall have been taken by
each of the parties to this Agreement and the other Transaction Agreements to
authorize such Agreements and the transactions contemplated hereby and thereby.
6.8 General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement and the other
Transaction Agreements shall be reasonably satisfactory in form and substance to
the Purchasers, and the Purchasers shall have received counterpart originals, or
certified or other copies, of all documents, including records of corporate
proceedings and opinions of counsel, that they may have requested in connection
therewith.
7. Covenants. In addition to its other undertakings herein, the Company
covenants that so long as any Security shall remain outstanding it will comply,
and will cause each of its Subsidiaries to comply, with such of the following
provisions as are applicable to it:
7.1 Payment of Notes. The Company will duly and punctually pay the
principal of and premium, if any, and interest on the Notes.
7.2 Certain Tax Matters.
7.2.1 Allocation of Purchase Price. The Company hereby agrees with
----------------------------
each Purchaser that (i) for the purposes of Sections 1271 through 1275 of
the Code, the assumed price at which each of the Securities would have been
issued had they been issued apart from the investment unit consisting of
Securities is equal to the allocated cost thereof set forth on Schedule I
hereto and that (ii) each such assumed price will be appropriately used by
the Company for income tax purposes.
7.2.2 Additional Taxes. In the event that it is determined that
----------------
original issue discount exists with respect to any Note in an amount
greater than the difference, if any, between the face amount of such Note
and its allocated cost, determined in accordance with Section 7.2.1 hereof,
with the result that the aggregate federal, state or city income taxes, or
interest, penalties or additions to tax payable with respect to such Note
from time to time are in excess of what they would have been otherwise
(such excess being referred to as the "Additional Taxes"), the Company will
pay to each holder or former holder of the Notes, as additional interest,
an amount (the "Tax Compensation Amount") that, after deducting all
federal, state and city taxes required
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<PAGE>
to be paid by such holder with respect to the receipt of such amount, shall
be equal to the Additional Taxes of such holder. The Tax Compensation
Amount shall be paid within 30 days after receipt of a written demand
therefor from such holder accompanied by a written statement setting forth
the Additional Taxes and the Tax Compensation Amount payable (which written
statement shall, at the request and expense of the Company, be verified by
such holder's independent certified public accountants). For the purposes
of determining the amount of the Additional Taxes and the Tax Compensation
Amount, it shall be assumed that each holder's federal, state and city
income tax rate is equal to the highest rate for such tax applicable to New
York residents doing business in New York City.
8. Information and Reports to be Furnished.
8.1 Reports. The Company and each of its Subsidiaries will maintain a
system of accounting in which full, true and correct entries will be made of all
dealings and transactions in relation to their business and affairs in
accordance with generally accepted accounting principles, and the Company and
each of its Subsidiaries will set aside on its books all proper reserves
required by generally accepted accounting principles. The fiscal year of the
Company and each of its Subsidiaries ends on or about December 31 each year, and
will not be changed without the written consent of the Majority Holders. The
Company will furnish the following financial statements, notices and other
information to each original Purchaser so long as it holds any of the
Securities:
8.1.1 Annual Statements. The Company will furnish, as soon as
-----------------
available, and in any event within ninety (90) days after the end of each
fiscal year of the Company, the consolidated and consolidating balance
sheets of the Company and its Subsidiaries as at the end of each such
fiscal year and the consolidated (and as to statements of income only,
consolidating) statements of income, cash flows and changes in
stockholders' equity for such year of the Company and its Subsidiaries,
setting forth in each case in comparative form the figures for the next
preceding fiscal year, accompanied by the unqualified report of independent
certified public accountants of recognized national standing reasonably
satisfactory to the Majority Holders, to the effect that such consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
years and present fairly and in all material respects the financial
condition of the Company and its Subsidiaries at the dates thereof and the
results of their operations and changes in their cash flows and
stockholders' equity for the periods covered thereby, and the statement of
such accountants that such accountants have caused the provisions of this
Agreement and the other Transaction Agreements to be reviewed and that in
the course of their audit of the Company and its Subsidiaries nothing has
come to their attention to lead them to believe that any Default hereunder
or default thereunder exists, or, if such is not the case, specifying such
Default or possible Default and the nature thereof.
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8.1.2 Quarterly Reports. The Company will furnish, as soon as
-----------------
available and in any event within forty-five (45) days after the end of each
fiscal quarter in each fiscal year of the Company, the consolidated and
consolidating balance sheets of the Company and its Subsidiaries as the end of
such quarter and the consolidated (and as to statement of income data only,
consolidating) statements of income, cash flows and changes in stockholders'
equity for such quarter and the portion of the fiscal year then ended of the
Company and its Subsidiaries, setting forth in each case the figures for the
corresponding periods of the previous fiscal year in comparative form, all in
reasonable detail.
8.1.3 Monthly Reports. The Company will furnish, as soon as
---------------
practicable, and in any event within thirty (30) days after the end of each
calendar month in each fiscal year of the Company, consolidated financial
statements of the Company and its Subsidiaries for and as at the end of such
month in the form customarily prepared by management for internal use.
8.1.4 Officers' Certificates. The Company will furnish, together
----------------------
with delivery of financial statements of the Company and its Subsidiaries
pursuant to Sections 8.1.1 and 8.1.2 above, a certificate of the Company and
signed by the President and chief financial officer of each of the Company (i)
to the effect that such statements have been prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
and in all material respects the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of their operations and
cash flows and changes in their stockholders' equity for the periods then ended
(but excluding, in the case of interim financial statements, normal year-end
audit adjustments), and (ii) to the effect that such officers have caused the
provisions of this Agreement, the other Transaction Agreements and the Charter
of the Company and each of its Subsidiaries to be reviewed and have no knowledge
of any Default hereunder or default thereunder, or if either such officer has
such knowledge, specifying such Default or default and the nature thereof, and
what action the Company has taken, is taking or proposes to take with respect
thereto.
8.1.5 Other Reports. The Company will furnish:
-------------
(a) As soon as available, all budgets and projections relating
to the Company or any of its Subsidiaries prepared for use by their
respective boards of directors or management.
(b) With the quarterly statements furnished pursuant to
Section 8.1.2 hereof, comparisons of actual results to budgets and
projections furnished pursuant to Section 8.1.5(a) hereof.
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(c) Promptly upon the Company's receipt thereof, copies of all
audit reports (including without limitation so-called "management
letters") submitted to the Company by independent public accountants
in connection with each annual, interim or special audit of the books
of the Company and its Subsidiaries made by such accountants.
(d) Copies of all information furnished under the Credit
Agreement and the Bridge Loan Agreement simultaneous with the
furnishing thereunder.
8.1.6 Notice of Litigation, Defaults, etc. The Company will
-----------------------------------
promptly give notice of any litigation or any administrative proceeding
(including without limitation any audit by tax authorities) to which they
or any of their Subsidiaries may hereafter become a party that involves a
potential liability equal to or greater than $250,000 (net of any amounts
for which an insurance carrier has acknowledged responsibility), or that
may otherwise result in any material adverse change in the business,
operations, assets, prospects or condition, financial or otherwise, of the
Company and its Subsidiaries. Forthwith upon any officer of the Company or
any Subsidiary obtaining knowledge of any Default hereunder, any default or
event of default under any other Transaction Agreement or under any
agreement relating to Indebtedness for money borrowed or arising under
notes or debentures or in respect of Capitalized Leases or purchase money
obligations, the Company will furnish a notice specifying the nature and
period of existence thereof and what action the Company has taken, is
taking or proposes to take with respect thereto.
8.1.7 Notices under Other Agreements. The Company will furnish
------------------------------
copies of all notices given to them or to any of their Subsidiaries
pursuant to any Transaction Agreement, or under any agreement relating to
Indebtedness for money borrowed or arising under notes or debentures or in
respect of Capitalized Leases or purchase money obligations,
contemporaneously with the receipt thereof, and will furnish copies of all
notices and reports sent by the Company or any of its Subsidiaries pursuant
to any Transaction Agreement or under any such other agreement
contemporaneously with the sending thereof.
8.2 Other Information; Management Rights. From time to time upon request
of any authorized partner, designee or officer of any original Purchaser so long
as it holds any Securities or of any Person holding in the aggregate 10% or more
of the aggregate principal amount of Notes then outstanding or holding 5% or
more of the Common Stock constituting Securities (excluding any such shares that
have been sold in a registered public offering or in a "brokers transaction"
within the meaning of Rule 144) the Company will furnish to such authorized
partner, designee or officer, and their representatives, such information
regarding the business of the Company and its Subsidiaries (including materials
furnished to the directors of the Company and its Subsidiaries at or in
connection with board meetings) as such partner, designee or officer may
reasonably request. Each such partner, designee or officer, and their
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representatives, shall have the right during normal business hours to make an
independent examination of the books and records of the Company or any of its
Subsidiaries, to make copies, notes and abstracts therefrom, and to discuss
their business, affairs and financial condition with the officers, employees and
accountants of the Company. Each such partner, designee or officer shall have
the right during normal business hours to consult with and advise the directors
and executive officers of the Company and its Subsidiaries with respect to major
policy matters, and thereby participate in the management of the Company and its
Subsidiaries; provided, however, that no such partner, designee or officer shall
thereby have any right to direct the management or policies of the Company or
any of its Subsidiaries.
9. Defaults.
9.1 Events of Default; Remedies. If any one or more of the following
events (herein referred to as "Events of Default") shall happen, that is to say:
9.1.1 The Company shall fail to make any payment in respect of (i)
the principal of or premium on any of the Notes as the same shall become
due, whether at maturity or by acceleration or otherwise, or (ii) the
interest on any of the Notes as the same shall become due and such failure
to pay interest shall continue for a period of two (2) business days; or
9.1.2 The Company or any of its Subsidiaries shall fail to perform or
observe any of the provisions of Sections 7 or 8 hereof and such failure
shall not have been rectified or cured to the reasonable satisfaction of
the Majority Holders within thirty (30) days after the occurrence of such
failure; or
9.1.3 The Company or any of its Subsidiaries shall fail to perform or
observe any other covenant, agreement or provision to be performed or
observed by it under this Agreement, any other Financing Agreement or its
Charter, and such failure shall not be rectified or cured to the reasonable
satisfaction of the Majority Holders within thirty (30) days after the
occurrence of such failure; or
9.1.4 Any representation or warranty of the Company contained in or
made at any time in connection with this Agreement or any other Financing
Agreement, including without limitation any representation or warranty
incorporated by reference in any of the foregoing, shall prove (as such
representation or warranty would read if all qualifications as to
materiality or knowledge were deleted from it) to have been false in any
material respect on any date as of which it was made; or
9.1.5 The Company or any of its Subsidiaries shall fail to make any
required payment on any Indebtedness (other than the Notes) of the Company
or any of its Subsidiaries for money borrowed or arising under notes or
debentures or in respect of Capitalized Leases or purchase money
obligations in an aggregate principal amount
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outstanding exceeding $250,000, including without limitation any
Indebtedness under the Credit Agreement or the Bridge Loan Agreement, or
the Company or any of its Subsidiaries shall fail to perform or observe any
of the material covenants or provisions contained in any Contractual
Obligation evidencing, securing, governing or otherwise relating to any
such Indebtedness, or in its Charter, or any other event shall occur or
condition exist, the effect of which failure, event or condition is (or,
with the giving of notice or the passage of time or both, would be) to
cause, or to permit the holders of any such Indebtedness (or a trustee or
agent on behalf of such holders) to cause, any such Indebtedness to become
due prior to its stated maturity, or to permit the holder of any security
to elect (other than by virtue of rights as a holder of common equity) any
director of the Company or any of its Subsidiaries; or
9.1.6 Any lien, claim, security interest or other encumbrance (a
"Lien") securing any Indebtedness of the Company or any of its Subsidiaries
in an aggregate principal amount outstanding exceeding $250,000 shall be
enforced; or
9.1.7 Any share of common stock of the Company shall be transferred
in willful violation of the Stockholders Agreement; or
9.1.8 A final judgment that, in the aggregate with other outstanding
final judgments against the Company and its Subsidiaries, exceeds $250,000
shall be rendered against the Company or any Subsidiary if, within thirty
(30) days after entry thereof, such judgment shall not have been discharged
or stayed pending appeal or good faith efforts to settle, or within thirty
(30) days after expiration of such stay such judgment shall not have been
discharged; or
9.1.9 The Company or any of its Subsidiaries shall:
(a) commence a voluntary case under Title 11 of the United
States Code as from time to time in effect, or authorize, by
appropriate proceedings of its board of directors or other governing
body, the commencement of such a voluntary case;
(b) have filed against it a petition commencing an involuntary
case under said Title 11, which petition shall not have been dismissed
or stayed within 30 days;
(c) seek relief as a debtor under any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
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(d) have entered an order by a court of competent jurisdiction
(i) finding it to be bankrupt or insolvent, (ii) ordering or approving
its liquidation, reorganization or any modification or alteration of
the rights of its creditors or (iii) assuming custody of, or
appointing a receiver or other custodian for, all or a substantial
part of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint or consent to the
appointment of a receiver or other custodian for all or a substantial
part of its property;
then and in each and every such case, subject to the subordination
agreements set forth in the Notes and the guarantee, (A) the holder or
holders of the Applicable Remedy Percentage or more in outstanding
principal amount of the Notes may proceed to protect and enforce its or
their available rights by suit in equity (including without limitation a
suit for rescission), action at law and/or other appropriate proceeding
either for specific performance of any covenant, provision or condition
contained in this Agreement or in the Notes, or in aid of the exercise of
any power granted to them in this Agreement or in the Notes, and (unless
there shall have occurred an Event of Default under Section 9.1.9 hereof,
in which case the unpaid principal amount of the Notes shall automatically
become due and payable) may by notice to the Company declare all or any
part of the unpaid principal amount of the Notes then outstanding to be
forthwith due and payable, and thereupon such unpaid principal amount or
part thereof, together with interest accrued thereon and, to the extent
permitted by law, an amount equal to any premium that would be payable on
the date of such declaration (or the soonest date thereafter on which a
voluntary prepayment would be permitted) upon a voluntary prepayment, shall
become so due and payable without presentation, protest or further demand
or notice of any kind, all of which are hereby expressly waived, and such
holder or holders may proceed to enforce payment of such amount or part
thereof in such manner as it or they may elect; and (B) any holder or
holders of the Applicable Remedy Percentage or more of the outstanding
shares of Common Stock (other than shares of Common Stock sold in a
registered public offering or to the public in a "brokers transaction"
within the meaning of Rule 144) may proceed to protect and enforce its or
their rights by suit in equity (including without limitation a suit for
rescission), action at law and/or other appropriate proceeding either for
specific performance of any covenant, provision or condition contained in
this Agreement or any term of the Charter of the Company, or in aid of the
exercise of any power granted to them in this Agreement or in the Charter
of the Company.
9.2 Annulment of Defaults. A Default or Event of Default shall not be
deemed to have occurred or to be in existence for any purpose of this Agreement
if the Majority Holders shall have expressly waived such event in writing
pursuant to Section 9.4 hereof or stated in writing that the same has been cured
to their reasonable satisfaction. No waiver pursuant to
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<PAGE>
this Section 9.2 shall extend to or affect any subsequent Default or Event of
Default or impair the rights of any holder of Securities upon the occurrence
thereof.
9.3 Waivers. The Company hereby waives to the extent not prohibited by
applicable law that cannot itself be waived (i) all presentments, demands for
performance, notices of nonperformance (except to the extent required by the
provisions hereof), protests, notices of protest, notices of intent to
accelerate and notices of dishonor in connection with any of the Notes, (ii) any
requirement of diligence or promptness on the part of any holder of Securities
in the enforcement of such holder's rights under the provisions of this
Agreement or any other Financing Agreement, (iii) any and all notices of every
kind and description that may be required to be given by any Legal Requirement
and (iv) any defense of any kind (other than payment) that The Company may now
or hereafter have with respect to its liability under this Agreement or any
other Financing Agreement.
