<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
January 29, 1999
----------------
OMEGA CABINETS, LTD
--------------------------
(Exact name of registrant as specified in charter)
Delaware 333-37135 42-1423186
-------- --------- ----------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporate) Identification No.)
1205 Peters Drive, Waterloo, Iowa 50703
- - --------------------------------- -----
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (319) 235-5700
--------------
Page 1 of 283
Exhibit Index on Page 7
================================================================================
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
(a) In a series of transactions described more fully below, Omega Cabinets,
Ltd., a Delaware corporation (the "Company"), through certain of its
subsidiaries, acquired all of the outstanding capital stock (the "Kitchen Craft
Stock") of Kitchen Craft of Canada Ltd., a Canadian corporation ("Kitchen
Craft").
As contemplated by the Master Transaction Agreement dated as of January 29,
1999 (the "Master Transaction Agreement") among (i) 3578275 Canada Inc., a
Canadian corporation and an indirect subsidiary of the Company; (ii) Omega
Holdings, Inc., a Delaware corporation and the sole direct parent company of
the Company ("Holdings"); and (iii) the Selling Participants (as defined in the
Master Transaction Agreement), the following transactions occurred in the
following order:
(1) Omega Kitchen Craft Holdings Corp., a Delaware corporation and a
direct wholly owned subsidiary of the Company, purchased 100,000
shares of Class A Common Stock of 3578275 Canada Inc. representing all
of the issued and outstanding shares of Class A Common Stock of
3578275 Canada Inc. other than 1 share issued to the incorporator of
3578275 Canada Inc.
(2) Omega Kitchen Craft U.S. Corp., a Delaware corporation and an indirect
wholly owned subsidiary of the Company, acquired all of the
outstanding capital stock of Bulrad Illinois, Inc., an Illinois
corporation, from Kitchen Craft for cash consideration equal to
approximately $600,000.
(3) 3578275 Canada Inc. acquired all of the outstanding Kitchen Craft
Stock and retired all related party indebtedness of Kitchen Craft in
exchange for approximately (Cdn) $70.4 million and 2,904.7728 shares
of Class B Common Stock of 3578275 Canada Inc., exchangeable on a 1-
for-1 basis into shares of common stock, $.01 par value per share (the
"Common Stock"), of Holdings. In addition, all other indebtedness of
Kitchen Craft existing as of January 29, 1999 was retired in exchange
for approximately (Cdn) $4.5 million cash.
(4) 3578275 Canada Inc. and Kitchen Craft amalgamated under Canadian law
to form a new corporation, Kitchen Craft of Canada Ltd., a Canadian
corporation. In the amalgamation (i) each outstanding share of Class
A Common Stock of 3578275 Canada Inc. was converted into one share of
Class A Common Stock of Kitchen Craft of Canada Ltd., (ii) each
outstanding share of Class B Common Stock of 3578275 Canada Inc. was
converted into one share of Class B Common Stock of Kitchen Craft of
Canada Ltd., which shares are exchangeable on a 1-for-1 basis into
shares of Holdings Common Stock, and (iii) each outstanding share of
Kitchen Craft owned by 3578275 Canada Inc. was canceled for no
consideration.
-2-
<PAGE>
In order to finance the transactions described above, (i) Holdings sold
9,674.5734 shares of its Common Stock to Mezzanine Lending Associates III, L.P.
for aggregate consideration of $13,272,296.14 and a portion of such
consideration was contributed down to 3578275 Canada Inc. through the Company
and Omega Kitchen Craft Holdings Corp.; (ii) the Company amended and restated
its existing senior credit agreement to provide for an additional term loan of
$25.0 million and the Company borrowed $25.0 million under the new term loan and
loaned the proceeds therefrom to 3578275 Canada Inc. in return for an
intercompany note (the "Intercompany Note"); and (iii) 3578275 Canada Inc.
entered into a Canadian dollar denominated senior credit agreement (the
"Canadian Senior Credit Agreement") supplemental to the amended and restated
senior credit agreement of the Company pursuant to which it borrowed
approximately (Cdn) $22.0 million under a term loan and approximately (Cdn) $2.0
under a revolving loan. The proceeds from the sale of Holdings Common Stock to
Mezzanine Lending Associates III, L.P. together with the borrowings evidenced by
the Intercompany Note and the borrowings under the Canadian Senior Credit
Agreement were used to pay the purchase price to the selling stockholders of
Kitchen Craft and to pay certain related fees and expenses.
Immediately prior to the acquisition of Kitchen Craft, there were 100
shares of common stock of Kitchen Craft, 23,442,000 Class A preference shares of
Kitchen Craft, and 77,000 Class B preference shares of Kitchen Craft
outstanding. The amount and nature of the consideration was determined by arms-
length negotiation among the parties.
The foregoing description is qualified in its entirety by reference to the
Master Transaction Agreement, a copy of which is attached hereto as Exhibit 2.1
and incorporated herein by reference.
(b) Kitchen Craft of Canada Ltd., based in Winnipeg, Manitoba, is the second
largest manufacturer of kitchen and bathroom cabinetry and laminated countertops
in Canada and the largest Canadian manufacturer of semi-custom kitchen and
bathroom cabinetry. Kitchen Craft is also a leading competitor in the United
States semi-custom cabinet market. In contrast to the Company, 100% of Kitchen
Craft's cabinetry sales are generated by frameless products. The Company intends
to continue to use the assets of Kitchen Craft for the purposes described above.
ITEM 5. OTHER EVENTS.
In connection with the transactions contemplated by the Master Transaction
Agreement, the Company solicited the consent of the holders of its 10-1/2%
Senior Subordinated Notes due 2007 (the "Notes") to certain amendments to the
Indenture dated as of July 24, 1997 (the "Indenture) between the Company,
Panther Transport, Inc., HomeCrest Corporation and The Chase Manhattan Bank, as
trustee. On January 28, 1999, the Company, Panther Transport, Inc. and The Chase
Manhattan Bank, as trustee, entered into the First Supplemental Indenture to
effect the amendments to the Indenture described in the Company's Consent
Solicitation Statement dated January 12, 1999, as supplemented by Supplement No.
1 thereto dated January 26, 1999, Supplement No. 2 thereto dated January 27,
1999, and Supplement No. 3 thereto dated January 27, 1999.
Immediately following consummation of the acquisition of Kitchen Craft
pursuant to the terms of the Master Transaction Agreement, the Company, Panther
Transport, Inc., Omega
-3-
<PAGE>
Kitchen Craft U.S. Corp., a Delaware corporation and an indirect wholly owned
subsidiary of the Company, Bulrad Illinois, Inc., an Illinois corporation and in
indirect wholly owned subsidiary of the Company, and The Chase Manhattan Bank,
as trustee, entered into the Second Supplement Indenture dated January 29, 1999
pursuant to which each of Omega Kitchen Craft U.S. Corp. and Bulrad Illinois,
Inc. agreed to guarantee the Company's obligations under the Notes and the
Indenture in accordance with the terms and provisions of the Indenture.
-4-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of the Acquired Businesses
The required historical financial statements for the acquired business
referred to in Item 2 of this Report are incorporated herein by
reference to the information included in the Company's Consent
Solicitation Statement dated January 12, 1999 and filed as Exhibit
99.1 to the Company's Current Report on Form 8-K filed January 12,
1999.
(b) Pro Forma Financial Information
The required pro forma financial information with respect to the
acquired business referred to in Item 2 of this Report are
incorporated herein by reference to the information included in the
Company's Consent Solicitation Statement dated January 12, 1999 and
filed as Exhibit 99.1 to the Company's Current Report on Form 8-K
filed January 12, 1999.
(c) Exhibits:
2.1 Master Transaction Agreement dated as of January 29, 1999 among (i)
3578275 Canada Inc., a Canadian corporation; (ii) Omega Holdings,
Inc., a Delaware corporation; and (iii) the Selling Participants (as
defined in the Master Transaction Agreement).
2.2 Agreement to furnish copies of omitted annexes, schedules and exhibits
to the Master Transaction Agreement.
4.1 First Amended and Restated Credit Agreement dated as of January 29,
1999 by and among Omega Cabinets, Ltd., Panther Transport, Inc., and
any other party that becomes a party thereto, the Banks (as defined
therein), U.S. Bank National Association, as agent, and The First
National Bank of Chicago, as documentation agent.
4.2 Credit Agreement dated as of January 29, 1999 between 3578275 Canada
Inc. and the Lenders (as defined therein), and Canadian Imperial Bank
of Commerce, as Administrative Agent.
99.1 First Supplemental Indenture dated January 28, 1999 between Omega
Cabinets, Ltd., Panther Transport, Inc. and The Chase Manhattan Bank,
as trustee.
99.2 Second Supplemental Indenture dated January 29, 1999 between Omega
Cabinets, Ltd., Panther Transport, Inc., Omega Kitchen Craft U.S.
Corp., Bulrad Illinois, Inc., and The Chase Manhattan Bank, as
trustee.
-5-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OMEGA CABINETS, LTD.
By: /s/ Robert L. Moran
-----------------------------
Name: Robert L. Moran
Title: President
Date: February 12, 1999
-6-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibits Page
- - ---------- ----------------------- ----
2.1 Master Transaction Agreement dated as of January 29,
1999 among (i) 3578275 Canada Inc., a Canadian
corporation; (ii) Omega Holdings, Inc., a Delaware
corporation; and (iii) the Selling Participants (as
defined in the Master Transaction Agreement).
2.2 Agreement to furnish copies of omitted annexes,
schedules and exhibits to the Master Transaction
Agreement.
4.1 First Amended and Restated Credit Agreement dated as of
January 29, 1999 by and among Omega Cabinets, Ltd., Panther
Transport, Inc., and any other party that becomes a party
thereto, the Banks (as defined therein), U.S. Bank National
Association, as agent, and The First National Bank of
Chicago, as documentation agent.
4.2 Credit Agreement dated as of January 29, 1999 between
3578275 Canada Inc. and the Lenders (as defined therein),
and Canadian Imperial Bank of Commerce, as Administrative
Agent.
99.1 First Supplemental Indenture dated January 28, 1999
between Omega Cabinets, Ltd., Panther Transport, Inc.
and The Chase Manhattan Bank, as trustee.
99.2 Second Supplemental Indenture dated January 29,
1999 between Omega Cabinets, Ltd., Panther
Transport, Inc., Omega Kitchen Craft U.S. Corp.,
Bulrad Illinois, Inc., and The Chase Manhattan Bank,
as trustee.
<PAGE>
EXHIBIT 2.1
================================================================================
KITCHEN CRAFT OF CANADA LTD.
________________________________________
MASTER TRANSACTION AGREEMENT
________________________________________
Dated as of January 29, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS........................................................2
2. THE PURCHASE.......................................................2
3. PAYMENT AND CLOSING................................................2
3.1. Transaction Price............................................2
3.2. Allocation Among Sellers.....................................2
3.3. Delivery by Buyer............................................3
3.4. Delivery by Sellers.........................................3
3.5. Time and Place of Closing....................................3
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTICIPANTS.........3
4.1. Corporate Matters, etc........................................3
4.1.1. Organization, Power and Standing.....................3
4.1.2. Capitalization.......................................4
4.1.3. Subsidiaries.........................................4
4.1.4. Charter and By-laws..................................5
4.2. Financial Statements, etc.....................................5
4.2.1. Financial Information................................5
4.2.2. Character of Financial Information...................5
4.2.3. Inventory and Receivables............................6
4.2.4. Change in Condition.................................7
4.3. Liabilities..................................................9
4.3.1. Debt.................................................9
4.3.2. Other Liabilities....................................9
4.3.3. Pre-Closing Transactions.............................9
4.4. Assets......................................................10
4.4.1. Title to Assets....................................10
4.4.2. Real Property and Equipment........................10
4.4.3. Intellectual Property Rights.......................12
4.4.4. Accounts; Funds, etc...............................12
4.5. Contracts, etc..............................................12
4.5.1. Certain Contractual Obligations....................12
4.5.2. Nature of Contracts, etc...........................14
4.5.3. Insurance..........................................14
4.5.4. Transactions with Affiliates.......................15
4.5.5. Non-Contravention, etc.............................16
4.6. Compliance with Laws, Consents, etc.........................16
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
4.6.1. Compliance Generally...............................16
4.6.2. Tax Matters........................................17
4.6.3. No Illegal Payments, etc...........................21
4.6.4. Employee Benefit Plans.............................21
4.7. Environmental and Safety Matters, etc.......................23
4.8. Employee Matters............................................24
4.8.1. Labor Relations.....................................24
4.8.2. Employees...........................................25
4.9. Customers, Suppliers and Distributors.......................25
4.10. Litigation, etc.............................................26
4.10.1. General Litigation.................................26
4.10.2. Products Liability Matters.........................26
4.11. Disclosure..................................................26
4.12. Banking Facilities, Powers of Attorney, etc.................27
4.13. Books and Records...........................................27
4.14. Brokers or Finders Fees.....................................27
4.15. Representations and Warranties Relating to the Sellers......27
4.15.1. Enforceability.....................................27
4.15.2. Organization, Power and Standing...................27
4.15.3. Non-Contravention, etc.............................28
4.15.4. Title, etc.........................................28
4.15.5. Investment Intent, Etc.............................29
4.16. Representations and Warranties Relating to the Selling
Individuals.................................................30
4.16.1. Enforceability.....................................30
4.16.2. Power and Standing.................................30
4.16.3. Non-Contravention, etc.............................30
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.......................31
5.1. Corporate Matters...........................................31
5.2. Authorization and Enforceability............................31
5.3. Non-Contravention, etc......................................31
5.4. Brokers or Finders Fees......................................31
5.5. Financial Statements, etc....................................32
5.5.1. Financial Information...............................32
5.5.2. Character of Financial Information..................32
5.6. Capitalization..............................................32
5.7. Other Liabilities...........................................33
5.8. Compliance Generally.......................................33
5.9. Environmental and Safety Matters, etc......................34
5.10. General Litigation..........................................34
5.11. Stockholders Agreement......................................35
6. CERTAIN AGREEMENTS OF THE PARTIES.................................35
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
6.1. Consents....................................................35
6.2. Certain Closing Matters.....................................35
6.2.1. Expenses of Transaction.............................35
6.2.2. Preparation for Closing.............................35
6.2.3. Certain Closing Agreements..........................35
6.3. Covenants regarding Confidentiality.........................36
6.4. Tax Matters.................................................37
6.4.1. Pre-Closing Taxes...................................37
6.4.2. Returns.............................................37
6.4.3. Tax Allocations.....................................38
6.4.4. Payment of Transfer Taxes and Other Charges.........38
6.4.5. Withholding.........................................39
6.4.6. Tax Sharing Agreements..............................39
6.4.7. Section 85 Election.................................39
6.5. Non-Cash Net Working Capital Adjustments; Closing Date
Current Income Tax Liabilities..............................39
6.5.1. Pre-Closing.........................................39
6.5.2. Post-Closing........................................39
6.6. Excess Cash..................................................40
6.7. Indebtedness................................................40
6.8. Sellers' Representative.....................................41
6.8.1. Appointment.........................................41
6.8.2. Authorization.......................................41
6.8.3. Actions Binding.....................................41
6.9. Amalgamation; Bulrad Illinois Transfer......................42
6.10. Escrow of Agreement and Documents...........................42
6.11. Certain Provisions Relating to the Rollover Shares,
Exchange Shares and Holdings Shares.........................42
6.11.1. Definition..........................................42
6.11.2. Rollover Shares.....................................42
6.11.3. Exchange Shares.....................................42
6.11.4. Holdings Shares.....................................43
6.11.5. Execution of Documents..............................44
6.12. Unanimous Shareholder Agreement Relating to Amalco..........45
7. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER................45
7.1. [Intentionally Omitted].....................................45
7.2. [Intentionally Omitted].....................................45
7.3. [Intentionally Omitted].....................................45
7.4. Certain Deliveries..........................................45
7.5. Closing Agreements..........................................45
7.6. Legality; Governmental Authorization; General Litigation....45
7.7. Opinion of Counsel..........................................46
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE SELLERS..............46
8.1. [Intentionally Omitted].....................................46
8.2. [Intentionally Omitted].....................................46
8.3. Closing Agreements..........................................46
8.4. Government Authorization; Litigation........................46
8.5. Opinion of Counsel..........................................47
9. INDEMNIFICATION...................................................47
9.1. Sellers' Indemnification....................................47
9.2. Buyer's Indemnification.....................................48
9.3. Time Limitation on Indemnification..........................49
9.4. Third Party Claims..........................................50
9.5. No Circular Recovery........................................51
9.6. No Circularity of Limitations...............................51
10. DEFINITIONS.......................................................51
10.1. Certain Matters of Construction.............................51
10.2. Cross Reference Table.......................................52
10.3. Certain Definitions.........................................54
10.3.1. Action.............................................54
10.3.2. Affiliate..........................................54
10.3.3. Business...........................................54
10.3.4. Business Day.......................................55
10.3.5. By-laws............................................55
10.3.6. Charter............................................55
10.3.7. Cleanup............................................55
10.3.8. Closing Date Current Income Tax Liabilities........55
10.3.9. Closing Debt Amount................................55
10.3.10. Code...............................................55
10.3.11. Compensation.......................................56
10.3.12. Contracts..........................................56
10.3.13. Contractual Obligation.............................56
10.3.14. Debt...............................................56
10.3.15. Distribution.......................................57
10.3.16. Environment........................................57
10.3.17. Environmental Claim................................57
10.3.18. Environmental Laws.................................57
10.3.19. ERISA..............................................58
10.3.20. Escrow Account.....................................58
10.3.21. Escrow Agent.......................................58
10.3.22. Escrow Funds.......................................58
10.3.23. ETA................................................58
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
10.3.24. Guarantee........................................58
10.3.25. Governmental Authority...........................58
10.3.26. Governmental Order...............................59
10.3.27. Hazardous Substance..............................59
10.3.28. Hedging Obligations..............................59
10.3.29. Intangibles......................................59
10.3.30. Knowledge........................................60
10.3.31. Legal Requirement................................60
10.3.32. Lien.............................................60
10.3.33. Loss.............................................60
10.3.34. Majority Sellers.................................61
10.3.35. Material Adverse Effect..........................61
10.3.36. Members of the Immediate Family..................61
10.3.37. MSA..............................................61
10.3.38. Non-Cash Net Working Capital.....................61
10.3.39. Ordinary Course of Business......................61
10.3.40. Person...........................................61
10.3.41. Release..........................................62
10.3.42. Rollover Stock Value.............................62
10.3.43. Securities Act...................................62
10.3.44. Subsidiary.......................................62
10.3.45. Tax Act..........................................62
10.3.46. Taxes............................................62
10.3.47. Tax Return.......................................62
11. GOVERNING LAW....................................................63
11.1. Governing Law..............................................63
11.2. Consent to Jurisdiction....................................63
11.3. Reliance...................................................63
12. HOLDINGS GUARANTEE...............................................63
12.1. Guarantee..................................................63
12.2. Waiver Requirement to Proceed Against Buyer................64
12.3. Wavier of Notice of Acceptance.............................64
13. MISCELLANEOUS....................................................64
13.1. Entire Agreement; Waivers..................................64
13.2. Amendment or Modification, etc.............................64
13.3. Headings, etc..............................................64
13.4. Schedules; Listed Documents, etc...........................64
13.5. Severability...............................................65
13.6. Counterparts...............................................65
13.7. Survival; Successors and Assigns...........................65
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
14. NOTICES..........................................................65
</TABLE>
-vi-
<PAGE>
SCHEDULES
Schedule 3.2 Sellers, Acquired Shares, Rollover Shares, Etc.
Schedule 4.1.1 Foreign Jurisdictions
Schedule 4.1.2 Capitalization
Schedule 4.1.3 Subsidiaries
Schedule 4.2.3.1(b) Inventory Summary
Schedule 4.2.3.2(a) Accounts Receivable
Schedule 4.2.4(b)-(e) Changes in Conditions
Schedule 4.3.1 Accounting of Closing Debt Amount
Schedule 4.3.3 Pre-Closing Transactions
Schedule 4.4.1 Liens
Schedule 4.4.2(a) Leases and Real Property
Schedule 4.4.2(b) Real Property Compliance
Schedule 4.4.2(c) Real Property Permits, Etc.
Schedule 4.4.2.3 Notice of Certain Matters
Schedule 4.4.3(a) Listed Intangibles
Schedule 4.4.3(b) Listed Licenses
Schedule 4.5.1 Contractual Obligations
Schedule 4.5.1A Description of Oral Contractual Obligations
Schedule 4.5.2 Breaches, Defaults, etc.
Schedule 4.5.3(a) Liability Policies
Schedule 4.5.3(b) Claims
Schedule 4.5.3(c) Other Matter Referenced in Section 4.5.3
Schedule 4.5.3(d) Declarations Pages
Schedule 4.5.3(e) Insurance Policies Not in Force
Schedule 4.5.4 Transactions with Affiliates
Schedule 4.5.5 Non-Contravention, etc. (Contracts)
Schedule 4.6.1 Non-Contravention, etc. (Laws)
Schedule 4.6.2 Tax Matters
Schedule 4.6.4.1 Employee Plans
Schedule 4.6.4.6 Retiree Benefits
Schedule 4.7 Environmental and Safety Matters
Schedule 4.8(a) Labor Matters
Schedule 4.8(b) Employees
Schedule 4.9(a-e) Customers, Suppliers and Distributors
Schedule 4.10.1 Litigation
Schedule 4.10.2 Product Liability Actions
Schedule 4.12 Financial Institutions
Schedule 4.15.3 Non-Contravention, etc. (Sellers)
Schedule 5.6 Capitalization (Holdings)
Schedule 5.8 Compliance (Buyer)
Schedule 5.9 Environmental (Buyer)
-vii-
<PAGE>
Schedule 5.10 Litigation (Buyer)
EXHIBITS
Exhibit 1A Articles of Amalgamation
Exhibit 1B Articles of Incorporation to be adopted by Amalco
Exhibit 3.3 Section 3.3 Notice (providing wire instructions and
allocation between U.S. and Canadian funds)
Exhibit 4.2 Company Financials
Exhibit 5.5 Omega Financials
Exhibit 6.2.3 Closing Agreements
(i) Stockholders Agreement
(ii) Non-Competition Agreement (Messrs. Herbert D.
Buller, Mark Buller, David Buller, Philip Buller
and James Buller)
(iii) Escrow Agreement
(iv) Employment Agreements (Messrs. Herbert D. Buller,
Mark Buller, David Buller, Philip Buller and James
Buller)
(v) Resolutions of the directors and the stockholders
of the Company approving the transfer of the
Acquired Shares to the Buyer
(vi) Unanimous Shareholder Termination Agreement
(vii) Buyer Unanimous Shareholder Agreement
Exhibit 6.5.1(a) Estimated Closing Date Non-Cash Net Working Capital
Exhibit 6.5.1(b) Estimated Closing Date Current Income Tax Liabilities
Exhibit 6.7 Payoff Letters
Exhibit 6.10 Wires
Exhibit 6.12 Amalco Unanimous Shareholder Agreement
Exhibit 7.7 Opinion of Aikins, MacAulay & Thorvaldson
Exhibit 8.5 Opinions of:
Ropes & Gray
Thompson Dorfman Sweatman
Davies Ward & Beck
Exhibit 9.1.3 Certain Environmental Matters
-viii-
<PAGE>
MASTER TRANSACTION AGREEMENT
This MASTER TRANSACTION AGREEMENT (the "Agreement") is made as of the 29th
day of January, 1999, among (i) 3578275 Canada Inc., a Canadian corporation (the
"Buyer"); (ii) Omega Holdings, Inc., a Delaware corporation ("Holdings"); (iii)
Bill Rademaker, Ernie Boschmann and Peter Neufeld (collectively the "Selling
Employees"); (iv) HEB2 Holdings Ltd, Herbert Buller, Erna Buller, MEB2 Holdings,
Ltd, MEB Family Trust, JWB2 Holdings, Ltd. JWB Family Trust, PCB2 Holdings Ltd.,
PCB Family Trust, DHB 2 Holdings, Ltd. and DHB Family Trust (collectively, with
the Selling Employees, the "Sellers"); and (v) each of Mark Buller, Philip
Buller, David Buller and James Buller (the "Selling Individuals" and
collectively with the Sellers, the "Selling Participants").
Recitals
--------
1. The Sellers collectively own all of the issued and outstanding shares
of capital stock of Kitchen Craft of Canada, Ltd., a Canadian corporation (the
"Company"), and all options, warrants or other rights to acquire the same.
2. The Sellers desire to sell and transfer to the Buyer and the Buyer
desires to purchase (the "Purchase") from the Sellers all of the issued and
outstanding shares of capital stock and all outstanding options, warrants or
other rights to acquire capital stock of the Company (collectively, the
"Acquired Shares") for a combination of cash, the Rollover Shares (as defined in
Section 3.1) and the other consideration set forth in this Agreement, all upon
the terms and subject to the conditions set forth in this Agreement.
3. Immediately prior to the consummation of the Purchase, the Company will
transfer (the "Bulrad Illinois Transfer") to Omega Kitchen Craft U.S. Corp., a
Delaware corporation, all of the issued and outstanding shares of capital stock
and all outstanding options, warrants and other rights to acquire capital stock
(the "Bulrad Illinois Shares") of Bulrad Illinois Inc., an Illinois corporation
("Bulrad Illinois") for cash consideration of $599,340 (U.S.) (i.e., the
equivalent of $910,000 (CDN)) (the "Bulrad Purchase Price).
4. Prior to the consummation of the Purchase and the Bulrad Illinois
Transfer, the Sellers and the Selling Individuals caused the Pre-Closing
Transactions to be consummated as set forth in Schedule 4.3.3.
5. Immediately following the consummation of the Purchase, the Buyer and
the Company will amalgamate under Canadian law (the "Amalgamation"), forming a
new corporation ("Amalco"), pursuant to the Articles of Amalgamation
substantially in the form attached hereto as Exhibit 1A. In connection with the
Amalgamation, Amalco will adopt
<PAGE>
Articles of Incorporation substantially identical to the Articles of
Incorporation of the Buyer, the form of which is attached hereto as Exhibit 1B.
6. In connection with the Amalgamation, the Rollover Shares will be
exchanged for shares of Class B Common Shares of Amalco (the "Exchange Shares"),
which will be subject to the provisions attaching to such shares in the Articles
of Incorporation of Amalco, as set forth in the Articles of Amalgamation.
Agreement
---------
Therefore, in consideration of the foregoing and the mutual agreements and
covenants set forth below, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms are used in this Agreement as specifically defined
herein. These definitions are set forth or referred to in Section 10.
2. THE PURCHASE. Upon the terms, subject to the conditions, and in reliance
on the representations, warranties and covenants set forth herein, the Sellers
will sell and transfer to the Buyer and the Buyer will purchase from the
Sellers, on the Closing Date, all of the Acquired Shares.
3. PAYMENT AND CLOSING.
3.1. Transaction Price. In consideration of the sale and transfer by the
-----------------
Sellers hereunder of the Acquired Shares to the Buyer and of the agreement by
each Selling Participant to perform each of its other obligations and covenants
hereunder, the Buyer will: (a) pay to the Sellers at the Closing an aggregate
amount (the "Initial Cash Purchase Price") equal to $87,000,000 (CDN) minus the
-----
Bulrad Purchase Price minus the Rollover Stock Value minus the Estimated Closing
----- -----
Date Current Income Tax Liabilities minus the Closing Debt Amount (to the extent
-----
any portion of the Closing Debt Amount has not been discharged pursuant to
Section 6.6) minus the Escrow Amount plus the Estimated Non-Cash Net Working
----- ----
Capital Adjustment (it being understood that the Estimated Non-Cash Net Working
Capital Adjustment may be a positive or negative amount, and if a negative
amount shall reduce, on a dollar-for-dollar basis, the Initial Cash Purchase
Price), (b) transfer to the Sellers an aggregate of 2,904.7728 shares of Class B
Common Shares of the Buyer (the "Rollover Shares"), (c) deposit $2,000,000 (CDN)
(the "Escrow Amount") at the Closing into the Escrow Account and (d) make such
additional payments, if any, as may become due pursuant to the adjustment
provisions of Section 6.5 (such aggregate consideration being referred to herein
as the "Purchase Price").
3.2. Allocation Among Sellers. Schedule 3.2 sets forth a list of: (a)
------------------------
the Sellers, (b) the Acquired Shares held by each Seller, (c) the amount of the
Initial Cash Purchase Price
-2-
<PAGE>
allocated (and to be paid) to each Seller and, (d) the number of Rollover Shares
allocated (and to be issued and delivered) to each Seller.