9.4 Course of Dealing, Waiver Procedure, etc. No course of dealing
between the Company or any of its Affiliates on the one hand, and any holder of
Securities or any of such holder's Affiliates, on the other hand, nor, except as
set forth in the last sentence of this Section 9.4, any action by any holder of
Securities or any of its Affiliates, nor any action by any director (including
without limitation any director who is an authorized signatory of any holder of
Securities or a director for whose election any holder of Securities shall have
voted), shall operate as a waiver of the rights of such holder under this
Agreement, any other Financing Agreement or any Security. No delay or omission
in exercising any right under this Agreement or any other Financing Agreement
shall operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. No waiver or consent shall be binding upon any holder of
any Securities unless it is given in a writing stating that such writing is a
waiver or consent, as the case may be, given pursuant to this Section 9.4, and
signed by such one or more of the holders of the Securities as may be required
by the provisions of this Agreement.
10. Payment On Securities; Registration; Transfer.
10.1 Home Office Payment. All payments made to the Purchasers in respect
of Securities held by them shall be made in federal or other immediately
available funds in lawful money of the United States for credit, not later than
12:00 noon, New York time, to their respective accounts as set forth on Schedule
II hereto, and shall be accompanied by sufficient information to identify the
source and application thereof and instructions to give advice by telephone as
set forth on Schedule II, or in any case by such other reasonable method or at
such other address as any Purchaser shall have from time to time notified the
Company. Each Purchaser agrees that, before any Note is assigned or
transferred, such Purchaser will, at its election, surrender such Note for a new
Note as provided in Section 10.2 hereof, or make or cause to be made a notation
thereon of principal payments previously made and of the date to which interest
thereon has been paid and notify the Company of the name and address of the
transferee of such Note.
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<PAGE>
10.2 Registration, Transfer and Exchange of Notes.
10.2.1 Notes Register. The Company shall keep at its principal
--------------
office a register in which shall be entered the names and addresses of the
registered holders of the Notes and particulars of the respective Notes
held by them and of all transfers of such Notes. References to the "holder"
or "holder of record" of any Note shall mean the payee thereof unless the
payee shall have presented such Note to the Company for transfer and the
transferee shall have been entered in said register as a subsequent holder,
in which case the terms shall mean such subsequent holder. The ownership of
the Notes shall be proven by such register.
10.2.2 Transfer. The holder of any of the Notes may at any time and
--------
from time to time prior to maturity or redemption thereof surrender any
Note held by it for exchange or (subject to compliance with the applicable
provisions of Section 11 hereof) transfer at said office of the Company.
Within a reasonable time thereafter and without expense (other than
transfer taxes, if any) to such holder, the Company shall issue, at its
expense, in exchange therefor another Note or Notes, dated the date to
which interest has been paid on the surrendered Note, for the same
aggregate principal amount as the principal amount of the Note or Notes so
surrendered, having the same maturity and rate of interest, containing the
same provisions and subject to the same terms and conditions as the Note or
Notes so surrendered. Each such new Note shall be in the denominations and
registered in the name of such Person or Persons as the holder of such
surrendered Note or Notes may designate in writing, and such exchange shall
be made in a manner such that no additional or lesser amount of principal
or interest shall result. The Company will pay shipping and insurance
charges, from and to each holder's principal office, involved in the
exchange or transfer of any Note.
10.2.3 Registration. Each Note issued hereunder, whether originally
------------
or in substitution for, or upon transfer or exchange of, any Note shall be
registered on the date of execution thereof by the Company. The registered
holder of record shall be deemed to be the owner of the Note for all
purposes of this Agreement and, subject to the provisions hereof, shall be
entitled to the principal, premium, if any, and interest evidenced by such
Note free from all equities or rights of set-off or counterclaim between
the Company and the transferor of such holder of record or any previous
holder of record thereof. All notices given hereunder to the holder of
record shall be deemed validly given if given in the manner specified in
Section 18 hereof.
10.3 Transfer and Exchange of Common Stock. The Company shall keep at its
principal office a register in which shall be entered the names and addresses of
the holders of shares of Common Stock issued by it and particulars of the Common
Stock held by them and of all transfers of such Common Stock. Upon surrender at
such office of any certificate representing shares of Common Stock for
registration of exchange or (subject to compliance
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<PAGE>
with the applicable provisions of Section 11 hereof) transfer, the Company shall
issue, at its expense, one or more new certificates, in such denomination or
denominations as may be requested, for shares of such Common Stock, and
registered as such holder may request. Any certificate representing shares of
Common Stock surrendered for registration of transfer shall be duly endorsed, or
accompanied by a written instrument of transfer duly executed by the holder of
such certificate or his attorney duly authorized in writing.
10.4 Replacement of Securities. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Note or certificate evidencing Common Stock and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity bond in such reasonable
amount as the Company may determine (or, in the case of any Security held by any
Purchaser or another institutional holder or such Purchaser's or holder's
nominee, of an unsecured indemnity agreement from such Purchaser or such other
holder reasonably satisfactory to the Company), or, in the case of any such
mutilation, upon the surrender of such Security for cancellation to The Company
at its principal office, the Company at its expense will execute and deliver, in
lieu thereof, a new Note or certificate of like tenor, dated in the case of a
Note so that there will be no loss of interest. Any Security in lieu of which
any such new Security has been so executed and delivered by the Company shall
not be deemed to be an outstanding Security for any purpose of this Agreement.
11. Restrictions On Transfer. All Securities acquired by the Purchasers
hereunder and all securities issued in exchange therefor or upon transfer
thereof ("Restricted Securities") shall be transferable only upon satisfaction
of the conditions specified in this Section 11.
11.1 Restrictive Legend. Except as otherwise permitted by this Section 11,
each Note shall bear a legend in substantially the form set forth below, as the
case may be, and each certificate representing Common Stock shall bear a legend
in the form specified in the Stockholders Agreement.
"This Note has not been registered under the Securities Act of 1933, as
amended, and may not be sold or otherwise transferred in the absence of
such registration or an exemption therefrom under such Act. Furthermore,
this Note may be sold or otherwise transferred only in compliance with the
conditions specified in the Merger Financing Agreement hereinafter referred
to, a complete and correct copy of which is available for inspection at the
principal office of the issuer of this Note and will be furnished without
charge to the holder of this Note upon written request."
11.2 Notice of Proposed Transfer; Opinions of Counsel. Prior to any
transfer of any Restricted Securities that are not registered under an effective
registration statement under the Securities Act (other than a transfer pursuant
to Rule 144 under the Securities Act), the holder thereof will give written
notice to the Company of such holder's intention to effect such transfer,
describing in reasonable detail the manner of the proposed transfer. If any
such holder delivers to the Company an opinion of Ropes & Gray or other counsel
reasonably
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<PAGE>
acceptable to the Company to the effect that the proposed transfer may be
effected without registration of such Restricted Securities under the Securities
Act and the written agreement of the proposed transferee to be bound by all of
the terms and conditions contained in this Agreement and the Stockholders
Agreement and applicable to the Purchasers, such holder shall thereupon be
entitled, within 60 days thereafter, to transfer such Restricted Securities in
accordance with the terms of the notice delivered by such holder to the Company.
11.3 Termination of Restrictions. The restrictions imposed by Section 11.2
hereof upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (i) when, in the opinion of
Ropes & Gray or other counsel reasonably acceptable to the Company, such
restrictions are no longer required in order to ensure compliance with the
Securities Act or (ii) when such Restricted Securities shall have been
effectively registered under the Securities Act or transferred pursuant to Rule
144. Whenever (i) such restrictions shall cease and terminate as to any
Restricted Securities or (ii) such Security shall be transferable under
paragraph (k) of Rule 144, the holder thereof shall be entitled to receive from
The Company, without expense, (a) in the case of Notes, new Notes of like tenor
not bearing the legend set forth in Exhibit 2.1(a) hereto, as the case may be,
or (b) in the case of Common Stock, new certificates not bearing the legend
referred to in Section 11.1 hereof.
12. Definitions Reference Table. The following terms defined elsewhere in this
Agreement in the Sections set forth below shall have the respective meanings
therein defined:
<TABLE>
<CAPTION>
Term Definition
---- ----------
<S> <C>
"Additional Taxes" Section 7.2.2
"Bank" Recital 3
"Closing" Recital 4
"Bridge Loan Agreement" Recital 3
"Closing Date" Recital 4
"Common Stock" Recital 2.2
"The Company" Preamble
"Credit Agreement" Recital 3
"Event of Default" Section 9.1
"Financing" Recital 2
"holder" Section 10.2.1
"holder of record" Section 10.2.1
"indemnified liabilities" Section 14
"indemnitees" Section 14
"Indemnity Note" Recital 3
"Indemnity Note Letter of Credit" Recital 3
"ISI Warrant" Recital 4.2
"Lien" Section 9.1.6
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Management Stockholders" Recital 3
"Management Subscription Agreement" Recital 3
"Merger" Recital 3
"Merger Agreement" Recital 1
"Merger Certificate" Recital 3
"Notes" Recital 2
"Omega" Recital 2
"Option Plan" Recital 3
"Purchasers" Preamble
"Restricted Securities" Section 11
"Securities" Recital 2
"Stockholders Agreement" Recital 3
"Tax Compensation Amount" Section 7.2.2
"Transaction Agreements" Recital 3
</TABLE>
13. Additional Definitions.
13.1 "Affiliate" shall mean, with respect to any specified Person, (i)
---------
any Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person or any of its Subsidiaries,
(ii) any Person who is or has been within five years an officer, director or
direct or indirect beneficial holder of at least 5% of any class of the
outstanding capital stock of such specified Person or any of its Subsidiaries,
(iii) any Person of which such specified Person or an Affiliate (as defined in
clause (i) or (ii) above) thereof shall, directly or indirectly, beneficially
own at least 5% of any class of outstanding capital stock or other evidence of
beneficial interest, (iv) in the event that such specified Person is BCC or any
Purchaser, any general or limited partner or advisory board member of any
Purchaser and any general or limited partner of any partner of any Purchaser and
(v) Members of the Immediate Family of any of the foregoing; provided, however,
that neither BCC, nor any Purchaser, nor any Person that, absent the investment
of the Purchasers in the Securities, would be an Affiliate (as defined by the
provisions of this Section 14.1 other than this proviso) of BCC or any Purchaser
shall be an Affiliate of the Company or any of its Subsidiaries for the purposes
of this Agreement or any other Contractual Obligation incorporating this
definition by reference; and provided, further, that no Person shall for the
purpose of this Agreement or any other Contractual Obligation incorporating this
definition by reference be an Affiliate of BCC or any Purchaser unless such
Person would, absent the investment of the Purchasers in the Securities, be an
Affiliate (as defined by the provisions of this Section 14.1 other than this
proviso) thereof; provided, further, no Person shall be deemed to be an
Affiliate of another Person solely by reason of the fact that control is
exercised over the former by the latter pursuant to a Contractual Obligation
arising in the ordinary course of business.
13.2 "Applicable Remedy Percentage" shall mean greater than fifty percent
----------------------------
(50.0%).
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<PAGE>
13.3 "BCC" shall mean Butler Capital Corporation, a New York corporation.
---
13.4 "By-laws" shall mean all written rules, regulations and by-laws, and
-------
all other documents (other than the Charter), relating to the management,
governance or internal regulation of a Person (other than an individual) or
interpretative of the Charter of such Person, each as from time to time in
effect.
13.5 "Capitalized Lease" shall mean any lease that is or should be
-----------------
capitalized on the balance sheet of the lessee in accordance with generally
accepted accounting principles.
13.6 "Capitalized Lease Obligations" shall mean the amount of the
-----------------------------
liability reflecting the aggregate discounted amount of future payments under
all Capitalized Leases calculated in accordance with generally accepted
accounting principles.
13.7 "Charter" shall mean the certificate or articles of incorporation or
-------
organization, statute, constitution, joint venture or partnership agreement or
articles or other charter documents of any Person (other than an individual),
each as from time to time in effect.
13.8 "Code" shall mean the federal Internal Revenue Code of 1986 or any
----
successor statute, and the rules and regulations thereunder, and in the case of
any referenced section of any such statute, rule or regulation, any successor
section thereof, collectively and as from time to time amended and in effect.
13.9 "Commission" shall mean the Securities and Exchange Commission or
----------
any other federal agency at the time administering the Securities Act or the
Exchange Act.
13.10 "Compensation," as applied to any Person, shall mean the
------------
aggregate of all salaries, compensation, remuneration or bonuses of any
character, and medical, surgical, dental, hospital, disability, unemployment,
retirement, pension, profit sharing, vacation, insurance or fringe benefits of
any kind, or other payments of any kind whatsoever made directly or indirectly
by the Company or any of its Subsidiaries to such Person, Members of the
Immediate Family of such Person or Affiliates of such Person.
13.11 "consolidated" and "consolidating," when used with reference to
------------ -------------
any term, shall mean that term as applied to the accounts of the Company and its
Subsidiaries or such of their respective Subsidiaries as may be specified,
consolidated in accordance with generally accepted accounting principles, and
with appropriate deductions for minority interests in Subsidiaries.
13.12 "Contractual Obligation" shall mean, with respect to any Person,
----------------------
any contract, agreement, deed, mortgage, lease, license, other instrument,
commitment,
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<PAGE>
undertaking, written or oral, or other document, including without limitation
any Charter or By-law provisions and any document or instrument evidencing
Indebtedness, to which or by which such Person is a party or otherwise subject
or bound or to which or by which any property or asset of such Person is subject
or bound.
13.13 "Default" shall mean an Event of Default as defined in Section 9.1
-------
hereof or an event or condition that with the passage of time or giving of
notice, or both, would, absent cure, become such an Event of Default.
13.14 "Enforceable" shall mean, with respect to any Contractual
-----------
Obligation, that such Contractual Obligation is the legal, valid and binding
obligation of the Person in question, enforceable against such Person in
accordance with its terms, except to the extent that enforcement of the rights
and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
13.15 "ERISA" shall mean the federal Employee Retirement Income Security
-----
Act of 1974 or any successor statute, and the rules and regulations thereunder,
and in the case of any referenced section of any such statute, rule or
regulation, any successor section thereto, collectively and as from time to time
amended and in effect.
13.16 "Exchange Act" shall mean the Securities Exchange Act of 1934 or any
------------
successor federal statute, and the rules and regulations of the Commission
thereunder, and in the case of any referenced section of any such statute, rule
or regulation, any successor section thereto, collectively and as from time to
time amended and in effect.
13.17 "Financing Agreements" shall mean this Agreement, the Notes, and any
--------------------
other present or future agreements relating to this Agreement from time to time
entered into between the Company or its Subsidiaries and the holders of any
Securities or that is stated to be a Financing Agreement, as from time to time
amended or modified, and all statements, reports or certificates delivered by
the Company or any of its Subsidiaries to such holders in connection herewith or
therewith.
13.18 "generally accepted accounting principles" shall mean generally
----------------------------------------
accepted accounting principles, as defined by the Financial Accounting Standards
Board.
13.19 "Guarantee" shall mean (i) any guarantee of the payment or
---------
performance of, or any contingent obligation in respect of, any Indebtedness or
other obligation of any other Person, (ii) any other arrangement whereby credit
is extended to one obligor on the basis of any promise or undertaking of another
, (A) to pay the Indebtedness of such obligor, (B) to purchase any obligation
owed by such obligor, (C) to purchase or lease assets (other than inventory in
the ordinary course of business) under circumstances that
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<PAGE>
would enable such obligor to discharge one or more of its obligations, or (D) to
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not such arrangement is disclosed in the balance
sheet of such other or is referred to in a footnote thereto, and (iii) any
liability as general partner of a partnership or as a venturer in a joint
venture in respect of Indebtedness or other obligations of such partnership or
venture.
13.20 "Indebtedness" shall mean all obligations, contingent or otherwise,
------------
that in accordance with generally accepted accounting principles would be
required to be presented upon the obligor's balance sheet as liabilities, but in
any event including liabilities secured by any Lien existing on property owned
or acquired by the obligor or a Subsidiary thereof, whether or not the liability
secured thereby shall have been assumed, Capitalized Lease Obligations and all
Guarantees, endorsements and other contingent obligations in respect of
Indebtedness of others.
13.21 "Investment" shall mean (i) any share of capital stock, evidence of
----------
Indebtedness or other security issued by any other , (ii) any loan, advance, or
extension of credit to, or contribution to the capital of, any other Person,
(iii) any purchase of the securities or an interest in the assets constituting a
business or a discrete part of a business of any other Person, or commitment or
option to make such purchase if, in the case of an option, the consideration
therefor exceeds ten percent of the value of the securities or assets subject
thereto, and (iv) any other investment; provided, however, that the term
"Investment" shall not include (A) current trade and customer accounts
receivable arising in the ordinary course of business and payable in accordance
with customary trade terms or prepaid assets arising in the ordinary course of
business, (B) advances to employees for travel expenses, drawing accounts and
similar expenditures, (C) stock or other securities acquired in connection with
the satisfaction or enforcement of Indebtedness or claims due or owing to the
Company or any of its Subsidiaries or as security for any such Indebtedness or
claim, or (D) demand deposits in banks or trust companies. The amount of an
Investment outstanding at any time shall be determined in accordance with
generally accepted accounting principles; provided, however, that no Investment
shall be increased as a result of an increase in the undistributed retained
earnings of the Person in whom an Investment was made or decreased as a result
of an equity interest in the losses of any such Person.
13.22 "Legal Requirement" shall mean any federal, state, local or foreign
-----------------
law, statute, standard, ordinance, code, order, rule, regulation, resolution,
promulgation, or any order, judgment or decree of any court, arbitrator,
tribunal or governmental authority, or any license, franchise, permit or similar
right granted under any of the foregoing, or any similar provision having the
force and effect of law.
13.23 "Majority Holders" shall mean, with respect to any class(es) or
----------------
type(s) of Securities issued hereunder, the holder or holders at the relevant
time of more than fifty percent (50%) of the outstanding principal amount or the
number of outstanding shares, as
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<PAGE>
the case may be, of the specified class(es) or type(s) of Securities or, if no
class or type is specified, the holder or holders at the relevant time of each
of (i) more than fifty percent (50.0%) in outstanding principal amount of the
Notes and (ii) more than fifty percent (50.0%) of the outstanding shares of
Common Stock constituting Securities (excluding any such shares that have been
sold in a registered public offering or in a "brokers transaction" within the
meaning of Rule 144).
13.24 "Material Adverse Effect" means any adverse effect on the business,
-----------------------
operations, assets, prospects or condition, financial or otherwise, of the
Company and its Subsidiaries (on a consolidated basis) that, when considered
together with all other adverse changes and effects with respect to which such
phrase is used in this Agreement, would be material to the business, operations,
assets, prospects or condition, financial or otherwise, of the Company and its
Subsidiaries (on a consolidated basis).
13.25 "Members of the Immediate Family" shall mean, with respect to any
-------------------------------
individual, each spouse, parent, brother, sister or child of such individual,
each spouse of any such Person, each child of any of the aforementioned Persons,
each trust created in whole or in part for the benefit of one or more of such
Persons and each custodian or guardian of the property of one or more such
Persons.
13.26 "Person" shall mean any individual, partnership, corporation, the
------
Company, association, trust, joint venture, unincorporated organization, entity
or division, or any government, governmental department or agency or political
subdivision thereof.
13.27 "Rule 144" shall mean Rule 144 of the rules and regulations of the
--------
Commission promulgated under the Securities Act, and any successor rule or
regulation thereto, and in the case of any referenced section of such rule, any
successor section thereto, collectively and as from time to time amended and in
effect.
13.28 "Securities Act" shall mean the Securities Act of 1933 or any
--------------
successor federal statute, and the rules and regulations of the Commission
thereunder, and in the case of any referenced section of any such statute, rule
or regulation, any successor section thereto, collectively and as from time to
time amended and in effect.
13.29 "Subsidiary" shall mean any Person of which the Company or other
----------
specified Person shall at the time own directly or indirectly through a
Subsidiary at least a majority of the outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally or at least a majority of the
partnership, joint venture or similar interests, or in which the Company or
other specified Person is a general partner or joint venturer without limited
liability.
13.30 "Tax Liabilities" shall mean all liabilities (absolute, accrued,
---------------
contingent, determined or determinable) in respect of (i) any taxes (including
without limitation taxes
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<PAGE>
required to be withheld from employees' salaries and other withholding taxes and
obligations and all deposits required to be made with respect to such
withholding taxes or otherwise) arising under any Legal Requirement or (ii) any
interest, penalties, assessments, additions to tax or deficiencies arising in
connection with any such taxes.
13.31 "Wholly Owned Subsidiary" shall mean any Subsidiary all of the
-----------------------
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally other than directors' qualifying shares is owned by the Company
or other specified Person, directly or indirectly through a Wholly Owned
Subsidiary.
14. Expenses, Etc. Whether or not any of the transactions contemplated by
this Agreement and the other Transaction Agreements shall be consummated, the
Company agrees to pay, or to cause its Subsidiaries to pay, on demand, all
expenses and costs in connection with such transactions and operations hereunder
and thereunder, including without limitation (i) the reasonable fees and
expenses of counsel to the Purchasers arising in connection with the
preparation, negotiation and execution of this Agreement and the other
Transaction Agreements and the consummation of the transactions contemplated
hereby and thereby, (ii) the reasonable fees and expenses of accountants,
consultants and other professionals engaged by the Purchasers or BCC in
connection with consummation of such transactions, (iii) the out-of-pocket and
overhead expenses incurred by any Purchaser or BCC in connection with the
consummation of such transactions, the providing of any consulting or other
services to the Company or any of its Subsidiaries or the attendance at any
meeting of the board of directors (or any committee thereof) of the Company or
any of its Subsidiaries, (iv) all Tax Liabilities (other than Tax Liabilities
based upon or measured by income), including without limitation recording or
filing fees and sales, transfer and documentary stamp and other similar Tax
Liabilities, at any time payable in respect of any Security or this Agreement,
any other Transaction Agreement or any of the transactions contemplated hereby
or thereby, (v) all expenses (including without limitation reasonable attorneys'
fees and expenses) incurred in respect of the exercise or performance, or the
preservation or enforcement, of any right granted to any holder of Securities
hereunder or under any other Transaction Agreement, and (vi) all expenses
(including without limitation reasonable attorneys' fees and expenses) in
connection with any amendments or waivers of, or consents under, this Agreement
or any other Transaction Agreement (whether or not the same becomes effective).
In consideration of the execution, delivery and performance of this
Agreement by the Purchasers, the Company hereby agrees to indemnify, exonerate
and hold, and to cause each of its Subsidiaries, jointly and severally, to
indemnify, exonerate and hold each Purchaser and BCC and each of their
respective partners, officers, directors, advisory board members, employees and
agents (collectively, the "indemnitees") free and harmless from and against any
and all actions, causes of action, suits, losses, liabilities and damages, and
expenses in connection therewith, including without limitation reasonable
attorneys' fees and disbursements (collectively, the "indemnified liabilities"),
incurred by the
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<PAGE>
indemnitees or any of them as a result of, or arising out of, or relating to any
transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Securities, or the
execution, delivery, performance or enforcement of this Agreement or any other
Transaction Agreement, or the service of any indemnitee as an officer or
director of the Company or any of its Subsidiaries, or any litigation or
investigation instituted by any governmental agency or any other Person and
involving the Company, any Affiliate of the Company or any indemnitee, except
for any such indemnified liabilities arising on account of any indemnitee's
gross negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make, and to cause each of its Subsidiaries to make, the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities that is permissible under applicable law.
The obligations of the Company and its Subsidiaries under this Section 15
shall survive payment for or transfer of any or all of the Securities.
15. Limited Liability of Partners. The Company agrees that it will not, nor
will any of its Subsidiaries or Affiliates, hold any of the partners of any
Purchaser or any other holder of any Security to any personal liability,
including any liability for obligations arising under or in connection with this
Agreement, the other Transaction Agreements, or the transactions contemplated
hereby or thereby.
16. Notices. Any notice or other communication in connection with this
Agreement, any other Financing Agreement or the Securities shall be effective
only if given in writing (or in the form of a telex or telecopy) addressed as
provided below and either (i) actually delivered at said address or (ii) in the
case of a letter, seven business days shall have elapsed after the same shall
have been deposited in the United States mails, postage prepaid and registered
or certified:
If to the Company, to it at the following address:
1205 Peters Drive
Waterloo, Iowa 50703
Attention: Chief Executive Officer
Telecopy: 319-235-5827
or at such other address as the Company shall have specified by notice actually
received by the addressor, with a copy to:
Butler Capital Corporation
767 Fifth Avenue, 6th Floor
New York, New York 10153
Attention: Costa Littas
-27-
<PAGE>
Telecopy: 212-759-0876
If to any Purchaser, to it at its address set forth on Schedule II hereof,
or at such other address as such Purchaser shall have specified by notice
actually received by the addressor, with a copy to Ropes & Gray, One
International Place, Boston, Massachusetts, 02110-2624, Attention: R. Newcomb
Stillwell, Esq., Telecopy: 617-951-7050.
If to any other holder of record of any Security, to it at its address set
forth in the register referred to in Section 10 hereof.
17. Survival of Covenants, Etc. All covenants, agreements, representations and
warranties made herein or in any other document referred to herein or delivered
to any Purchaser pursuant hereto shall be deemed to have been material and
relied upon by such Purchaser, notwithstanding any investigation made by such
Purchaser or on its behalf, and shall survive the execution and delivery to such
Purchaser of this Agreement and of the Securities.
18. Amendments and Waivers. Except as otherwise explicitly provided herein, any
term of this Agreement or of the Notes may be amended, and the observance of any
term of this Agreement or of the Notes may be waived, and any consent may be
granted hereunder (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Majority Holders; provided, however, that no such amendment or waiver
shall (i) reduce the percentage of any type of Securities the holders of which
are required to consent to any such amendment or waiver, (ii) increase the
percentage of the holders of such type of Securities required to exercise the
remedies provided in Section 8.1 hereof, (iii) decrease the percentage of the
holders of such type that may annul any Event of Default as provided in Section
8.2 hereof or (iv) reduce the principal amount of, or reduce the rate of
interest on, or reduce the amount of premium payable on any prepayment of, such
type of Securities, without in each case the prior written consent of all
holders of such type of Securities (other than Securities sold in a registered
public offering or in a "brokers transaction" within the meaning of Rule 144).
Any amendment or waiver effected in accordance with this Section 18 or consent
given pursuant to this Section 18 shall be binding upon the Company and each
holder of any Security.
19. Consent to Jurisdiction; Jury Trial Waiver.
19.1 Consent to Jurisdiction. The Company by its execution hereof (i)
hereby irrevocably submits, and agrees to cause each of its Subsidiaries to
submit, to the exclusive jurisdiction of the federal and state courts of the
State of Delaware (provided that any Purchaser may bring any such action, suit
or proceeding against the Company in any jurisdiction in which the Company is
subject to personal jurisdiction) for the purpose of any suit, action or other
proceeding out of or based upon this Agreement or any other
-28-
<PAGE>
Transaction Agreement or the subject matter hereof or thereof, and (ii) hereby
waives, and agrees to cause each of its Subsidiaries to waive, to the extent not
prohibited by applicable law, and agrees not to assert, and agrees not to allow
any of its Subsidiaries to assert, by way of motion, as a defense or otherwise,
in any such proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that any such proceeding brought in one of the
above-named courts is improper, or that this Agreement or any other Transaction
Agreement, or the subject matter hereof or thereof may not be enforced in or by
such court. The Company hereby consents to service of process in any such
proceeding in any manner permitted by Delaware law, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 16 hereof is reasonably calculated to give
actual notice.
19.2 Waiver of Jury Trial. To the extent not prohibited by applicable law
that cannot be waived, each of the Purchasers and the Company hereby waives, and
agrees to cause each of its Subsidiaries to waive, and covenants that neither it
nor any of its Subsidiaries will assert (whether as plaintiff, defendant or
otherwise) any right to trial by jury in any forum in respect of any issue,
claim, demand, action or cause of action arising out of or based upon this
Agreement or any other Transaction Agreement or the subject matter hereof or
thereof or any Financing Obligation or in any way connected with or related or
incidental to the dealings of any Purchaser, the Company or any of its
Subsidiaries in connection with any of the above, in each case whether now
existing or hereafter arising and whether in contract or tort or otherwise. The
Company acknowledges that it has been informed by the Purchasers that this
Section 19.2 constitutes a material inducement upon which the Purchasers are
relying and will rely in entering into this Agreement and any other present or
future Financing Agreements. The Company or any Purchaser may file an original
counterpart or a copy of this Section 19.2 with any court as written evidence of
the consent of the Company and each Purchaser to the waiver of its right to
trial by jury.
20. Choice of Law; Miscellaneous. This Agreement may be executed in any number
of counterparts each of which shall be an original but which together shall
constitute one instrument, which shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction, and shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns. Immediately after the consummation of
the Merger, Holdings, as successor to the obligations of the Company under this
Agreement and the other Financing Agreements, will execute this Agreement and
cause Omega to execute this Agreement. In addition, immediately after the
consummation of the Merger, Holdings will cause Omega to deliver to each
Purchaser a guaranty of the obligations of the Company in respect of the Notes
held by such Purchaser in the form included in Exhibit 2.1(a). This Agreement
and the other Financing Agreements and
-29-
<PAGE>
Transactions Agreements set forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby. In the event that any
provision hereof would, under applicable law, be invalid or unenforceable, such
provision shall, to the extent permitted under applicable law, be construed by
modifying or limiting it so as to be valid and enforceable to the maximum extent
possible under applicable law. The provisions of this Agreement are severable,
and in the event that any provision hereof should be held invalid or
unenforceable in any respect, it shall not invalidate, render unenforceable or
otherwise affect any other provision hereof. The headings in this Agreement are
for convenience of reference only and shall not alter or otherwise affect the
meaning hereof. In addition, whether or not any express assignment has been
made, the provisions of this Agreement that are for the benefit of any Purchaser
as the holder of any Security shall also inure to the benefit of, and be
enforceable by, all subsequent holders of such Securities, except where
reference is explicitly made only to the original Purchasers or expressly not
assigned; and any provision of this Agreement referring to a specified
percentage of any Security held by the Purchasers shall also be deemed to refer
to any holder or holders of such specified percentage of such Security, except
as otherwise expressly provided herein.
[SPACE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound by
the terms hereof, have hereunto set their hands, under seal, as of the date
first above written.
OMEGA MERGER CORP.
By
---------------------------------
Title:
OMEGA HOLDINGS, INC.
By
---------------------------------
Title:
OMEGA CABINETS, LTD.
By
---------------------------------
Title:
MEZZANINE LENDING ASSOCIATES III, L.P.
By: Mezzanine Lending Management III, L.P.