3.3. Delivery by Buyer. At the Closing, the Buyer shall deliver, against
-----------------
the deliveries by the Sellers set forth in Section 3.4: (a) the Initial Cash
Purchase Price by wire transfer of a combination of immediately available U.S.
federal funds and Canadian Funds to an account designated by the Sellers by
notice, a copy of which is attached hereto as Exhibit 3.3 (the "Section 3.3
Notice") to the Buyer not fewer than five (5) days prior to the Closing, (b) to
the Escrow Agent the Escrow Amount by wire transfer of immediately available
federal funds to the Escrow Account to be held in accordance with the terms and
conditions set forth in the Escrow Agreement and (c) to the Sellers (or their
representative), stock certificates representing the Rollover Shares. The
Section 3.3 Notice shall specify the allocation between U.S. Funds and Canadian
Funds to be made pursuant to this Section 3.3. The actual amount of U.S. funds
to be paid to the Sellers under this Section 3.3. shall be calculated based on
an exchange rate of $1.5182 Canadian dollars to one U.S. dollar.
3.4. Delivery by Sellers. At the Closing, the Sellers will convey,
-------------------
transfer, assign and deliver to the Buyer a certificate or certificates for all
of the Acquired Shares to be sold by the Sellers duly endorsed or accompanied by
separate stock powers duly endorsed, with signature(s) certified by Aikins
MacAulay & Thorvaldson, in each case free and clear of any Liens and in form
proper for transfer and satisfactory to the Buyer against those deliveries by
the Buyer set forth in Section 3.3.
3.5. Time and Place of Closing. The closing of the Bulrad Illinois
-------------------------
Transfer, the purchase and sale of the Acquired Shares and the other
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Thompson Dorfman Sweatman, Toronto Dominion Centre, 2200-201
Portage Avenue, Winnipeg, Manitoba R3B 3L3 or such other location as the parties
may agree, at 9:00 a.m. (Manitoba time) on January 29, 1999 (the "Closing
Date").
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTICIPANTS.
In order to induce the Buyer to enter into and perform this Agreement and
to consummate the transactions contemplated hereby, (i) each of the Selling
Participants other than the Selling Employees jointly and severally represents
and warrants to the Buyer as set forth in Sections 4.1 through 4.16 below and
(ii) each Selling Employee represents and warrants solely with respect to such
Selling Employee, and not any other Seller, as set forth in Sections 4.15.1,
4.15.2, 4.15.3 and 4.15.4 below:
4.1. Corporate Matters, etc.
----------------------
4.1.1. Organization, Power and Standing. The Company and each
--------------------------------
Subsidiary of the Company is a corporation liability duly organized,
validly existing and in good
-3-
<PAGE>
standing under the laws of the jurisdiction of its existence, which in the
case of the Company is Canada, and has all requisite corporate power and
authority to execute, deliver and perform each of the Closing Agreements to
which it is a party, to carry on the Business as currently conducted, and
to consummate the transactions contemplated hereby (including without
limitation, the Amalgamation, assuming that the Buyer does not cause the
Company to take any action after the Closing and before the Amalgamation
that is not explicitly described in this Agreement and further assuming
that the Buyer complies with the amalgamation provisions of the Canada
Business Corporations Act). The Company and each Subsidiary of the Company
is duly qualified or licensed to do business as currently conducted, and is
in good standing as such, in each jurisdiction in which the failure to be
so qualified or licensed and in good standing could reasonably be expected
to have a Material Adverse Effect, and each such jurisdiction is listed in
Schedule 4.1.1.
4.1.2. Capitalization. Schedule 4.1.2 is a true and correct list of
--------------
all outstanding equity securities (including, without limitation, shares of
capital stock as well as any options, warrants or other rights to acquire
capital stock) of the Company. The only issued and outstanding shares of
capital stock of the Company are the shares included in the Acquired
Shares, all of which have been duly authorized and validly issued and are
fully paid and non-assessable, and all of which are beneficially owned and
held of record by the Sellers. There is no Contractual Obligation or
Charter or By-law provision which obligates the Company to issue, purchase
or redeem, or make any payment in respect of, any shares of capital stock
or other securities convertible into or exchangeable for shares of capital
stock or which provides for any stock appreciation or similar right or
grants any right to share in the equity, income, revenues or cash flow of
the Company.
4.1.3. Subsidiaries. The Company has no Subsidiaries except as set
------------
forth on Schedule 4.1.3. Such Schedule sets forth the name and
jurisdiction of incorporation or formation of each Subsidiary. The Company
is the beneficial and record holder of 100 shares of Common Stock of Bulrad
Illinois, which are all of the issued and outstanding shares of capital
stock of Bulrad Illinois, and all of the issued and outstanding shares of
capital stock of Kitchen Craft Cabinetry Ltd., such shares of Bulrad
Illinois and Kitchen Craft Cabinetry Ltd. have been duly authorized and
validly issued and are fully paid and nonassessable, and the Company owns
such shares free and clear of any Liens other than restrictions on transfer
imposed by applicable securities laws. HBJR Inc., a Manitoba corporation
("HBJR") has amalgamated with Old Kitchen Craft and the Amalgamated Holding
Companies as set forth on Schedule 4.3.3, and is now included in, the
Company. Mobili Enterprises Northwest LLC, a limited liability company
formed under the laws of the State of Washington, has been merged with and
into Bulrad Illinois. There is no Contractual Obligation or Charter or By-
law provision which obligates any Subsidiary to issue, purchase or redeem,
or make any payment in respect of or pursuant to which the Company or any
of its Subsidiaries, directly or
-4-
<PAGE>
indirectly, granted any option, warrant or other right to any Person to
acquire any shares of the capital stock (or other shares of beneficial
interest) of any Subsidiary of the Company or other securities convertible
into or exchangeable for shares of capital stock or which provides for any
stock appreciation or similar rights or grants any right to share in the
equity, income, revenues or cash flow of any Subsidiary of the Company.
4.1.4. Charter and By-laws. The Selling Individuals and Herbert D.
-------------------
Buller have heretofore delivered to the Buyer a true and complete copy of
the Company's Charter and By-laws and the Charter and By-laws of each of
the Company's Subsidiaries.
4.2. Financial Statements, etc.
-------------------------
4.2.1. Financial Information.
---------------------
4.2.1.1. Pre-Execution Deliveries. The Buyer has been
------------------------
furnished with true and complete copies of each of the following
(which are attached hereto as Exhibit 4.2):
(a) The audited consolidated balance sheets of the Company
and its Subsidiaries as of December 31, 1996 and December 31, 1997,
and the related consolidated statements of income and retained
earnings and cash flows for the fiscal years then ended, accompanied
by the notes thereto and the unqualified opinion thereon of Ernst &
Young (Winnipeg) confirming that the same are prepared in accordance
with Canadian generally accepted accounting principles consistently
applied (the "Audited Financials").
(b) The unaudited consolidated balance sheet of the Company
and its Subsidiaries as of December 31, 1998 and related unaudited
consolidated statements of earnings and stockholders equity and cash
flows for the fiscal year then ended (the "Unaudited Year-End Internal
Financials" and together with the Audited Financials, the "Financial
Statements").
4.2.1.2. Balance Sheet. As used herein, the term "Balance
-------------
Sheet Date" shall mean December 31, 1998 and the term "Balance Sheet"
shall mean the balance sheet as of December 31, 1998 contained in the
Unaudited Year-End Internal Financials.
4.2.2. Character of Financial Information. The Financial Statements
----------------------------------
(including the notes thereto) were prepared in accordance with Canadian
generally accepted accounting principles applied consistently throughout
the periods specified therein, and present fairly the financial position
and results of operations of the Company and its
-5-
<PAGE>
Subsidiaries as of the dates and for the periods specified therein, subject
in the case of the Unaudited Year-End Internal Financials to an absence of
footnotes and normal year- end audit adjustments which will not be
material.
4.2.3. Inventory and Receivables.
-------------------------
4.2.3.1. Inventories.
-----------
(a) The values at which all inventories are carried on the
Balance Sheet, including without limitation the reserves with respect
thereto reflected in the Balance Sheet, have been calculated in
accordance with Canadian generally accepted accounting principles.
(b) Schedule 4.2.3.1(b) hereto is a true and complete copy of
the summary as of the close of business on the last day of the
calendar month immediately preceding the Closing Date of the inventory
record with respect to inventory of the Company and its Subsidiaries,
and includes: (i) an estimate as of such date of the amounts included
in such inventory of inventory in transit and raw materials, and (ii)
a reconciliation (including applicable reserves, which were
established in accordance with past practices of the Company and its
Subsidiaries taking into account current circumstances relating to the
Business and Canadian generally accepted accounting principles) of the
foregoing amounts to the inventory amounts in the Company's books and
records as of such date, which reconciliation will be consistent with
the past practices of the Company.
(c) Taking into account the reserves for inventory set forth
in the Balance Sheet and Schedule 4.2.3.1(b), the inventories
reflected on the Balance Sheet are, and the inventories reflected on
Schedule 4.2.3.1(b) are, (i) in all material respects in good and
merchantable condition, (ii) usable in all material respects for the
purposes for which they are intended or salable in the Ordinary Course
of Business, (iii) not excessive in kind or amount in the context of
the Company's volume of business for such items taken as a whole,
taking into account the seasonality of the Business and the build up
of inventory in connection with direct response marketing, and (iv)
verifiable in all material respects by reference to records which are
maintained by the Company. The inventories reflected on the Balance
Sheet included, and the inventories reflected on Schedule 4.2.3.1(b)
include, any and all inventory held on consignment by third parties.
-6-
<PAGE>
4.2.3.2. Accounts Receivable.
-------------------
(a) Schedule 4.2.3.2(a) is a schedule of aged accounts
receivable of the Company and its Subsidiaries as of the close of
business on the last day of the calendar month immediately preceding
the Closing Date showing separately those receivables which, as of
such date, had been outstanding from the due date for (i) 1 to 29
days, (ii) 30 to 59 days, (iii) 60 to 89 days, and (iv) 90 or more
days (except in the case of the Edmonton, Alberta location where
receivables outstanding longer than 60 days are aged (x) 60 to 74
days, and (y) 75 or more days), and the reserves therefor, which
reserves have been calculated in accordance with both the past
practices of the Company and its Subsidiaries taking into account
current circumstances relating to the Business and its Subsidiaries
and Canadian generally accepted accounting principles.
(b) Taking into account the reserves for uncollectible
accounts set forth in the Balance Sheet and Schedule 4.2.3.2(a), all
of the accounts reflected on the Balance Sheet were, and all of the
accounts that will be reflected on Schedule 4.2.3.2(a) are, accounts
receivable that (i) arose from valid sales in the Ordinary Course of
Business, and (ii) to the Sellers' Knowledge, are not subject to any
material rights of set-off or counterclaim.
4.2.4. Change in Condition.
-------------------
(a) Since December 31, 1997, the Business has been conducted
only in the Ordinary Course of Business;
(b) Since the Balance Sheet Date, neither the Company nor any
of its Subsidiaries has
(i) incurred or otherwise become liable in respect of
any Debt except for (A) borrowings in the Ordinary Course of
Business which have been repaid in full or are reflected in the
Closing Debt Amount or (B) the issuance of notes and shareholder
loans identified on Schedule 4.2.4(b), which notes and loans were
part of the Pre-Closing Transactions set forth in Schedule 4.3.3
and are also included in the Closing Debt Amount, or
(ii) become liable in respect of any Guarantee (other
than Guarantees by the Company and its Subsidiaries of
obligations of the Company and its Subsidiaries);
-7-
<PAGE>
(c) Except for the distribution of Excess Cash as described in
Section 6.6 and except for the Pre-Closing Transactions, neither the
Company nor any of its Subsidiaries has (i) since the Balance Sheet
Date, declared or made (or agreed to declare or make) any Distribution
or (ii) since December 31, 1997, entered into or performed any other
transaction which has resulted or will result in any payment or other
transfer of assets to or for the benefit of any Selling Participant or
any Affiliate of any Selling Participant (other than transactions
among the Company and its Subsidiaries and those transactions set
forth on Schedule 4.2.4(c));
(d) Except for the matters set forth on Schedule 4.2.4(d) and
Schedule 4.3.3, which matters, in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect,
since December 31, 1997 neither the Company nor any of its
Subsidiaries has (i) sold, leased to others or otherwise disposed of
any portion of its assets (except for sales of inventory and equipment
in the Ordinary Course of Business), (ii) entered into any Contractual
Obligation relating to (A) the purchase of any debt or equity interest
in any Person, (B) the purchase of assets constituting a business or
(C) any merger, consolidation or other business combination, (iii)
cancelled or compromised any material debt or claim, (iv) knowingly
waived or released any right of material value (other than in the
Ordinary Course of Business), or (v) instituted, settled or agreed to
settle (other than in the Ordinary Course of Business) any material
Action, inquiry or investigation;
(e) Except for the matters set forth on Schedule 4.2.4(e), which
matters, in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect, since the Balance Sheet
Date neither the Company nor any of its Subsidiaries has (i) made any
changes in the rate of Compensation in effect for any of the Selling
Participants or any of their Affiliates or (ii) paid or agreed or
orally promised to pay, conditionally or otherwise, any extra
Compensation to any Person specified in clause (i), or (iii) made any
changes (other than general salary increases in the Ordinary Course of
Business) in the rate of Compensation of any other officer, employee,
consultant or agent of the Company or any Subsidiary of the Company;
(f) Since December 31, 1997, neither the Company nor any of its
Subsidiaries has made any material change in its customary methods of
accounting or accounting practices (including without limitation with
respect to reserves), pricing policies or payment or credit practices
or failed to pay any creditor any amount owed to such creditor when
due or granted any extensions of credit;
-8-
<PAGE>
(g) Since December 31, 1997, none of any Selling Participants,
the Company or any of its Subsidiaries has entered into any
Contractual Obligation to do any of the things referred to in clauses
(a), (c)(ii), (d) and (f) above (other than the exceptions to such
clauses specifically set forth in such clauses);
(h) Since the Balance Sheet Date, none of any Selling
Participants, the Company or any of its Subsidiaries has entered into
any Contractual Obligation to do any of the things referred to in
clauses (b), (c)(i) and (e) above (other than the exceptions to such
clauses specifically set forth in such clauses); and
(i) Since the Balance Sheet Date, no Material Adverse Effect has
occurred, nor, to the Sellers' Knowledge, has any event or events
occurred which could reasonably be expected to have, a Material
Adverse Effect.
4.3. Liabilities.
-----------
4.3.1. Debt. Schedule 4.3.1 sets forth a full and accurate account
----
of the Closing Debt Amount.
4.3.2. Other Liabilities. After giving effect to the Closing
-----------------
hereunder and the consummation of the Purchase, neither the Company nor any
of its Subsidiaries will have any material liabilities or other material
obligations, whether absolute, accrued, contingent, due, to become due, or
otherwise, other than the following:
(a) Obligations and liabilities of the Company and its
Subsidiaries reflected on the Balance Sheet.
(b) Obligations and liabilities of the Company and its
Subsidiaries incurred since the Balance Sheet Date in the Ordinary
Course of Business.
(c) Obligations and liabilities of the Company and its
Subsidiaries described in Schedules 4.2.4(d) and 4.2.4(e).
4.3.3. Pre-Closing Transactions. Schedule 4.3.3 hereto
------------------------
sets forth a true and complete description of certain actions taken
since December 23, 1998 in preparation for the Closing (the "Pre-
Closing Transactions"). Immediately prior to the amalgamation of the
Amalgamated Holding Companies (as defined in Schedule 4.3.3) with HBJR
and Kitchen Craft of Canada, Ltd., the predecessor to the Company
("Old Kitchen Craft"), to form the Company, neither HBJR nor any of
the Amalgamated Holding Companies had any liabilities or other
obligations, whether absolute, contingent, due, to become due, or
otherwise, other than the notes and shareholder loans identified on
Schedule 4.3.3 as described in Schedule 4.3.3 hereto and which are
included in
-9-
<PAGE>
the Closing Debt Amount. Other than the ownership of 33,333 and 1/3
shares of Class I common shares of 3161234 Manitoba Ltd. valued at
approximately $100,000 (CDN), by HEB Holdings Ltd. from August 26,
1998 through January 15, 1999, which such shares were fully paid and
are non-assessable, the Amalgamated Holding Companies never carried on
any business or were engaged in any activities other than holding
shares of the Company or one or more of the Amalgamated Holding
Companies. The Pre-Closing Transactions did not cause Old Kitchen
Craft and its Subsidiaries and will not cause the Company or any of
its Subsidiaries to incur any liabilities, whether absolute,
contingent, due, to become due, or otherwise (other than the notes and
shareholder loans identified on Schedule 4.3.3 which were issued or
incurred as described in Schedule 4.3.3 hereto and are included in the
Closing Debt Amount), or to lose any benefits.
4.4. Assets.
------
4.4.1. Title to Assets. The Company and its Subsidiaries have good
---------------
and marketable title to, or, in the case of Real Property (as defined in
Section 4.4.2.1 below) have beneficial ownership with good and marketable
registered title to such Real Property free and clear of all Liens except
as described on Schedule 4.4.1, or in the case of property held under lease
or other Contractual Obligation, have a valid and enforceable leasehold
interest in and right to use, all of their respective properties, rights
and assets, whether real or personal and whether tangible or intangible
(collectively, the "Assets"), including without limitation all properties,
rights and assets reflected in the Balance Sheet (except for inventory sold
or otherwise disposed of since the Balance Sheet Date in the Ordinary
Course of Business). The Assets are not subject to any Lien securing any
Debt or other material obligation except as described in Schedule 4.4.1.
The Assets (including without limitation the Real Property, the Equipment,
the Intangibles and the Contracts) constitute all properties, rights and
assets held for or used in or necessary for the conduct of the Business as
currently conducted.
4.4.2. Real Property and Equipment.
---------------------------
4.4.2.1. General. Except as set forth on Schedule 4.4.2(a),
-------
all of the real property and fixtures and other improvements
constituting real property included in the Assets (the "Real
Property") and all of the tangible personal property other than
inventory and other de-minimis quantities of parts and machinery in
storage and not in operation included in the Assets (the "Equipment")
are in good operating condition and repair in all material respects
(subject to normal wear and tear), and are suitable for the purposes
for which they are presently used in the Business as presently being
conducted by the Company and its Subsidiaries. Schedule 4.4.2(a) sets
forth a list of each lease or other Contractual Obligation (including
all amendments) under which any
-10-
<PAGE>
Real Property or Equipment is held or used by the Company or any of
its Subsidiaries (the "Leases"). Except as set forth in Schedule
4.4.2(a), there is no lease or other Contractual Obligation under
which the Company or any of its Subsidiaries is liable as lessor with
respect to any Real Property or Equipment. Schedule 4.4.2(a) also sets
forth a list of all of the realty included in the Real Property and of
the addresses of each other location, if any, at which is located any
Equipment or inventory.
4.4.2.2. Real Estate Compliance. Except as disclosed on
----------------------
Schedule 4.4.2(b), each current use of the Real Property occupied or
used by the Company or any of its Subsidiaries complies with (i) all
applicable Legal Requirements, including, without limitation,
applicable zoning restrictions, bylaws and ordinances, and variances
thereto; all health and fire codes, bylaws and ordinances; (ii) all
subdivision regulations and (iii) all other covenants, conditions and
restrictions applicable thereto, except for such non-compliance as has
not had and will not have, individually or in the aggregate, a
Material Adverse Effect. Except as disclosed on Schedule 4.4.2(c),
all certificates, licenses, approvals and permits necessary in
connection with the construction and present use and operation of the
Real Property and the lawful occupancy thereof (the "Permits") have
been issued by the appropriate Governmental Authorities. The matters
described on Schedule 4.4.2(c) have not had and could not reasonably
be expected to have a Material Adverse Effect. The current use of
such Real Property is in accordance with the certificates of occupancy
relating thereto. All such Permits shall continue in full force and
effect immediately after giving effect to the transactions
contemplated hereby. All buildings, structures and improvements on or
used in connection with the Real Property are located entirely within
the limits thereof and there are no encroachments from buildings,
structures or improvements on or used in connection with any adjacent
property that encroach onto the Real Property, except for such
encroachments from or onto Real Property as do not, and could not
reasonably by expected to, individually or in the aggregate, interfere
with the current use of such Real Property in the Business in any
material respect.
4.4.2.3. Absence of Certain Notices. Neither the Company nor
--------------------------
any of its Subsidiaries, nor any Selling Participant, has received any
notice (x) prior to January 1, 1995 the subject matter of which such
notice has not been finally resolved or (y) except as set forth on
Schedule 4.4.2.3, on or since January 1, 1995 of (i) any violation of
any Legal Requirement, including, without limitation, zoning
restrictions, bylaws and ordinances, building, life, safety, health
and fire codes, bylaws and ordinances affecting any of the Real
Property, (ii) any violation of any Permit or (iii) any eminent
domain, condemnation or similar Action pending or, to the Sellers'
Knowledge, threatened, or any decree or order relating thereto.
-11-
<PAGE>
4.4.3. Intellectual Property Rights. Schedule 4.4.3(a) lists all
----------------------------
Intangibles which are material to the conduct of the Business or otherwise
are of material value to the Company and its Subsidiaries (the "Listed
Intangibles"). Schedule 4.4.3(b) sets forth a list of each license or
other Contractual Obligation (including all amendments) under which any
Listed Intangible is held or used by the Company or any of its Subsidiaries
(the "Listed Licenses"). Except as described in Schedule 4.4.3(b), there
is no license or other Contractual Obligation under which the Company or
any of its Subsidiaries is liable as licensor with respect to any
Intangibles. Except as set forth on Schedule 4.4.3(b), none of any Seller,
the Company or any of the Company's Subsidiaries has received any notice
(x) prior to January 1, 1995 the subject matter of which such notice has
not been finally resolved or (y) on or since January 1, 1995 that the use
by the Company and its Subsidiaries of the Intangibles infringes or has
infringed any rights of any third party; to the knowledge of the Selling
Participants (other than the Selling Employees, as to whom no
representation is made) and the Company after reasonable investigation of
their records, documents and files, such use does not actually infringe and
has not actually infringed any such rights and no activity of any third
party infringes upon the rights of the Company and its Subsidiaries with
respect to any of the Intangibles.
4.4.4. Accounts; Funds, etc. Immediately after giving effect to the
--------------------
Closing, all monies and accounts arising out of, relating to or established
for the Business, the Company or any of its Subsidiaries shall be held by,
and accessible only to, the Company and its Subsidiaries.
4.5. Contracts, etc.
--------------
4.5.1. Certain Contractual Obligations. Set forth on Schedule 4.5.1
-------------------------------
is a true and complete list of all of the following Contractual Obligations
of the Company and its Subsidiaries (which such Schedule 4.5.1 is divided
into Sections (a) through (j), each of which such Sections contains a true
and complete list of the Contractual Obligations of the Company and its
Subsidiaries referred to in the paragraph of Section 4.5.1 below identified
by the same letter):
(a) All collective bargaining agreements and other labor
agreements; all employment or consulting agreements; and all other
material plans, agreements or arrangements (other than any Employee
Plan) which constitute Compensation or benefits payable by the Company
or any of its Subsidiaries.
(b) All Contractual Obligations under which the Company or
its Subsidiaries has incurred or may incur any severance pay or
special Compensation obligations or obligations to provide notice of
termination of employment or pay in lieu of such notice which would
arise or become payable
-12-
<PAGE>
by reason of, this Agreement or the consummation of the transactions
contemplated hereby.
(c) All Contractual Obligations (other than licensing, sales and
distribution agreements disclosed pursuant to clause (h) below) under
which the Company or its Subsidiaries is or will after the Closing be
restricted from carrying on any business or other activities in any
country (or any state, town, territory, province, city or other
political subdivision thereof) in which the Business is currently
conducted or is currently proposed to be conducted.
(d) All Contractual Obligations (including without limitation
options) to sell or otherwise dispose of a material portion of any
Assets (other than sales of inventory in the Ordinary Course of
Business).
(e) All Contractual Obligations under which the Company or its
Subsidiaries has or will after the Closing have any material liability
or obligation to or for the benefit of any Selling Participant or any
Affiliate of any Selling Participant (other than such Contractual
Obligations disclosed on Schedule 4.5.4 or pursuant to any Closing
Agreement).
(f) All Contractual Obligations under which the Company or any
of its Subsidiaries has any material liability or obligation for Debt
or constituting or giving rise to a Guarantee of any material
liability or obligation of any Person, or under which any Person has
any material liability or obligation constituting or giving rise to a
Guarantee of any material liability or obligation of the Company or
its Subsidiaries (including without limitation partnership and joint
venture agreements).
(g) Other than as contemplated by the Closing Agreements and the
Pre- Closing Transactions, all Contractual Obligations under which the
Company or its Subsidiaries is or may become obligated to pay any
material amount in respect of indemnification obligations, purchase
price adjustment or otherwise in connection with any (i) acquisition
or disposition of assets or securities, (ii) merger, consolidation or
other business combination, or (iii) series or group of related
transactions or events of a type specified in subclauses (i) and (ii).
(h) All distributorship and sales representative or sales agency
agreements and all other material Contractual Obligations (other than
purchase orders and sales orders entered into in the Ordinary Course
of Business), with distributors, suppliers, vendors, or other
suppliers of goods or services.
(i) All purchase orders for capital equipment that either (i)
involve payments in any 12-month period after December 31, 1998 in
excess of
-13-
<PAGE>
$250,000 (CDN) or (ii) were not entered into in the Ordinary Course of
Business.
(j) All Contractual Obligations (other than purchase orders
for capital equipment) not required to be listed on Schedule 4.5.1
pursuant to clauses (a) through (i) above which individually (or
together with any related Contractual Obligations) involve liabilities
or payments of the Company or any of its Subsidiaries in excess of
$250,000 (CDN) in any 12-month period after December 31, 1998.
The Sellers have heretofore made available to the Buyer a true and complete
copy of each of the Contractual Obligations listed on Schedule 4.5.1 (or
with respect to any oral Contractual Obligation, a complete and accurate
description of such Contractual Obligation is set forth on Schedule
4.5.1A), each as in effect on the date hereof including without limitation
all amendments thereto (the "Listed Contracts") and true and complete
copies of each of the Leases, Listed Licenses and Insurance Policies.
4.5.2. Nature of Contracts, etc. No breach or default by the Company
------------------------
or any of its Subsidiaries under any of the Contracts has occurred and is
continuing, and to the Sellers= Knowledge no event has occurred which with
notice or lapse of time would constitute such a breach or default or permit
termination, modification or acceleration by any other Person under any of
the Contracts, other than any such breaches, defaults and events set forth
on Schedule 4.5.2 which have not had and could not reasonably be expected
to have a Material Adverse Effect. To the Sellers, Knowledge, no breach or
default by any Person other than the Company or any of its Subsidiaries
under any of the Contracts has occurred and is continuing, and no event has
occurred which with notice or lapse of time would constitute such a breach
or default or permit termination, modification or acceleration by the
Company or any of its Subsidiaries under any of such Contracts.
4.5.3. Insurance. Set forth on Schedule 4.5.3(a) is a copy of the
---------
declarations page from each liability (including without limitation, public
liability, products liability and automobile liability) policy by which the
Company or its Subsidiaries has been insured since January 1, 1997
(collectively, the "Liability Policies"). Except for the matters set forth
on the claims list included on Schedule 4.5.3(b), the matters set forth on
Schedule 4.5.3(c) and such other matters which have not had and could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, there have been no liability Actions against the
Company or its Subsidiaries or, to the Sellers' Knowledge, any occurrence
which may give rise to any Action against the Company or its Subsidiaries
not in the Ordinary Course of Business or which will be in excess of any
deductible under any Liability Policy. The list includes the current legal
status of such claims or occurrences. Statutory workers' compensation has
been maintained on all employees of the Company and its Subsidiaries to the
extent required
-14-
<PAGE>
by Legal Requirements. The Company and its Subsidiaries have paid in full
all amounts owing under The Workers Compensation Act, R.S.M. 1987, c. W200
(Manitoba) or any other comparable provincial legislation, and to the
Sellers= Knowledge, none of the Company or any of its Subsidiaries has
received a notice that has caused or would cause a penalty reassessment
under such legislation. All worker's compensation policies with respect to
employees of the Company and its Subsidiaries located in the United States
were written by insurers in existence as of the date hereof. The premiums
for all Liability Policies and workers' compensation policies have been
fully paid. Set forth on Schedule 4.5.3(d) is a copy of the declarations
page from all insurance policies of the Company and its Subsidiaries
currently in effect other than the Liability Policies and the workers'
compensation policies (together with the Liability Policies and the
workers' compensation policies, the "Insurance Policies"). Immediately
after giving effect to the Closing and the consummation of the transactions
contemplated hereby, except as set forth on Schedule 4.5.3(e), each
Insurance Policy will be in full force and effect and be payable to the
Company or one or more of its Subsidiaries.