By
---------------------------------
General Partner
-31-
<PAGE>
Schedule I
Schedule of Purchasers and Securities
<TABLE>
<CAPTION>
Purchaser Security Price
--------- -------- -----
<S> <C> <C>
Mezzanine Lending Associates III, L.P. $10 million principal $10,000,000
amount 11% note
61,865 Shares of $61,865,000
Common Stock
</TABLE>
-32-
<PAGE>
Schedule II
Schedule of Purchasers, Addresses and Home Office Payments
<TABLE>
<CAPTION>
Purchaser Depository Institution Account No. Telephone Advice
- --------- ---------------------- ----------- ----------------
<S> <C> <C> <C>
Mezzanine Lending Chase Manhattan #479-92600 Christine Olivenia
Associates III, L.P. Bank, N.A. 212-388-5106
767 Fifth Avenue
Sixth Floor
New York, NY 10153
</TABLE>
-33-
<PAGE>
Exh.10.8
1997 OMEGA HOLDINGS, INC.
DEFERRED COMPENSATION PLAN
Effective June 13, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Purpose...................................................................1
ARTICLE 1
Definitions.................................................... 1
ARTICLE 2
Commencement of Participation.................................. 3
2.1 Commencement of Participation......................... 3
ARTICLE 3
Taxes.......................................................... 3
3.1 FICA and Other Taxes.................................. 3
ARTICLE 4
Unforeseeable Financial Emergencies............................ 4
4.1 Distribution for Unforeseeable Financial Emergencies.. 4
ARTICLE 5
Benefits Prior to Termination of Employment.................... 4
5.1 Cash Benefits......................................... 4
ARTICLE 6
Termination Benefit............................................ 4
6.1 Benefit Payable in Shares............................. 4
6.2 Cash Benefits......................................... 5
ARTICLE 7
Stockholders Agreement......................................... 5
7.1 Deferral of Share Benefit During Lock-Up Period....... 5
ARTICLE 8
Beneficiary Designation........................................ 5
8.1 Beneficiary........................................... 5
8.2 Beneficiary Designation; Change; Spousal Consent...... 5
8.3 Acknowledgment........................................ 6
8.4 No Beneficiary Designation............................ 6
8.5 Doubt as to Beneficiary............................... 6
8.6 Discharge of Obligations.............................. 6
ARTICLE 9
Leave of Absence............................................... 6
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.1 Leave of Absence...................................... 6
ARTICLE 10
Amendment or Modification...................................... 6
10.1 Amendment............................................. 6
10.2 Effect of Payment..................................... 7
ARTICLE 11
Administration................................................. 7
11.1 Committee Duties...................................... 7
11.2 Agents................................................ 7
11.3 Binding Effect of Decisions........................... 7
11.4 Indemnity of Committee................................ 7
11.5 Employee Information.................................. 7
ARTICLE 12
Other Benefits and Agreements.................................. 8
12.1 Coordination with Other Benefits...................... 8
ARTICLE 13
Claims Procedures.............................................. 8
13.1 Presentation of Claim................................. 8
13.2 Notification of Decision.............................. 8
13.3 Review of a Denied Claim.............................. 9
13.4 Decision on Review.................................... 9
13.5 Legal Action.......................................... 10
ARTICLE 14
Rabbi Trust.................................................... 10
14.1 Establishment of the Rabbi Trust...................... 10
14.2 Interrelationship of the Plan and the Rabbi Trust..... 10
14.3 Distributions From the Rabbi Trust.................... 10
ARTICLE 15
Miscellaneous.................................................. 10
15.1 Unsecured General Creditor............................ 10
15.2 Company's Liability................................... 10
15.3 Nonassignability...................................... 10
15.4 Not a Contract of Employment.......................... 11
15.5 Furnishing Information................................ 11
15.6 Terms................................................. 11
15.7 Captions.............................................. 11
15.8 Governing Law......................................... 11
15.9 Notice................................................ 11
15.10 Successors............................................ 12
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
15.11 Spouse's Interest..................................... 12
15.12 Validity.............................................. 12
15.13 Incompetence.......................................... 12
15.14 Court Order........................................... 12
</TABLE>
-iii-
<PAGE>
1997 OMEGA HOLDINGS, INC.
DEFERRED COMPENSATION PLAN
Effective June 13, 1997
Purpose
The purpose of this Plan is to provide specified benefits to those
Employees and Directors of Omega Holdings, Inc. (the "Company") and its
subsidiaries whose options to purchase Company stock are canceled as a result of
the merger of Omega Merger Corp. ("Merger Corp.") with and into the Company (the
"Merger") pursuant to the Agreement and Plan of Merger, dated April 28, 1997, as
amended, by and among the Company, the stockholders of the Company and Omega
Merger Corp. (the "Merger Agreement"). The benefits provided by the Plan
represent the unsecured obligation of the Company. The Plan is intended to be
unfunded for tax purposes and for purposes of Title I of ERISA. The Company has
established the Rabbi Trust, which is subject to the claims of general creditors
of the Company. The Rabbi Trust will hold Shares of the Company and may from
time to time dispose of Shares of the Company. Separate book-keeping accounts
within a single trust will be maintained for each Participant under the Plan,
which accounts are intended to reflect the obligation of the Company to
distribute cash and shares of Company stock to each Participant. The Rabbi
Trust may, at the direction of the Company, itself make such distributions to
satisfy the obligations of the Company under this Plan. This Plan does not
provide for elective deferrals by Participants.
ARTICLE 1
Definitions
-----------
Unless otherwise indicated, capitalized terms not defined herein have
the meanings set forth in the Merger Agreement. For purposes hereof, unless
otherwise clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
1.1 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 8, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.2 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.3 "Board" shall mean the board of directors of the Company.
-1-
<PAGE>
1.4 "Cash Account Balance" shall mean, with respect to any Participant as of
any determination date, an amount denominated in U.S. dollars equal to
the following as of such determination date (i) an amount equal to the
principal and interest payments received by the Rabbi Trust on the
Promissory Note, if any, to the extent held for the account of the
Participant, plus (ii) an amount equal to any dividends on, or proceeds
of sale of, the Shares received by the Rabbi Trust and allocated to the
account of the Participant, less (iii) all cash distributions made to
the Participant under the Plan.
1.5 "Claimant" shall have the meaning set forth in Section 13.1.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as may be amended
from time to time.
1.7 "Committee" shall mean the committee described in Article 11.
1.8 "Company" shall mean Omega Holdings, Inc.
1.9 "Disability" shall mean the permanent disability of a Participant. A
Participant shall be determined to have incurred a "Disability" if he or
she is determined to be disabled under the long-term disability policy
carried by the Company or any Subsidiary that covers such Participant
or, if there is no such policy, by the Board in good faith.
1.10 "Employee" shall mean a person who is an employee of the Company or any
of its subsidiaries.
1.11 "Employers" shall mean the Company or any of its subsidiaries that
employs any Employees.
1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.13 "Participant" shall mean any Employee (i) whose options are canceled
pursuant to Section 1.5(b)(ii) of the Merger Agreement and (ii) who has
timely executed the Sixth Amendment of the Merger Agreement. A spouse
or former spouse of a Participant shall not be treated as a Participant
in the Plan, even if he or she has an interest in the Participant's
benefits under the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.14 "Plan" shall mean this 1997 Omega Holdings, Inc. Deferred Compensation
Plan.
-2-
<PAGE>
1.15 "Rabbi Trust" shall mean the trust established by the Company pursuant
to the Rabbi Trust Agreement, dated as of June 13, 1997, between the
Company and the Trustee, as amended from time to time.
1.16 "Share Account Balance" shall mean, with respect to any Participant as
of any determination date, an amount denominated in Shares, equal to the
following as of such determination date (i) the number of Shares issued
to the Rabbi Trust pursuant to Section 1.5(b)(ii)(C) of the Merger
Agreement and allocated to the account of the Participant, minus (ii)
the sum of (A) the number of Shares so held and allocated that have been
sold by the Rabbi Trust and (B) the number of Shares distributed to the
Participant pursuant to the Plan.
1.17 "Termination Benefit" shall mean the benefit set forth in Article 6.
1.18 "Termination of Employment" or "Terminate Employment" shall mean the
cessation of employment with all Employers, voluntarily or
involuntarily, for any reason, including retirement and Disability.
1.19 "Trustee" shall mean the trustee of the Rabbi Trust.
1.20 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
ARTICLE 2
Commencement of Participation
-----------------------------
2.1 Commencement of Participation. Participation in the Plan shall commence
-----------------------------
immediately after the Merger.
ARTICLE 3
Taxes
-----
3.1 FICA and Other Taxes. The Company or the Trustee shall withhold from
--------------------
any payments made to a Participant, either pursuant to this Plan or otherwise,
such federal, state and local income, employment and other taxes that are
required to be paid in connection with payments or accruals under this Plan, in
amounts and in a manner to be determined in the sole discretion of the Company.
-3-
<PAGE>
ARTICLE 4
Unforeseeable Financial Emergencies
-----------------------------------
4.1 Distribution for Unforeseeable Financial Emergencies. If the
----------------------------------------------------
Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to receive a partial or full
distribution of the Participant's Share Account Balance. If the
Committee, in its sole discretion, approves the petition, the Company
shall make a benefit payment within 30 days of such approval equal to
that number of Shares, not to exceed the Share Account Balance, which
the Committee, in its sole discretion, determines is reasonably needed
to satisfy the Unforeseeable Financial Emergency. Such benefit shall be
paid to the Participant or, if the Participant is not living at the time
of payment, to the Participant's Beneficiary.
ARTICLE 5
Benefits Prior to Termination of Employment
-------------------------------------------
5.1 Cash Benefits. The Company shall pay to the Stockholders Committee on
-------------
behalf of and for distribution to each Participant or his or her
Beneficiary the amount to which such Participant is entitled under
Sections 1.5(b)(ii)(A) and (D) of the Merger Agreement. The amount to
which such Participant is entitled under Section 1.5(b)(ii)(A) shall be
paid at the Effective Time. The amount to which such Participant is
entitled under Section 1.5(b)(ii)(D) shall be paid promptly after the
amount of the Per Share Final Working Capital Adjustment Payment is
finally determined. If the Rabbi Trust receives an amount that is added
to the Cash Account Balance of a Participant prior to the Termination of
Employment of the Participant, the Company shall, or shall cause the
Trustee to, make a cash benefit payment to the Participant or, if the
Participant is not living at the time of payment, to the Participant's
Beneficiary, within 30 days of the date on which such amount is added to
the Cash Account Balance of such Participant equal to the amount added
to the Cash Account Balance plus any interest earned by the Rabbi Trust
on such amount between the date the amount was added to the Cash Account
Balance and the date on which the cash benefit payment was made to the
Participant.
ARTICLE 6
Termination Benefit
-------------------
6.1 Benefit Payable in Shares. When a Participant Terminates Employment,
--------------------------
the Company shall make a benefit payment in Shares equal to the number
of Shares reflected in the Participant's Share Account Balance. Such
benefit shall be paid no later than 30 days after the date of
Termination of Employment and shall be
-4-
<PAGE>
paid to the Participant or, if the Participant is not living at the time
of payment, to the Participant's Beneficiary.
6.2 Cash Benefits. If a Participant Terminates Employment, the Company
-------------
shall make cash benefit payments to the Participant, or, if the
Participant is not alive at the time payment is made, to the
Participant's Beneficiary, equal to any amount which is then credited to
or subsequently added to the Cash Account Balance after Termination of
Employment plus any interest earned by the Rabbi Trust on such amount
between the date the amount was added to the Cash Account Balance and
the date on which the cash benefit payment was made to the Participant.
Such payments shall be made within 30 days after any such addition to
the Cash Account Balance.
ARTICLE 7
Stockholders Agreement
----------------------
7.1 Deferral of Share Benefit During Lock-Up Period. If an Initial Public
-----------------------------------------------
Offering, as that term is defined in the Omega Holdings, Inc.
Stockholders Agreement dated June 13, 1997 (the "Stockholders
Agreement"), is scheduled to occur or has occurred, any distribution of
Shares, which otherwise would occur under Section 4.1 or Section 6.1
during a period the Participant would be precluded from selling the
Shares by Section 5.5 of the Stockholders Agreement, shall be deferred
and made within 30 days after the conclusion of such period.
ARTICLE 8
Beneficiary Designation
-----------------------
8.1 Beneficiary. Each Participant shall have the right, at any time, to
-----------
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan upon the
death of a Participant. The Beneficiary designated under this Plan may
be the same as or different from the Beneficiary designation under any
other plan of the Company or any plan of any Employer in which the
Participant participates.
8.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
------------------------------------------------
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by
-5-
<PAGE>
that Participant's spouse and returned to the Committee. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The
Committee shall be entitled to rely on the last Beneficiary Designation
Form filed by the Participant and accepted by the Committee prior to his
or her death.
8.3 Acknowledgment. No designation or change in designation of a
--------------
Beneficiary shall be effective until received, accepted and acknowledged
in writing by the Committee or its designated agent.
8.4 No Beneficiary Designation. If a Participant fails to designate a
--------------------------
Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
8.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
-----------------------
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to cause
the Company to withhold such payments until this matter is resolved to
the Committee's satisfaction.
8.6 Discharge of Obligations. The payment of benefits under the Plan to a
------------------------
Beneficiary shall fully and completely discharge the Company and the
Committee from all further obligations under this Plan with respect to
the Participant.
ARTICLE 9
Leave of Absence
----------------
9.1 Leave of Absence. If a Participant is authorized by the Participant's
----------------
Employer for any reason to take a leave of absence from the employment
of the Employer, the Participant shall continue to be considered
employed by the Employer for purposes of this Plan and the Rabbi Trust.
ARTICLE 10
Amendment or Modification
-------------------------
10.1 Amendment. The Company may at any time amend or modify the Plan in
---------
whole or in part; provided, however, that no amendment or modification
shall be effective to decrease or restrict the value of a Participant's
Cash Account Balance or Share Account Balance in existence at the time
the amendment or
-6-
<PAGE>
modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification. The amendment or modification of the Plan shall not affect
any Participant or Beneficiary who has become entitled to the payment of
benefits under the Plan as of the date of the amendment or modification.
10.2 Effect of Payment. The full payment of the applicable benefit under
-----------------
Article 4, 5 or 6 of the Plan shall completely discharge all obligations
to a Participant and his or her designated Beneficiaries under this
Plan.
ARTICLE 11
Administration
--------------
11.1 Committee Duties. This Plan shall be administered by the Committee,
----------------
which shall consist of the Board, or such committee as the Board shall
appoint. Members of the Committee may be Participants under this Plan.
The Committee shall have the discretion and authority to (i) make,
amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan.
11.2 Agents. In the administration of this Plan, the Committee may, from
------
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to the Company.
11.3 Binding Effect of Decisions. The decision or action of the Committee
---------------------------
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
11.4 Indemnity of Committee. The Company shall indemnify and hold harmless
----------------------
the members of the Committee against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to
act with respect to this Plan, except in the case of willful misconduct
by the Committee or any of its members.
11.5 Employee Information. To enable the Committee to perform its functions,
--------------------
the Company shall supply full and timely information to the Committee on
all matters relating to the date and circumstances of the Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Committee may reasonably require.
-7-
<PAGE>
ARTICLE 12
Other Benefits and Agreements
-----------------------------
12.1 Coordination with Other Benefits. The benefits provided for a
--------------------------------
Participant and Participant's Beneficiary under the Plan are in addition
to any other benefits available to such Participant under any other plan
or program for employees of the Company or its subsidiaries. The Plan
shall supplement and shall not supersede, modify or amend any other such
plan or program except as may otherwise be expressly provided.
ARTICLE 13
Claims Procedures
-----------------
13.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
---------------------
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. The claim must state with
particularity the determination desired by the Claimant. All other
claims must be made within 180 days of the date on which the event that
caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
13.2 Notification of Decision. The Committee shall consider a Claimant's
------------------------
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
-8-
<PAGE>
(iv) an explanation of the claim review procedure set forth in
Section 13.3 below.
The Committee shall make its decision with respect to a claim within 90
days after receiving the claim (180 days if special circumstances
require additional time for processing the claim and if written notice
of the extension and the reasons therefor are furnished to the
Participant or Beneficiary before the termination of the initial 90-day
period). If no notice of disposition of the claim is furnished to the
Participant or Beneficiary within such 90-day (or 180-day) period, the
claim will be deemed denied.
13.3 Review of a Denied Claim. Within 60 days after receiving a notice from
------------------------
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
13.4 Decision on Review. The Committee shall render its decision on review
------------------
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(c) such other matters as the Committee deems relevant.
If the Committee does not render its decision within the aforesaid 60-
day (or 120-day) period, the claim shall be deemed denied on review.
-9-
<PAGE>
13.5 Legal Action. Except as provided by law, a Claimant's compliance with
------------
the foregoing provisions of this Article 13 is a mandatory prerequisite
to a Claimant's right to commence any legal action with respect to any
claim for benefits under this Plan.
ARTICLE 14
Rabbi Trust
-----------
14.1 Establishment of the Rabbi Trust. The Company shall establish the Rabbi
--------------------------------
Trust and shall issue shares of its stock to the Rabbi Trust to be held
in accordance with its terms.
14.2 Interrelationship of the Plan and the Rabbi Trust. The provisions of
-------------------------------------------------
the Plan shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Rabbi Trust
shall govern the rights of the Company, Participants and the creditors
of the Company to the assets transferred to the Rabbi Trust. The Company
shall at all times remain liable to carry out its obligations under the
Plan.
14.3 Distributions From the Rabbi Trust. The Company's obligations under
----------------------------------
the Plan may be satisfied with assets held in the Rabbi Trust and
distributed pursuant to the terms of the Rabbi Trust, and any such
distribution shall reduce the Company's obligations under this Plan.
ARTICLE 15
Miscellaneous
-------------
15.1 Unsecured General Creditor. Participants and their Beneficiaries,
--------------------------
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of the Company including
Rabbi Trust assets. For purposes of the payment of benefits under this
Plan, any and all of the Company's assets shall be, and remain, the
general, unpledged unrestricted assets of the Company. The Company's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money or property in the future.
15.2 Company's Liability. The Company's liability for the payment of
-------------------
benefits shall be defined only by the Plan and, as entered into between
the Company and a Participant. The Company shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan.
15.3 Nonassignability. Neither a Participant nor any other person shall have
----------------
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or
-10-
<PAGE>
otherwise encumber, transfer, hypothecate, alienate or convey in advance
of actual receipt, the amounts, if any, payable hereunder, or any part
thereof, which are, and all rights to which are expressly declared to
be, unassignable and non-transferable, except that the foregoing shall
not apply to any court order specified in Section 15.14 below. No part
of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, nor be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or insolvency.
15.4 Not a Contract of Employment. The terms and conditions of the Plan
----------------------------
shall not be deemed to constitute a contract of employment or contract
for other services between the Company or any Employer and the
Participant. Such employment or other service relationship is hereby
acknowledged to be an "at will" relationship that can be terminated at
any time for any reason, or no reason, with or without cause, and with
or without notice, unless expressly provided in a written employment or
consulting agreement. Nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of the Company or
any Employer, or to interfere with the right of the Company or any
Employer to discipline or discharge the Participant at any time.
15.5 Furnishing Information. A Participant or his or her Beneficiary will
----------------------
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder.
15.6 Terms. Whenever any words are used herein in the masculine, they shall
-----
be construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular
or in the plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases where they
would so apply.
15.7 Captions. The captions of the articles, sections and paragraphs of this
--------
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
15.8 Governing Law. Subject to ERISA, the provisions of this Plan shall be
-------------
construed and interpreted according to the internal laws of the State of
Delaware without regard to its conflicts of laws principles.
15.9 Notice. Any notice or filing required or permitted to be given to the
------
Committee under this Plan shall be sufficient if in writing and hand-
delivered, or sent by registered or certified mail, to the address
below:
-11-
<PAGE>
Omega Holdings, Inc.
1205 Peters Drive
Waterloo, Iowa 50703
Attention: Henry P. Key, President
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
15.10 Successors. The provisions of this Plan shall bind and inure to the
----------
benefit of the Company and its successors and assigns and the
Participant and the Participant's designated Beneficiaries.
15.11 Spouse's Interest. The interest, if any, in the benefits hereunder of a
-----------------
spouse of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
15.12 Validity. In case any provision of this Plan shall be illegal or
--------
invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal or invalid provision had never been inserted
herein.
15.13 Incompetence. If the Committee determines in its discretion that a
------------
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of his
or her property, the Committee may direct payment of such benefit to the
guardian, legal representative or person having the care and custody of
such minor, incompetent or incapable person. The Committee may require
such proof of minority, incompetency, incapacity or guardianship, as it
may deem appropriate prior to distribution of the benefit. Any payment
of a benefit shall be a payment for the account of the Participant or
the Participant's Beneficiary, as the case may be, and shall be a
complete discharge of any liability under the Plan for such payment.
15.14 Court Order. The Committee is authorized to make any payments directed
-----------
by court order in any action in which the Plan or the Committee has been
named as a party.
-12-
<PAGE>
PAGE INTENTIONALLY LEFT BLANK
-13-
<PAGE>
PAGE INTENTIONALLY LEFT BLANK
-14-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Plan document to be
executed by its duly authorized officer as of June 13, 1997.
OMEGA HOLDINGS, INC.
By:
-----------------------------------
Title:
--------------------------------
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<PAGE>
Exh. 10.9
RABBI TRUST AGREEMENT
This Rabbi Trust Agreement is made as of this 13th day of June 1997, by and
between Omega Holdings, Inc. (the "Company") and American National Bank and
Trust Company of Chicago (the "Trustee"). Pursuant to the Agreement and Plan of
Merger, dated April 28, 1997, as amended, by and among the Company, certain
stockholders of the Company and Omega Merger Corp. ("Merger Corp.") (the "Merger
Agreement"), Merger Corp. will merge with and into the Company (the "Merger")
and the Company shall continue as the surviving corporation and the separate
existence of Merger Corp. shall cease. Capitalized terms not defined herein
have the meanings set forth in the 1997 Omega Holdings, Inc. Deferred
Compensation Plan (the "Plan") and the Merger Agreement. It is intended that
the Rabbi Trust hereby established be unfunded for tax purposes and for purposes
of Title I of ERISA.
Section 1. Establishment of Trust
(a) Subject to the claims of its creditors as set forth in Section 3, the
Company hereby establishes this Rabbi Trust. At the time of the Merger, the
Company shall deposit with the Trustee in trust Shares of the Company equal to
the Share Account Balances of all of the Participants, which shall become the
principal of the Rabbi Trust to be held, administered and disposed of by the
Trustee as provided in the Plan and this Rabbi Trust Agreement.
(b) The Rabbi Trust hereby established shall be irrevocable.
(c) The Rabbi Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of subpart E, part I, subchapter J, Chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Rabbi Trust, and any earnings thereon shall be
held separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes herein set forth. The Plan Participants
and their beneficiaries shall have no preferred claim on, or any beneficial
ownership interest in, any assets of the Rabbi Trust prior to the time such
assets are paid to the Plan Participants. Any rights created under this Rabbi
Trust Agreement shall be mere unsecured contractual rights of Plan Participants
or their beneficiaries against the Company. Any assets held by the Rabbi Trust
will be subject to the claims of the Company's general creditors under federal
and state law in the event of Insolvency, as defined in Section 3(a) herein.
(e) The Rabbi Trust shall maintain a separate book-keeping account within a
single trust for each Plan Participant to reflect the Cash Account Balance and
the Share Account balance as defined in the Plan.
<PAGE>
Section 2. Payments to Plan Participants or Their Beneficiaries.
(a) The Company shall deliver to the Trustee instructions acceptable to the
Trustee for determining the amounts payable to Plan Participants or their
beneficiaries, the form in which such amount is to be paid, and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
the Trustee shall make payments to the Plan Participants or their beneficiaries
in accordance with such instructions. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment or accrual of benefits to
Plan Participants or their beneficiaries and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by the Company.
(b) The Company may make payment of benefits directly to Plan Participants
or their beneficiaries as they become due. The Company shall notify the Trustee
of its decision to make payment of benefits directly prior to the time amounts
are payable to Plan Participants or their beneficiaries and, in the event of
such a payment (other than a payment of amounts referenced in sections
1.5(b)(ii)(A) and (D) of the Merger Agreement, which amounts shall not be
deposited in the Rabbi Trust), the Trustee shall distribute to the Company cash
or property equivalent to any amounts paid. If the principal of the Rabbi
Trust, and any earnings thereon, are not sufficient to make payments of benefits
in accordance with the terms of the Plan, the Company shall make the balance of
each such payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient.
Section 3. Trustee Responsibility Regarding Payments to Plan Participants When
Company is Insolvent.
(a) The Trustee shall cease payment of benefits to Plan Participants or
their beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Rabbi Trust Agreement if (i) the
Company is unable to pay its debts as they become due, or (ii) the Company is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Rabbi Trust, as provided in
Section 1(d) hereof, the principal and income of the Rabbi Trust shall be
subject to claims of general creditors of the Company under federal and state
law as set forth below.
(c) The Board of Directors and the Chief Executive Officer of the Company
shall have the duty to inform the Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of the Company alleges in
writing to the Trustee that the Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to Plan Participants or their
beneficiaries.
-2-
<PAGE>
(d) Unless the Trustee has actual knowledge of the Company's Insolvency, or
has received notice from the Company or a person claiming to be a creditor
alleging that the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. The Trustee may in all events rely on
such evidence concerning the Company's solvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(e) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments to Plan Participants or their
beneficiaries and shall hold the assets of the Rabbi Trust for the benefit of
the Company's general creditors. Nothing in this Rabbi Trust Agreement shall in
any way diminish any rights of Plan Participants or their beneficiaries to
pursue their rights as general creditors of the Company with respect to benefits
due under the Plan, this Rabbi Trust Agreement or otherwise.
(f) The Trustee shall resume the payment of benefits to Plan Participants
or their beneficiaries in accordance with Section 2 of this Rabbi Trust
Agreement only after the Trustee has determined that the Company is not
Insolvent or is no longer Insolvent.
(g) Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Rabbi Trust pursuant to this Section 3 hereof
and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
Participants or their beneficiaries for the period of such discontinuance, less
the aggregate amount of any payments made to Plan Participants or their
beneficiaries by the Company in lieu of the payments provided for hereunder
during any such period of discontinuance.
Section 4. Payments to the Company.
Except as provided in Sections 2(b) and 3 hereof, the Company shall have no
right or power to direct the Trustee to return to the Company or to divert to
others any of the Rabbi Trust assets before all payments of benefits have been
made to Plan Participants or their beneficiaries pursuant to the terms of this
Rabbi Trust Agreement.
Section 5. Investment Authority
(a) The Trustee shall invest and reinvest exclusively in stock issued by
the Company and the Promissory Note; provided, however, that the Trustee may
invest temporarily in interest bearing accounts including, but not limited to,
certificates of deposit, time deposits, savings accounts and money market
accounts, with maturities of less than one year. The Trustee shall invest all
Cash Account Balances in interest bearing securities. The Trustee shall not be
liable or responsible for any loss or diminution in the value of Rabbi Trust
assets resulting from the retention of stock issued by the Company.
-3-
<PAGE>
(b) All rights associated with assets of the Rabbi Trust shall be exercised
by the Trustee or the person designated by the Trustee, except that the Trustee
shall exercise all voting rights with respect to shares held in the Share
Account Balance of a Participant pursuant to written instructions from such
Participant or his or her beneficiary.
Section 6. Dividends.
During the term of this Rabbi Trust, the Company shall deposit into the
Rabbi Trust the value of all dividends that are or would be paid with respect to
Shares of the Company held in the Rabbi Trust on the record date for such
dividends.
Section 7. Accounting by Trustee.
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee. Within 60 days following the close of each calendar
year and within 60 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company a written account of its administration of
the Rabbi Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it and
showing all cash, securities and other property held in the Rabbi Trust at the
end of such year or as of the date of such removal or resignation, as the case
may be.
Section 8. Responsibility of Trustee.
(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company which is contemplated by,
and in conformity with the Plan and this Rabbi Trust and is given in writing by
the Company. In the event of a dispute between the Company and a party, the
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Rabbi Trust, the Company agrees to indemnify the Trustee
against the Trustee's costs, expenses and liabilities (including, without
limitation, attorneys' fees and expenses relating thereto) and to be primarily
liable for such payments. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment from
the Rabbi Trust.
-4-
<PAGE>
(c) The Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) The Trustee is hereby authorized and directed to execute and deliver
the Omega Holdings, Inc. Stockholders Agreement dated June 13, 1997 (the
"Stockholders Agreement") in the form of Exhibit A hereto and the Sixth
Amendment to the Merger Agreement in the form of Exhibit B hereto, it being
understood that the Trustee shall incur no liability to any person for such
action.
(e) The Trustee shall be a party to and bound by the Stockholders
Agreement.
(f) The Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein.
Section 9. Compensation and Expenses of Trustee.
The Company shall pay the Trustee's fees and expenses. If not so paid, the
fees and expenses shall be paid from the Rabbi Trust.
Section 10. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice to the Company,
which shall be effective 30 days after receipt of such notice unless the Company
and the Trustee agree otherwise.
(b) The Trustee may be removed by Company on 30 days notice or upon shorter
notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 60 days after receipt of notice
of resignation, removal or transfer, unless the Company extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Rabbi Trust.
Section 11. Appointment of Successor.
(a) The Trustee has been approved by the Participants.
-5-
<PAGE>
(b) If the Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, the Participants (acting by a majority in interest) may appoint
any third party (other than any Participant or the Company), such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace the Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Rabbi Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer.
Section 12. Amendment or Termination.
(a) This Rabbi Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. In particular and without limiting the
foregoing, the Company may amend this Rabbi Trust Agreement so that the Plan
will be unfunded for tax purposes and for purposes of Title I of ERISA.
Notwithstanding the foregoing, no such amendment shall be inconsistent with the
Plan or shall make the Rabbi Trust revocable.
(b) The Rabbi Trust shall not terminate until the date on which the Plan
Participants or their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan and this Rabbi Trust Agreement. Upon termination of
the Rabbi Trust any assets remaining in the Rabbi Trust shall be returned to
Company.
Section 13. Stockholders Agreement
(a) Pursuant to Section 9.1 of the Stockholders Agreement, the Trustee
shall not Transfer Shares (as those terms are defined in the Stockholders
Agreement) to any Participant unless the Participant delivers to the Company the
acknowledgment and agreement set forth in such Section 9.1 of the Stockholders
Agreement.
(b) If a Tag Along Notice is furnished to the Trustee under Section 3.1.1
of the Stockholders Agreement, the Trustee shall exercise, pursuant to Section
3.1.2 of the Stockholders Agreement, the option to include in the Sale the Tag
Along Sale Percentage of Shares (as those terms are defined in the Stockholders
Agreement) in each Share Account Balance.
(c) If the Trustee receives notice from the Company that, pursuant to
Section 8.1 of the Stockholders Agreement, the Initial Sponsors have requested
the Company to effect the registration under the Securities Act for a Public
Offering of all or part of the Registrable Securities held by such Initial
Sponsors (as those terms are defined in the Stockholders Agreement), then the
Trustee shall exercise its piggyback registration rights pursuant to and in
accordance with Section 8.2 of the Stockholders Agreement with respect to the
number of Shares in each Share Account Balance that bears the same ratio to the
total number of Shares
-6-
<PAGE>
in such Share Account Balance as the number of Sponsor Shares requested to be
registered bears to the total number of Sponsor Shares held by Initial Sponsors
(as those terms are defined in the Stockholders Agreement). Except as provided
in the preceding sentence, the Trustee shall not exercise its piggyback
registration rights under Section 8.2 of the Stockholders Agreement.