4.5.4. Transactions with Affiliates. Except for the matters set
----------------------------
forth on Schedule 4.5.4 (the "Affiliate Relationships"), no Selling
Participant or any Affiliate of any Selling Participant (other than the
Company and its Subsidiaries) is an officer, director, employee,
consultant, competitor, customer, distributor, supplier or vendor of, or is
party to any Contractual Obligation (other than the Closing Agreements)
with, the Company or its Subsidiaries. Except as set forth on Schedule
4.5.4, there are no trademarks, trade names (or any component thereof),
service marks, service names, copyrights, patents, patent rights,
franchises, or confidential knowledge that any Selling Participant or any
Affiliate of any Selling Participant owns or is licensed or otherwise has
the right to use which are or have been used in, or are necessary to, the
conduct of the Business. Since January 1, 1998, (i) the terms of the
Affiliate Relationships have not been adversely altered in any material
respect, and (ii) there have been no relationships, Contractual Obligations
or other transactions between the Company or its Subsidiaries on the one
hand, and any Seller or such Affiliate on the other hand, other than (x)
the Affiliate Relationships, (y) other de-minimis relationships,
Contractual Obligations and transactions the termination or non-
continuation of which has not had and could not reasonably be expected to
have a Material Adverse Effect and (z) the Pre- Closing Transactions.
Except as set forth in Schedule 4.5.4, all transactions between the Company
or any of its Subsidiaries on the one hand, and any Selling Participant or
any Affiliate of any Selling Participant on the other hand, which occurred
during the periods covered by the Financial Statements and are required by
Canadian generally accepted accounting principles to be reflected therein,
are reflected in the Financial Statements at amounts which do not overstate
the net worth or net income of the Company and its Subsidiaries as compared
with fair market values and prices which would have been charged and paid
between parties at arms' length at the time of the entering into of the
transactions in question.
-15-
<PAGE>
4.5.5. Non-Contravention, etc. Assuming that the Company does not,
----------------------
at any time after the Closing and prior to the Amalgamation, amend its
Charter, By-Laws or any of its Contractual Obligations, neither the
execution and delivery of this Agreement nor the consummation of any of the
transactions contemplated hereby (including without limitation, the
Amalgamation) does or will constitute, result in or give rise to (i) a
breach of or a default or violation under any Charter or By-Laws provision
of the Company or its Subsidiaries, (ii) except as set forth on Schedule
4.5.5, a material breach of or a material default or material violation
under any Contractual Obligation of the Company or any of its Subsidiaries,
or the requirement that any consent under or waiver of any such Contractual
Obligation, Charter or By-Laws be obtained, (iii) the acceleration of the
time for performance of any obligation under any such Contractual
Obligation, (iv) the imposition of any Lien upon or the forfeiture of any
Asset (including without limitation any Asset held under a Lease or
License), or (v) except as set forth on Schedule 4.5.5, any severance
payments, right of termination, modification of terms, or any other right
or cause of action under any such Contractual Obligation, Charter or By-
laws provision. The failure to obtain waivers or consents with respect to
the matters set forth on Schedule 4.5.5 has not had and could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
4.6. Compliance with Laws, Consents, etc.
-----------------------------------
4.6.1. Compliance Generally. The Business has at all times been
--------------------
conducted in compliance with all applicable Legal Requirements and the
Company and its Subsidiaries are not in default or violation under any
applicable Legal Requirement, except for such violations or defaults as
have not had and could not reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries have been duly granted
all licenses, permits, franchises and other authorizations under any Legal
Requirement necessary for the conduct of the Business, except licenses,
permits, franchises and other authorizations the failure of which to have
been obtained has not had and could not reasonably be expected to have a
Material Adverse Effect. Neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated
hereby does or will constitute, result in or give rise to a breach or
violation or default under any Legal Requirement applicable to the Company
or its Subsidiaries except for such violations or defaults as have not had
and could not reasonably be expected to have a Material Adverse Effect,
assuming that the Buyer does not cause the Company to take any action after
the Closing and before the Amalgamation that is not explicitly described in
this Agreement and that the Buyer complies with the amalgamation provisions
of the Canada Business Corporations Act. No approval, consent, waiver,
authorization or other order of, and no declaration, filing, registration,
qualification or recording with, any Governmental Authority is required to
be obtained or made by or on behalf of the Company or its Subsidiaries in
connection with the execution, delivery or performance of this Agreement or
the
-16-
<PAGE>
consummation of any of the transactions contemplated hereby (including
without limitation, the Amalgamation), except for (i) the items listed on
Schedule 4.6.1 which have been obtained and are and will be in full force
and effect at the Closing and (ii) the filing of Articles of Amalgamation
and accompanying statutory declarations to effect the Amalgamation.
4.6.2. Tax Matters. Except as set forth on Schedule 4.6.2 (which such
-----------
Schedule 4.6.2 is divided into Sections (i) through (xxvii), each of which
such Sections sets forth any exceptions to the paragraph of Section 4.6.2
below identified by the same number):
(i) all Tax Returns required to be filed by or with respect to the
Company or any of its Subsidiaries have been duly and timely
filed in accordance with all applicable Legal Requirements,
all such Tax Returns were true, correct and complete in all
material respects, and no claim has ever been made by any Tax
authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any
of its Subsidiaries is or may be subject to taxation by that
jurisdiction,
(ii) all Taxes that are due and payable by the Company and each of
its Subsidiaries have been paid in full and all assessments
for Taxes have been paid in full,
(iii) no Tax Return has been the subject of examination or audit by
Revenue Canada, the Internal Revenue Service ("IRS") or the
appropriate provincial, state, local or foreign Tax authority,
(iv) there are no outstanding deficiencies that have been asserted
or assessments made as a result of any examinations of the Tax
Returns referred to in clause (i) by Revenue Canada, the IRS
or the appropriate provincial, state, local or foreign Tax
authority,
(v) there is no Action, audit, deficiency or assessment pending
or, to the Sellers' Knowledge threatened with respect to any
Taxes of the Company or any of its Subsidiaries, and there are
no Liens or other security interests on any of the assets of
the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any
Tax, other than for current Taxes not yet due and payable,
(vi) no waivers of statutes of limitations or extensions of time
have been given or requested by or with respect to any Taxes
of the Company or any of its Subsidiaries,
-17-
<PAGE>
(vii) Schedule 4.6.2 lists all income Tax Returns filed with respect
to the Company and its Subsidiaries for all taxable years or
periods for which the statute of limitations or period for
assessment has not yet closed, indicates those Tax Returns
that have been audited and those Tax Returns that currently
are the subject of audit,
(viii) no written powers of attorney (for example, IRS Form 2848 or
other similar authority) with respect to Taxes of the Company
or any of its Subsidiaries are currently in force,
(ix) The Company and each of its Subsidiaries has remitted to the
appropriate Tax authority when required by law to do so all
amounts collected by it on account of the goods and services
Tax imposed under the ETA,
(x) The Tax liability of the Company and each of its Subsidiaries
that files a Tax Return in Canada has been assessed by Revenue
Canada for all taxable years up to and including the taxation
year ended December 31, 1997,
(xi) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing
of any Tax Return, or payment of any Tax, by the Company or
any of its Subsidiaries and the Sellers have provided to the
Buyer a true copy of all Tax Returns filed by the Company and
each of its Subsidiaries since December 31, 1995,
(xii) Each Seller and Selling Individual is a resident of Canada for
the purposes of the Tax Act,
(xiii) The Company and each of its Subsidiaries other than HBJR
organized under the laws of Canada or a province thereof is a
registrant for the purposes of the ETA whose registration
numbers are listed on Schedule 4.6.2,
(xiv) None of the Company or any of its Subsidiaries has made any
elections or designations for the purposes of the Tax Act or
any relevant provincial Tax law, or for the purposes of any
administrative rulings or notices or administrative practices
pursuant to such act or any such law with respect to any
taxable years or periods with respect to which the statute of
limitations or the period for assessment has not yet closed,
(xv) None of the Company or any of its Subsidiaries that is subject
to U.S. federal income taxation has made any payments, is
obligated to make any payments or is a party to any agreement
(including without limitation any
-18-
<PAGE>
of the Closing Agreements) that could obligate it to make any
payments that will be not deductible under Section 280G of the
Code or will be subject to the excise tax under Section 4999
of the Code,
(xvi) The unpaid Taxes of the Company and its Subsidiaries did not
as of December 31, 1998 exceed the reserve for Taxes (rather
than any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth on
the face of the Balance Sheet (rather than in any notes
thereto) and will not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with
the past custom and practice of the Company and its
Subsidiaries,
(xvii) The Company and each of its Subsidiaries have withheld and
timely paid to Revenue Canada, the IRS or the appropriate
provincial, state, local or foreign Tax authority all amounts
required to be withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and the Company
and each of its Subsidiaries will continue to do so with
respect to all such payments through the Closing Date,
(xviii) no consent to the application of Section 341(f) of the Code
has been made by or on behalf of the Company or any of its
Subsidiaries,
(xix) None of the Company or any of its Subsidiaries that is subject
to U.S. federal income taxation is or has been a United States
real property holding company within the meaning of Section
897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code,
(xx) None of the Company or any of its Subsidiaries is a party to
any Tax allocation or Tax sharing agreement;
(xxi) None of the Company or any of its Subsidiaries has been a
member of an Affiliated Group (as defined in Section 1504(a)
of the Code, or any similar provision of state, local or
foreign law) filing a consolidated federal income Tax Return
or has any liability for the Taxes of any person under
Treasury Regulation Section 1.1502-6 (or any similar provision
of provincial, state, local or foreign law), as a transferee,
a successor, by contract, or otherwise,
(xxii) Since the dates of its incorporation, the Company has been and
is carrying on "manufacturing and processing in Canada of
goods for sale or lease" within the meaning of section 125.1
of the Tax Act.
-19-
<PAGE>
(xxiii) There are no amounts outstanding and unpaid for which the
Company or any of its Subsidiaries has previously claimed a
deduction under the Tax Act with respect to any taxable years
or periods with respect to which the statute of limitations or
the period for assessment has not yet closed.
(xxiv) Neither the Company nor any of its Subsidiaries has any
outstanding loans or indebtedness incurred by directors,
former directors, officers, shareholders and/or employees or
by any person or corporation not dealing at arms' length
(within the meaning of the Tax Act) with any of the foregoing.
(xxv) There are no circumstances existing which could result in the
application of section 80 of the Tax Act or any equivalent
provincial provision to the Company or any of its
Subsidiaries.
(xxvi) Neither the Company nor any of its Subsidiaries has claimed or
will claim any reserve under any one or more of subparagraph
40(1)(a)(iii), or paragraphs 20(1)(m) or 20(1)(n) of the Tax
Act or any equivalent provincial provision, if any such amount
could be included in the income of the Company or any
Subsidiary for any period ending after the Closing Date.
(xxvii) Neither the Company nor any of its Subsidiaries has acquired
property from, or disposed of property to, for proceeds less
than the fair market value thereof, any person or corporation
with whom it does not deal at arm's length within the meaning
of the Tax Act during any taxable year or period with respect
to which the statute of limitations or the period for
assessment has not yet closed and, during such same periods,
all transactions between or among the Company or any of its
Subsidiaries and any person owned or controlled directly or
indirectly by the same persons that own or control the Company
or any of its Subsidiaries satisfies the arm's length standard
within the meaning of Treasury Regulation (S)1.482-1(b).
The exempt surplus for the purposes of the Tax Act of Bulrad Illinois in
respect of the Company is approximately $475,000 (U.S.) and in any case,
not less than $385,000 (U.S.). The net capital losses of the Company
immediately before the Closing available to be claimed in respect of the
taxation year of the Company ending at time of the Closing is approximately
$270,000 (CDN) and in any case, not less than $255,000 (CDN). Such loss
will be utilized against any capital gain incurred as a result of the
Bulrad Illinois Transfer. The Company's adjusted cost base of the Bulrad
Illinois Shares (without taking into account any exempt surplus of Bulrad
Illinois or the net capital losses referred to above) is not less than $100
(CDN).
-20-
<PAGE>
4.6.3. No Illegal Payments, etc. Neither any Seller, the Company,
------------------------
its Subsidiaries, nor any of their respective officers, employees or
agents, has (a) directly or indirectly given or agreed to give any gift,
contribution, payment or similar benefit to any supplier, customer,
governmental employee or other Person who was in a position to help or
hinder the Company or any of its Subsidiaries (or assist in connection with
any actual or proposed transaction) or made or agreed to make any
contribution, or reimbursed any political gift or contribution made by any
other Person, to any candidate for federal, state, local or foreign public
office (i) which at the time of such action would have subjected (whether
then or in the future) the Company, its Subsidiaries or the Buyer to any
damage or penalty in any Action, or (ii) the non- continuation of which has
had or could reasonably be expected to have a Material Adverse Effect, or
(b) established or maintained any unrecorded fund or asset or made any
false entries on any books or records for any purpose.
4.6.4. Employee Benefit Plans.
----------------------
4.6.4.1. Disclosure. Schedule 4.6.4.1 sets forth all Employee
----------
Plans to which the Company or any Subsidiary contributes or is
obligated to contribute, or under which the Company or any Subsidiary
has or may have any present or future liability for premiums or
benefits, or which benefits any employee or former employee of the
Company or any Subsidiary or the beneficiaries of any such employee or
former employee (an "Existing Plan"), as well as all plans,
agreements, policies and arrangements that would be Existing Plans if
the term "employee" were construed to include outside directors,
consultants or other independent contractors who provide services to
or for the benefit of the Company or its Subsidiaries. For purposes
of this Agreement, the term "Employee Plan" means any plan, program,
agreement, policy or arrangement (a "plan"), whether or not reduced to
writing, that is: (i) a welfare benefit plan within the meaning of
Section 3(1) of ERISA (a "Welfare Plan") and any other health benefit
plan, including without limitation a plan relating to hospitalization,
dental, vision, life or long or short term disability (any such plan,
including a Welfare Plan, being referred to herein as a "Health
Plan"); (ii) a pension benefit plan, including without limitation
any pension benefit plan within the meaning of Section 3(2) of ERISA,
(a "Pension Plan"); (iii) a stock bonus, stock purchase, stock option,
restricted stock, stock appreciation right or similar equity-based
plan; or (iv) any other deferred-compensation, retirement, welfare-
benefit, bonus, profit sharing, incentive or fringe-benefit plan.
With respect to each Existing Plan, the Selling Participants have
provided or made available to the Buyer accurate, current and complete
copies of each of the following: (1) where the plan has been reduced
to writing, the plan document together with all amendments; (2) where
the plan has not been reduced to writing, a written summary of all
material plan terms; (3) where applicable, copies of any trust
agreements, custodial agreements, insurance policies,
-21-
<PAGE>
administration agreements and similar agreements, and investment
management or investment advisory agreements; (4) copies of any
summary plan descriptions, employee handbooks or similar employee
communications; (5) copies of the most recent financial statements and
actuarial reports related to such plan; (6) in the case of any plan
that is intended to be qualified under Section 401(a) of the Code, a
copy of the most recent determination letter from the IRS, if any, and
any related correspondence, including a copy of the request for such
determination; (7) in the case of any funding arrangement intended to
qualify as a VEBA under Section 501(c)(9) of the Code, a copy of any
IRS letter determining that it so qualifies; (8) in the case of any
plan for which Forms 5500 are required to be filed, a copy of the
three most recently filed Forms 5500, with schedules attached; and (9)
copies of any other reports or returns filed with, notices, letters or
other correspondence to or from any insurers, trustees, Revenue
Canada, the Manitoba Pension Commission, the IRS, the U.S. Department
of Labor or any other Governmental Authority relating to the plan
within the three years preceding the date of this Agreement. Also set
forth in Schedule 4.6.4.1 is a list of each Existing Plan in which
employees of the Company and its Subsidiaries will continue to
participate after giving effect to the Closing (the "Company Plans").
4.6.4.2. No Defined Benefit Pension Plans. Neither the Company
---------------------------------
nor any Subsidiary, nor any corporation, trust, partnership or other
entity that would be considered as a single employer with the Company
or any of its Subsidiaries under applicable Canadian or Manitoba law
or under Section 4001(b)(1) of ERISA or Sections 414(b), (c), (m) or
(o) of the Code has ever maintained or been required to contribute to
any defined benefit pension plan, as that term is defined in The
Pension Benefits Act, R.S.M. 1987, c. P32 or any Employee Plan subject
to Title IV of ERISA.
4.6.4.3. Plan Administration. Each Existing Plan, including any
-------------------
associated trust or fund, is registered under and is in compliance
with all applicable Legal Requirements and has been administered in
accordance with its terms, and all reports, returns and filings
required to be made thereunder have been made. Each Existing Plan
that is intended to be qualified under Section 401(a) of the Code is
so qualified. Nothing has occurred with respect to any Existing Plan
that has subjected or could subject the Company or any of its
Subsidiaries to a liability in any material amount under Section 502
of ERISA or Chapter 43 of Subtitle D or section 6652 of the Code, or
that has subjected or could subject any participant in or beneficiary
of an Existing Plan to a tax in any material amount under Section 4973
of the Code. Each Pension Plan has been funded in accordance with the
requirements of such plans. There is no unfunded liability under any
Pension Plan. No changes have occurred since the date of the most
recent actuarial report provided to the Buyer in respect of each
-22-
<PAGE>
Pension Plan which makes such report misleading in any material
respect and, since the date of such report, the Company or its
Subsidiaries have not made or granted or committed to make or grant
any benefit or improvements to which members of the Pension Plan are
or may become entitled which are not reflected in such actuarial
report. No funds have been withdrawn by the Company from any Pension
Plan or other Existing Plans.
4.6.4.4. All Contributions and Premiums Paid. All required
-----------------------------------
contributions, assessments and premium payments due on account of each
Existing Plan have been made.
4.6.4.5. Claims. There are no existing (or, to the Sellers'
------
Knowledge, threatened) Actions or other controversies relating to an
Existing Plan, other than claims for information or benefits in the
normal course and, to the best of the Sellers' Knowledge, no basis
exists for such an Action.
4.6.4.6. Retiree Benefits; Certain Health Plans. Except as
--------------------------------------
disclosed on Schedule 4.6.4.6, no Existing Plan that is a Health Plan
(other than as required under Section 601 et seq. of ERISA with
respect to any Welfare Plan), provides benefits or coverage following
retirement or other termination of employment. Each welfare benefit
trust or fund that constitutes or is associated with an Existing Plan
and that is intended to be exempt from U.S. federal income tax under
Section 501(c)(9) of the Code is so exempt. No event has occurred that
could result in a loss of any deduction to the Company or its
Subsidiaries under Section 162(n) of the Code. There are no employees
or former employees of the Company or its Subsidiaries who are
receiving from the Company or its Subsidiaries any pension or other
payments, or who are entitled to receive any such payments, not
covered by a Pension Plan to which the Company or its Subsidiaries is
a party.
4.6.4.7. No Restrictions On Termination. Except as disclosed
------------------------------
on Schedule 4.6.4.6, no provision of any Existing Plan would result in
any limitation on the ability of the Company or any of its
Subsidiaries, or Amalco to terminate the plan.
4.6.4.8. Effect of Transactions. The execution and delivery of
----------------------
this Agreement and the consummation of the transactions contemplated
hereby will not involve any prohibited transaction within the meaning
of ERISA.
4.7. Environmental and Safety Matters, etc. Each of the Company and its
-------------------------------------
Subsidiaries is and has at all times been in compliance in all material respects
with all applicable Legal Requirements (including, without limitation, all
applicable Environmental Laws) relating to environmental, natural resource,
public and workplace health or safety
-23-
<PAGE>
matters. Except as set forth on Schedule 4.7, there is no Action (including,
without limitation, any Environmental Claim), pending (or, to the Sellers'
Knowledge, threatened) against the Company or any of its Subsidiaries in respect
of (i) noncompliance with any such Legal Requirement, (ii) except as disclosed
in Schedule 4.10.1 or Schedule 4.10.2, personal injury, wrongful death, other
tortious conduct, or the existence of any nuisance relating to materials,
commodities or products held, used, sold, transferred, manufactured or disposed
of by or on behalf of the Company or any Subsidiary or any predecessor entity
made of, containing or incorporating any Hazardous Substance, or (iii) the
presence or release or threatened release into the Environment of any Hazardous
Substance, whether generated by the Company or any Subsidiary or any predecessor
entity or located at or about a site included in the Real Property or heretofore
owned or, occupied or controlled by the Company or any Subsidiary or any
predecessor entity or currently or heretofore leased or otherwise used by the
Company or any Subsidiary or any predecessor entity. No event has occurred or
condition exists or operating practice is being employed that will give rise to
any liability or Losses on the part of the Company or any of its Subsidiaries
(or, after the Closing, the Buyer) either at the present or at any future time
(including, without limitation, any Environmental Claim) under any existing
Environmental Laws or otherwise resulting from or relating to the handling,
storage, use, transportation or disposal prior to the Closing Date of any
Hazardous Substance by or on behalf of the Company or any of its Subsidiaries or
any of their respective predecessor entities or otherwise.
4.8. Employee Matters.
----------------
4.8.1. Labor Relations. Except as set forth in Schedule 4.8(a),
---------------
none of the employees of the Company or its Subsidiaries are
represented by a labor union or employee association and the Company
and its Subsidiaries are not subject to any agreement with any labor
union or employee association and have not made any commitment to or
conducted negotiations with any labor union or employee association
with respect to any future agreement. To the best of the Sellers'
Knowledge, during the period of five years preceding the date of this
Agreement there has been no attempt to organize, certify or establish
any labor union or employee association in relation to any of the
employees of the Company or its Subsidiaries and no application had
been filed or proceedings instituted by any union or employee
association with any labor relations board seeking certification as a
bargaining agent. To the best of the Sellers' Knowledge, there is no
organizational effort currently being made or threatened by or on
behalf of any labor union or employees association to organize any of
the employees of the Company or its Subsidiaries, except as set forth
in Schedule 4.8(a). There are no existing or threatened labor or
employment disputes, grievances, controversies or other labor troubles
affecting the Company or any of its Subsidiaries or the Business,
except for disputes with individual employees arising in the Ordinary
Course of Business.
-24-
<PAGE>
4.8.2. Employees. Schedule 4.8(b) states the name, duration of
---------
employment and age of each employee of the Company and its
Subsidiaries as of the date set forth on Schedule 4.8(b). Schedule
4.8(b) also states the names of all employees of the Company and its
Subsidiaries who, as of the date set forth on Schedule 4.8(b) are on
disability, maternity, paternity or other authorized leave or who are
receiving workers' compensation or short-term or long-term disability
benefits, the date of commencement of the leave and the date of
anticipated return of each such employee.
4.9. Customers, Suppliers and Distributors.
-------------------------------------
(a) Except as set forth in Schedule 4.9(a), since the Balance
Sheet Date (i) no customer (or group of customers) or any distributor
of the Business has given the Company or any of its Subsidiaries
notice that such customer (or group of customers) or distributor will
cease to purchase products or services or reduce the amount of
products and services purchased from the Company or any Subsidiary,
and (ii) no supplier (or group of suppliers) of the Business listed on
Schedule 4.9(c) has given the Company or its Subsidiaries notice that
such supplier (or group of suppliers) will cease to supply or restrict
the amount supplied or change its price or terms to the Company or its
Subsidiaries of any products or services.
(b) Except as set forth on Schedule 4.9(b), none of the Company
or its Subsidiaries is a party to any Contract (i) with respect to
special pricing or payment arrangements with any customer as of the
Closing Date with respect to any Contract involving or which might
involve, but for such special arrangements, payments in any 12-month
period in excess of $100,000 (CDN) and as of the date set forth on
Schedule 4.9(b) with respect to any other Contract or (ii) as of the
Closing Date which provides special warranty provisions (including
without limitation, with respect to duration), with any customer or
the provision of benefits to any customer other than those offered to
all customers.
(c) Schedule 4.9(c) sets forth a list of each of the twenty
largest customers and twenty largest suppliers of the Company and its
Subsidiaries for calendar year 1998 and the dollar amount of their
respective purchases or sales, as the case may be.
(d) Schedule 4.9(d) sets forth each Contractual Obligation to
which the Company or any of its Subsidiaries is a party under the
terms of which (i) it may be obligated to purchase any product from,
or sell any product to, any other Person on an exclusive basis with
respect to any geographic area or group of
-25-
<PAGE>
potential customers or (ii) any other Person may be similarly
obligated toward the Company or any of its Subsidiaries.
(e) Except as set forth on Schedule 4.9(e), to the Sellers'
Knowledge no supplier or vendor to the Company or any of its
Subsidiaries is subject to restrictions of any kind or nature
whatsoever on its ability to export (directly or indirectly)
instruments or other goods purchased by the Company or its
Subsidiaries into Canada or the United States.
4.10. Litigation, etc.
---------------
4.10.1. General Litigation. There is no Action, at law or in
------------------
equity, or any proceeding before or investigation by any Governmental
Authority pending or (to the Sellers' Knowledge) threatened against the
Company or its Subsidiaries, except as described in Schedule 4.10.1. Set
forth on Schedule 4.10.1 is the reserve with respect to each matter listed
thereon maintained on the books and records of the Company in accordance with
past practice. There is no Action, at law or in equity, pending or (to the
Sellers' Knowledge) threatened against the Company or its Subsidiaries, nor,
to the Sellers' Knowledge is there any basis therefor, which seeks rescission
of, seeks to enjoin the consummation of, or otherwise relates to, this
Agreement or any of the transactions contemplated hereby. No Governmental
Order (i) has been issued against any Person other than the Company or its
Subsidiaries which granted equitable relief binding the Company or its
Subsidiaries or which has otherwise had or could reasonably be expected to
have a Material Adverse Effect or (ii) has been issued against the Company or
its Subsidiaries and is still in effect.
4.10.2. Products Liability Matters. Set forth on Schedule 4.10.2 is
--------------------------
(i) a listing of all product liability Actions pending or, to the Sellers'
Knowledge threatened (other than the Existing Products Claims referred to
below) which have been made against the Company or its Subsidiaries and have
not been resolved, and (ii) a listing and description (including without
limitation summary of procedural status, status of settlement discussions,
and other significant matters) of all pending product liability claims and
all product liability claims threatened and other occurrences which have
occurred but have not yet resulted in a products liability claim
(collectively, the "Existing Products Claims") and the reserve with respect
to each such claim and occurrence maintained on the books and records of the
Company in accordance with Canadian generally accepted accounting principles
and past practice.
4.11. Disclosure. Neither this Agreement (including without limitation
----------
the Schedules hereto), nor the Financial Statements, nor any certificate
furnished or to be furnished by or on behalf of the Selling Participants,
contains or will contain any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading.
-26-
<PAGE>
4.12. Banking Facilities, Powers of Attorney, etc. Schedule 4.12 hereto
-------------------------------------------
sets forth a true, correct and complete list of each bank, savings and loan or
similar financial institution in which the Company or any of its Subsidiaries
has an account or safety deposit box or other arrangement, and any numbers of
the accounts or safety deposit boxes maintained by the Company or its
Subsidiaries thereat, the names of all persons authorized to draw on each such
account or to have access to any such safety deposit box facility, and any
outstanding powers of attorney executed on behalf of the Company or its
Subsidiaries in respect of the Company or its Subsidiaries. Except as set forth
on Schedule 4.12, neither the Company nor any of its Subsidiaries have any
general or special powers of attorney outstanding (whether as grantor or grantee
thereof) or has any obligation or liability (whether actual, accrued, accruing,
contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity, except as
endorser or maker of checks or letters of credit, respectively, endorsed or made
in the Ordinary Course of Business.
4.13. Books and Records. The books of account, minute books, stock record
-----------------
books and other records of the Company and its Subsidiaries, all of which have
been made available to the Buyer, are true, complete and correct in all material
respects. At the Closing, all of those books and records will be in the
possession of the Company and its Subsidiaries.
4.14. Brokers or Finders Fees. The Selling Participants and their agents
-----------------------
have incurred no liability and will incur no liability, contingent or otherwise,
for brokerage or finder's fees or agents commissions or other similar payment in
connection with this Agreement or the transactions contemplated hereby, except
for fees and expenses (if any) which shall be solely the responsibility of and
will be paid by the Sellers or the Selling Individuals (and will not become an
obligation of the Company, any of its Subsidiaries or Amalco) after the Closing.