Section 13. Miscellaneous.
(a) Any provision of this Rabbi Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan Participants or their beneficiaries under the
Plan and this Rabbi Trust Agreement may not be anticipated, assigned (either at
law or in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(c) This Rabbi Trust Agreement shall be governed by and construed in
accordance with the laws of Delaware.
Section 14. Effective Date.
The effective date of this Rabbi Trust Agreement shall be June 13, 1997.
PAGE INTENTIONALLY LEFT BLANK
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have executed this
Agreement as of this 13th day of June 1997.
OMEGA HOLDINGS, INC.
By:
-------------------------
Title:
-------------------------
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By:
--------------------------
Title:
-------------------------
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<PAGE>
Exhibit 10.10
CODE, HENNESSY & SIMMONS, INC.
10 South Wacker Drive, Suite 3175
Tel: 312-876-3945
Fax: 312-876-3854
Andrew W. Code
Principal
September 16, 1994
PERSONAL AND CONFIDENTIAL
- -------------------------
Mr. Henry P. Key
3308 Cardinal Lane
Woodstock, Illinois 60098
Dear Hank:
On behalf of Omega's Board of Directors, it is my pleasure to offer you the
position of President and Chief Executive Officer of the company. There is
unanimous support for you candidacy, which is supported by our collective belief
that your operating and executive experience have superbly prepared you to lead
the company. Omega has enjoyed tremendous success to date, but we feel that
with you leadership and guidance, the company's future will be even brighter.
As discussed in our phone call, the basic terms of employment are as follows:
. Base Salary: $15,000 paid monthly, which equals an annual rate of
$180,000.
. Bonus: Your bonus plan is targeted at 50% of base salary. This is
determined by two criteria, (i) of the achievement of operating
earnings targets, and (ii) the achievement of objectives set forth in
a performance plan which you will help to devise. You may earn up to
100% of your base salary which will be determined by an operating
earnings schedule agreed upon by you and the Board of Directors. Since
you will be joining Omega in the midst of our fiscal year, we will
guarantee you a $25,000 bonus payment to be paid at year end.
. Options: You will be offered a vertical strip of equity amounting to
2.0% of the company (equal to Code, Hennessy & Simmons' price) for the
price of $280,000. As agreed, Code, Hennessy & Simmons will arrange a
loan (if necessary) for the amount of $140,000 and you are responsible
for funding the remaining $140,000. Also, you will have the
opportunity to acquire up to an additional 4.0% of the company to be
earned over a five year period in the form of options or direct stock
purchases (with the choice between the two at your direction). We
suggest that you retain an attorney for the purpose of reviewing all
of the employment documents. You will be reimbursed as to a reasonable
and agreed upon amount for those services.
<PAGE>
EXHIBIT 10.11
Dated as of April 24, 1997
Henry P. Key
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, IA 50703
Dear Mr. Key:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of Omega
Cabinets, Ltd., ("Omega") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with Omega under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by Omega without Cause (as defined herein) or (ii) voluntarily by
you for Good Reason (as defined herein), you will be paid severance pay, in one
lump sum at the time of such termination of employment, in an amount equal to
eighteen (18) months of your base monthly salary (as in effect immediately prior
to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting Omega; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by Omega, at the expense of Omega, until the earlier to occur of (i)
that date on which you become eligible for comparable coverage under another
group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
Omega shall provide you with comparable benefits of equal value. In addition,
you and your dependents may be entitled to the right to continued health
benefits at your cost under section 4980B of the Code, Part 6 of Subtitle B of
the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of Omega.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by Omega, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of Omega to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of Omega and to your heirs and legal representatives. If necessary,
Omega will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of Omega to expressly assume and agree to perform
Omega's obligations under the terms of this Agreement in the same manner and to
the same extent that Omega would be required to perform them if no such
succession had occurred.
Please remember that the contents of this letter are strictly confidential.
You are not to discuss the contents of this letter with anyone.
Very truly yours,
Thomas J. Formolo, Vice President
Omega Cabinets, Ltd.
-3-
<PAGE>
EXHIBIT 10.12
OMEGA CABINETS
1205 Peters Drive
Waterloo, Iowa 50703
Tel: 319-236-2256
Fax: 319-235-5827
Henry P. Key
President
Chief Executive Officer
September 11, 1995
Mr. Robert L. Moran
8359 Colebrook Cove
Germantown, TN 38139
Dear Bob:
On behalf of Omega Cabinets, Ltd. it is my pleasure to confirm our offer of
employment as Vice President, Operations. In this position, you will report
directly to me and participate with the other officers in establishing corporate
policy, procedure, and direction. You will have responsibility for all
operations including...
<TABLE>
<CAPTION>
<S> <C>
. All plant manufacturing activities . Facilities maintenance
. Purchasing . Warehousing
. Production control (scheduling, . Traffic
editing, expediting)
</TABLE>
Clearly, we feel that your background and experience have prepared you for this
responsibility and we are certain that in our team, you will enjoy a great
measure of personal success while helping Omega achieve its objectives.
The basic terms of employment are as follows...
. Base Salary
You will be paid $4,615.38 bi-weekly (an amount equal to $120,000
annually).
. Bonus
Your annual bonus potential will be equal to 30% of base salary. The
actual amount of bonus paid will be based upon the company achieving
certain earnings goals and your personal performance as measured against
agreed-upon objectives.
<PAGE>
. Equity
You will be offered the opportunity to purchase a vertical strip of
equity amounting to an investment of $150,000. If necessary, Omega will
assist you in this investment by guaranteeing a personal loan at your
bank of choice for up to 50% of the amount.
You will also participate in Omega's management stock option program.
Based upon individual and company performance, the company would intend
to issue to you additional fully-diluted option shares. All awards will
be made at the discretion of the Board of Directors of Omega Holdings,
Inc.
. Relocation Expenses
The company will reimburse you for reasonable relocation expenses
including the following... customary realtor fees associated with the
selling of your house in Germantown; packing, loading, transporting and
unloading your household goods; temporary living expenses for a maximum
of 26 weeks (rent not to exceed a mutually agreed-upon amount); and
return trips to Germantown every two weeks until you are relocated.
Additionally, the company will pay for one house hunting trip for your
spouse.
. Signing Bonus
You will be paid a lump sum amount of $13,000 as reimbursement for
incidental expenses not covered in the relocation allowances.
. Separation
If you are separated from the company for reasons other than cause
(i.e., malfeasance, gross neglect, illegal activities, etc.), you will
receive salary continuation for a maximum of six months.
. Benefits
You will be eligible to participate in health, life, dental, 401(k),
and long-term disability plans as provided to all employees.
. Vacation
You are entitled to two weeks of paid vacation.
Bob, we are truly excited about your joining the OMEGA team!!! We have many
-----
challenges and opportunities... and all of us on the staff are eagerly looking
forward to the enthusiasm, experience, and skills you bring to our group. We
have no doubt that you will contribute greatly to our future success.
---
-2-
<PAGE>
If this opportunity meets with your expectations, please acknowledge your
acceptance by signing in the space provided and return a copy to me at your
earliest convenience.
Sincerely, Dated this 15th day of Sept., 1995
Henry P. Key -------------------------------------
Robert L. Moran
cc: David Moore
Lance Erlick
-3-
<PAGE>
OMEGA CABINETS, LTD.
1205 Peters Drive
Waterloo, Iowa 50703
June 13, 1997
Mr. Robert L. Moran
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Dear Bob:
Reference is made to the Letter Agreement dated September 11, 1995 between
you and the Company setting forth the terms of your employment. This is to
confirm that effective today the Letter Agreement is hereby amended to extend to
12 months from six months your maximum period of continuation of payments equal
to salary referred to in the paragraph headed "Separation."
Sincerely,
OMEGA CABINETS, LTD.
By: /s/ Henry P. Key
--------------------
Henry P. Key
President and CEO
Accepted and agreed:
/s/ Robert L. Moran
- ---------------------
Robert L. Moran
<PAGE>
Exhibit 10.13
Dated as of April 24, 1997
Robert L. Moran
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, IA 50703
Dear Mr. Moran:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of Omega
Cabinets, Ltd., ("Omega") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with Omega under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by Omega without Cause (as defined herein) or (ii) voluntarily by
you for Good Reason (as defined herein), you will be paid severance pay, in one
lump sum at the time of such termination of employment, in an amount equal to
eighteen (18) months of your base monthly salary (as in effect immediately prior
to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting Omega; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by Omega, at the expense of Omega, until the earlier to occur of (i)
that date on which you become eligible for comparable coverage under another
group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
Omega shall provide you with comparable benefits of equal value. In addition,
you and your dependents may be entitled to the right to continued health
benefits at your cost under section 4980B of the Code, Part 6 of Subtitle B of
the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of Omega.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by Omega, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of Omega to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of Omega and to your heirs and legal representatives. If necessary,
Omega will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of Omega to expressly assume and agree to perform
Omega's obligations under the terms of this Agreement in the same manner and to
the same extent that Omega would be required to perform them if no such
succession had occurred.
Please remember that the contents of this letter are strictly confidential.
You are not to discuss the contents of this letter with anyone.
Very truly yours,
Thomas J. Formolo, Vice President
Omega Cabinets, Ltd.
-3-
<PAGE>
Exhibit 10.14
CODE, HENNESSY & SIMMONS, INC.
10 South Wacker Drive, Suite 3175
Chicago, Illinois 60606
Tel: 312-876-8636
Fax: 312-876-3854
Thomas J. Formolo
Vice President
July 11, 1994
Lance E. Erlick
422 Willow Wood Rd.
Palatine, Illinois 60067
Dear Lance:
We are pleased to make this offer to join Omega Cabinets, Ltd. ("Omega") as
Chief Financial Officer effective July 18, 1994. As you know, Omega was the
first investment originated by Code, Hennessy & Simmons, Inc. in its second
fund, having been consummated on June 17, 1994. We are very excited about the
prospects for this company, and believe that someone with your background and
experience could be a major contributor to the success of the investment.
Outlined below are the principal terms of this offer:
. Annual base salary of $95,000.
. Annual bonus potential equal to 30% of base salary. Actual bonus will be
based upon personal performance relative to goals, and company results. The
bonus potential for calendar year 1994 will be prorated based upon actual
number of months worked in 1994.
. Signing bonus of $20,000 to be paid along with your first payroll check in
calendar year 1995. This bonus is in lieu of covering any increased costs
that you may have as a result of the move which are related to your son's
education.
. You will be entitled to purchase a 0.75% strip of the securities issued at
Omega's parent, Omega Holdings, Inc. ("Holdings"). Holdings was capitalized
with $12.0 million of 14.0% of 14.0% P.I.K. junior subordinated debt, and
$2.0 million of common stock. This strip will, therefore, cost you
$105,000. If you choose, the company will finance up to 50.0% of the total
cost of this purchase, and you can pay back the note over 5 years at 8.0%
interest. If you pay for the entire purchase in cash, your ownership will
be fully vested at time of purchase; if you elect to borrow some of the
acquisition cost, your ownership will vest as the note is repaid. All
investors in Omega own their securities at Holdings.
. You will also be eligible to participate in Omega's management stock option
program. Based upon individual and company performance, the company would
intend to issue an additional, fully diluted 10.0% of Holdings to certain
managers over a 5 year period in the form of no cost options exercisable at
a slight discount to the then prevailing market value per share. All awards
will be made at the discretion of the Board of Directors of Holdings, and
may or may not be in proportion to the respective amounts sold to
management up front. Furthermore, the timing of the issuance of the
Performance Shares may be other than straight line over the period.
. Omega will cover all of your actual moving expenses including:
. customary expenses incurred to sell your home in Palatine including
brokerage commissions;
. reasonable travel, hotel and meal expenses incurred by you and your
family while searching for a new home in the Waterloo, Iowa area;
. customary moving expenses to relocate your family's personal effects
to the Waterloo, Iowa area;
. temporary living expenses until a new owned or rented residence is
secured; and
<PAGE>
. expenses incurred in connection purchasing a new primary residence
including a customary number of mortgage points.
To the extent that any of these reimbursements would have to be reported by
you as income on your personal tax returns, Omega will gross up the amount
so as to leave you in an unaffected position.
. Three weeks of vacation per year. You will be entitled to two weeks of
vacation for the balance of calendar year 1994.
. Participation in all of Omega's other applicable employee welfare plans.
. Omega will finance any required continuing education that will enable you
to maintain your finance and accounting certifications and memberships.
. If you are terminated without cause at any time during the first two years
of your employment at Omega, you will be provided with continuing salary
payments for 1 year, if you are terminated without cause at any time after
the second anniversary of your employment start date, you will be provided
with continuing salary payments for 6 months.
If this offer meets with your expectations, please sign in the space allotted
below. We believe you will be a great addition to the team at Omega, and look
forward to working with you as we pursue our aggressive plans for the business.
Sincerely,
Thomas J. Formolo
Accepted and Agreed
-------------------------------
Lance E. Erlick
Date: 7/15/94
cc: Andrew W. Code
Robert J. Bertch
-2-
<PAGE>
Exhibit 10.15
Dated as of April 24, 1997
Lance E. Erlick
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, IA 50703
Dear Mr. Erlick:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of Omega
Cabinets, Ltd., ("Omega") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with Omega under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by Omega without Cause (as defined herein) or (ii) voluntarily by
you for Good Reason (as defined herein), you will be paid severance pay, in one
lump sum at the time of such termination of employment, in an amount equal to
eighteen (18) months of your base monthly salary (as in effect immediately prior
to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting Omega; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by Omega, at the expense of Omega, until the earlier to occur of (i)
that date on which you become eligible for comparable coverage under another
group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
Omega shall provide you with comparable benefits of equal value. In addition,
you and your dependents may be entitled to the right to continued health
benefits at your cost under section 4980B of the Code, Part 6 of Subtitle B of
the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of Omega.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by Omega, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of Omega to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of Omega and to your heirs and legal representatives. If necessary,
Omega will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of Omega to expressly assume and agree to perform
Omega's obligations under the terms of this Agreement in the same manner and to
the same extent that Omega would be required to perform them if no such
succession had occurred.
PLEASE REMEMBER THAT THE CONTENTS OF THIS LETTER ARE STRICTLY CONFIDENTIAL.
YOU ARE NOT TO DISCUSS THE CONTENTS OF THIS LETTER WITH ANYONE.
Very truly yours,
Thomas J. Formolo, Vice President
Omega Cabinets, Ltd.
-3-
<PAGE>
Exhibit 10.16
OMEGA CABINETS
1205 Peters Drive
Waterloo, IA 50703
Tel: 319-236-2256
Fax: 319-235-5827
Henry P. Key
President
Chief Executive Officer
April 10, 1995
Mr. John A. Goebel, Jr. Mr. Michael J. Hagan
Mr. Douglas J. Conley Mr. Thomas J. Schmidt
HomeCrest Corporations
1002 Eisenhower Drive North
P.O. Box 595
Goshen, IN 46526
Gentlemen:
On behalf of Omega Holdings, Inc. we are pleased that you have each chosen to
continue your relationship with HomeCrest following the pending acquisition.
There is unanimous support for your continued employment with HomeCrest, which
is supported by our collective belief that your operating and management
experience have clearly prepared you to guide the company in the future.
HomeCrest has enjoyed significant success since you have been together as a team
and we feel with your continued commitment, the company's future looks event
brighter.