4.15. Representations and Warranties Relating to the Sellers.
------------------------------------------------------
4.15.1. Enforceability. Each of this Agreement and the Closing
--------------
Agreements to which any of the Sellers are stated to be party has been duly
authorized, executed and delivered by or on behalf of each Seller stated to
be party thereto, and constitutes the legal, valid and binding obligation
of each Seller stated to be party thereto, enforceable against each Seller
stated to be party thereto in accordance with its terms.
4.15.2. Organization, Power and Standing. Each Seller (other than
--------------------------------
any Seller who is a natural person or which is a trust) is a corporation
duly organized, validly existing and in good standing under the laws of
Manitoba. Each of MEB Family Trust, JWB Family Trust, PCB Family Trust and
DHB Family Trust is a valid trust under, and is governed by, the laws of
Manitoba. Pursuant to the trust agreement dated as of April 29, 1996 with
respect to the MEB Family Trust, Mark Buller has been duly appointed as
trustee of the MEB Family Trust, and he has further been duly authorized
-27-
<PAGE>
to act on behalf of such trust with respect to this Agreement and the
transactions contemplated hereby. Pursuant to the trust agreement dated as
of April 29, 1996 with respect to the JWB Family Trust, James Buller has
been duly appointed as trustee of the JWB Family Trust, and he has further
been duly authorized to act on behalf of such trust with respect to this
Agreement and the transactions contemplated hereby. Pursuant to the trust
agreement dated as of April 29, 1996 with respect to the PCB Family Trust,
Philip Buller has been duly appointed as trustee of the PCB Family Trust,
and he has further been duly authorized to act on behalf of such trust with
respect to this Agreement and the transactions contemplated hereby.
Pursuant to the trust agreement dated as of April 29, 1996 with respect to
the DHB Family Trust, Herbert and Erna Buller have been duly appointed as
trustees of the DHB Family Trust, and they have further been duly
authorized to act on behalf of such trust with respect to this Agreement
and the transactions contemplated hereby. Each Seller has all requisite
power and authority, corporate and otherwise, to enter into this Agreement
and each Closing Agreement to which it is stated to be party, to carry out
and perform its obligations hereunder and thereunder and to consummate the
Purchase, the Pre-Closing Transactions and the exchange of shares
contemplated by the Amalgamation.
4.15.3. Non-Contravention, etc. Neither, the execution and delivery
----------------------
of this Agreement or any of the Closing Agreements to which any of the
Sellers are stated to be party, nor the consummation of the transactions
contemplated hereby (including without limitation, the Amalgamation) does
or will constitute, result in or give rise to any breach or violation of,
or any default or right or cause of action under, any Contractual
Obligation of any Seller or any Legal Requirement applicable to any Seller
or, in the Charter or By-laws, trust documents or other organizational
documents of such Seller. No approval, consent, waiver, authorization or
other order of, and no declaration, filing, registration, qualification or
recording with, any Governmental Authority or any other Person, including
without limitation any party to any Contractual Obligation of any Seller,
is required to be made by or on behalf of the Sellers in connection with
the execution, delivery or performance of (i) this Agreement or any of the
Closing Agreements to which any of the Sellers are stated to be party and
(ii) the transactions contemplated hereby (including without limitation,
the Amalgamation) by the Sellers, except for such items set forth on
Schedule 4.15.3 which such items have been obtained and are and will
continue to be in full force and effect at and through the Closing..
4.15.4. Title, etc. Each Seller has good and marketable title to the
----------
Acquired Shares owned by such Seller, free and clear of any Liens. Except
pursuant to this Agreement, there is no Contractual Obligation pursuant to
which any Seller has, directly or indirectly, granted any option, warrant
or other right to any Person to acquire any Acquired Shares or of any other
direct or indirect interests in the Company or any of its Subsidiaries.
Upon delivery of certificates representing such Acquired Shares, and
payment therefor as contemplated herein, the Buyer will receive good and
-28-
<PAGE>
marketable title to such Acquired Shares free and clear of any Liens and
subject to no rescission or similar rights or equities of any kind.
4.15.5. Investment Intent, Etc. The Sellers who are acquiring the
-----------------------
Rollover Shares and the Exchange Shares (as indicated on Schedule 3.2) and
who, as holders of the Exchange Shares, may as a result of either their
exercise of exchange rights with respect to the Exchange Shares or as a
result of the exercise by Amalco of exchange rights with respect to the
Exchange Shares receive Holdings Shares, are acquiring such Rollover Shares
and Exchange Shares and will acquire such Holdings Shares, as principals,
for their own account, for investment only and not with a view to resale,
or for sale in connection with, any distribution thereof within the meaning
of the Securities Act or the MSA, or in a manner which is or would be in
violation of any applicable Legal Requirement, including without limitation
the Securities Act and the MSA. The Selling Participants understand and
agree that one or more of the foregoing transactions may be exempt from the
registration and prospectus requirements of the MSA only if a report in
Form 8 of the Regulations under the MSA is prepared, executed and filed
with The Manitoba Securities Commission within a period of 10 days after
any such transaction. The Sellers agree to execute all such reports and
otherwise cooperate with Holdings and Amalco in effecting all such filings
as may in the discretion of Holdings and Amalco be required. The Selling
Participants also understand and agree that the Rollover Shares and the
Exchange Shares and the Holdings Shares will not be registered or qualified
under the Securities Act or the MSA or other state or provincial "blue-sky"
or other securities laws and therefore cannot be resold unless such resale
is registered under the Securities Act and applicable state laws and unless
a prospectus is filed and a receipt obtained therefor under the MSA or
unless exemptions from the registration and prospectus and filing
requirements of the Securities Act and the MSA are available, and that
neither the Buyer nor any of its Affiliates is under any obligation to
effect any such registration or file any such prospectus or obtain any such
exemption, except to the extent set forth in the Stockholders Agreement
with respect to the Exchange Shares. The Selling Participants acknowledge
that the Exchange Shares to be acquired will bear a legend to the effect
that transfers are restricted unless (i) the transfer is exempt from the
registration requirements under the Securities Act, and Amalco receives an
opinion of counsel reasonably satisfactory to it to that effect or (ii) the
transfer is made pursuant to an effective registration statement under the
Securities Act and complies with or is exempt from the registration and
prospectus requirements of the MSA. Each of the Sellers who is acquiring
Rollover Shares, Exchange Shares or who may acquire Holdings Shares (other
than the Selling Employees as to whom no representation as to "accredited
investor" status is made) is an "accredited investor" within the definition
set forth in Rule 501(a) under the Securities Act and is not a "U.S.
person" as such term is defined in Rule 902 under the Securities Act. Each
of the Selling Employees is not a "U.S. person" as such term is defined in
Rule 902 under the Securities Act. The Sellers who are acquiring Rollover
Shares or Exchange Shares or who may acquire Holdings Shares are able to
bear the
-29-
<PAGE>
economic risk of holding such shares for an indefinite period of time, are
experienced and have such knowledge and experience in financial and
business matters and are capable of evaluating the risks and merits of
acquiring the Rollover Shares, the Exchange Shares and the Holdings Shares.
The Selling Participants have been provided access to information and have
been afforded an opportunity to ask questions of and receive answers from
representatives of the Buyer and its Affiliates concerning the terms and
conditions of this Agreement and the business, assets and condition,
financial and otherwise, of Holdings and its Subsidiaries.
4.16. Representations and Warranties Relating to the Selling Individuals.
------------------------------------------------------------------
4.16.1. Enforceability. Each of this Agreement and the Closing
--------------
Agreements to which any of the Selling Individuals are stated to be party
has been duly authorized, executed and delivered by each Selling Individual
stated to be party thereto, and constitutes the legal, valid and binding
obligation of each Selling Individual stated to be party thereto,
enforceable against each Selling Individual stated to be party thereto in
accordance with its terms.
4.16.2. Power and Standing. Each Selling Individual has full
------------------
power and authority to execute and deliver this Agreement and each of the
Closing Agreements to which such Selling Individual is stated to be party,
and to perform his obligations hereunder and thereunder.
4.16.3. Non-Contravention, etc. Neither the execution and
-----------------------
delivery of this Agreement or any of the Closing Agreements to which any
Selling Individual is stated to be party, nor the consummation of the
transactions contemplated hereby (including without limitation the
Amalgamation) does or will constitute, result in or give rise to any breach
or violation of, or any default or right or cause of action under, any
Contractual Obligation of any Selling Individual or any Legal Requirement
applicable to any Selling Individual. No approval, consent, waiver,
authorization or other order of, and no declaration, filing, registration,
qualification or recording with, any Governmental Authority or any other
Person, including, without limitation, any party to any Contractual
Obligation of any Selling Individual, is required to be made by or on
behalf of any Selling Individual in connection with (i) the execution,
delivery or performance of this Agreement or any Closing Agreement to which
any Selling Individual is stated to be party and (ii) the transactions
contemplated hereby (including without limitation, Amalgamation) by any
Selling Individual.
-30-
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
In order to induce the Sellers to enter into and perform this Agreement and
to consummate the transactions contemplated hereby, the Buyer represents and
warrants to the Sellers as follows:
5.1. Corporate Matters. The Buyer is a corporation duly organized, validly
-----------------
existing and in good standing under the laws of Canada. Holdings is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Each of the Buyer and Holdings has all requisite
power and authority to execute, deliver and perform this Agreement and each
Closing Agreement to which the Buyer and Holdings, as the case may be, is stated
to be party and to consummate the transactions contemplated hereby (including
without limitation in the case of the Buyer, the Amalgamation). The Buyer has
heretofore delivered to the Sellers true and complete copies of the Buyer's and
Holdings' Charter and By- laws.
5.2. Authorization and Enforceability. This Agreement and each Closing
--------------------------------
Agreement to which the Buyer or Holdings is stated to be party has been duly
authorized, executed and delivered by the Buyer or Holdings, as the case may be,
and constitutes the legal, valid and binding obligation of the Buyer or
Holdings, as the case may be, enforceable against the Buyer or Holdings, as the
case may be, in accordance with its terms.
5.3. Non-Contravention, etc. Neither the execution, delivery nor
----------------------
performance of this Agreement or any of the Closing Agreements to which the
Buyer or Holdings is stated to be party, nor the consummation of the
transactions contemplated hereby (including without limitation, the
Amalgamation) does or will constitute, result in or give rise to any breach or
violation of, or any default or right or cause of action under, any Contractual
Obligation of or the Charter or By-Laws of the Buyer or Holdings or any Legal
Requirement applicable to the Buyer or Holdings. Other than post-acquisition
filings under the Investment Canada Act and U.S. federal and state and Canadian
federal and provincial securities laws filings in connection with the sale of
capital stock in connection with the transactions contemplated hereby, no
approval, consent, waiver, authorization or other order of, and no declaration,
filing, registration, qualification or recording with, any Governmental
Authority or any other Person, including without limitation any party to any
Contractual Obligation of the Buyer or Holdings, is required to be obtained or
made by or on behalf of the Buyer or Holdings in connection with the execution,
delivery or performance of (i) this Agreement or any Closing Agreement to which
the Buyer or Holdings is stated to be party and (ii) the transactions
contemplated hereby (including without limitation, the Amalgamation) by the
Buyer or Holdings, except for such items which have been obtained and are and
will be in full force and effect at the Closing.
5.4. Brokers or Finders Fees. The Buyer and its agents have incurred no
-----------------------
liability and will incur no liability, contingent or otherwise, for brokerage or
finder's fees or agents commissions or other similar payment in connection with
this Agreement or the transactions
-31-
<PAGE>
contemplated hereby except for fees and expenses (if any) which shall be the
responsibility of and be paid by Holdings and/or its Subsidiaries (and will not
become an obligation of the Selling Participants) after the Closing.
5.5. Financial Statements, etc.
-------------------------
5.5.1. Financial Information The Sellers have been furnished with
---------------------
true and complete copies of each of the following (which are attached
hereto as Exhibit 5.5):
(a) The audited consolidated balance sheets of Holdings and
its Subsidiaries as of December 28, 1996 and December 27, 1997, and
the related consolidated statements of income, stockholders' equity
and cash flows for the fiscal years then ended, accompanied by the
notes thereto and the unqualified opinion thereon of Ernst & Young LLP
confirming that the same are prepared in accordance with United States
generally accepted accounting principles consistently applied (the
"Omega Audited Financials").
(b) The unaudited consolidated balance sheet of Holdings and
its Subsidiaries as of January 2, 1999 and related unaudited
consolidated statements of income cash flows for the year then ended
(the "Omega Unaudited Financials).
5.5.2. Character of Financial Information The Omega Audited
----------------------------------
Financials (including the notes thereto) and the Omega Unaudited Financials
were prepared in accordance with United States generally accepted
accounting principles applied consistently throughout the periods specified
therein, and present fairly the financial position and results of
operations of Holdings and its Subsidiaries as of the dates and for the
periods specified therein, subject in the case of the Omega Unaudited
Financials to an absence of footnotes and normal year-end audit
adjustments.
5.6. Capitalization. Schedule 5.6 is a true and correct list of all
--------------
outstanding equity securities (including, without limitation, shares of capital
stock as well as any options, warrants or other rights to acquire capital stock)
of Holdings. The only issued and outstanding shares of capital stock of
Holdings are the shares listed on Schedule 5.6, all of which have been duly
authorized and validly issued and are fully paid and non-assessable. The Buyer
is an indirect, wholly-owned subsidiary of Holdings and, except for the transfer
of the Rollover Shares contemplated by this Agreement, has not granted any
option, warrant or other right to acquire capital stock of the Buyer. The
authorized capital stock of the Buyer consists of an unlimited number of Class A
Common Shares and an unlimited number of Class B Common Shares. The only issued
and outstanding shares of capital stock of the Buyer are 100,000 Class A Common
Shares, all of which have been duly authorized and validly issued, are fully
paid and non-assessable and are owned by an indirect, wholly-owned subsidiary of
Holdings. Except as set forth on Schedule 5.6 (with respect to Holdings) and
except for this Agreement
-32-
<PAGE>
(with respect to the Buyer) there is no Contractual Obligation or Charter or By-
law provision which obligates Holdings or the Buyer to issue, purchase or
redeem, or make any payment in respect of, any shares of capital stock or other
securities convertible into or exchangeable for shares of capital stock or which
provides for any stock appreciation or similar right or grants any right to
share in the equity, income, revenues or cash flow of the Company. As of the
Closing (after giving effect to the Amalgamation), the Exchange Shares (on an as
exchanged basis) will represent 3.4611% of the total issued and outstanding
shares of Holdings common stock on a fully diluted basis (i.e., including shares
issuable upon exercise of outstanding options and warrants).
5.7. Other Liabilities. After giving effect to the Closing hereunder and
-----------------
the consummation of the Purchase, neither the Buyer nor Holdings will have any
material liabilities or other material obligations, whether absolute, accrued,
contingent, due, to become due, or otherwise, other than the following:
(a) Obligations and liabilities of Holdings and its Subsidiaries
reflected on the balance sheet referred to in Section 5.5.1(b) above.
(b) Obligations and liabilities of Holdings and its Subsidiaries
incurred since the date of the balance sheet referred to in Section
5.5.1(b) above.
(c) Obligations and liabilities of the Buyer, Holdings and
Holdings' Subsidiaries incurred in connection with the transactions
contemplated hereby (including, without limitation, the incurrence of
debt to finance the Purchase and to provide working capital for
Amalco, Holdings, and Holdings' Subsidiaries) or assumed in the
Amalgamation by operation of law from the Company.
5.8. Compliance Generally. The respective businesses of the Buyer,
--------------------
Holdings and Holdings' Subsidiaries have at all times been conducted in
compliance with all applicable Legal Requirements and the Buyer, Holdings, and
Holdings' Subsidiaries are not in default or violation under any applicable
Legal Requirement, except for such violations or defaults as have not had and
could not reasonably be expected to have a material adverse effect on Holdings
and its Subsidiaries considered as a whole. The Buyer, Holdings and Holdings'
Subsidiaries have been duly granted all licenses, permits, franchises and other
authorizations under any Legal Requirement necessary for the conduct of their
business as presently conducted, except licenses, permits, franchises and other
authorizations the failure of which to have been obtained has not had and could
not reasonably be expected to have a material adverse effect on Holdings and its
Subsidiaries considered as a whole. Neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated hereby
does or will constitute, result in or give rise to a breach or violation or
default under any Legal Requirement applicable to the Buyer, Holdings or
Holdings' Subsidiaries except for such violations or defaults as have not had
and could not reasonably be expected to have a material adverse effect on
Holdings and its Subsidiaries considered as a whole. Other than
-33-
<PAGE>
post-acquisition filings under the Investment Canada Act and U.S. federal and
state and Canadian federal and provincial securities laws filings in connection
with the sale of capital stock in connection with the transactions contemplated
hereby, no approval, consent, waiver, authorization or order of, and no
declaration, filing, registration, qualification or recording with, any
Governmental Authority is required to be obtained or made by or on behalf of the
Buyer, Holdings or any of Holdings' Subsidiaries in connection with the
execution, delivery or performance of this Agreement or the consummation of any
of the transactions contemplated hereby (including without limitation, the
Amalgamation), except for the items set forth on Schedule 5.8, which such items
which have been obtained and are and will be in full force and effect at the
Closing.
5.9. Environmental and Safety Matters, etc. Each of the Buyer, Holdings
and Holdings' Subsidiaries is and has at all times been in compliance in all
material respects with all applicable Legal Requirements (including, without
limitation, all applicable Environmental Laws) relating to environmental,
natural resource, public and workplace health or safety matters. Except as set
forth on Schedule 5.9, there is no Action (including, without limitation, any
environmental claim), pending against the Buyer, Holdings or any of Holdings'
Subsidiaries in respect of (i) noncompliance with any such Legal Requirement,
(ii) except as disclosed in Schedule 5.10, personal injury, wrongful death,
other tortious conduct, or the existence of any nuisance relating to materials,
commodities or products held, used, sold, transferred, manufactured or disposed
of by or on behalf of the Buyer, Holdings or any of Holdings' Subsidiaries or
any predecessor entity made of, containing or incorporating any Hazardous
Substance, or (iii) the presence or release or threatened release into the
Environment of any Hazardous Substance, whether generated by the Buyer, Holdings
or any of Holdings' Subsidiaries or any predecessor entity or located at or
about a site owned or occupied or controlled by the Buyer, Holdings or any of
Holdings' Subsidiaries or any predecessor entity or currently or heretofore
leased or otherwise used by the Buyer, Holdings or any of Holdings' Subsidiaries
or any predecessor entity. No event has occurred or condition exists or
operating practice is being employed that will give rise to any liability or
Losses on the part of the Buyer, Holdings or any of Holdings' Subsidiaries
either at the present or at any future time (including, without limitation, any
environmental claim) under any existing Environmental Laws or otherwise
resulting from or relating to the handling, storage, use, transportation or
disposal prior to the Closing Date of any Hazardous Substance by or on behalf of
the Buyer, Holdings or any of Holdings' Subsidiaries or any of their respective
predecessor entities or otherwise.
5.10. General Litigation. Except as described in Schedule 5.10., there is
------------------
no Action, at law or in equity, or any proceeding before or investigation by any
Governmental Authority pending or (to the knowledge of the Buyer) threatened
against the Buyer, Holdings or any of Holdings' Subsidiaries, which seeks, or is
reasonably likely to result in, a judgment in excess of $2,000,000. Set forth
on Schedule 5.10 is the reserve with respect to each matter listed thereon
maintained on the books and records of the Buyer, Holdings and Holdings'
Subsidiaries in accordance with past practice. There is no Action, at law or in
equity, pending
-34-
<PAGE>
or (to the knowledge of the Buyer) threatened against the Buyer, Holdings or
Holdings' Subsidiaries, nor, to the knowledge of the Buyer is there any basis
therefor, which seeks rescission of, seeks to enjoin the consummation of, or
otherwise relates to, this Agreement or any of the transactions contemplated
hereby. Except as has not had and would not reasonably be expected to have a
material adverse effect on Buyer, Holdings and Holdings' Subsidiaries (taken as
a whole), no Governmental Order has been issued against, or is otherwise binding
against, the Buyer, Holdings or any of Holdings' Subsidiaries.
5.11. Stockholders Agreement. Attached hereto as Exhibit 6.2.3(i) is a
----------------------
true and correct copy of the Stockholders Agreement among Holdings and its
stockholders as amended to date.
6. CERTAIN AGREEMENTS OF THE PARTIES.
6.1. Consents. From and after the Closing, each party hereto will use
--------
reasonable best efforts to secure the written consents or waivers required under
all Contractual Obligations of the Selling Participants and the Company and its
Subsidiaries (including, without limitation, the consents and waivers described
on Schedule 4.5.5) in a manner reasonably satisfactory in form and substance to
the Buyer.
6.2. Certain Closing Matters.
-----------------------
6.2.1. Expenses of Transaction. Subject to Section 9 hereof, each
-----------------------
party hereto will pay all financial advisory, legal, accounting and other
expenses incurred by it in connection with the preparation and execution of
this Agreement, the compliance herewith and the transactions contemplated
hereby. For the purposes of the preceding sentence, if the transactions
contemplated hereby are consummated, all such fees and expenses of the
Company and its Subsidiaries shall be deemed to be fees and expenses of,
and shall be borne by, the Sellers and the Selling Individuals.
6.2.2. Preparation for Closing. Each party has used and will use
-----------------------
its best efforts to bring about the fulfillment of each of the conditions
precedent to the obligations of the other parties hereto set forth in this
Agreement, and will render all reasonable assistance (not requiring the
expenditure of funds) to such other parties requested by such other parties
in connection with such other parties' best efforts.
6.2.3. Certain Closing Agreements. Attached hereto as Exhibit
--------------------------
6.2.3 are forms of each of the following agreements (the "Closing
Agreements"). On or prior to the Closing, each of the parties hereto shall
have executed and delivered, or cause such Person's Affiliates to execute
and deliver such of the following Closing Agreements to which they are
respectively stated to be party in substantially the same form as set forth
in Exhibit 6.2.3:
-35-
<PAGE>
(i) the Stockholders Agreement (the "Stockholders Agreement")
among Holdings and the stockholders of Holdings party thereto;
(ii) the Non-Competition Agreement (the "Non-Competition
Agreement") between Holdings and each of Herbert D. Buller, Mark
Buller, James Buller, David Buller and Philip Buller.
(iii) the Escrow Agreement among the Buyer, the Selling
Participants and the escrow agent identified therein (the "Escrow
Agreement");
(iv) the following employment agreements (the "Employment
Agreements"):
(A) the Employment Agreement between the Buyer and Herbert D.
Buller;
(B) the Employment Agreement between the Buyer and Mark Buller;
(C) the Employment Agreement between the Buyer and James
Buller;
(D) the Employment Agreement between the Buyer and David
Buller;
(E) the Employment Agreement between the Buyer and Philip
Buller;
(v) Resolutions of the directors and the stockholders of the
Company, as may be required by the Charter of the Company, approving
the transfer of the Acquired Shares to the Buyer;
(vi) an agreement among the parties to any unanimous shareholder
agreement concerning the business and affairs of the Company and/or
its Subsidiaries, terminating such unanimous shareholder agreement as
of the Closing Date (the "Unanimous Shareholder Termination
Agreement"); and
(vii) unanimous shareholders agreements relating to the Buyer
(the "Buyer Unanimous Shareholder Agreement").
6.3. Covenants regarding Confidentiality. Each of the Selling Participants
-----------------------------------
acknowledges that the success of the Company and its Subsidiaries after the
Closing depends in part upon the continued preservation of the confidentiality
of certain information possessed by such Selling Participant that the
preservation of the confidentiality of such information by such Selling
Participant is an essential premise of the bargain between the Selling
Participants and the Buyer, and that the Buyer would be unwilling to enter into
this Agreement in the absence of this Section 6.3. Accordingly, each Selling
Participants hereby agrees with the Buyer that
-36-
<PAGE>
such Selling Participants will not, and will cause its Affiliates not to, at any
time on or after the Closing Date, directly or indirectly, without the prior
written consent of the Buyer, disclose or use, in any way harmful to the Buyer
or its Affiliates, the Company or any of its Subsidiaries, or otherwise contrary
to the interests of the Buyer or its Affiliates, the Company or any of its
Subsidiaries, any confidential or proprietary information involving or relating
to the Buyer or its Affiliates, the Company or any of its Subsidiaries;
provided, however, that the information subject to the foregoing provisions of
- - -------- -------
this sentence shall be deemed not to include any information known generally in
the industry (other than as a result of disclosure in violation hereof by any
Selling Participant or any such Affiliate thereof); and provided, further, that
the provisions of this Section 6.3 shall not prohibit any retention of records
or disclosure required by law, so long as reasonable prior notice is given of
such disclosure and a reasonable opportunity is afforded to contest the same or
made in connection with the enforcement of any right or remedy relating to this
Agreement or the transactions contemplated hereby. The Selling Participants
further acknowledge that the provisions of the Confidentiality Agreement dated
November 19, 1998 by and among Holdings, the Company, Herbert D. Buller and Mark
Buller shall remain in full force and effect notwithstanding the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby. All confidentiality obligations of Butler Capital Corporation, BCC
Industrial Services, Inc., and the Buyer relating to the Company, its
Subsidiaries and Affiliates (including without limitation, all such obligations
under the confidentiality agreement executed as of December 10, 1997 on behalf
of Butler Capital Corporation and BCC Industrial Services, Inc) shall terminate
upon the consummation of the Closing.
6.4. Tax Matters.
-----------
6.4.1. Pre-Closing Taxes. The Sellers (other than the Selling Employees)
-----------------
and the Selling Individuals shall be liable for and shall pay, and hereby
indemnify the Buyer for, all Taxes of the Company and each of its Subsidiaries,
in excess of the Estimated Closing Date Current Income Tax Liabilities,
attributable to all taxable years or periods ending on or before the Closing
Date and, with respect to any taxable years or periods that begin before the
Closing and end after the Closing, the portion of such taxable years or periods
ending at the Closing (collectively "Pre-Closing Tax Periods"), other than any
Taxes attributable solely to the Bulrad Illinois Transfer. The Buyer shall be
liable for and hereby agrees to pay any Taxes of the Company attributable solely
to the Bulrad Illinois Transfer. To the extent all Taxes of the Company and
each of its Subsidiaries for all Pre-Closing Tax Periods, excluding any Taxes
attributable solely to the Bulrad Illinois Transfer, is less than the Estimated
Closing Date Current Income Tax Liabilities, the Buyer shall pay to the Sellers
the excess of the Estimated Closing Date Current Income Tax Liabilities over the
amount of Taxes of the Company and each of its Subsidiaries for all Pre-Closing
Tax Periods, excluding any Taxes attributable solely to the Bulrad Illinois
Transfer.
6.4.2. Returns. The Sellers shall cause the Company and its Subsidiaries
-------
to prepare, consistent with past custom and practice and timely file with the
appropriate Governmental
-37-
<PAGE>
Authorities all Tax Returns that relate to taxable years or periods ended on or
before the Closing Date. The Buyer shall cause the Company and its Subsidiaries
to prepare and timely file with the appropriate Governmental Authorities all
other Tax Returns required to be filed by the Company and its Subsidiaries,
including without limitation any Tax Returns that relate to taxable years or
periods that begin before and end after the Closing Date. The Sellers (other
than the Selling Employees) and the Selling Individuals shall pay to the Buyer
the Taxes for which they are liable pursuant to Sections 6.4.1 and 6.4.4, but
which are payable after the Closing at least 10 Business Days prior to the due
date for the payment of such Taxes. The Sellers will allow the Buyer an
opportunity to review and comment upon any Tax Returns of the Company or any of
its Subsidiaries prepared by Sellers prior to filing and will not file any such
Tax Returns without the Buyer's consent, which consent shall not be unreasonably
withheld.
6.4.3. Tax Allocations. In order appropriately to apportion any income
---------------
Taxes relating to any taxable year or period that begins before and ends after
the Closing Date, the parties hereto shall, to the extent permitted by
applicable law, elect with the relevant Tax authority to terminate the taxable
year as of the Closing Date. In any case where applicable law does not permit
the Company or any of its Subsidiaries to treat such date as the end of a
taxable year, then whenever it is necessary to determine the liability for
income or franchise Taxes of the Company or any of its Subsidiaries for a
portion of a taxable year, such determination shall be made by a closing of the
books of the Company or any of its Subsidiaries, except that exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned on a time basis. In order
appropriately to apportion any Taxes other than income or franchise Taxes
relating to any taxable year or period that begins before and ends after the
Closing Date, (i) ad valorem Taxes (including, without limitation, real and
-- -------
personal property Taxes) shall be accrued on a daily basis over the period for
which the Taxes are levied, or if it cannot be determined over what period the
Taxes are being levied, over the fiscal period of the relevant taxing authority,
in each case irrespective of the lien or assessment date of such Taxes, and (ii)
franchise and other privilege Taxes not measured by income shall be accrued on a
daily basis over the period to which the privilege relates.