This letter is to confirm those material aspects of your employment arrangements
and is of course conditional upon the closing of the acquisition...
. Base Salary
-----------
. Through the remainder of 1995, you will receive the same base
salary that you currently receive from HomeCrest. Thereafter,
your salary will be subject to review in accordance with Omega's
policies for senior management .
. Bonus
-----
. You will continue to be eligible for a bonus for 1995 in
accordance with HomeCrest's current bonus policy. We all
understand that the criteria for eligibility may need to be
adjusted to eliminate the potential effects resulting from the
acquisition. Following 1995, you will be eligible for a bonus in
accordance with Omega's policy for its senior management.
<PAGE>
. Stock Options
-------------
. You will be eligible for stock options in Omega Holdings, Inc. in
the same way as other senior members of management of Omega and
in accordance with the spread sheet previously discussed with
you.
. Signing Bonus
-------------
. To compensate you for discontinuing the company-provided
automobile (which we intend to sell) and the ExecuCare benefit,
you will each receive a signing bonus of $15,000.
. Separation Payments
-------------------
. Following the acquisition, should HomeCrest terminate your
employment without cause, HomeCrest will, during the six month
period thereafter, pay for your medical coverage and either
continue your base salary for the six month period or make such
payment in a lump sum, whichever option HomeCrest shall choose.
Again, we are excited about your continued employment with HomeCrest and look
forward to your favorable response to this letter. If you wish to discuss any
of the matters, I am available to answer any of your questions.
Sincerely,
Hank
Agreed to and Accepted this 11 day of April, 1995.
__________________________
John A. Goebel, Jr.
__________________________
Michael J. Hagan
__________________________
Douglas J. Conley
__________________________
Thomas J. Schmidt
cc: Andrew W. Code
Thomas J. Formolo
S. Michael Peck, Esq.
-2-
<PAGE>
OMEGA CABINETS, LTD.
1205 Peters Drive
Waterloo, Iowa 50703
June 13, 1997
Mr. John A. Goebel, Jr.
Omega Cabinets, Ltd.
1205 Peters Drive
Waterloo, Iowa 50703
Dear John:
Reference is made to the Letter Agreement dated April 10, 1995 between you
and the Company setting forth the terms of your employment. This is to confirm
that effective today the Letter Agreement is hereby amended to extend to 12
months from six months your period of payment equal to base salary referred to
in the paragraph headed "Separation Payments."
Sincerely,
OMEGA CABINETS, LTD.
By:________________________
Henry P. Key
President and CEO
Accepted and agreed:
____________________________
John A. Goebel, Jr.
<PAGE>
Exhibit 10.17
Dated as of April 24, 1997
John A. Goebel, Jr.
HomeCrest Corporation
1002 Eisenhower Drive North
Goshen, IN 46526
Dear Mr. Goebel:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of HomeCrest
Corporation ("HomeCrest") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with HomeCrest under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by HomeCrest without Cause (as defined herein) or (ii) voluntarily
by you for Good Reason (as defined herein), you will be paid severance pay, in
one lump sum at the time of such termination of employment, in an amount equal
to eighteen (18) months of your base monthly salary (as in effect immediately
prior to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting HomeCrest; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by HomeCrest, at the expense of HomeCrest, until the earlier to occur
of (i) that date on which you become eligible for comparable coverage under
another group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
HomeCrest shall provide you with comparable benefits of equal value. In
addition, you and your dependents may be entitled to the right to continued
health benefits at your cost under section 4980B of the Code, Part 6 of Subtitle
B of the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of HomeCrest.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by HomeCrest, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of HomeCrest to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of HomeCrest and to your heirs and legal representatives. If necessary,
HomeCrest will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of HomeCrest to expressly assume and agree to
perform HomeCrest's obligations under the terms of this Agreement in the same
manner and to the same extent that HomeCrest would be required to perform them
if no such succession had occurred.
PLEASE REMEMBER THAT THE CONTENTS OF THIS LETTER ARE STRICTLY CONFIDENTIAL.
YOU ARE NOT TO DISCUSS THE CONTENTS OF THIS LETTER WITH ANYONE.
Very truly yours,
Thomas J. Formolo, Vice President
HomeCrest Corporation
-3-
<PAGE>
Exhibit 10.18
OMEGA CABINETS
1205 Peters Drive
Waterloo, IA 50703
Tel: 319-236-2256
Fax: 319-235-5827
Henry P. Key
President
Chief Executive Officer
April 10, 1995
Mr. John A. Goebel, Jr. Mr. Michael J. Hagan
Mr. Douglas J. Conley Mr. Thomas J. Schmidt
HomeCrest Corporations
1002 Eisenhower Drive North
P.O. Box 595
Goshen, IN 46526
Gentlemen:
On behalf of Omega Holdings, Inc. we are pleased that you have each chosen to
continue your relationship with HomeCrest following the pending acquisition.
There is unanimous support for your continued employment with HomeCrest, which
is supported by our collective belief that your operating and management
experience have clearly prepared you to guide the company in the future.
HomeCrest has enjoyed significant success since you have been together as a team
and we feel with your continued commitment, the company's future looks event
brighter.
This letter is to confirm those material aspects of your employment arrangements
and is of course conditional upon the closing of the acquisition...
. Base Salary
-----------
. Through the remainder of 1995, you will receive the same base
salary that you currently receive from HomeCrest. Thereafter,
your salary will be subject to review in accordance with Omega's
policies for senior management .
. Bonus
-----
. You will continue to be eligible for a bonus for 1995 in
accordance with HomeCrest's current bonus policy. We all
understand that the criteria for eligibility may need to be
adjusted to eliminate the potential effects resulting from the
acquisition. Following 1995, you will be eligible for a bonus in
accordance with Omega's policy for its senior management.
<PAGE>
. Stock Options
-------------
. You will be eligible for stock options in Omega Holdings, Inc. in
the same way as other senior members of management of Omega and
in accordance with the spread sheet previously discussed with
you.
. Signing Bonus
-------------
. To compensate you for discontinuing the company-provided
automobile (which we intend to sell) and the ExecuCare benefit,
you will each receive a signing bonus of $15,000.
. Separation Payments
-------------------
. Following the acquisition, should HomeCrest terminate your
employment without cause, HomeCrest will, during the six month
period thereafter, pay for your medical coverage and either
continue your base salary for the six month period or make such
payment in a lump sum, whichever option HomeCrest shall choose.
Again, we are excited about your continued employment with HomeCrest and look
forward to your favorable response to this letter. If you wish to discuss any
of the matters, I am available to answer any of your questions.
Sincerely,
Hank
Agreed to and Accepted this 11 day of April, 1995.
__________________________
John A. Goebel, Jr.
__________________________
Michael J. Hagan
__________________________
Douglas J. Conley
__________________________
Thomas J. Schmidt
cc: Andrew W. Code
Thomas J. Formolo
S. Michael Peck, Esq.
-2-
<PAGE>
Exhibit 10.19
Dated as of April 24, 1997
Michael J. Hagan
HomeCrest Corporation
1002 Eisenhower Drive North
Goshen, IN 46526
Dear Mr. Hagan:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of HomeCrest
Corporation ("HomeCrest") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with HomeCrest under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by HomeCrest without Cause (as defined herein) or (ii) voluntarily
by you for Good Reason (as defined herein), you will be paid severance pay, in
one lump sum at the time of such termination of employment, in an amount equal
to eighteen (18) months of your base monthly salary (as in effect immediately
prior to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting HomeCrest; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by HomeCrest, at the expense of HomeCrest, until the earlier to occur
of (i) that date on which you become eligible for comparable coverage under
another group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
HomeCrest shall provide you with comparable benefits of equal value. In
addition, you and your dependents may be entitled to the right to continued
health benefits at your cost under section 4980B of the Code, Part 6 of Subtitle
B of the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of HomeCrest.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by HomeCrest, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of HomeCrest to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of HomeCrest and to your heirs and legal representatives. If necessary,
HomeCrest will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of HomeCrest to expressly assume and agree to
perform HomeCrest's obligations under the terms of this Agreement in the same
manner and to the same extent that HomeCrest would be required to perform them
if no such succession had occurred.
PLEASE REMEMBER THAT THE CONTENTS OF THIS LETTER ARE STRICTLY CONFIDENTIAL.
YOU ARE NOT TO DISCUSS THE CONTENTS OF THIS LETTER WITH ANYONE.
Very truly yours,
Thomas J. Formolo, Vice President
HomeCrest Corporation
-3-
<PAGE>
Exhibit 10.20
OMEGA CABINETS
1205 Peters Drive
Waterloo, IA 50703
Tel: 319-236-2256
Fax: 319-235-5827
Henry P. Key
President
Chief Executive Officer
April 10, 1995
Mr. John A. Goebel, Jr. Mr. Michael J. Hagan
Mr. Douglas J. Conley Mr. Thomas J. Schmidt
HomeCrest Corporations
1002 Eisenhower Drive North
P.O. Box 595
Goshen, IN 46526
Gentlemen:
On behalf of Omega Holdings, Inc. we are pleased that you have each chosen to
continue your relationship with HomeCrest following the pending acquisition.
There is unanimous support for your continued employment with HomeCrest, which
is supported by our collective belief that your operating and management
experience have clearly prepared you to guide the company in the future.
HomeCrest has enjoyed significant success since you have been together as a team
and we feel with your continued commitment, the company's future looks event
brighter.
This letter is to confirm those material aspects of your employment arrangements
and is of course conditional upon the closing of the acquisition...
. Base Salary
-----------
. Through the remainder of 1995, you will receive the same base
salary that you currently receive from HomeCrest. Thereafter,
your salary will be subject to review in accordance with Omega's
policies for senior management .
. Bonus
-----
. You will continue to be eligible for a bonus for 1995 in
accordance with HomeCrest's current bonus policy. We all
understand that the criteria for eligibility may need to be
adjusted to eliminate the potential effects resulting from the
acquisition. Following 1995, you will be eligible for a bonus in
accordance with Omega's policy for its senior management.
<PAGE>
. Stock Options
-------------
. You will be eligible for stock options in Omega Holdings, Inc. in
the same way as other senior members of management of Omega and
in accordance with the spread sheet previously discussed with
you.
. Signing Bonus
-------------
. To compensate you for discontinuing the company-provided
automobile (which we intend to sell) and the ExecuCare benefit,
you will each receive a signing bonus of $15,000.
. Separation Payments
-------------------
. Following the acquisition, should HomeCrest terminate your
employment without cause, HomeCrest will, during the six month
period thereafter, pay for your medical coverage and either
continue your base salary for the six month period or make such
payment in a lump sum, whichever option HomeCrest shall choose.
Again, we are excited about your continued employment with HomeCrest and look
forward to your favorable response to this letter. If you wish to discuss any
of the matters, I am available to answer any of your questions.
Sincerely,
Hank
Agreed to and Accepted this 11 day of April, 1995.
__________________________
John A. Goebel, Jr.
__________________________
Michael J. Hagan
__________________________
Douglas J. Conley
__________________________
Thomas J. Schmidt
cc: Andrew W. Code
Thomas J. Formolo
S. Michael Peck, Esq.
-2-
<PAGE>
Exhibit 10.21
Dated as of April 24, 1997
Thomas J. Schmidt
HomeCrest Corporation
1002 Eisenhower Drive North
Goshen, IN 46526
Dear Mr. Schmidt:
Omega Holdings, Inc. ("Holdings"), the ultimate parent company of HomeCrest
Corporation ("HomeCrest") is presently contemplating a sale. In recognition of
your past service and future contributions and in order to obtain your
cooperation in the sale and transition process, we wish to implement a special
transition compensation program. While it is our hope that the program outlined
in this Letter Agreement ("Agreement") will never have cause to be implemented,
the following paragraphs will address some of your concerns in the event they
are and highlight the benefits that will be available to you under those
circumstances.
If a Change of Control (as defined herein) occurs on or prior to September
30, 1997, and your employment with HomeCrest under the new owner is terminated
within one hundred and eighty (180) days following the date of such Change in
Control (i) by HomeCrest without Cause (as defined herein) or (ii) voluntarily
by you for Good Reason (as defined herein), you will be paid severance pay, in
one lump sum at the time of such termination of employment, in an amount equal
to eighteen (18) months of your base monthly salary (as in effect immediately
prior to Change of Control or, if greater, as in effect immediately prior to the
termination of your employment). The foregoing severance payment, however, will
be reduced to the maximum amount which will avoid treatment of the severance pay
and other consideration (if any) paid to you as a result of the Change of
Control as a parachute payment as defined in section 280G of the Internal
Revenue Code of 1986, as amended ("Code").
----
For purposes of this Agreement, "Cause" shall mean your conviction of a
-----
felony, or any conduct by you involving crime or moral turpitude materially and
adversely affecting HomeCrest; a "Change of Control" shall be deemed to have
-----------------
occurred if the present shareholders of Holdings no longer own, either
individually or in the aggregate, more than fifty percent (50%) of the voting
power of all of the then outstanding securities of Holdings or upon the
occurrence of any other transaction in which the business of Holdings and its
subsidiaries is sold; and "Good Reason" shall mean a reduction in salary,
benefits or perquisites, relocation of more than twenty-five (25) miles without
your consent, or a material reduction in position, duties and/or
responsibilities.
Upon termination of employment in the manner described above, you will also
be entitled to the additional benefits outlined in the following paragraphs.
<PAGE>
You will also be entitled to all compensation earned, including
compensation for vacation time earned or accrued, up to and including the date
of termination of employment. In addition, you will be entitled to reimbursement
for business related expenses incurred by you up to and including the date of
your termination of employment.
You will also be entitled to any and all vested benefits and account
balances accrued under the terms of any qualified retirement plan(s) through the
date of your termination of employment. All such benefits shall be payable to
you or for your benefit at your direction in accordance with the terms of the
qualified plans.
You will also be entitled to continuation of coverage under the group
health, group life, group long-term disability and any other group plans
maintained by HomeCrest, at the expense of HomeCrest, until the earlier to occur
of (i) that date on which you become eligible for comparable coverage under
another group plan, including a plan maintained by a new employer, or (ii) the
expiration of two (2) years from the date of termination. If such continued
participation is precluded by the provisions of such plans or by applicable law,
HomeCrest shall provide you with comparable benefits of equal value. In
addition, you and your dependents may be entitled to the right to continued
health benefits at your cost under section 4980B of the Code, Part 6 of Subtitle
B of the Title I of ERISA and applicable state law.
You will also be eligible for executive outplacement assistance consisting
of consultation services, testing, if appropriate, and resume preparation at the
expense of HomeCrest.
All amounts payable under this Agreement will be subject to the applicable
federal, state and local income tax withholding, which will result in lesser
amounts being paid directly to you.
You will be entitled to payment of the severance pay and other benefits
described herein without any obligation to seek or accept other employment and,
in the case of any breach hereof by HomeCrest, you will have no duty to mitigate
damages. If you obtain other employment, any compensation payable to you will
not reduce the amounts payable to you hereunder.
Our entering into this Agreement does not terminate any existing agreement,
arrangement or plan of HomeCrest to which you are a party or in which you are a
participant. To the extent, however, payments or benefits are provided under
this Agreement, they will be in substitution of comparable payments or benefits
pursuant to any such other agreement, arrangement or plan. To the extent
payments or benefits are not provided under this Agreement, you remain entitled
to the payments and benefits provided under the terms of all such other
agreements, arrangements or plans.
-2-
<PAGE>
If for any reason Holdings decides not to sell or the closing of such sale
does not occur for any reason prior to September 30, 1997, the severance
payments and other benefits described in this letter will not be payable.