6.4.4. Payment of Transfer Taxes and Other Charges. The Sellers and the
-------------------------------------------
Selling Individuals shall pay any stock transfer Taxes, real property transfer
Taxes, sales Taxes, documentary stamp Taxes, recording charges and other similar
Taxes arising under any Legal Requirement (collectively "Transfer Taxes") in
connection with the Pre-Closing Transactions and the transfer of the Rollover
Shares or the Exchange Shares. Any other Transfer Taxes arising in connection
with the Purchase or the Amalgamation shall be paid by the Buyer or Amalco.
Each of the parties hereto shall prepare and file, and shall fully cooperate
with each other party with respect to the preparation and filing of, any Tax
Returns and other filings relating to any Transfer Taxes or charges as may be
required.
-38-
<PAGE>
6.4.5. Withholding. There shall be withheld from any amount payable under
-----------
this Agreement such amounts, if any, as may be required to be withheld under
applicable Legal Requirements. Provided that the Sellers have delivered to the
Buyer the statement pursuant to Section 1.897-2(h) of the U.S. Treasury
Regulations required by Section 7.4, the parties are not aware as of the date of
this Agreement that any such withholding is required.
6.4.6. Tax Sharing Agreements. All Tax sharing or Tax allocation
----------------------
agreements to which the Company or any of its Subsidiaries is a party shall be
terminated as of the Closing Date and after the Closing Date the Company and its
Subsidiaries shall not be bound thereby or have any liability thereunder.
6.4.7. Section 85 Election. The Buyer and each Seller of the Rollover
-------------------
Shares agrees that the purchase and sale of the Rollover Shares is being made
pursuant to and in accordance with the provisions of Section 85 of the Tax Act.
In respect thereof, the Buyer agrees with each Seller of the Rollover Shares to
jointly elect, in the prescribed form and within the time referred to in
subsection 85(6) of the Tax Act, and in doing so to designate as the agreed
amount for the purposes of subsection 85(1) of the Tax Act, an amount equal to
such Seller's adjusted cost base of the Rollover Shares owned by such Seller or
such greater amount as the Sellers may direct.
6.5. Non-Cash Net Working Capital Adjustments; Closing Date Current
--------------------------------------------------------------
Income Tax Liabilities.
- - ----------------------
6.5.1. Pre-Closing. The Company, at the expense of the Sellers
-----------
shall cause Ernst & Young (Winnipeg) to prepare and deliver at least five
days prior to the Closing Date to the Buyer and Sellers estimates,
reasonably acceptable to the Buyer and the Sellers, of (a) the Non-Cash Net
Working Capital of the Company and its Subsidiaries as of the Closing Date
which estimate shall be attached hereto as Exhibit 6.5.1(a) (the "Estimated
Closing Date Non-Cash Net Working Capital") and (b) of the Closing Date
Current Income Tax Liabilities which estimate shall be attached hereto as
Exhibit 6.5.1(b) (the "Estimated Closing Date Current Income Tax
Liabilities"). The "Estimated Non-Cash Net Working Capital Adjustment"
shall equal the Estimated Closing Date Non-Cash Net Working Capital minus
-----
$11,069,270 (CDN).
6.5.2. Post-Closing.
------------
6.5.2.1. As soon as practicable and in no event not later than
sixty (60) days after the Closing Date, the Buyer, at the expense of the
Company, shall cause Ernst & Young (Winnipeg) to prepare and deliver to the
Buyer, the Sellers and Ernst & Young LLP (Chicago) a consolidated balance
sheet of the Company and its Subsidiaries as of immediately prior to the
Closing (the "Closing Date Company Balance Sheet"), together with a
----------------------------------
statement (the "Company Statement") setting forth in reasonable detail the
-----------------
determination of the Non-Cash Net Working Capital of the Company and its
-39-
<PAGE>
Subsidiaries as of the Closing Date (the "Closing Date Non-Cash Net Working
---------------------------------
Capital"). The Closing Date Company Balance Sheet shall be prepared in
-------
accordance with Canadian generally accepted accounting principles, applied
in a manner consistent with the preparation of the Financial Statements.
The Buyer, Sellers and Ernst & Young LLP (Chicago) shall review the Closing
Date Company Balance Sheet and the Company Statement. The Buyer and Sellers
shall cooperate with Ernst & Young (Winnipeg) and Ernst & Young LLP
(Chicago) and use their best efforts to resolve any disputes relating to
the calculation of the Closing Date Non-Cash Net Working Capital within
thirty (30) days after the deliveries of the Closing Date Company Balance
Sheet and the Company Statement. Upon the resolution of any such dispute,
the Closing Date Non-Cash Net Working Capital shall become final,
conclusive and binding on the parties hereto for all purposes of this
Section 6.5.2.
6.5.2.2. If the Closing Date Non-Cash Net Working Capital, as finally
determined in accordance with Sections 6.5.2.1, is less than the Estimated
Closing Date Non-Cash Net Working Capital, Herbert D. Buller and the
Selling Individuals shall pay or cause the Sellers to pay, within five (5)
business days after the final determination of the Closing Date Non-Cash
Net Working Capital, an amount to the Buyer equal to such difference
together with interest thereon from the Closing Date at eight percent (8%)
per annum. If the Closing Date Non-Cash Net Working Capital, as finally
determined in accordance with Sections 6.5.2.1 is more than the Estimated
Closing Date Non-Cash Net Working Capital, the Buyer shall pay, within five
(5) business days after the final determination of the Closing Date Non-
Cash Net Working Capital, an amount to the Sellers equal to such difference
together with interest thereon from the Closing Date at eight percent (8%)
per annum. Any payment made pursuant to this Section 6.5.2.2 shall be made
by wire transfer of immediately available funds to an account designated by
the payee.
6.6. Excess Cash. Immediately prior to the Purchase, cash of the Company
-----------
and its Subsidiaries including without limitation the Bulrad Purchase Price
("Excess Cash") shall be paid or distributed as follows: (i) first, to
discharge any outstanding Debt of the Company and its Subsidiaries and (ii)
second, to the extent any Excess Cash remains after the application pursuant to
clause (i) above, distributed to the Sellers.
6.7. Indebtedness. Attached hereto as Exhibit 6.7 are payoff letters from
------------
the relevant lenders with respect to the Debt included in the Closing Debt
Amount and to be repaid at Closing, which letters specify the aggregate amount
required to be paid in order to repay in full such obligations (including any
and all accrued but unpaid interest and prepayment penalty obligations due upon
repayment), and payment instructions, under the agreements relating to such debt
obligations on the projected Closing Date, as well as the per diem amount to be
added thereto in the event that the actual Closing Date is a date subsequent to
such projected Closing Date. Such letters include customary undertakings as
necessary by the relevant lenders to release in full on the Closing Date any and
all Liens securing Debt obligations and
-40-
<PAGE>
to prepare and file with the appropriate governmental and other offices on the
Closing Date such instruments as may be required to effect or evidence such
release.
6.8. Sellers' Representative.
-----------------------
6.8.1. Appointment. In order to efficiently administer the
-----------
transactions contemplated hereby, the Selling Participants hereby designate
Herbert D. Buller as their representative (the "Sellers' Representative"),
and by his execution of this Agreement, Herbert D. Buller accepts such
appointment. In the event that the Sellers' Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such
position, the Majority Sellers shall promptly select another representative
to fill such vacancy and such substituted representative shall be deemed to
be the Sellers' Representative for all purposes of this Agreement.
6.8.2. Authorization. The Sellers' Representative is hereby
-------------
authorized and empowered to take all action necessary on behalf of any of
the Selling Participants in connection with (i) the provisions of Section 9
hereof (indemnification), (ii) the provisions of Section 6.5 hereof (post-
Closing adjustment); (iii) the provisions of the Escrow Agreement, (iv) the
notice provisions of this Agreement and the Escrow Agreement and (v) such
other matters as are reasonably necessary for the consummation of the
transactions contemplated hereby.
6.8.3. Actions Binding. All decisions and actions by the Sellers'
---------------
Representative, including, without limitation, any written agreement
between the Sellers' Representative and the Buyer relating to the defense
or settlement of any claims for which there is indemnification pursuant to
Section 9 hereof or the resolution of any dispute relating to the post-
closing adjustment under Section 6.5 hereof or any actions taken under the
Escrow Agreement, shall be binding upon all of the Selling Participants and
no Selling Participant shall have the right to object, dissent, protest or
otherwise contest the same. The Buyer and its Affiliates shall be able to
rely conclusively on the written instructions and decisions of the Sellers'
Representative as to any actions taken by the Sellers' Representative
hereunder, and no party hereunder nor any other Person shall have any cause
of action against the Buyer or its Affiliates for actions or omissions in
reliance upon the instructions or decisions of the Sellers' Representative.
The provisions of this Section 6.8 are independent and severable, are
irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Selling Participant may
have in connection with the transactions contemplated by this Agreement.
The Selling Participants acknowledge that the willingness of the Buyer to
enter into this Agreement is based, in part, on the appointment of a
representative to act on behalf of the Selling Participants and agree that
remedies available at law for any breach of the provisions of this Section
6.8 are inadequate; therefore, the Buyer and its Affiliates shall be
entitled to temporary and permanent
-41-
<PAGE>
injunctive relief without the necessity of proving damages if the Buyer
brings an action to enforce the provisions of this Section 6.8.
6.9. Amalgamation; Bulrad Illinois Transfer. The Buyer covenants to use
--------------------------------------
its best efforts to cause the Amalgamation to occur. For the purposes of the
representations and warranties set forth in Section 4 hereof, to the extent any
portion of any such representation and warranty relates to the Amalgamation,
such portion of such representation and warranty shall be read to include an
assumption that the Buyer has not carried on any business or other activities
except as contemplated by this Agreement. The parties agree that the Bulrad
Illinois transfer shall occur as part of the Closing immediately prior to the
Purchase, and that for the purposes of this Agreement, except as explicitly
stated in this Agreement or as the context otherwise requires, Bulrad Illinois
and its Subsidiaries shall be deemed to be Subsidiaries of the Company.
6.10. Escrow of Agreement and Documents. The Buyer and the Selling
---------------------------------
Participants acknowledge joint custody in escrow of this Agreement, the Closing
Agreements, and the other documents and instruments to be delivered pursuant
hereto, which documents shall be deemed delivered upon (and not prior to) the
acknowledgment by an officer of each of the recipient banks of receipt of the
applicable wires listed on the wire schedule attached hereto as Exhibit 6.10.
6.11. Certain Provisions Relating to the Rollover Shares, Exchange Shares
-------------------------------------------------------------------
and Holdings Shares.
- - -------------------
6.11.1. Definition. For the purposes of this Section 6.11, the term
----------
"Transfer" shall mean any sale pledge, assignment, encumbrance or other
transfer or disposition of any shares to any other Person, whether
directly, indirectly, voluntarily, involuntarily, by operation of law or
judicial process or otherwise.
6.11.2. Rollover Shares. The Selling Participants who hold shares
---------------
of corporate Sellers shall not Transfer any shares or other interest in
such Sellers prior to the Amalgamation. The Sellers shall not Transfer the
Rollover Shares to any Person prior to the exchange of such shares for the
Exchange Shares in connection with the Amalgamation.
6.11.3. Exchange Shares. The Selling Participants who hold shares
---------------
of corporate Sellers shall not Transfer any beneficial interest in such
Sellers for so long as such corporation holds Exchange Shares or shares of
Holdings issued in exchange for Exchange Shares (it being understood that
this sentence shall not prohibit the Transfer of shares of a corporate
Seller by the Selling Participants who hold such shares to another
corporation which is wholly beneficially owned by such Selling Participants
or Members of their Immediate Family so long as in the case of any such
Transfer to a corporation in which a Member of the Immediate Family Member
of a Selling
-42-
<PAGE>
Participant has an interest, such Member of the Immediate Family Member
agrees to be bound by the provisions of this Agreement relating to the
Exchange Shares and the Holdings Shares). Each Seller shall not Transfer
Exchange Shares to any Person other than (i) to Amalco in exchange for
shares of Holdings pursuant to the terms of the Articles of Incorporation
of Amalco, (ii) in the case of a Seller who is an individual, to a
corporation wholly-owned by such individual which is formed solely for the
purpose of holding such shares and carries on no other business, (iii) to
the spouse or child of such Seller (or in the case of a Seller which is a
corporation, of the owner(s) of such Seller on the date hereof), (iv) to a
trust created solely for the benefit of the spouse or child of such Seller
(or in the case of a Seller which is a corporation, of the owner(s) of such
Seller on the date hereof), (v) to the custodian or guardian of any
property of one or more of the spouse or children of such Seller (or in the
case of a Seller which is a corporation, of the owner(s) of such Seller on
the date hereof) in his capacity as such custodian or guardian, (vi) upon
death by will or the applicable laws of intestate succession or (vi) to a
charitable trust; provided, however, than in any such case, no Transfer
shall be effective unless the transferee agrees to bound by the provisions
relating to the Exchange Shares, including without limitation the
provisions of this Agreement, the provisions of the Articles of
Amalgamation of Amalco and the Amalco Unanimous Shareholder Agreement, to
the same extent as the transferor. Notwithstanding the foregoing, no Seller
shall Transfer Exchange Shares to a corporation pursuant to clause (ii)
above unless the transferor agrees not to Transfer any portion of his
interest in the transferee corporation for so long as such corporation
holds such shares. Holdings shall cause Amalco not to exercise its rights
with respect to the Exchange Shares originally issued to HEB2 Holdings Ltd.
to cause, under Section 4.2(b) of the Provisions Attaching to the Class B
Common Shares contained in the Articles of Amalgamation of Amalco, an
exchange of such Exchange Shares for shares of common stock of Holdings in
connection with Herbert D. Buller ceasing to be an employee of Holdings or
a direct or indirect Subsidiary of Holdings.
6.11.4. Holdings Shares.
---------------
(a) Stockholders Agreement. Each of HEB2 Holdings Ltd., MEB2
----------------------
Holdings Ltd., JWB2 Holdings Ltd., DHB2 Holdings, PCB2 Holdings Ltd.,
Bill Rademaker, Ernie Boschmann and Peter Neufeld (collectively, the
"Rollover Shareholders") agrees, effective as of the date such
Rollover Shareholder first acquires any shares of common stock of
Holdings ("Holdings Shares") to become a party to, to be bound by, and
to comply with the provisions of the Stockholders Agreement in the
same manner as if such Rollover Shareholder were an original signatory
to such Stockholders Agreement subject to the following
qualifications: (i) all of the Holdings Shares acquired by a Rollover
Shareholder in exchange for or otherwise in respect of the Exchange
Shares originally issued to HEB2 Holdings Ltd. shall be deemed to be
Other Shares (as such term is defined in the Stockholders Agreement)
-43-
<PAGE>
under the Stockholders Agreement and (ii) all Holdings Shares acquired
by a Rollover Shareholder other than in exchange for or otherwise in
respect of the Exchange Shares originally issued to HEB2 Holdings Ltd.
shall be deemed to be Management Shares (as such term is defined in
the Stockholders Agreement) under the Stockholders Agreement.
(b) Certain Transfers of Other Shares. Holdings agrees that it
---------------------------------
will not exercise its purchase rights under Section 4.2.1 of the
Stockholders Agreement with respect to any Transfer of Other Shares by
any Rollover Shareholder to a transferee permitted by clauses (ii) -
(vi) of Section 6.11.3, provided, however, than in any such case, no
such Transfer shall be effective unless the transferee agrees to be
bound by the provisions relating to such shares, including without
limitation the provisions of this Agreement and the Stockholders
Agreement, to the same extent as the transferor. Notwithstanding the
foregoing, no Rollover Shareholder shall Transfer Other Shares to a
corporation pursuant to clause (ii) of Section 6.11.3 or otherwise to
a wholly-owned subsidiary of such Rollover Shareholder, unless the
Rollover Shareholder (and in the case of a Rollover Shareholder which
is not an individual, the owner(s) of such Rollover Shareholder)
agrees not to Transfer any portion of his interest in the transferee
corporation for so long as such corporation holds such shares.
(c) Certain Transfers of Management Shares. Holdings agrees
--------------------------------------
that it will consent to any Transfer of Management Shares by any
Rollover Shareholder to a transferee permitted by clauses (ii) - (vi)
of Section 6.11.3 to the extent that such Transfer would, without such
consent, be prohibited by the Stockholders Agreement, subject to
compliance with this Section 6.11 and provided that in any such case
no such Transfer shall be effective unless the transferee agrees to be
bound by the provisions relating to such shares, including without
limitation the provisions of this Agreement and the Stockholders
Agreement, to the same extent as the transferor. Notwithstanding the
foregoing, no Rollover Shareholder shall Transfer Management Shares to
a corporation pursuant to clause (ii) of Section 6.11.3 or otherwise
to a wholly- owned subsidiary of such Rollover Shareholder, unless the
Rollover Shareholder (and in the case of a Rollover Shareholder which
is not an individual, the owner(s) of such Rollover Shareholder)
agrees not Transfer any portion of his interest in the transferee
corporation for so long as such corporation holds such shares.
6.11.5. Execution of Documents. Each of the Selling Participants
----------------------
agrees to execute and deliver such additional documents and instruments as
Holdings or its Affiliates may from time to time request in order to carry
out the provisions of this Section 6.11.
-44-
<PAGE>
6.12. Unanimous Shareholder Agreement Relating to Amalco. Immediately
--------------------------------------------------
following the Amalgamation, each of the parties hereto which is stated to be
party to, or which such party's Affiliate is stated to be party to, the
unanimous shareholders agreements relating to the Amalco in the form attached
hereto as Exhibit 6.12 (the "Amalco Unanimous Shareholder Agreement") shall
execute and deliver or cause its Affiliate to execute and deliver, as the case
may be, the Amalco Unanimous Shareholder Agreement in substantially the same
form as set forth in Exhibit 6.12.
7. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER.
The obligations of the Buyer at the Closing to purchase the Acquired Shares
and to execute and deliver the Closing Agreements are subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
compliance with which, or the occurrence of which, may be waived prior to the
Closing in writing by the Buyer in its sole discretion:
7.1. [Intentionally Omitted]
7.2. [Intentionally Omitted]
7.3. [Intentionally Omitted]
7.4. Certain Deliveries. The Buyer shall have received the payoff letters
------------------
required to be delivered pursuant to Section 6.7. The Buyer shall have received
a statement pursuant to Section 1.897-2(h) of the U.S. Treasury Regulations
certifying that none of the stock of the Company or any of its Subsidiaries is a
U.S. real property interest within the meaning of Section 897 of the Code.
7.5. Closing Agreements. The parties to each of the Closing Agreements other
------------------
than the Buyer shall have executed and delivered such agreements in
substantially the same form as set forth in Exhibit 6.2.3.
7.6. Legality; Governmental Authorization; General Litigation. The Buyer's
--------------------------------------------------------
purchase of and payment for the Acquired Shares, and the consummation of the
other transactions contemplated hereby, shall not be prohibited by any Legal
Requirement, and shall not subject the Company, any of its Subsidiaries or the
Buyer to any penalty or Tax or other liability other than liabilities created by
the Buyer, if any. The Sellers shall have caused to have been obtained or made
and be in full force and effect all approvals, consents, approvals, waivers,
authorizations and other orders of, and declarations, filings, registrations,
qualifications and recordings with, any Governmental Authority necessary to be
obtained or made by the Seller, the Company or any of its Subsidiaries, in order
to permit the consummation of the transactions contemplated hereby or otherwise
reasonably requested by the Buyer in connection with the Buyer's financing of
the transactions contemplated by this Agreement, including without limitation
any of the foregoing set forth on Schedule 4.6.1. All necessary filings, if
-45-
<PAGE>
any, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the Investment Canada Act and the Competition Act (Canada) shall have
been made. All applicable waiting periods under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended, shall have expired or been terminated.
All applicable receipts, if any, to be issued under The Investment Canada Act
and The Competition Act (Canada) shall have been issued. No Action shall have
been instituted at or prior to the Closing by any Person other than the Buyer or
any of its Affiliates, or instituted or threatened in writing by any
Governmental Authority, relating to this Agreement or any of the transactions
contemplated hereby or against the Company, any of its Subsidiaries, any of the
Sellers or the Buyer, the result of which could prevent or make illegal the
consummation of any such transaction or could otherwise have a material adverse
effect on the Buyer or have a Material Adverse Effect.
7.7. Opinion of Counsel. The Sellers shall have furnished the Buyer with a
------------------
favorable opinion(s) of Aikins, MacAulay & Thorvaldson on the Closing Date in
substantially the form of Exhibit 7.7. Such opinion(s) shall, at the request of
the Buyer, be confirmed to any Person providing financing in connection with any
of the transactions contemplated hereby.
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE SELLERS.
The obligation of each Seller at the Closing to sell and transfer the
Acquired Shares is subject to the satisfaction, at or prior to the Closing, of
all of the following conditions, compliance with which, or the occurrence of
which, may be waived prior to the Closing in writing by the Majority Sellers in
their sole discretion:
8.1. [Intentionally Omitted]
8.2. [Intentionally Omitted]
8.3. Closing Agreements. The parties to each of the Closing Agreements
------------------
other than the Selling Participants shall have executed and delivered each of
the Closing Agreements to which they are party in substantially the same form
set forth in Exhibit 6.2.3.
8.4. Government Authorization; Litigation. The Sellers= sale of the
------------------------------------
Acquired Shares, and the consummation of the other transactions contemplated
hereby shall not be prohibited by any Legal Requirement. The Buyer shall have
caused to be obtained or made and be in full force and effect all approvals,
consents, waivers, authorizations and other orders of, and declarations,
filings, registrations, qualifications and recordings with, any Governmental
Authority necessary to be obtained or made by the Buyer in order to permit the
consummation of the transactions contemplated hereby or otherwise reasonably
required by the Sellers, and, without limiting the generality of the foregoing,
all necessary filings, if any, pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976,
-46-
<PAGE>
as amended, The Investment Canada Act and The Competition Act (Canada) shall
have been made. All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended shall have expired or been
terminated. All applicable receipts, in any, to be issued under The Investment
Canada Act and The Competition Act (Canada) shall have been issued. No Action
shall have been instituted at or prior to the Closing before any court,
arbitrator or other governmental body by any Person other than any Seller, any
Affiliate thereof, the Company or any of its Subsidiaries, or instituted or
threatened by any Governmental Authority, relating to this Agreement or any of
the transactions contemplated hereby or against the Buyer, the result of which
could prevent or make illegal the consummation any such transaction or could
otherwise have a material adverse effect on such Seller.
8.5. Opinion of Counsel. The Buyer and Holdings shall have furnished the
------------------
Seller's Representative with a favorable opinion of Ropes & Gray, Thompson
Dorfman Sweatman and Davies, Ward & Beck, respectively, in each case dated the
Closing Date in substantially the forms provided at Exhibit 8.5.
9. INDEMNIFICATION.
9.1. Sellers' Indemnification. Subject to the limitations set forth in
------------------------
this Section 9, each of the Sellers (other than the Selling Employees) and
Selling Individuals shall, on a joint and several basis, indemnify and hold
harmless, to the fullest extent permitted by law, the Buyer and each of its
officers, directors, employees, agents and Affiliates except any Seller or
Selling Individual (collectively, the "Buyer Indemnitees") from, against and in
-----------------
respect of Losses arising from or related to any of the following:
9.1.1. any breach of default in performance by any Selling
Participant of any covenant, indemnity or agreement of the Selling
Participant contained in this Agreement (it being understood that such
covenants and agreements do not include the representations and warranties
set forth in Section 4 hereof), any Closing Agreement or in any
certificate, instrument or other document delivered by or on behalf of any
Selling Participant pursuant hereto or thereto;
9.1.2. any breach of any representation or warranty made by any
Selling Participant in this Agreement, any Closing Agreement or in any
certificate, instrument or other document delivered by or on behalf of any
of the Selling Participants pursuant hereto or thereto (as each such
representation or warranty would read if all qualifications as to
materiality (including without limitation in the definition of Material
Adverse Effect) were deleted therefrom; it being understood that the
minimum dollar limitation set forth in and pursuant to the terms of Section
9.1.6 below shall serve as the sole measure of materiality for the purposes
of the indemnification provided by the Sellers (other than the Selling
Employees) and the Selling Individuals under this Section 9;
9.1.3. the matters set forth on Exhibit 9.1.3;
-47-
<PAGE>
9.1.4. the Pre-Closing Transactions; and
9.1.5. any failure to obtain consents or waivers under or in respect
of any Contractual Obligations of the Selling Participants, the Company or
the Company's Subsidiaries (including without limitation, the matters set
forth on Schedule 4.5.5) with respect to the transactions contemplated by
this Agreement .
9.1.6. Monetary Limitations.
--------------------
(i) The Sellers and Selling Individuals shall not have any
obligation to indemnify any Buyer Indemnitee pursuant to Section 9.1.3
unless and until the aggregate of all such individual Losses incurred
or sustained by all Buyer Indemnitees in respect of the matters set
forth on Exhibit 9.1.3 exceeds $100,000 (CDN), whereupon (subject to
the last sentence of this Section 9.1.6(i)) the Buyer Indemnitees
shall be entitled to indemnification for the aggregate cumulative
amount of such Losses in excess of $100,000 (CDN); it being understood
that all Losses incurred or sustained by all Buyer Indemnitees in
respect of the matters set forth on Exhibit 9.1.3 shall also apply
toward the $500,000 minimum dollar limitation set forth in the
immediately following sentence. Except as provided in clause (ii)
below, the Sellers and Selling Individuals shall not have any
obligation to indemnify any Buyer Indemnitee pursuant to Section 9.1.2
or Section 9.1.5 unless and until the aggregate of all such individual
Losses incurred or sustained by all Buyer Indemnitees in respect of
the matters described in Section 9.1.2, Section 9.1.3 and Section
9.1.5 exceeds $500,000 (CDN), whereupon (subject to the immediately
following sentence) the Buyer Indemnitees shall be entitled to
indemnification for the aggregate cumulative amount of Losses incurred
or sustained in respect of the matters described in Section 9.1.2 and
Section 9.1.5 in excess of such $500,000 (CDN) limitation. Except as
provided in clause (ii) below, the aggregate liability of the Sellers
(other than the Selling Individuals) and Selling Individuals to
indemnify the Buyer Indemnitees for Losses in respect of Sections
9.1.2 and 9.1.3 shall in no event exceed $10,000,000 (CDN).
(ii) Notwithstanding the foregoing, no maximum dollar
limitation shall apply to Losses arising from the matters described in
Section 9.1.5 and no minimum or maximum dollar limitation shall apply
to Losses arising from (A) any claim with respect to the
representations and warranties contained in Sections 4.1, 4.3.1,
4.3.3, 4.6.2, 4.14, 4.15 and 4.16, (B) any claim under Section 9.1.1
or 9.1.4 or (C) any claim based upon fraud or intentional
misrepresentation.
9.2. Buyer's Indemnification. Subject to the limitations set forth in
-----------------------
this Section 9, the Buyer shall indemnify and hold harmless, to the fullest
extent permitted by law, each of the
-48-
<PAGE>
Selling Participants and each of the Selling Participant's respective officers,
directors, employees, agents and Affiliates (collectively, the "Seller
------
Indemnitees") from, against and in respect of Losses arising from or related to
- - -----------
any of the following:
9.2.1. any breach or default in performance by the Buyer of any
covenant, indemnity or agreement of the Buyer contained in this Agreement
(it being understood that such covenants and agreements do not include the
representations and warranties set forth in Section 5 hereof), any Closing
Agreement or in any certificate, instrument or other document delivered by
or on behalf of the Buyer pursuant hereto or thereto; or
9.2.2. any breach of any representation or warranty made by the Buyer
in this Agreement, any Closing Agreement or in any certificate, instrument
or other document delivered by or on behalf of the Buyer pursuant hereto or
thereto (as each such representation or warranty would read if all
qualifications as to materiality were deleted therefrom; it being
understood that the minimum dollar limitation set forth in and pursuant to
the terms of Section 9.2.3 below shall serve as the sole measure of
materiality for the purposes of the indemnification provided by the Buyer
under this Section 9).
9.2.3. Monetary Limitations.
--------------------
(i) Except as provided in clause (ii) below, the Buyer shall
not have any obligation to indemnify any Seller Indemnitee pursuant to
Section 9.2.2 unless and until the aggregate of all such individual
Losses incurred or sustained by all Seller Indemnitees in respect of
Section 9.2.2 exceeds $500,000 (CDN), whereupon (subject to the
immediately following sentence) the Buyer Indemnitees shall be
entitled to indemnification for the entire aggregate cumulative amount
of such Losses in excess of $500,000 (CDN). Except as provided in
clause (ii) below, the aggregate liability of the Buyer to indemnify
the Seller Indemnitees for Losses in respect of Section 9.2.2 shall in
no event exceed $10,000,000 (CDN).
(ii) Notwithstanding the foregoing, no minimum or maximum
dollar limitation shall apply to Losses arising from (A) any claim
with respect to the representations and warranties contained in
Sections 5.1, 5.2, 5.4 and 5.6, (B) any claim under Section 9.2.1 or
(C) any claim based upon fraud or intentional misrepresentation.
9.3. Time Limitation on Indemnification. Notwithstanding the foregoing, no
----------------------------------
Action may be made or instituted under this Section 9 after February 29, 2000,
except for Reserved Claims. The term "Reserved Claims" shall mean (i) all
claims as to which the Indemnified Party has given any Indemnifying Party
reasonably specific written notice (in light of the facts then known) on or
prior to such date, (ii) all claims with respect to any of the representations
-49-
<PAGE>
or warranties contained in Sections 5.1, 5.2, 5.4, 5.6, 4.1, 4.3.1, 4,3.3, 4.14,
4.15 or 4.16 or in any Schedule hereto referred to in any such Section, (iii)
all claims under Sections 4.6.2 or 4.6.4 or in any Schedule hereto referred to
in such Sections, (iv) all claims under Sections 9.1.1, 9.1.4, 9.1.5 and 9.2.1,
(v) all claims based upon fraud or intentional misrepresentation and (vi) all
claims with respect to the representations and warranties contained in Section
4.7 and any Schedule hereto referred to in such Section and all claims under
Section 9.1.3. As to Reserved Claims referred to in clause (iii) above, no
Action may be made or instituted under this Section 9 after sixty (60) days
after the expiration of the applicable statute of limitations governing the Tax,
employee benefits matter or other matter to which the Loss relates (after giving
effect to any agreement extending or tolling such statute of limitations). As
to Reserved Claims referred to in clause (vi) above, no Action may be made or
instituted under this Section 9 after February 28, 2002. Reserved Claims
referred to in clauses (i), (ii), (iv) and (v) above shall not be subject to any
limitation as to time.
9.4. Third Party Claims. Promptly after the receipt by any party entitled
------------------
to indemnification (the "Indemnified Party") pursuant to this Section 9 of
-----------------
notice of the commencement of any action against such Indemnified Party by a
third party, such Indemnified Party shall, if a claim with respect thereto is to
be made against any party obligated to provide indemnification (the
"Indemnifying Party") pursuant to this Section 9, give such Indemnifying Party
------------------
written notice thereof in reasonable detail in light of the circumstances then
known to such Indemnified Party. The failure to give such notice shall not
relieve any Indemnifying Party from any obligation hereunder except where, and
then solely to the extent that, such failure actually and materially prejudices
the rights of such Indemnifying Party. Such Indemnifying Party shall have the
right to defend such claim, at such Indemnifying Party's expense and with
counsel of its choice reasonably satisfactory to the Indemnified Party, provided
that the Indemnifying Party conducts the defense of such claim actively and
diligently. If the Indemnifying Party assumes the defense of such claim, the
Indemnified Party agrees to reasonably cooperate in such defense so long as the
Indemnified Party is not materially prejudiced thereby. So long as the
Indemnifying Party is conducting the defense of such claim actively and
diligently, the Indemnified Party may retain separate co-counsel at its sole
cost and expense and may participate in the defense of such claim, and neither
any Indemnifying Party nor any Indemnified Party will consent to the entry of
any judgment or enter into any settlement with respect to such claim without the
prior written consent of the other, which consent will not be unreasonably
withheld. In the event the Indemnifying Party does not or ceases to conduct the
defense of such claim actively and diligently, (x) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, such claim in any manner it may reasonably deem to
be appropriate, (y) the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the costs of defending against such claim,
including attorneys' fees and expenses, and (z) the Indemnifying Party will
remain responsible for any Losses the Indemnitee may suffer as a result of such
claim to the full extent provided in this Section 9.
-50-
<PAGE>
9.5. No Circular Recovery. Each Selling Participant hereby agrees that he
--------------------
or it will not make any claim for indemnification against the Buyer or any
Affiliates of the Buyer or the Company or any of its Subsidiaries by reason of
the fact that he or it or any of its officers, directors, agents or other
representatives was a controlling person, director, officer, employee, agent or
other representative of the Buyer or any Affiliates of the Buyer or the Company
or any of its Subsidiaries or was serving as such for another Person at the
request of the Buyer or any other Affiliates or the Company or any of its
Subsidiaries (whether such claim is for Losses of any kind or otherwise and
whether such claim is pursuant to any statute, Charter, By-law, Contractual
Obligation or otherwise) with respect to any claim brought by the Buyer against
the Selling Participants relating to this Agreement or any of the transactions
contemplated hereby.
9.6. No Circularity of Limitations. In the event that an Indemnified Party
-----------------------------
claims that an Indemnifying Party has breached its obligation to make any
payment under this Section 9, the time and monetary limitations contained herein
shall be inapplicable to resolution of such claim for payment (but such
limitations shall be operative as provided herein to determination of the
underlying claim).
10. DEFINITIONS.
For purposes of this Agreement:
10.1. Certain Matters of Construction. In addition to the definitions
-------------------------------
referred to as set forth below in this Section 11:
(a) The words "hereof", "herein", "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, reference to Sections, Exhibits or
Schedules are, unless the context otherwise requires, references to
Sections of, and Exhibits and Schedules to, this Agreement, and references
to a particular Section of this Agreement shall include all subsections
thereof.
(b) The words "party" and "parties" shall refer to each of the
Selling Participants, the Buyer and Holdings.
(c) The word "including" shall deemed to mean "including without
limitation."
(d) Definitions shall be equally applicable to both the singular and
plural forms of the terms defined, and references to the masculine,
feminine or neuter gender shall include each other gender.
-51-
<PAGE>
(e) Accounting terms used herein and not otherwise defined herein
are used herein as defined by Canadian generally accepted accounting
principles in effect as of the date hereof.
(f) Except where otherwise explicitly expressed, all dollar amounts
in this Agreement refer to Canadian dollars.
(g) References to "the Company and its Subsidiaries" and phrases to
similar effect means "the Company and each of its Subsidiaries" and
includes Old Kitchen Craft, HBJR and the Amalgamated Holding Companies,
unless the context otherwise requires.
10.2. Cross Reference Table. The following terms defined elsewhere in
---------------------
this Agreement in the Sections set forth below shall have the respective
meanings therein defined:
Term Definition
---- ----------
"accredited investor" Section 4.15.5
"Acquired Shares" Recitals
"Affiliate Relationships" Section 4.5.4
"Agreement" Preamble
"Amalgamation" Recitals
"Amalco" Recitals
"Amalco Unanimous Shareholder Agreement" Section 6.12
"Amalgamated Holding Companies" Schedule 4.3.3
"Assets" Section 4.4.1
"Audited Financials" Section 4.2.1.1
"Balance Sheet" Section 4.2.1.2
"Balance Sheet Date" Section 4.2.1.2
"Bulrad Illinois" Recitals
"Bulrad Illinois Shares" Recitals
"Bulrad Illinois Transfer" Recitals
"Bulrad Purchase Price" Recitals
"Buyer" Preamble
"Buyer Indemnitees" Section 9.1
"Buyer Unanimous Shareholder Agreement" Section 6.2.3
"Closing" Section 3.5
"Closing Agreements" Section 6.2.3
"Closing Date" Section 3.5
"Closing Date Company Balance Sheet" Section 6.5.2.1
"Closing Date Non-Cash Net Working Capital" Section 6.5.2.1
"Company" Recitals
"Company Plans" Section 4.6.4
"Company Statement" Section 6.5.2.1
-52-
<PAGE>
"Contracts" Section 4.5.1
"Employee Plan" Section 4.6.4.1
"Employment Agreements" Section 6.2.3
"Equipment" Section 4.4.2.1
"Escrow Agreement" Section 6.2.3
"Escrow Amount" Section 3.1
"Estimated Closing Date Current Income Tax Liabilities" Section 6.5.1
"Estimated Closing Date Non-Cash Net Working Capital" Section 6.5.1
"Estimated Non-Cash Net Working Capital Adjustment" Section 6.5.1
"Excess Cash" Section 6.6
"Exchange Shares" Recitals
"Existing Plan" Section 4.6.4.1
"Existing Products Claims" Section 4.10.2
"Financial Statements" Section 4.2.1.1
"HBJR" Section 4.1.3
"Health Plan" Section 4.6.4.1
"Holdings" Preamble
"Holdings Shares" Section 6.11.4
"Indemnified Party" Section 9.4
"Indemnifying Party" Section 9.4
"Initial Cash Purchase Price" Section 3.1
"Insurance Policies" Section 4.5.3
"IRS" Section 4.6.2
"Leases" Section 4.4.2.1
"Liability Policies" Section 4.5.3
"Listed Contracts" Section 4.5.1
"Listed Intangibles" Section 4.4.3
"Listed Licenses" Section 4.4.3
"Non-Competition Agreement" Section 6.2.3
"Old Kitchen Craft" Section 4.3.3
"Omega Audited Financials" Section 5.5.1
"Omega Unaudited Financials" Section 5.5.1
"Pension Plan" Section 4.6.4.1
"Permits" Section 4.4.2.2
"plan" Section 4.6.4.1
"Pre-Closing Tax Periods" Section 6.4.1
"Pre-Closing Transactions" Section 4.3.3
"Purchase" Recitals
"Purchase Price" Section 3.1
"Real Property" Section 4.4.2.1
"Reserved Claims" Section 9.3
"Rollover Shareholders" Section 6.11.4
"Rollover Shares" Section 3.1
-53-
<PAGE>
"Section 3.3 Notice Section 3.3
"Sellers" Preamble
"Selling Employees" Preamble
"Selling Individuals" Preamble
"Selling Participants" Preamble
"Sellers' Representative" Section 6.8
"Stockholders Agreement" Section 6.2.3
"Transfer" Section 6.11.1
"Transfer Taxes" Section 6.4.4
"Unaudited Year-End Internal Financials" Section 4.2.1.1
"Unanimous Shareholder Termination Agreement" Section 6.2.3
"Welfare Plan" Section 4.6.4.1
10.3. Certain Definitions. The following terms shall have the following
-------------------
meanings:
10.3.1. Action. The term "Action" shall mean any claim, action,
------
cause of action or suit (in contract or tort or otherwise), arbitration or
proceeding by or before any Governmental Authority.
10.3.2. Affiliate. The term "Affiliate" shall mean, as to any
---------
specified Person at any time, (i) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control with
such specified Person at such time, (ii) each Person who is or has been
within two years prior to the time in question 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 and the Members of the
Immediate Family of each such officer, director or holder (and, if such
specified Person is a natural person, of such specified Person), and (iii)
each Person of which such specified Person or an Affiliate (as defined in
clauses (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 at such time, provided, however, that
-------- -------
in the case the time in question is after the Closing, the Sellers and each
of their Affiliates (as determined by the provisions of this Section 10.3.2
other than this proviso) (other than the Buyer, the Company and the Company
Subsidiaries) shall be deemed not to be Affiliates of the Buyer, the
Company or the Company Subsidiaries, and the Buyer, the Company and the
Company Subsidiaries shall be deemed not to be Affiliates of the Sellers
and such Persons, for any purposes of this Agreement.
10.3.3. Business. The term "Business" shall mean collectively the
--------
businesses of the Company and each of its Subsidiaries including without
limitation as such business is reflected in the Financial Statements.
-54-
<PAGE>
10.3.4. Business Day. The term "Business Day" shall mean any day on
------------
which banking institutions in Winnipeg, Manitoba are customarily open for
the purpose of transacting business.
10.3.5. By-laws. The term "By-laws" shall mean all by-laws relating
-------
to such Person, as from time to time in effect.
10.3.6. Charter. The term "Charter" shall mean the certificate or
-------
articles of incorporation, organization, amalgamation or arrangement,
statute, constitution, joint venture or partnership agreement, limited
liability company agreement or articles or other charter documents of any
Person (other than an individual), each as from time to time in effect.
10.3.7. Cleanup. The term "Cleanup" means all actions required under
-------
existing Environmental Laws to: (1) clean up, remove, treat or remediate
any Hazardous Substance in the Environment; (2) prevent the Release of any
Hazardous Substance so that it does not migrate, endanger or threaten to
endanger public health or welfare or the Environment; (3) perform pre-
remedial studies and investigations and post-remedial monitoring and care;
or (4) respond to any request of any Governmental Authority for documents
or information in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of any
Hazardous Substance in the Environment.
10.3.8. Closing Date Current Income Tax Liabilities. The term
-------------------------------------------
"Closing Date Current Income Tax Liabilities" shall mean all accrued, but
unpaid, liabilities of the Company and its Subsidiaries with respect to
income Taxes as of immediately prior to the Closing, for all taxable years
or periods ending on or before the Closing Date and, with respect to any
taxable years or periods that begin before the Closing and end after the
Closing, the portion of such taxable years or periods ending at the
Closing, provided, however, that the Closing Date Current Income Tax
-------- -------
Liabilities shall not include any Taxes of the Company attributable solely
to the sale by the Company of the Bulrad Illinois Shares immediately prior
to the Purchase.
10.3.9. Closing Debt Amount. The term "Closing Debt Amount" shall
-------------------
mean the Debt of the Company and its Subsidiaries on a consolidated basis
(including, without limitation, any and all notes issued and any and all
shareholder loans arising or outstanding in connection with the Pre-Closing
Transactions), as of immediately prior to the Closing.
10.3.10. Code. The term "Code" shall mean the Internal Revenue Code of
----
1986, as amended, 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.
-55-
<PAGE>
10.3.11. Compensation. The term "Compensation", as applied to any
------------
Person, shall mean all salaries, compensation, remuneration, allowances or
bonuses of any character, and medical, surgical, dental, hospital,
disability, sick leave, unemployment, retirement, pension, vacation,
insurance or fringe benefits of any kind, or other payments of any kind in
the nature of compensation whatsoever made directly or indirectly by the
Company or any of its Subsidiaries to such Person or Members of the
Immediate Family of such Person.
10.3.12. Contracts. The term "Contracts" shall mean, collectively,
---------
the Listed Contracts, the Leases, Licenses, the Insurance Policies and each
other Contractual Obligation of the Company or its Subsidiaries.
10.3.13. Contractual Obligation. The term "Contractual Obligation"
----------------------
shall mean, with respect to any Person, any contract, agreement, deed,
mortgage, lease, license, commitment, undertaking, arrangement or
understanding, written or oral, or other document or instrument including
without limitation any document or instrument evidencing or otherwise
relating to any Debt but excluding the Charter and By-laws of such Person,
to which or by which such Person is a party or otherwise subject or bound
or to which or by which any property or right of such Person is subject or
bound.
10.3.14. Debt. "Debt" means, with respect to any Person, (A) all
----
obligations of such Person, whether or not contingent, in respect of (i)
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 (including, in each case, any and all
accrued and unpaid interest thereon and any and all prepayment penalties
and other fees that would be payable in connection with any repayment
thereof if such obligations were repaid or prepaid at or immediately
following the Closing), (ii) under or in respect of capital leases or the
balance deferred and unpaid of the purchase price of any property, (iii)
for the deferred purchase price of goods or services (other than for items
ordered by the Company or any of its Subsidiaries in the Ordinary Course of
Business prior to the Closing which such items are not received by the
Company or any of its Subsidiaries prior to the Closing), and (iv) Hedging
Obligations, except any such indebtedness described above that constitutes
a trade payable or an accrued expense incurred in the Ordinary Course of
Business, 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 generally
accepted accounting principles, as well as (B) 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, (C) to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.
-56-
<PAGE>
10.3.15. Distribution. The term "Distribution" shall mean, with
------------
respect to the capital stock of or other evidence of beneficial interest in
any Person, (i) the declaration or payment of any dividend on or in respect
of any shares of any class of such capital stock or beneficial interest;
(ii) the purchase, redemption or other retirement of any shares of any
class of such capital stock or beneficial interest, directly, or indirectly
through a Subsidiary or otherwise; and (iii) any other distribution on or
in respect of any shares of any class of such capital stock or beneficial
interest, or on or in respect of any stock appreciation or similar right.
10.3.16. Environment. The term "Environment" means soils, land
-----------
surface or subsurface strata, surface waters (including navigable waters,
streams, ponds, drainage basins and wetlands), groundwaters, drinking water
supply, stream, sediments, ambient air, plant and animal life and any other
environmental medium and natural resources, whether outdoor or indoor.
10.3.17. Environmental Claim. The term "Environmental Claim" shall
-------------------
mean any accusation, allegation, notice of violation, claim, demand,
abatement order or other order or direction (conditional or otherwise), or
other mandatory communication by any Governmental Authority or any Person
for any damage, including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
Environment, violation of pollution standards, nuisance, pollution,
contamination or other adverse effects on the Environment, and/or for
fines, penalties, or restrictions, resulting from or based upon at any time
(i) the existence of a Release (whether sudden or non-sudden or accidental
or non-accidental) of, or exposure to, any Hazardous Substance, in, into or
onto the Environment at, in, by, from or related to the Business or any
prior business or any site included in the Real Property or heretofore
owned, occupied or controlled by the Company or any of its Subsidiaries or
any of its or their respective predecessor entities; (ii) the use,
handling, transportation, storage, treatment or disposal of any Hazardous
Substance in connection with the operation of the Business or any prior
business of the Company or its Subsidiaries; or (iii) the violation or
alleged violation of any Environmental Law; or (iv) the requirement to
undertake any Cleanup.
10.3.18. Environmental Laws. The term "Environmental Laws" shall mean
------------------
all Legal Requirements relating to environmental matters, including without
limitation those relating to the Release or threatened Release of any
Hazardous Substance and to the generation, use, storage or transportation
of any Hazardous Substance, including, without limitation, The Contaminated
Sites Remediation Act (Manitoba), The Environment Act (Manitoba), The
Dangerous Goods Handling and Transportation Act (Manitoba), The Ozone
Depleting Substances Act (Manitoba), The Waste Reduction and Prevention Act
(Manitoba), The Public Health Act (Manitoba), The Radioactive Substances
Act (Manitoba), the Canadian Environmental Protection Act (Canada), the
Fisheries Act (Canada), the
-57-
<PAGE>
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Water Act, the Safe Drinking Water Act, the
Asbestos Hazard Emergency Response Act, the Atomic Energy Act, the Toxic
Substances Control Act, the Oil Pollution Act, the Federal Insecticide,
Fungicide, and Rodenticide Act, the Clean Air Act and comparable Canadian,
United States and foreign federal, state, provincial, municipal or local
laws and any similar or analogous municipal, local, provincial, state and
federal statues and regulations promulgated pursuant thereto.
10.3.19. ERISA. The term "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.
10.3.20. Escrow Account. The term "Escrow Account" shall have the
--------------
meaning assigned to such term in the Escrow Account Agreement.
10.3.21. Escrow Agent. The term "Escrow Agent" shall have the meaning
------------
assigned to such term in the Escrow Account Agreement.
10.3.22. Escrow Funds. The term "Escrow Funds" shall have the meaning
------------
assigned to such term in the Escrow Account Agreement.
10.3.23. ETA. The term "ETA" shall mean the Excise Tax Act (Canada),
---
as amended from time to time.
10.3.24. Guarantee. The term "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 Person (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 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, and (iii)
any liability as a 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.
10.3.25. Governmental Authority. The term "Governmental Authority"
----------------------
shall mean any Canadian, United States or foreign, federal, state,
provincial, municipal or local government, governmental authority,
regulatory or administrative agency,
-58-
<PAGE>
governmental commission, court or tribunal (or any department, bureau or
division thereof) or any arbitral body having lawful jurisdiction.
10.3.26. Governmental Order. The term "Governmental Order" shall mean
------------------
any order, writ, judgment, directive, notice, injunction, decree,
stipulation, designation, determination or award entered by or with any
Governmental Authority.
10.3.27. Hazardous Substance. The term Hazardous Substance shall mean
-------------------
(i) any chemical, waste, material, pollutant or substance included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "pollutant" or "toxic substances" or words of similar import
under any applicable Environmental Laws; (ii) any substance, waste,
material or emission which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, pathological, or
otherwise hazardous by listing or definition under any applicable
Environmental Laws; (iii) any (A) oil, natural gas, petroleum or petroleum
derived substance, any drilling fluids, any flammable substances or
explosives, any radioactive materials, any hazardous wastes or substances,
any toxic wastes or substances or (B) other materials or pollutants that,
in the case of both (A) and (B), (1) pose a hazard to the Business, the
Assets or the Real Property or to persons on or about the Real Property or
any other property that may be affected by the Release of such materials or
pollutants from the Real Property or to Persons on or about such property
or (2) cause such property or such other property to be in violation of any
applicable Environmental Laws; (iv) asbestos, urea formaldehyde foam
insulation, toluene, radon gas, polychlorinated biphenyls and any
electrical equipment which contains oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million;
and (v) any solid, liquid, gas, odor, sound, vibration, heat, radiation or
other form of energy and any other chemical, waste, material or substance,
exposure to which is prohibited, limited or regulated by any applicable
Environmental Laws or Governmental Authority.
10.3.28. Hedging Obligations. The term "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.
10.3.29. Intangibles. The term "Intangibles" shall mean trade and
-----------
product names; foreign letters patent of invention, patents, patent
applications, and unpatented proprietary development records; trademarks,
service marks, logos and copyrights (including registrations and
applications); trade secrets, know-how and other proprietary or
confidential information; computer software; and other intangible property
and rights that are directly or indirectly owned, licensed or otherwise
used by the Company or any of its Subsidiaries.
-59-
<PAGE>
10.3.30. Knowledge. The term "Knowledge" shall mean, with respect to
---------
the knowledge of the Sellers, the actual knowledge, after reasonable
investigation, of Herbert D. Buller, Mark Buller, Philip Buller, David
Buller, James Buller and/or Dennis Litke.
10.3.31. Legal Requirement. The term "Legal Requirement" shall mean
-----------------
any applicable Canadian, United States, or foreign, federal, state,
provincial, municipal or local law, statute, standard, ordinance, code,
order, bylaw, rule, regulation, resolution or promulgation, or any
Governmental Order, or any license, franchise, permit, approval or similar
right granted under any of the foregoing, or any similar provision having
the force and effect of law, or any policy, practice or guideline used or
adopted by any Government Authority in the application or enforcement of
any of the foregoing, and includes any applicable Environmental Laws.
10.3.32. Lien. The term "Lien" shall mean any mortgage, pledge, lien,
----
security interest, charge, adverse or prior claim, encumbrance, restriction
on transfer, conditional sale or other title retention device or
arrangement (including without limitation a capital lease), transfer for
the purpose of subjection to the payment of any Debt, or restriction on the
creation of any of the foregoing, whether relating to any property or right
or the income or profits therefrom; provided, however, that the term "Lien"
-------- -------
shall not include (i) statutory liens for Taxes to the extent that the
payment thereof is not in arrears or otherwise due, (ii) encumbrances in
the nature of zoning restrictions, easements, rights or restrictions of
record on the use of real property if the same do not detract from the
value of such property or impair its use in the Business as currently
conducted, (iii) statutory or common law liens to secure landlords, lessors
or renters under leases or rental agreements confined to the premises
rented to the extent that no payment or performance under any such lease or
rental agreement is in arrears or is otherwise due, (iv) deposits or
pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated
under applicable Legal Requirements or other social security and (v)
statutory or common law liens in favor of carriers, warehousemen, mechanics
and materialmen, statutory or common law liens to secure claims for labor,
materials or supplies and other like liens, which secure obligations to the
extent that payment thereof is not in arrears or otherwise due.
10.3.33. Loss. The term "Loss" or "Losses", in respect of any matter,
----
shall mean any and all damages, deficiencies, claims, actions, charges,
suits, proceedings, demands, assessments, judgments, orders, decrees,
awards, penalties, fines, amounts paid in settlement, losses (including
without limitation any diminution in value), costs, expenses, fees,
obligations and liabilities (including without limitation costs of
collection and reasonable attorneys' fees and expenses) arising from or
related to such matter, net of any related recoveries received from third
parties arising from or related to such matter.
-60-
<PAGE>
10.3.34. Majority Sellers. The term "Majority Sellers" shall mean
----------------
Sellers holding at Closing a majority or more (in value) of the Acquired
Shares.
10.3.35. Material Adverse Effect. The term "Material Adverse Effect"
-----------------------
shall mean any change in or effect on the business, operations, assets,
prospects, or condition, financial or otherwise, of the Company or any of
its Subsidiaries which, when considered either singly or in the aggregate
together with all other adverse changes or effects with respect to which
such phrase is used in this Agreement, is materially adverse to the Company
and its Subsidiaries considered as one enterprise.
10.3.36. Members of the Immediate Family. The term "Members of the
-------------------------------
Immediate Family", with respect to any individual, shall mean 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 the
aforementioned Persons and each custodian or guardian of any property of
one or more of the aforementioned Persons.
10.3.37. MSA. The term "MSA" means The Securities Act (Manitoba), as
---
amended and in effect from time to time.
10.3.38. Non-Cash Net Working Capital. The term "Non-cash Net Working
----------------------------
Capital" shall mean as of a specified date, with respect to the Company and
its Subsidiaries (excluding Bulrad Enterprises, Inc.), the accounts
receivable, inventory and prepaid expenses, less accounts payable and
accrued liabilities of the Company and its Subsidiaries (excluding Bulrad
Enterprises, Inc.) as of such specified date, all as determined in
accordance with Canadian generally accepted accounting principles, in a
manner consistent with the preparation of the Financial Statements;
provided, however, that in calculating Non-cash Net Working Capital there
shall be excluded (to the extent consistent with the preparation of the
Financial Statements) accounts payable and accrued liabilities with respect
to assets ordered by the Company or any of its Subsidiaries and in transit
but not yet received as of such specified date, if any, whether or not such
exclusion would be in accordance with Canadian generally accepted
accounting principles.
10.3.39. Ordinary Course of Business. The term "Ordinary Course of
---------------------------
Business" shall mean the ordinary course of the Business consistent with
past custom and practice in light of all circumstances.
10.3.40. Person. The term "Person" shall mean any individual,
------
partnership, limited liability company, corporation, association, trust,
joint venture, unincorporated organization or other entity, and any
government, governmental department or agency or political subdivision
thereof.
-61-
<PAGE>
10.3.41. Release. The term "Release" shall mean any presence,
-------
release, spill, emission, leaking, pumping, pouring, injection, escaping,
disposal, discharge, dispersal, leaching or migration in or into the
Environment (including the abandonment or disposal of any barrels,
containers, storage tanks or other receptacles containing any Hazardous
Substance), or in, into or out of any vessel or facility, including the
movement of any Hazardous Substance through the air, soil, surface water,
groundwater or property, and when used as a verb has like meaning.
10.3.42. Rollover Stock Value. The term "Rollover Stock Value" shall
--------------------
mean $6,050,000(CDN).
10.3.43. Securities Act. The term "Securities Act" shall mean the
--------------
Securities Act of 1933, as amended from time to time.
10.3.44. Subsidiary. The term "Subsidiary" shall mean any Person of
----------
which the Company (or other specified Person) shall own directly or
indirectly through a Subsidiary, a nominee arrangement or otherwise at
least a majority of the outstanding capital stock (or other shares of
beneficial interest) presently 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.
10.3.45. Tax Act. The term "Tax Act" shall mean the Income Tax Act
-------
(Canada), as amended from time to time.
10.3.46. Taxes. The term "Taxes" shall mean any federal, state,
-----
local, or foreign income, gross receipts, goods and services, corporation,
land transfer, license, payroll, employment or wage, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs
duties, capital, capital stock, franchise, profits, withholding, Canadian
Pension Plan premiums, employment insurance premiums, social security (or
similar), unemployment, disability, real or personal property, sales, use,
transfer, registration, turnover or value added, alternative or add-on
minimum, estimated tax, or other tax, levy, duty, assessment, re-
assessment, social or other charges of any kind whatsoever, whether direct
or indirect, including any interest, penalty, or addition thereto, whether
disputed or not.