This Agreement shall be binding upon and inure to the successors and
assigns of HomeCrest and to your heirs and legal representatives. If necessary,
HomeCrest will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business and/or assets of HomeCrest to expressly assume and agree to
perform HomeCrest's obligations under the terms of this Agreement in the same
manner and to the same extent that HomeCrest would be required to perform them
if no such succession had occurred.
PLEASE REMEMBER THAT THE CONTENTS OF THIS LETTER ARE STRICTLY CONFIDENTIAL.
YOU ARE NOT TO DISCUSS THE CONTENTS OF THIS LETTER WITH ANYONE.
Very truly yours,
Thomas J. Formolo, Vice President
HomeCrest Corporation
-3-
<PAGE>
Exhibit 10.22
DEFERRED NON-QUALIFIED COMPENSATION AGREEMENT
This Deferred Compensation Agreement is made this day __ of ________, 19__
between Omega Cabinets, Ltd. hereinafter referred to as "Employee".
WHEREAS, the Employee has rendered to the Employer several years of valued
service and it is the desire of the Employer to have the benefit of the
Employee's continued loyalty, service and advice and to assist the Employee in
providing for the contingencies of death and retirement, it is hereby agreed as
follows:
1. DEFERRED RETIREMENT: If the Employee shall have continued in the
employ of the Employer beyond the Employee's sixty-fifth (65th) birthday, then
benefits as provided in Paragraph 3 hereof shall be payable commencing only upon
the Employee's actual retirement.
2. DEATH PRIOR TO RETIREMENT: Should the Employee die before his or her
sixty-fifth (65th) birthday and while in the employ of the Employer, the
Employer will commence to pay on the first business day of the calendar month
following Employee's death the sum of $1,666.67 per month for a continuous
period of one hundred twenty (120) months to _________________, the designated
beneficiary of Employee, if living; otherwise, to the estate of the deceased
Employee. If the beneficiary designated above should survive Employee, but die
prior to receiving the one hundred twenty (120) monthly equal payments, the same
shall be paid to the estate of the designated beneficiary or as specified in the
deceased beneficiary's Last Will and Testament.
3. RETIREMENT BENEFITS: Should the Employee still be in the employ of the
Employer upon his sixty-fifth (65th) birthday, the Employer will commence to pay
on the first business day of the calendar month following his sixty-fifth (65th)
birthday, to the Employee as a retirement benefit the sum of $1,666.67 per
month, until a total of $200,000.00 has been paid to Employee, provided,
however, that if the sum of $1,666.67 is more than one-twelfth (1/12) of the
"Social Security earnings limit" for the calendar year in which Employee
retires, then in that event the monthly payment shall be an amount equal to one-
twelfth (1/12) of the "Social Security earnings limit" for the calendar year in
which Employee retires. In the event the "Social Security earnings limit" is
increased in any year or years subsequent to the year in which Employee retires,
the monthly payment to be paid to Employee shall be increased to an amount equal
to one-twelfth (1/12) of the "Social Security earnings limit" for that
subsequent year, provided, however, that in no event shall the monthly payment
exceed the sum of $1,666.67. In the event Employee dies before he shall have
received the total of $200,000.00 in benefits under this Agreement, the amount
of monthly benefits to be paid to Employee's designated beneficiary, if living,
or otherwise to his estate, as provided in paragraph 2 of this Agreement, shall
be $1,666.67 per month, to continue until the total benefits paid to Employee
<PAGE>
and his designated beneficiary or estate shall equal $200,000.00, at which time
the benefits shall cease. The term "Social Security earnings limit" shall mean
the maximum amount of earned income which an individual aged sixty-five (65) or
more may earn in any calendar year which will cause no decrease in the amount of
Social Security retirement benefits to which that individual would otherwise be
entitled, all as determined under Section 203 of the Social Security Act (42
United States Code Section 403), as amended from time to time.
4. MAXIMUM PAYMENTS: The maximum payments to be paid to Employee and/or
to his designated beneficiary or estate under this Agreement shall be
$200,000.00. Payments shall cease when the total of all payments paid under this
Agreement reach $200,000,00.
5. NON-COMPETE AGREEMENT: Employee agrees that during the period of
receipt of monthly payments from the Employer under this Agreement, he will not
directly or indirectly enter into or in any manner take part in any business,
profession or other endeavor either as an employee, agent, independent
contractor, owner or otherwise anywhere within the confines of Black Hawk
County, Iowa, which in the opinion of Employer shall be in competition with the
business of the Employer, which opinion of the Employer shall be final and
conclusive for the purposes of this Agreement. Employee agrees that if he fails
to comply with the above non-compete agreement for a continuous period of thirty
(30) days after Employer shall have notified him in writing to cease and desist
from his involvement in such business, then any of the provisions of this
Agreement to the contrary notwithstanding, Employee agrees that no further
payments are due or payable by Employer under this Agreement either to himself
or to his designated beneficiary, and that the company shall have no further
liability under this Agreement.
6. NON-ASSIGNABILITY: It is agreed that neither Employee nor his
designated beneficiary nor his executor or administrator shall have any right to
sell, assign, transfer or otherwise convey or encumber the right to receive any
payments under this Agreement, which payments and the right thereto are
expressly declared to be non-assignable and non-transferable, and in the event
of any attempted assignment or transfer Employer shall have no further liability
under this Agreement.
7. TERMINATION OF EMPLOYMENT: If Employee shall voluntarily terminate his
employment during his lifetime and prior to his retirement, or if his employment
shall be terminated by the Board of Directors of Employer, this Agreement shall
automatically terminate and Employer shall have no further obligation to make
any payments under this Agreement.
8. AGREEMENT MAY BE AMENDED: During the lifetime of Employee, this
Agreement may be altered, amended or revoked at any time or times, in whole or
in part by the mutual written agreement of Employee and Employer.
-2-
<PAGE>
9. NO TRUST: Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust or escrow of any kind or a fiduciary relationship between the
Employer and the Employee's designated beneficiary or any other person.
10. EMPLOYMENT RIGHTS: This Agreement creates no right in the Employee to
continue in the Employer's employ or in the employ of any other corporation
affiliated with or related to the Employer for any specific length of time nor
does it create any rights int eh Employee or obligations on the part of the
Employer except those specifically set forth in this Agreement.
11. BINDING EFFECTS: This Agreement shall be binding upon the inure to
the benefit of the Employer, its successors and assigns and the Employee and the
heirs, Executors, Administrators and legal representatives of the Employee.
12. GOVERNING LAW: This Agreement shall be construed in accordance with
and governed by the laws of the State of Iowa.
13. LIFE INSURANCE: The Employer may purchase a life insurance or annuity
contract, including a variable annuity contract, as an informal method of
funding the obligations contained under this agreement and to assist the
Employer in the discharge of its obligations under this Deferred Compensation
Agreement. In such event, the Employee has no right whatsoever in any life
insurance or annuity contract, side funds or any other funds or accounts
established by the Employer as its method of funding it contractual obligations
to the Employee and the parties shall not be considered as having created a
trust by this informal method of funding on the part of the Employer to assist
it in discharging its obligations under this contract. In that event the
Employer will be the sole owner and holder, as well as the beneficiary, of any
such annuity or insurance contracts or side funds. The Employer will possess
all rights under those contracts and accounts, which rights may be exercised at
any time in any manner that the Employer may see fit for its own purposes.
14. This Agreement shall be executed in duplicate each copy of which when
so executed and delivered shall be an original, but both copies shall together
constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have executed this Agreement on this ___ day
of ______________, 19__.
-3-
<PAGE>
Exhibit 10.23
OMEGA CABINETS
1205 Peters Drive
Waterloo, IA 50703
Tel: 319-235-5700
Fax: 319-236-9618
Henry P. Key
President
Chief Executive Officer
January 30, 1997
TO: Doug Conley Lance Erlick John Goebel
Mike Hagan Bob Moran Tom Schmidt
Hank Wellnitz
SUBJECT: FY '97 Executive Bonus Plan
Attached is a graph depicting our FY '97 Bonus Plan. As you will note, the plan
is identical to FY '96 in terms of overall design with 100% pay out occurring at
our budgeted operating income objective of $26,007... Your individual bonus
potential as a percentage of base salary remains the same as FY '96.
"Chance favors the prepared man." We are prepared. We have a great team.
Let's make FY '97 the best ever!!!
Hank
<PAGE>
OMEGA CABINETS, LTD.
EXECUTIVE BONUS PLAN
FY '97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% Plan EBIT % Bonus
<S> <C> <C>
85% 22,106 0.0%
90% 23,406 25.0%
95% 24,707 62.5%
100% 26,007 100.0%
105% 27,307 125.0%
</TABLE>
-2-
<PAGE>
EXHIBIT 12.1
OMEGA CABINETS, LTD.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------------
YEAR ENDED DECEMBER 31 PERIOD FROM
---------------------- JANUARY 1 THROUGH
1992 1993 JUNE 16, 1994
---------- ----------- -----------------
<S> <C> <C> <C>
Income (loss)
before income
taxes and
extraordinary
item............. $9,552,322 $10,287,992 $2,095,952
Fixed charges:
Interest
expense......... 191,677 60,349 22,321
Rental expense
(25%)........... 166,244 235,322 135,750
---------- ----------- ----------
Total fixed
charges......... 357,921 295,671 158,071
========== =========== ==========
Earnings before
income taxes and
fixed charges.... 9,910,243 10,583,663 2,254,023
========== =========== ==========
Ratio of earnings
to fixed charges. 27.7 35.8 14.3
Deficiency of
earnings to fixed
charges..........
<CAPTION>
THE COMPANY
----------------------------------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
---------------------------------------- -----------------------------------------
PERIOD FROM PRO FORMA
JUNE 17 THROUGH DECEMBER DECEMBER PRO FORMA JUNE 29, 1996 JUNE 28, 1997 JUNE 28, 1997
DECEMBER 31, 1994 30, 1995 29, 1996 DECEMBER 29, 1996 (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------- ---------- ----------- ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss)
before income
taxes and
extraordinary
item............. $3,057,877 $3,439,656 $11,856,024 $ 7,077,000 $4,517,013 $ 803,578 $ (195,000)
Fixed charges:
Interest
expense......... 4,123,344 9,700,914 10,441,182 15,220,000 5,247,818 6,604,809 7,603,000
Rental expense
(25%)........... 161,500 333,750 421,500 422,000 210,750 187,500 187,500
----------------- ---------- ----------- ----------------- ------------- ------------- -------------
Total fixed
charges......... 4,284,844 10,034,664 10,862,682 15,642,000 5,458,568 6,792,309 7,790,500
================= ========== =========== ================= ============= ============= =============
Earnings before
income taxes and
fixed charges.... 7,342,721 13,474,320 22,718,706 22,719,000 9,975,581 7,595,887 7,595,500
================= ========== =========== ================= ============= ============= =============
Ratio of earnings
to fixed charges. 1.7 1.3 2.1 1.5 1.8 1.1 --
Deficiency of
earnings to fixed
charges.......... $ (195,000)
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 28, 1997, except for Note 9, as to which
the date is June 13, 1997, in the Registration Statement (Form S-4) and
related Prospectus of Omega Cabinets, Ltd. for the registration of its $100
million 10 1/2% Senior Subordinated Notes due 2007.
/s/ Ernst & Young LLP
Ernst & Young LLP
Des Moines, Iowa September 29, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-4 of Omega
Cabinets, Ltd. of our report dated June 28, 1995 on the statements of income
and cash flows of Home-Crest Corporation for the year ended December 31, 1994
and the period ended May 25, 1995 and to the reference to us in the section
entitled "Experts".
/s/ Crowe, Chizek and Company LLP
Crowe, Chizek and Company LLP
Elkhart, Indiana
September 29, 1997
<PAGE>
Ex. 25.1
---------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
OMEGA CABINETS, LTD.
(Exact name of obligor as specified in its charter)
Delaware 42-1423186
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1205 Peters Drive
Waterloo, Iowa 50703
(Address of principal executive offices) (Zip Code)
PANTHER TRANSPORT, INC.
(Exact name of obligor as specified in its charter)
Delaware 42-1395277
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1205 Peters Drive
Waterloo, Iowa 50703
(Address of principal executive offices) (Zip Code)
--------------------------------------------------------------
10-1/2% Senior Subordinated Notes due 2007
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 9th day of September, 1997.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
---------------
/s/ R. Lorenzen
Senior Trust Officer
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin.............................................. $ 13,892
Interest-bearing balances...................................... 4,282
Securities:......................................................
Held to maturity securities...................................... 2,857
Available for sale securities.................................... 34,091
Federal Funds sold and securities purchased under
agreements to resell........................................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income $124,827
Less: Allowance for loan and lease losses 2,753
Less: Allocated transfer risk reserve....... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve......................................... 122,061
Trading Assets................................................... 56,042
Premises and fixed assets (including capitalized
leases)........................................................ 2,904
Other real estate owned.......................................... 306
Investments in unconsolidated subsidiaries and
associated companies........................................... 232
Customers' liability to this bank on acceptances
outstanding.................................................... 2,092
Intangible assets................................................ 1,532
Other assets..................................................... 10,448
--------
TOTAL ASSETS..................................................... $280,709
========
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices............................................ $ 91,249
Noninterest-bearing........................ $38,157
Interest-bearing........................... 53,092
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's...................................................... 70,192
Noninterest-bearing........................ $ 3,712
Interest-bearing........................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase.............................................. 35,185
Demand notes issued to the U.S. Treasury......................... 1,000
Trading liabilities.............................................. 42,307
Other Borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less.................. 4,593
With a remaining maturity of more than one year
through three years....................................... 260
With a remaining maturity of more than three years............. 146
Bank's liability on acceptances executed and outstanding......... 2,092
Subordinated notes and debentures................................ 5,715
Other liabilities................................................ 11,373
TOTAL LIABILITIES................................................ 264,112
--------
EQUITY CAPITAL
Perpetual Preferred stock and related surplus.................... 0
Common stock..................................................... 1,211
Surplus (exclude all surplus related to preferred stock)......... 10,283
Undivided profits and capital reserves........................... 5,280
Net unrealized holding gains (Losses)
on available-for-sale securities................................. (193)
Cumulative foreign currency translation adjustments.............. 16
TOTAL EQUITY CAPITAL............................................. 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL............................. $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS PROVIDED BY ERNST & YOUNG, LLP AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001043958
<NAME> PANTHER TRANSPORT, INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-28-1996 DEC-27-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-28-1996 JUN-28-1997
<CASH> 3,797 3,797
<SECURITIES> 0 0
<RECEIVABLES> 10,766,086 15,327,799
<ALLOWANCES> 1,628,000 1,728,000
<INVENTORY> 9,295,879 10,930,360
<CURRENT-ASSETS> 21,402,789 29,905,955
<PP&E> 29,552,466 30,869,272
<DEPRECIATION> 3,283,729 4,272,426
<TOTAL-ASSETS> 103,576,746 114,417,549
<CURRENT-LIABILITIES> 22,252,648 15,322,787
<BONDS> 0 0
0 0
0 0
<COMMON> 10 10
<OTHER-SE> 2,790,058 (47,318,251)
<TOTAL-LIABILITY-AND-EQUITY> 103,576,746 114,417,549
<SALES> 136,225,643 76,539,863
<TOTAL-REVENUES> 136,225,643 76,539,863
<CGS> 97,287,215 55,469,851
<TOTAL-COSTS> 97,287,215 55,469,851
<OTHER-EXPENSES> 16,641,222 13,661,625
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 10,441,182 6,604,809
<INCOME-PRETAX> 11,856,024 803,578
<INCOME-TAX> 4,700,000 530,000
<INCOME-CONTINUING> 7,156,024 273,578
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (947,443)
<CHANGES> 0 0
<NET-INCOME> 7,156,024 (673,865)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