10.3.47. Tax Return. The term "Tax Return" shall mean all federal,
----------
state, provincial, local and foreign returns, reports, claims for refund,
clearances, completions, accounts, filings, declarations or information
return or statement relating to Taxes and any schedule or attachments to
any of the foregoing and any amendments thereof.
-62-
<PAGE>
11. GOVERNING LAW.
11.1. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of Manitoba, Canada, 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.
11.2. Consent to Jurisdiction. Each of the parties agrees that any
-----------------------
action, suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof shall be brought and maintained exclusively in the courts
of the Province of Manitoba. Each of the parties hereto by execution hereof (i)
hereby irrevocably submits to the jurisdiction of the courts in the Province of
Manitoba 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 he or it is not subject personally to the jurisdiction of the above-
named courts, that he or it is immune from extraterritorial injunctive relief or
other injunctive relief, that his or 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 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 Manitoba, agrees that service
of process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 14 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 14 does not constitute good and
sufficient service of process. The provisions of this Section 11.2 shall not
restrict the ability of any party to enforce in any court any judgment obtained
in the courts of the Province of Manitoba.
11.3. Reliance. Each of the parties hereto acknowledges that he or it has
--------
been informed by each other party that the provisions of Section 11 constitute a
material inducement upon which such party is relying and will rely in entering
into this Agreement and the transactions contemplated hereby.
12. HOLDINGS GUARANTEE.
12.1. Guarantee. Holdings hereby guarantees to the Selling Participants
----------
the performance by Buyer of the obligations of the Buyer under this Agreement
and each of the Closing Agreements and, in the event of default by the Buyer of
any such obligations,
-63-
<PAGE>
Holdings agrees to perform all such obligations as if Holdings were the Buyer
under this Agreement and each of the Closing Agreements, and, subject to the
limitations set forth in Sections 9.2 and 9.3, to indemnify and hold harmless
the Selling Participants from any loss, costs or damages arising out of any
failure of the Buyer to perform any such obligations.
12.2. Waiver Requirement to Proceed Against Buyer. In the event of
--------------------------------------------
default by the Buyer under this Agreement or any of the Closing Agreements,
Holdings waives any right to require the Selling Participants to proceed against
the Buyer for such default or to pursue any other remedy which may be available
to the Selling Participants.
12.3. Wavier of Notice of Acceptance. Holdings expressly waives notice of
-------------------------------
the acceptance of this guarantee and notice of non-performance by the Buyer.
13. MISCELLANEOUS.
13.1. Entire Agreement; Waivers. This Agreement constitutes the entire
-------------------------
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
shall be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar), shall constitute a continuing waiver unless otherwise
expressly provided nor shall be effective unless in writing and executed (i) in
the case of a waiver by the Buyer, by the Buyer, and (ii) in the case of a
waiver by any Seller, by the Majority Sellers.
13.2. Amendment or Modification, etc. The parties hereto may not amend or
------------------------------
modify this Agreement except in such manner as may be agreed upon by a written
instrument executed by the Buyer and the Majority Sellers. Any written
amendment, modification or waiver executed by the Buyer and the Majority Sellers
shall be binding upon the parties hereto.
13.3. Headings, etc. Section and subsection headings are not to be
-------------
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof. This Agreement shall be deemed to express
the mutual intent of the parties, and no rule of strict construction shall be
applied against any party.
13.4. Schedules; Listed Documents, etc. Neither the listing nor
--------------------------------
description of any item, matter or document in any Schedule hereto nor the
furnishing or availability for review of any document shall be construed to
modify, qualify or disclose an exception to any representation or warranty of
any party made herein or in connection herewith, except to the extent that such
representation or warranty specifically refers to such Schedule and such
modification, qualification or exception is clearly described in such Schedule.
The parties hereto intend that each representation, warranty,
-64-
<PAGE>
covenant and agreement contained herein shall have independent significance. If
any party has breached any representation, warranty, covenant or agreement
contained herein in any respect, the fact that there exists other
representation, warranty, covenant or agreement relating to the same subject
matter (regardless of the relative levels of specificity) which the party has
not breached shall not detract from or mitigate the fact that such party is in
breach of the first representation, warranty, covenant or agreement.
13.5. Severability. In the event that any provision hereof would, under
------------
applicable law, be invalid or unenforceable in any respect, such provision shall
(to the extent permitted by applicable law) be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. The provisions hereof are severable,
and in the event 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.
13.6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
13.7. Survival; Successors and Assigns. All covenants, agreements,
--------------------------------
representations and warranties made herein and in the certificates, lists,
exhibits, schedules or other written information delivered or furnished in
connection herewith shall, except as provided otherwise in this Agreement,
survive the Closing, and shall be binding upon and shall inure to the benefit of
the parties hereto and their respective transferees, successors and assigns
(each of which such transferees, successors and assigns shall be deemed to be a
party hereto for all purposes hereof); provided, however, that (i) no party may
-------- -------
transfer any of its rights or obligations hereunder without the written consent
of the Buyer and the Majority Sellers, and (ii) no transfer or assignment by any
party shall relieve such party of any of its obligations hereunder. Except as
expressly provided herein, this Agreement shall not confer any right or remedy
upon any Person other than the parties and their respective transferees,
successors and assigns; provided further that notwithstanding the foregoing, all
-------- -------
parties to this Agreement agree that the Buyer and its Affiliates may transfer
or assign (including by way of collateral assignment) any of their respective
rights in or under this Agreement to their respective lenders.
14. NOTICES.
Any notices or other communications required or permitted hereunder shall
be effective if in writing and delivered personally or sent by telecopier,
Federal Express, or registered or certified mail, postage prepaid, addressed as
follows:
If to any Selling Participant,
to it at: Box 27 Group 529
Winnipeg, Manitoba R2C 2Z3
-65-
<PAGE>
With copies to: Aikins, MacAulay & Thorvaldson
360 Main Street
Winnipeg, Manitoba R3C 4G1
Facsimile: 204-957-0840
Attention: Edward L. Warkentin
Ernst & Young
360 Main Street
Winnipeg, Manitoba R3C 4G1
Facsimile: 204-956-0138
Attention: James Bryce
If to the Buyer c/o Butler Capital Corporation
or Holdings, to it at: 767 Fifth Avenue
New York, New York 10153
Facsimile: 212-759-0876
Attention: Donald E. Cihak
With copies to: Ropes & Gray
One International Place
Boston, MA 02110
Telecopier: 617-951-7050
Attention: Patrick Diaz
Davies Ward & Beck
P.O. Box 63, 44th Fl.
1 First Canadian Place
Toronto, Ontario, Canada M5X 1B1
Telecopier: 416-863-0871
Attention: Andrew Welsh
Thompson Dorfman & Sweatman
Toronto Dominion Centre
2200 - 201 Portage Avenue
Winnipeg, MB R3B 3L3
Telecopier: (204) 943-6445
Attention: Bruce S. Thompson
-66-
<PAGE>
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) two
business days after being sent by Federal Express, if sent by Federal Express,
(c) one business day after being delivered, if delivered by telecopier with
confirmation of good transmission, and (d) five business days after being sent,
if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
[SPACE INTENTIONALLY LEFT BLANK]
-67-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have, as of the date first above written, duly executed, signed, sealed
and delivered this Agreement.
SELLERS:
HEB2 HOLDINGS LTD.
per:
/s/ Herbert Buller
_____________________________
Name: Herbert Buller
President
cs.
MEB2 HOLDINGS, LTD.
per:
/s/ Mark Buller
_____________________________
Name: Mark Buller
President
cs.
JWB2 HOLDINGS, LTD.
per:
/s/ James Buller
_____________________________
Name: James Buller
President
cs.
-68-
<PAGE>
PCB2 HOLDINGS, LTD.
per:
/s/ Philip Buller
_____________________________
Name: Philip Buller
President
cs.
DHB2 HOLDINGS, LTD.
per:
/s/ David Buller
_____________________________
Name: David Buller
President
cs.
MEB FAMILY TRUST
per:
/s/ Mark Buller
_____________________________
Name: Mark Buller
JWB FAMILY TRUST
per:
/s/ James Buller
_____________________________
Name: James Buller
PCB FAMILY TRUST
per:
/s/ Philip Buller
_____________________________
Name: Philip Buller
-69-
<PAGE>
DHB FAMILY TRUST
per:
/s/ David Buller
_____________________________
Name: David Buller
Title
Witnessed by:
/s/ Herbert D. Buller /s/ Carmele Peter
___________________________________ ______________________________
Herbert D. Buller, individually Name: Carmele Peter
Witnessed by:
/s/ Erna Buller /s/ Carmele Peter
___________________________________ ______________________________
Erna Buller, individually Name: Carmele Peter
Witnessed by:
/s/ Bill Rademaker /s/ Carmele Peter
___________________________________ ______________________________
Bill Rademaker, individually Name: Carmele Peter
Witnessed by:
/s/ Ernie Boschmann /s/ Carmele Peter
___________________________________ ______________________________
Ernie Boschmann, individually Name: Carmele Peter
Witnessed by:
/s/ Peter Neufeld /s/ Carmele Peter
___________________________________ ______________________________
Peter Neufeld, individually Name: Carmele Peter
-70-
<PAGE>
SELLING INDIVIDUALS:
Witnessed by:
/s/ Mark Buller /s/ Carmele Peter
___________________________________ ______________________________
Mark Buller, individually Name: Carmele Peter
Witnessed by:
/s/ Philip Buller /s/ Carmele Peter
___________________________________ ______________________________
Philip Buller, individually Name: Carmele Peter
Witnessed by:
/s/ David Buller /s/ Carmele Peter
___________________________________ ______________________________
David Buller, individually Name: Carmele Peter
Witnessed by:
/s/ James Buller /s/ Carmele Peter
___________________________________ ______________________________
James Buller, individually Name: Carmele Peter
-71-
<PAGE>
BUYER:
3578275 CANADA INC.
per:
/s/ Donald E. Cihak
_____________________________
Name: Donald E. Cihak
Vice President
cs.
HOLDINGS
OMEGA HOLDINGS, INC.
per:
/s/ Robert L. Moran
_____________________________
Name: Robert L. Moran
President
cs.
-72-
<PAGE>
EXHIBIT 2.2
February 12, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Reference is made to the Master Transaction Agreement dated as of January
29, 1999, (the "Agreement"), among (i) 3578275 Canada Inc., a Canadian
corporation; (ii) Omega Holdings, Inc., a Delaware corporation; and (iii) the
Selling Participants (as defined in the Agreement), which is an exhibit to the
Registrant's Current Report on Form 8-K (the "Current Report") filed today with
the Securities and Exchange Commission (the "Commission"). The Registrant
hereby agrees to furnish to the Commission, upon request, a copy of any annex,
schedule or exhibit to the Agreement omitted from the copy of such Agreement
filed as an exhibit to the Current Report.
Very truly yours,
OMEGA CABINETS, LTD.
By: /s/ Robert L. Moran
-------------------------------
Name: Robert L. Moran
Title: President
<PAGE>
EXHIBIT 4.1
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January
29, 1999, is by and among OMEGA CABINETS, LTD., a Delaware corporation ("Omega")
and PANTHER TRANSPORT, INC., an Iowa corporation ("Panther" and, collectively
with Omega 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"), U.S. BANK NATIONAL ASSOCIATION, a national banking
association, one of the Banks, as agent for the Banks (in such capacity, the
"Agent"), and THE FIRST NATIONAL BANK OF CHICAGO, one of the Banks, as
documentation agent for the Banks (in such capacity the "Documentation Agent").
WHEREAS, the Borrowers are parties to that certain Credit Agreement
dated as of June 13, 1997, as amended by the First Amendment to Credit Agreement
dated as of September 25, 1998 (the "Existing Credit Agreement"); and
WHEREAS, Omega, "Kitchen Craft" (as defined below) and the
shareholders of Kitchen Craft have entered into the "Master Transaction
Agreement (Kitchen Craft)" (as defined below) dated as of January 29, 1999
pursuant to which Omega will purchase certain of the assets and all of the stock
of Kitchen Craft;
WHEREAS, in connection with the acquisition of Kitchen Craft, Omega
has requested certain financing from the Banks; and
WHEREAS, the Borrowers, the Banks and the Agent desire to amend and
restate the Existing Credit Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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):
<PAGE>
"Acquisition": Any transaction or series of transactions by which
-----------
either Borrower acquires, either directly or through an Affiliate or Subsidiary
or otherwise, (a) any or all of the stock or other securities of any class of
any Person or (b) a substantial portion of the assets, or a division or line of
business of any Person.
"Acquisition (Kitchen Craft)": The purchase by Omega, through one or
---------------------------
more Subsidiaries of certain of the assets and all of the issued and outstanding
capital stock of Kitchen Craft pursuant to the Master Transaction Agreement
(Kitchen Craft).
"Acquisition Closing Date (Kitchen Craft)": January 29, 1999, or such
----------------------------------------
other date as may be proposed by the Borrowers and agreed to by the Banks on
which all the conditions in the Acquisition Documents have been satisfied or
(with the consent of the Banks), waived.
"Acquisition Closing Date Balance Sheet (Kitchen Craft)": The
------------------------------------------------------
consolidated pro forma balance sheet of Omega and its Subsidiaries as of the
Acquisition Closing Date (Kitchen Craft), reflecting the assets, liabilities and
stockholders' equity of Omega and its Subsidiaries as of such date, based on the
financial statements of Omega and its Subsidiaries and of Kitchen Craft and its
Subsidiaries as of November 21, 1998, adjusted to reflect the effect of the
Acquisition (Kitchen Craft), the Term Loan B Advance and any revolving loans
made to finance the Acquisition (Kitchen Craft), and any other financing
obtained by Omega and its Subsidiaries to finance any part of the Acquisition
(Kitchen Craft).
"Acquisition Documents (Kitchen Craft)": The Master Transaction
-------------------------------------
Agreement (Kitchen Craft), and all other agreements, instruments, certificates
and other documents executed and delivered pursuant to or in connection
therewith, as the same may be supplemented, amended or otherwise modified.
"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
-------
Loans 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
- 2 -
<PAGE>
(including the terms "controlled by" and "under common control with") means the
possession, directly, of the power to direct or cause the direction of the
management and policies of the Person in question.
"Agent": As defined in the opening paragraph hereof.
-----
"Aggregate Revolving Commitment Amounts": As of any date, the sum of
--------------------------------------
the Revolving Commitment Amounts of all the Banks.
"Allocable Share": As of any date of determination, the ratio of the
---------------
outstanding principal balance of the Term Loan A or Term Loan B hereunder, or
the CIBC Term Loan(s), as applicable, to the aggregate principal amount of all
outstanding Indebtedness of the Borrowers under the each of the Term Loans
hereunder and the CIBC Term Loan(s).
"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:
Revolving Note and Term Note A:
-------------------------------
<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>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Term Note B:
- - -----------------------------------------
Cash Flow Eurodollar Base
Leverage Ratio Rate Advances Rate Advances
- - ----------------------------------------- ------------- -------------
<S> <C> <C>
Less than or equal to 2.50:1 1.50% 0.50%
Greater than 2.50:1 but less
than or equal to 3.5:1 2.00% 1.00%
Greater than 3.50:1 but less
than 4.5:1 2.50% 1.50%
Greater than or equal to
4.5:1 2.75% 1.75%
</TABLE>
During the period beginning on the Closing Date and ending on the date five days
after the financial statements and compliance certificate for the period ending
June 30, 1999 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.
"Assignee": As defined in Section 9.6(c).
--------
"BII": Bulrad Illinois, Inc., an Illinois corporation.
---
"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.
- 4 -
<PAGE>
"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.
"Bondholders": The holders of the Permanent Subordinated High Yield
-----------
Debt.
"Borrower Loan Documents": This Agreement, the Notes and any of the
-----------------------
Security Documents to be executed by either Borrower.
"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.
"Canadian Facilities": The Facilities owned by Kitchen Craft and
-------------------
commonly described as 1180 Springfield Road, Winnipeg, Manitoba, and
approximately 7.6 acres at the corner of Springfield Street and Roderick,
Winnipeg, Manitoba.
"Canadian Lenders": The lenders party to the CIBC Loan Documents.
----------------
"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
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).
- 5 -
<PAGE>
"Cash Flow Leverage Ratio": For any period of determination, the
------------------------
ratio of
(a) the aggregate principal amount of all outstanding Indebtedness of
Omega and its Subsidiaries as of the last day of that period,
to
(b) EBITDA for such period,
in each case determined as to Omega and its Subsidiaries on a consolidated basis
in accordance with GAAP; provided, however, that for any period of determination
-------- -------
including the Acquisition Closing Date (Kitchen Craft), the EBITDA (Kitchen
Craft) for the period from the beginning of such measurement period to the
Acquisition Closing Date (Kitchen Craft) shall be added to the EBITDA of Omega
and its Subsidiaries on a pro forma basis.
"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.
"CIBC": Canadian Imperial Bank of Commerce.
----
"CIBC Loan Documents": Collectively, that certain Credit Agreement of
-------------------
even date hereof by and among 3578275 Canada Inc., New Kitchen Craft, CIBC, as
agent, and the other banks party thereto, in the original principal amount of
C$37,000,000, as guaranteed by Omega, and all related documents as the same may
hereafter be amended, supplemented, extended, restated or otherwise modified
from time to time.
"CIBC Term Loan": The term loan in the original principal amount of
--------------
C$22,000,000 made pursuant to the CIBC Loan Documents.
"Closing Date": January 29, 1999.
------------
"Code": The Internal Revenue Code of 1986, as amended.
----
"Collateral Agent": U.S. Bank, in its capacity as collateral agent
----------------
pursuant to the Security Documents.
"Collateral Assignment": The Omega Collateral Assignment
---------------------
(Trademarks).
- 6 -
<PAGE>
"Commitments": The Revolving Commitments and the Term Loan B
-----------
Commitment.
"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
--------------
Omega and its Subsidiaries, determined in accordance with GAAP.
"Current Liabilities": As of any date, the consolidated current
-------------------
liabilities of Omega and its Subsidiaries, 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.
"Documentation Agent": as defined in the first paragraph hereof.
-------------------
"EBITDA": For any period of determination, the consolidated net
------
income of Omega and its Subsidiaries 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
CIBC Loan Documents, or the Kitchen Craft Acquisition Documents and deducted
from Omega and its Subsidiaries' income, as determined in accordance with GAAP,
with respect to a period of determination shall be added back in determining
EBITDA for
- 7 -
<PAGE>
that period; and (ii) all non-cash compensation expenses recorded during a
period in connection with the granting of options shall be added back in
determining EBITDA for that period.
"EBITDA (Kitchen Craft)": For any period of determination, the
----------------------
consolidated net income of Kitchen Craft and its Subsidiaries 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 CIBC Loan Documents or the Kitchen Craft
Acquisition Documents and deducted from Kitchen Craft and its Subsidiaries'
income, as determined in accordance with GAAP, with respect to a period of
determination shall be added back in determining EBITDA (Kitchen Craft) for that
period; (ii) all non-cash compensation expenses recorded during a period in
connection with the granting of options shall be added back in determining
EBITDA (Kitchen Craft) for that period, and (iii) any charitable contributions
made in excess of C$100,000 per year shall be added back in determining EBITDA
(Kitchen Craft) 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 Omega or any of its
Subsidiaries 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 Telerate page 3750
as of 11:00 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 (including without limitation the Reuters Screen LIBO page);
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 Bank 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), and
"Telerate page 3750" means the display designated as such on Telerate System
Incorporated (or such other page as may replace page
- 8 -
<PAGE>
3750 or that service for the purpose of displaying London interbank offered
rates of major banks for U.S. 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.
----------------
"Excess Cash Flow": As of each Fiscal Year End, beginning with the
----------------
1998 Fiscal Year End, determined for the period of four consecutive fiscal
quarters ending on such Fiscal Year End on a consolidated basis for Omega and
its Subsidiaries in accordance with GAAP (but excluding Kitchen Craft from such
determination for fiscal year 1998), 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, and (iii) 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 Omega 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), (iv)
the aggregate principal amount of Omega's 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 any of the Term Loans hereunder and the CIBC Term Loan
during the relevant period, (vi) 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.
"Exchangeable Shares": Certain non-voting shares of common stock of KC
-------------------
Holdings (and, after the amalgamation thereof with Kitchen Craft, New Kitchen
Craft) held by
- 9 -
<PAGE>
certain Kitchen Craft employees and members of management, the aggregate value
of which, as of the Closing Date shall not exceed C$6,050,000, which shall be
exchangeable for shares of the Stock of Holdings after the Closing Date.
"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 Omega or any of its Subsidiaries.
"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 incurred other than those described in Section
6.10(b), 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 Omega and its Subsidiaries,
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 Omega and its
Subsidiaries
in each case determined for said period on a consolidated basis in accordance
with GAAP.
"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 the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"High Yield Subordinated Permanent Debt": The $100,000,000 Senior
--------------------------------------
Subordinated Notes due 2007 issued by Omega pursuant to the Indenture dated as
of July 18, 1997 by and among Omega (as an original party and as successor by
merger to HomeCrest Corporation), Panther and The Chase Manhattan Bank, as
trustee.
"High Yield Subordinated Permanent Loan Documents": Collectively, the
------------------------------------------------
Indenture, a subordinated note, guaranty from 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
- 10 -
<PAGE>
Debt was issued by Omega and placed pursuant to Rule 144A by Goldman Sachs & Co.
and Citicorp Securities, Inc.
"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
Borrowers, 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 Borrowers 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.
"Holding Company": A Subsidiary of Omega that owns no assets other
---------------
than Stock of other Subsidiaries of Omega and has no Indebtedness.
"Holdings": Omega Holdings, Inc., a Delaware corporation.
--------
"Holdings Documents": Collectively, the Holdings Guaranty and the
------------------
Holdings Pledge Agreement, and any reaffirmations thereof executed in accordance
with Section 5.12 herein.
"Holdings Guaranty": An Amended and Restated 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": An Amended and Restated Pledge
-------------------------
Agreement, in form and substance satisfactory to the Agent, whereby Holdings
pledges all of its stock in Omega 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.
"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,
- 11 -
<PAGE>
(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 Agreement" has the meaning given to it in the
-------------------------
Existing Credit Agreement.
"Indenture": That certain indenture dated as of June 13, 1997 among
---------
the Borrowers, Holdings and Chase Manhattan Bank, as trustee.
"Indiana Amendment to Mortgage": An Amendment to Mortgage, Security
-----------------------------
Agreement, Assignment of Leases and Rents and Fixture Financing Statement
amending the Indiana Mortgage.
"Indiana Facility": The Facility owned by Omega 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": The Mortgage, Security Agreement, Assignment of
----------------
Leases and Rents and Fixture Financing Statement dated as of June 13, 1997,
whereby Omega granted the Agent, for the benefit of the Banks, a Lien in the
Indiana Facility, as the same may hereafter be amended, supplemented, extended,
restated or otherwise modified from time to time.
"Intellectual Property": As defined in Section 4.12.
---------------------
"Intercreditor Agreement": The Intercreditor Agreement by and among
-----------------------
the Agent, the Banks, CIBC and the other banks party to the CIBC Loan Documents,
in form and substance acceptable to the Lenders (as defined therein), executed
by a duly authorized officer of each of the Lenders and dated the date hereof.
"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.
"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 Omega and its
Subsidiaries, including (a) all but the principal component of payments in
respect of conditional sale contracts, Capitalized Leases and other title
- 12 -
<PAGE>
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;
(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
- 13 -
<PAGE>
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 Amendment to Mortgage": An Amendment to Mortgage, Security
--------------------------
Agreement, Assignment of Leases and Rents and Fixture Financing Statement
amending the Iowa Mortgage.
"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": The Mortgage, Security Agreement, Assignment of
-------------
Leases and Rents and Fixture Financing Statement, dated as of June 13, 1997,
whereby Omega granted the Agent, for the benefit of the Banks, a Lien in the
Iowa Facility, as the same may hereafter be amended, supplemented, extended,
restated or otherwise modified from time to time.
"KC Canada": 3578275 Canada Inc., a Canadian corporation.
---------
"KC Holdings": Omega Kitchen Craft Holdings Corp., a Delaware
-----------
corporation,
"Kitchen Craft": Kitchen Craft of Canada Ltd., a corporation governed
-------------
by the Canada Business Corporations Act.
"Kitchen Craft Note": That certain promissory note evidencing the
------------------
Kitchen Craft loan in the initial principal amount of $25,000,000 pursuant to
which Omega is making an unsecured loan to KC Canada to effectuate the
Acquisition (Kitchen Craft), together with any related documents, as the same
may hereafter be amended, supplemented, extended, restated or otherwise modified
from time to time, in form and substance acceptable to the Agent, dated as of
the date hereof, made by KC Canada on the Acquisition Closing Date (Kitchen
Craft), payable to Omega.
"Lender": As defined in the Intercreditor Agreement.
------
"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.
- 14 -
<PAGE>
"Loan": A Revolving Loan or a Term Loan.
----
"Loan Documents": This Agreement, the Notes and the Security
--------------
Documents.
"Majority Lenders": As defined in the Intercreditor Agreement.
----------------
"Master Transaction Agreement (Kitchen Craft)": That certain Master
--------------------------------------------
Transaction Agreement dated as of January 29, 1999 by and among KC Canada, as
buyer, Holdings, the shareholders of Kitchen Craft and its Subsidiaries, as
sellers, and certain employees, as in effect on the date hereof.
"Material Adverse Effect": A material adverse effect on the financial
-----------------------
condition, business, operations or prospects of Holdings and the Borrowers,
taken as a whole.
"Mortgages": Collectively, the Indiana, Iowa, and Tennessee
---------
Mortgages, amended as provided for herein.
"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 Omega or any ERISA Affiliate.
"New Kitchen Craft": Kitchen Craft, after the amalgamation of KC
-----------------
Canada with Kitchen Craft.
"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 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 KC US": Omega Kitchen Craft U.S. Corp., a Delaware corporation.
-----------
- 15 -
<PAGE>
"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.
"Pledge Agreements": Collectively, (i) the Amended and Restated Pledge
----------------
Agreement whereby Omega pledges all of its Stock in its U.S. Subsidiaries, (ii)
the Amended and Restated Pledge Agreement whereby Holdings pledges all of its
Stock in Omega, (iii) the Pledge Agreement whereby KC Holdings pledges sixty-
five percent of the Stock in New Kitchen Craft (excluding the Exchangeable
Shares), all of the Stock of Omega KC U.S., and the Kitchen Craft Note, (iv) the
Pledge Agreement whereby Omega KC U.S. pledges all of its Stock in its U.S.
Subsidiaries, and (v) any Subsidiary Pledge Agreement pursuant to which any
Subsidiary of Omega pledges its Stock in another Subsidiary of Omega, in each
case to the Collateral Agent for the benefit of the Banks and the Canadian
Lenders, each in form and substance satisfactory to the Collateral Agent, and as
each of the same may hereafter be amended, supplemented, extended, restated or
otherwise modified from time to time.
"Prohibited Transaction": The respective meanings assigned to such
----------------------
term in Section 4975 of the Code and Section 406 of ERISA.
"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.
- 16 -
<PAGE>
"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 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": December 26, 2003.
--------------------------------
"Revolving Commitment Fees": As defined in Section 2.17(a).
-------------------------
"Revolving Loan": As defined in Section 2.1.
--------------
"Revolving Loan Date": The date of the making of any Revolving Loans
-------------------
hereunder.
"Revolving Note": An amended and restated 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.
- 17 -
<PAGE>
"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": Collectively, (i) an Amended and Restated
-------------------
Security Agreement from each Borrower and (ii) any Subsidiary Security
Agreement, pursuant to each of which the Collateral Agent is granted, for the
benefit of the Banks and the Canadian Lenders, a security interest in the
personal property described therein, as the same may hereafter be amended,
supplemented, extended, restated or otherwise modified from time to time, each
in form and substance satisfactory to the Agent.
"Security Documents": The Security Agreements, Guaranties, Pledge
------------------
Agreements, Collateral Assignment, Holdings Documents, Indemnification
Agreements and the Mortgages, as the same may hereafter be amended,
supplemented, extended, restated or otherwise modified from time to time.
"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.
"Subordinated Debt": Any Indebtedness 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
Majority Lenders have approved in writing prior to the creation of such
Indebtedness (including the High Yield Subordinated Permanent Loan Documents and
any subordinated notes in form acceptable to the Agent and the Majority Lenders
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.
"Subsidiary Guaranty": A Guaranty, in form and substance satisfactory
-------------------
to the Agent, whereby any Subsidiary of Omega other than a Borrower guarantees
payment of the Obligations, as the same may hereafter be amended, supplemented,
extended, restated or otherwise modified from time to time.
"Subsidiary Pledge Agreement": A Pledge Agreement in form and
---------------------------
substance satisfactory to the Agent, whereby any Subsidiary of Omega pledges all
of (or, in the case of KC
- 18 -
<PAGE>
Holdings, 65% of) its Stock in any Subsidiaries 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.
"Subsidiary Security Agreement": A Security Agreement in form and
-----------------------------
substance satisfactory to the Agent whereby any Subsidiary of Omega other than
Panther grants to 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.
"Tennessee Amendment to Mortgage": An Amendment to Mortgage, Security
-------------------------------
Agreement, Assignment of Leases and Rents and Fixture Financing Statement
amending the Tennessee Mortgage.
"Tennessee Facility": The Facility owned by Omega 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, dated as of June 13, 1997, whereby Omega granted the Agent, for
the benefit of the Banks, a Lien in the Tennessee Facility, as the same may
hereafter be amended, supplemented, extended, restated or otherwise modified
from time to time.
"Term Loans": Term Loan A and Term Loan B.
----------
"Term Loan A": As defined in Section 2.1.
-----------
"Term Loan B": As defined in Section 2.1.
-----------
"Term Loan B Commitment": With respect to a Bank, the agreement of
----------------------
such Bank to make a Term Loan B to the Borrowers in an amount equal to such
Bank's respective Term Loan B Commitment Amount upon the terms and subject to
the conditions of this Agreement.
"Term Loan B Commitment Amounts": With respect to a Bank, the amount
------------------------------
set opposite such Bank's name on the signature pages hereof as its Term Loan B
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
outstanding Term Loans of such Bank and the denominator of which is the sum of
the Term Loans of all the Banks.
- 19 -
<PAGE>
"Term Notes": Promissory notes of the Borrowers evidencing Term Loan
----------
A and Term Loan B in the forms of Exhibit 1.1-6(a) and 1.1-6(b) hereto, as each
of 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 outstanding Term Loans of such Bank and
the denominator of which is the sum of the Revolving Commitment Amounts and
outstanding Term Loans 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
Letters of Credit outstanding on such date and (c) the aggregate amount of
Unpaid Drawings on such date.
"U.S. Bank": U.S. Bank National Association in its capacity as one of
---------
the Banks hereunder.
"U.S. Subsidiaries": Collectively, Omega KC U.S., Panther, KC Holding,
-----------------
BII and any other Person that becomes a Subsidiary of Omega and is incorporated
or otherwise organized under the laws of the United States.
"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.
"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. From and after the Acquisition Closing Date (Kitchen
Craft), all such determinations for Omega and its Subsidiaries on a consolidated
basis shall include results for New Kitchen Craft from and after the Acquisition
Closing Date (Kitchen Craft). 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
- 20 -
<PAGE>
behalf of the Borrowers and Majority Lenders 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".
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 made
under the existing Credit Agreement shall, from and after the Closing Date,
be Revolving Loans hereunder. 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 Loan A. A term loan from each Bank (each being a "Term
-----------
Loan A" and, collectively, the "Term A Loans") to the Borrowers, which
shall consist of the Term
- 21 -
<PAGE>
Loans made by such Bank under the Existing Credit Agreement, which Term
Loans shall remain outstanding as Term Loan A hereunder. A Term Loan A or
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.
2.1(c) Term Loan B. A term loan from each Bank (each being a "Term
-----------
Loan B" and, collectively, the "Term B Loans") to the Borrowers, which
shall be made in a single Advance on the Closing Date in the amount of each
Bank's Term Loan B Commitment Amount. A Term Loan B or 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 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
- 22 -
<PAGE>
(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. (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
- 23 -
<PAGE>
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 Loan B. Not later than 12:00 noon
-------------------------
(Minneapolis time) two Eurodollar Business Days prior to the requested
Closing Date if the Term Loan B is 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 Term Loan B is requested as Base Rate
Advances, Omega on behalf of the Borrowers shall request the Term Loan B 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 Term Loan B 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 Term Loan B is to
be funded as Eurodollar Rate Advance or Base Rate Advance, and (iii) in the
case of Eurodollar Rate Advance, 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 Agent the amount of
such Bank's Term Loan Percentage of the Term Loan B 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 Term Loan B
available to Omega on behalf of the Borrowers at the Agent's main office on
the Closing Date. If the Agent has disbursed a portion of a Term Loan B 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 B 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 B, the Agent shall be entitled
to recover such disbursement, with interest thereon at the rate (or rates)
then applicable to the such Term Loan B, 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
- 24 -
<PAGE>
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 Amended and Restated 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 Loans of each Bank shall be evidenced by
an Amended and Restated Term Note A or a Term Note B, as applicable, each
payable to the order of such Bank in the principal amount equal to such Bank's
Term Loans outstanding after the disbursement of the Term Loan B on the Closing
Date. 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 Loans 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 Loans, 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 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
- 25 -
<PAGE>
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 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 Lenders, 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
(iii) shall be payable upon written demand by the Agent.
- 26 -
<PAGE>
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 A. The remaining principal balance of the
----------------
Term Loans A shall be payable as follows:
(i) on each of April 3, 1999 and July 2, 1999, $1,000,000;
(ii) on each of October 1, 1999, December 31, 1999, March 31,
2000 and June 30, 2000, $1,375,000;
(iii) on each of September 29, 2000, December 29, 2000, March 30,
2001 and June 29, 2001, $1,500,000;
(iv) on each of September 28, 2001, December 28, 2001, March 29,
2002 and June 28, 2002, $1,875,000;
(v) on each of September 25, 2002, December 27, 2002, March 28,
2003 and June 27, 2003, $2,250,000; and
(vi) 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 A Loans;
provided, however that if the aggregate principal amount outstanding under
-----------------
Term Loan A 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) The Term Loan B. The principal of the Term Loan B shall be
---------------
payable in four equal quarterly installments, on March 31, June 30,
September 30 and December 31, 2004, in an aggregate amount of $6,250,000,
and, on
- 27 -
<PAGE>
December 31, 2004, any other amount then remaining unpaid with respect to
Term Loan B; provided, however that if the aggregate principal amount
-----------------
outstanding under the Term Loan B 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(d) Excess Cash Flow. On or before the 90th day after the
----------------
1998 Fiscal Year End, the Borrowers shall prepay the Term Loan A by an
amount equal to 75% of the Excess Cash Flow for the four consecutive fiscal
quarters ending on the 1998 Fiscal Year End. On or before the 90th day
after each subsequent Fiscal Year End, the Borrowers shall prepay to the
Agent for the benefit of the Banks, and Omega shall cause New Kitchen Craft
to prepay to CIBC, as applicable, the Allocable Share of 75% of the Excess
Cash Flow for the four consecutive fiscal quarters ending on such Fiscal
Year End, for application to each of the Term Loans hereunder and the CIBC
Term Loan.
2.6(e) Proceeds of Equity or Debt. Commencing the first day
--------------------------
after the Closing Date, within one Business Day following the receipt
thereof, the Borrowers shall prepay to the Agent for the benefit of the
Banks, and Omega shall cause New Kitchen Craft to prepay to CIBC, as
applicable, the Allocable Share of 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 of Holdings
and its Subsidiaries, up to a maximum amount of $2,500,000 in the
aggregate, or issued pursuant to Section 5.15 hereof), 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, for
application to each of the Term Loans hereunder and the CIBC Term Loan;
provided, however that this Section 2.6(e) shall not be deemed to authorize
-----------------
any Indebtedness that would otherwise be prohibited by Section 6.13.
2.6(f) Proceeds of Asset Sales. Within one Business Day following
-----------------------
the receipt thereof, the Borrowers shall prepay to the Agent for the
benefit of the Banks, and Omega shall cause New Kitchen Craft to prepay to
CIBC, as applicable, the Allocable Share of 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, for application to each of the Term Loans hereunder and the CIBC
Term Loan; provided, however that this Section 2.6(f)
-----------------
- 28 -
<PAGE>
shall not be deemed to authorize any sale or other transfer that would
otherwise be prohibited by Section 6.2.
2.6(g) Application of Prepayments. Any mandatory prepayments made
--------------------------
to the Banks 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(h) 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 or Term Loans, as applicable.
Section 2.7 Optional Prepayments.
--------------------
2.7(a) Terms of 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 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 on 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
- 29 -
<PAGE>
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.
2.7(b) Allocation of Prepayments. All prepayments on the Term
-------------------------
Loans hereunder and on the CIBC Term Loan shall be made based on the
Allocable Share of the Term Loans hereunder and the outstanding CIBC Term
Loan.
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, upon the terms and subject to the conditions of
this Agreement, to issue 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 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
--------------------------------
Letter of Credit shall be made by Omega on behalf of the Borrowers in writing,
by 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 Letter of Credit the Agent
shall send notice to the other Banks of such issuance.
Section 2.10 Terms of Letters of Credit. 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 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
- 30 -
<PAGE>
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;
(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;
- 31 -
<PAGE>
(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.
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 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
- 32 -
<PAGE>
Bank's Revolving Percentage of the amount of the Revolving Commitment Unpaid
Drawing. 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 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
(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
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 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 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 such Bank's
Revolving Percentage of the Unpaid Drawing if it is a Revolving Commitment
Unpaid Drawing. 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 of each Unpaid Drawing
(before deducting the amount of any Revolving 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 to reimburse the Agent for an
Unpaid Drawing of that Bank's Revolving Percentage 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 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 consisting of the Revolving Loans 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 Applicable Margin for Eurodollar Rate Advance consisting of the Revolving
Loans as of the date of issuance 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.
- 33 -
<PAGE>
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.
Any optional reduction of Revolving Commitment Amounts or termination of
Revolving Commitments hereunder or pursuant to the CIBC Loan Documents shall be
made ratably between the outstanding Revolving Commitments hereunder and the
outstanding CIBC commitments.
Section 2.17 Revolving Commitment and Agent's 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 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) 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 27, 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 A 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, a closing fee in the amount provided in a side letter
dated January 11, 1999 from the Agent. No Bank (other than the Agent) shall
be entitled to any portion of such agent's fee, except as separately agreed
between the Agent and such Bank.
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
- 34 -
<PAGE>
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 Term Loan B
--------------------
shall be used in connection with the Acquisition (Kitchen Craft), including the
making by Omega of the loan to KC Canada evidenced by the Kitchen Craft Note,
and to pay certain existing Indebtedness of Omega and its Subsidiaries,
including Kitchen Craft, as described on Exhibit 6.13. The payments described
in the preceding sentence shall be made on the Closing Date. The 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.
- 35 -
<PAGE>
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;
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 such Bank
first notifies Omega, on behalf of the Borrowers, of the change resulting in the
increased cost.
- 36 -
<PAGE>
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 2.25.
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 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 such
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
- 37 -
<PAGE>
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) 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,
- 38 -
<PAGE>
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 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
- 39 -
<PAGE>
Bank result in a decrease in the aggregate Commitments without the written
consent of the Majority Lenders.
ARTICLE III
------------
CONDITIONS PRECEDENT
Section 3.1 Conditions of Initial Transaction. The making of the
---------------------------------
Term Loan B and any Revolving Loans to be made upon the Closing Date 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) An Amended and Restated Revolving Note, an Amended and Restated
Term Note A and a Term Note B drawn to the order of each Bank executed by a
duly authorized officer of each Borrower and dated the Closing Date.
(ii) An Amended and Restated Security Agreement from Omega and an
Amended and Restated Pledge Agreement from Omega, each executed by a duly
authorized officer of Omega and dated the Closing Date.
(iii) Share certificates representing all of the issued and
outstanding shares of Omega KC US and KC Holdings, and undated stock powers
for such certificates, duly executed in blank.
(iv) Share certificates representing sixty-five percent (65%) of the
issued and outstanding shares of New Kitchen Craft and undated stock powers
for such certificates, duly executed in blank.
(v) The Kitchen Craft Note.
(vi) An Amended and Restated Security Agreement from Panther, executed
by a duly authorized officer (or officers) of Panther, and dated the
Closing Date.
(vii) A Pledge Agreement from each of Omega KC US and KC Holdings,
executed by a duly authorized officer (or officers) of KC Holdings or Omega
KC US, as applicable, and dated the Closing Date.
(viii) An Amended and Restated Holdings Guaranty and an Amended and
Restated Holdings Pledge Agreement, each executed by a duly authorized
officer (or officers) of Holdings and dated the Closing Date.
- 40 -
<PAGE>
(ix) Written opinions of Ropes & Gray, counsel to the Borrowers, and
Nyemaster, Goode, Voigts, West, Hansell & O'Brien, special Iowa counsel to
the Banks, addressed to the Banks and dated the Closing Date, covering the
matters set forth in Exhibit 3.1 hereto.
(x) Copies of the corporate resolutions of each of Holdings, each
Borrower, Omega KC US, KC Holdings and BII, authorizing the execution,
delivery and performance of the Loan Documents and the Kitchen Craft
Acquisition Documents to which it is a party, certified as of the Closing
Date by the Secretary or an Assistant Secretary of such Person.
(xi) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of Holdings, each Borrower, Omega KC
US, KC Holdings and BII authorized to execute the Loan Documents to which
it is a party and, in the case of the Borrowers, to request Loans, Letters
of Credit and conversions and continuations of Advances hereunder,
certified as of the Closing Date by the Secretary or an Assistant Secretary
of such Person.
(xii) A copy of the Certificate or Articles of Incorporation for each
Borrower, Holdings, Omega KC US, KC Holdings and BII 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.
(xiii) A copy of the bylaws of each Borrower, Holdings, Omega KC US,
KC Holdings and BII certified as of the Closing Date by the Secretary or an
Assistant Secretary of the relevant Borrower or Holdings.
(xiv) 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.
(xv) 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.
(xvi) 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.
- 41 -
<PAGE>
(xvii) A certificate of good standing for KC 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.
(xviii) A certificate of good standing for Omega KC US 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.
(xix) A certificate of good standing for BII in the State of Illinois,
certified by the appropriate governmental officials as of a date not more
than 20 days prior to the Closing Date.
(xx) Financing statements (Form UCC-1) or amendments to financing
statements as described on Exhibit 5.16 as "UCC Financing Statements and
Amendments Prepared," to be filed under the Uniform Commercial Code of the
applicable jurisdictions to perfect the Liens purported to be created under
each of the Security Agreements.
(xxi) Completed requests for information concerning Liens against
Holdings, Omega and its Subsidiaries as described on Exhibit 5.16 as "UCC
Searches Received."
(xxii) 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.
(xxiii) The Indiana Amendment to Mortgage, the Iowa Amendment to
Mortgage and the Tennessee Amendment to Mortgage.
(xxiv) Title Commitments downdating the title insurance policies
currently issuing the Mortgages.
(xxv) An Intercreditor Agreement by and among the Lenders in form and
substance acceptable to the Agent and the Majority Lenders, executed by a
duly authorized officer of each of the Lenders and dated the Closing Date.
(xxvi) Evidence of that the Borrowers maintain all insurance coverage
required by Section 5.3 hereof.
(xxvii) A letter from the Borrowers directing the Agent as to the
disbursement of the Term Loan B Advance and any Revolving Loans to be used
to finance the Acquisition (Kitchen Craft).
- 42 -
<PAGE>
(xxviii) A certificate of the chief financial officer or president of
Omega substantially in the form of Exhibit 1.1-5 and such other
documentation as the Agent may request with respect to the solvency and
financial condition of Omega and its Subsidiaries immediately before and
after giving effect to the Kitchen Craft Acquisition, making the Term Loan
B hereunder, and any other financing obtained by Omega and its Subsidiaries
or Kitchen Craft to finance all or any portion of the Acquisition (Kitchen
Craft), and the other transactions contemplated by this Agreement.
(xxix) The Agent shall have received from Omega a certificate dated
the Closing Date of the chief executive officer or chief financial officer
of Omega certifying that:
(A) The Master Transaction Agreement (Kitchen Craft) in the form
delivered to the Agent, remains in full force and effect, without
modification or amendment and embodies the entire agreement and
understanding between the parties thereto with respect to the matters
therein, and
(B) All conditions to the closing of the Acquisition (Kitchen
Craft) are satisfied or waived.
(xxx) The Agent shall have received from Omega:
(A) Copies of all agreements and documents related to the
Acquisition (Kitchen Craft), including all amendments thereof and
supplements thereto, all of which shall be in form and substance
satisfactory to the Banks, together with a certificate of an officer
of Omega certifying that (x) such copies are true and correct and (y)
such documents in the respective forms certified to the Banks, remain
in full force and effect without supplement, amendment or other
modification.
(B) A written environmental review, audit, assessment or report
("Environmental Audit"), in form and substance reasonably acceptable
to the Banks, by Project Performance Corp., setting forth the results
of an investigation of the Canadian Facilities according to a scope of
work previously provided to counsel for the Agent.
(C) The Acquisition Closing Date Balance Sheet (Kitchen
Craft).
(D) Statements of forecasted consolidated income and cash flow
for Omega and its Subsidiaries, and a forecasted consolidated balance
sheet of Omega and its Subsidiaries, together with supporting
assumptions, in the forms previously furnished by Omega to the Banks.
- 43 -
<PAGE>
(E) Evidence satisfactory to the Agent that all indebtedness of
Kitchen Craft other than Indebtedness permitted to remain outstanding
after the Closing Date pursuant to the Credit Agreement shall have
been repaid or will be repaid with the proceeds of the Term Loan B to
be made on the Closing Date.
(F) Copies of the CIBC Loan Documents, all of which shall be in
form and substance satisfactory to the Agent and the Majority Lenders,
together with (x) a certificate of an officer of Omega certifying that
(x) such copies are true and correct and (y) such documents in the
respective forms certified to the Banks remain in full force and
effect without supplement, amendment or other modification, and (y)
and evidence satisfactory to the Agent that all conditions to the
making of the initial CIBC loans thereunder have been satisfied.
(G) Evidence satisfactory to the Agent that Omega has obtained
the consent of the Bondholders of the High Yield Permanent
Subordinated Debt to the transactions described hereunder (including,
without limitation, a waiver of the requirement that Kitchen Craft
guarantee the High Yield Permanent Subordinated Debt).
3.1(b) Additional Conditions.
---------------------
(i) 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, and the reasonable fees and expenses of counsel
to the Agent payable pursuant to Section 9.2.
(ii) Butler Capital Corporation and certain shareholders of Kitchen
Craft identified on Exhibit 3.1(b) hereto shall have contributed not less
than C$26,200,000 in cash and in common equity to Holdings or KC Holdings
as set forth on Schedule 3.1(b) hereto, in order for KC Holdings to pay the
cash equity component of the Acquisition (Kitchen Craft) costs, and the
proceeds of all such equity shall be used to consummate the Acquisition
(Kitchen Craft) and to pay transaction fees.
(iii) In the event the total cash costs of the Acquisition
(Kitchen Craft) exceed C$93,500,000, excluding any working capital
adjustments to the purchase price, such excess shall be financed with
additional cash equity provided by funds managed by Butler Capital
Corporation.
(iv) In the event the total transaction costs relating to the
Acquisition (Kitchen Craft) exceed C$6,500,000, excluding any transaction
fees to be
- 44 -
<PAGE>
borne by the selling stockholders, such excess shall be financed with
additional cash equity provided by funds managed by Butler Capital
Corporation.
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.
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, Holdings and the Subsidiaries of Omega 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.
Section 3.2 Conditions Precedent to all Loans and Letters of Credit.
-------------------------------------------------------
The obligation of the Banks to make any Loans hereunder (including Term Loan B
and any Revolving Loans to be made upon the Closing Date), and of the Agent to
issue each 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.
- 45 -
<PAGE>
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
- 46 -
<PAGE>
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, the
Acquisition Documents (Kitchen Craft), CIBC Loan 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, 1997 and its unaudited
financial statements as at November 21, 1998, and Holdings' unaudited financial
statements as at November 21, 1998, 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 December 28, 1997, there has been no Material Adverse Change.
The projections dated
- 47 -
<PAGE>
December 16, 1998 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.
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
- 48 -
<PAGE>
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. Each of Omega KC US and KC Holdings is a Holding
Company.
Section 4.11 Taxes. Holdings and each Borrower 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 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 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
- 49 -
<PAGE>
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 Omega and the number and percentage
of the shares of each class of capital stock owned beneficially or of record by
Omega 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 statements are adequate for the purpose of
such instruments and for perfection of the Liens of the Collateral Agent. 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
- 50 -
<PAGE>
Collateral Agent 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
perfected the Liens created thereby. The filing of the Omega Collateral
Assignment in the United States Office of Patents and Trademarks perfected the
Liens created thereunder.
Section 4.21 Facilities. As of the Closing Date, Holdings, Omega and
----------
the Subsidiaries of Omega do not have any owned Facilities other than the
Canadian, Indiana, Iowa and Tennessee Facilities, and Holdings, Omega and the
U.S. Subsidiaries do not have any leased Facilities other than those described
on Exhibit 4.21.
Section 4.22 Affiliates. Except for Holdings, its Subsidiaries,
----------
Butler Capital Corporation, certain Affiliates of Butler Capital Corporation and
the officers and directors of Holdings and its Subsidiaries, Omega has no
Affiliates.
Section 4.23 Labor. None of the employees of Holdings, Omega or any
-----
U.S. Subsidiary of Omega 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 Acquisition (Kitchen Craft) and the financing transactions
contemplated in connection therewith, the conclusions set out in the certificate
described in Section 3.1(a)(xxviii) 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.
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 Borrowers and the U.S. Subsidiaries of Omega. As of
the Closing Date, Omega and its U.S.
- 51 -
<PAGE>
Subsidiaries are adequately insured under such policies, no notice of
cancellation has been received with respect to such policies and Omega and its
U.S. Subsidiaries are in compliance with all conditions contained in such
policies.
Section 4.27 Year 2000. Omega and its Subsidiaries have reviewed and
---------
assessed their respective business operations and computer systems and
applications and those of its respective Subsidiaries to address the "year 2000
problem" (that is, that computer applications and equipment used by Omega and
its Subsidiaries and directly, or indirectly through third parties, may be
unable to properly perform date-sensitive functions before, during and after
January 1, 2000). Based on that review and assessment, Omega and its
Subsidiaries reasonably believe that the year 2000 problem will not result in a
Material Adverse Effect.
Section 4.28 CIBC Loan Documents. All representations and warranties
-------------------
made by KC Canada or New Kitchen Craft pursuant to the CIBC Loan Documents are
and shall continue to be true and correct in all material respects at all
material times.
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 Lenders 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, the audited
financial statements and consolidated balance sheet 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, (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, and (iii) comparable consolidating financial statements of
Omega and its Subsidiaries, accompanied by a certificate signed by the
chief financial officer of Omega stating that such financial
- 52 -
<PAGE>
statements present fairly the financial condition of Omega and each of its
Subsidiaries and have been prepared in accordance with GAAP.
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 and consolidating statements of
income, cash flow and changes in 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 and consolidating 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 Lenders.
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.
- 53 -
<PAGE>
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 Holdings'
shareholders, and copies of all registration statements, periodic reports
and other documents filed with the 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
Omega, 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, Holdings or New Kitchen Craft under any
of the High Yield Subordinated
- 54 -
<PAGE>
Permanent Loan Documents, the CIBC 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.
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 (at the request of the Agent or any Bank) to visit and inspect any of the
properties, corporate books and financial
- 55 -
<PAGE>
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 such Bank 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 High Yield Subordinated Permanent Loan Documents, the CIBC Loan
Documents, the Kitchen Craft Note, and the Acquisition Documents (Kitchen
Craft)); 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
- 56 -
<PAGE>
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.
Section 5.10 ERISA. Each Borrower will maintain, and cause Holdings
-----
and each U.S. 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.
Omega 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 and Pledge Agreement. When
------------------------------------------------
so requested by the Agent from time to time, Omega will promptly cause Holdings,
and any other Person who may hereafter guaranty the Obligations or any part
thereof, or who has or may hereafter pledge certain collateral to execute and
deliver to the Agent reaffirmations of their respective Guaranties or Pledge
Agreements in such forms as the Agent may require.
Section 5.13 Further Assurances. Promptly upon request by the
------------------
Collateral Agent or the Agent, each Borrower shall promptly correct, and cause
Holdings or any Subsidiary of Omega to correct, any defect or error that may be
discovered in any Loan Document or in the
- 57 -
<PAGE>
execution, acknowledgment or recordation thereof. Promptly upon request by the
Collateral Agent or the Agent, 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, 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 Collateral Agent or the Agent 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 limitation, the delivery of a landlord waiver from any landlord required
by the Collateral Agent or the Agent; 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, Holdings or any Subsidiary of Omega may be or become bound to
convey, mortgage or assign to the Collateral Agent for the benefit of the Banks
and the Canadian Lenders 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 Agent and the Collateral Agent 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 U.S. Subsidiary of Omega to
maintain, at all times on and 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, The First National Bank of Chicago, 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 Borrowers and the Agent.
Section 5.15 Equity Contribution. Within 90 days after the Closing
-------------------
Date Omega shall cause managers of New Kitchen Craft, or Butler Capital
Corporation or its Affiliates, to contribute additional cash equity to Holdings
in an amount not less than C$300,000, which shall be contributed to New Kitchen
Craft for the purpose of repaying certain advances made under the CIBC Loan
Documents.
Section 5.16 Post-Closing Deliveries. The Borrowers shall, or shall
-----------------------
cause Holdings or the applicable Subsidiary of Omega to, execute and deliver to
the Agent or the Collateral Agent the following documents and instruments within
the period prescribed therefor:
(a) within 30 days after the date hereof, an amendment to the Omega
Collateral Assignment in form and substance satisfactory to the Collateral
Agent;
- 58 -
<PAGE>
(b) within 60 days after the request of the Agent or the Collateral
Agent made as soon as practical after the Closing Date, such consents,
waivers and agreements of lien holders, lessors, subcontractors and third
parties as the Agent or the Collateral Agent may reasonably request with
respect to any Collateral;
(c) as soon as possible and in any event within 60 days after the
completion of the construction under way as of the Closing Date on the Iowa
Facility, affidavits from all subcontractors who have performed services on
the Iowa Facility to the effect that such subcontractors have been paid all
obligations owed to them as of the date thereof and such indemnity
agreements from Omega and its general contractor as the issuer of title
insurance may require in connection with insurance for mechanic's liens;
(d) as soon as possible and in any event within 75 days after the
completion of such construction, an ALTA/ACSM Land Title Survey for the
Iowa Facility;
(e) within 10 Business Days after the Closing Date, the financing
statements (Form UCC-1) or amendments to financing statements described on
Exhibit 5.16 as "Pending UCC Financing Statements and Amendments"; and
(f) within 10 Business Days after the Closing Date, completed requests
for information concerning Liens against Holdings, Omega and its
Subsidiaries as described on Exhibit 5.16 as "Pending UCC Searches."
ARTICLE VI
-----------
NEGATIVE 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 Lenders 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,
windup or dissolve itself (or suffer any liquidation or dissolution) or permit
Holdings or any Subsidiary of Omega to do any of the foregoing; provided,
--------
however, that any Subsidiary of Omega (including New Kitchen Craft, Omega KC US,
- - -------
KC Holdings, BII 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).
- 59 -
<PAGE>
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 U.S. 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 U.S. 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 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 Closing Date, 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:
-----------------
(i) may form a new Subsidiary and transfer assets thereto so long as
such new Subsidiary (A) is a wholly-owned Subsidiary of such Borrower, and
(B) prior to the transfer of any assets thereto, either (1) executes and
delivers to the Agent an agreement in the form
- 60 -
<PAGE>
attached hereto as Exhibit 6.5 whereby such Subsidiary becomes a Borrower
hereunder and a Security Agreement in substantially the form delivered by
Panther, together with documents similar to those required with respect to
Panther pursuant to Sections 3.1(a)(xv) through 3.1(a)(xxiv) and 3.1(b) of
the Existing Credit Agreement, as appropriate or (2) executes and delivers
to the Agent a Subsidiary Guaranty and a Subsidiary Security Agreement
granting the Agent a security interest in all the assets of such new
Subsidiary for the benefit of the Banks (or, if such new Subsidiary is a
Holding Company, executes and delivers to the Agent a Subsidiary Pledge
Agreement), together with documents similar to those required with respect
to Panther pursuant to Sections 3.1(a)(xv) through 3.1(a)(xxiv) and 3.1(b)
of the Existing Credit Agreement, as appropriate and (C) 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 (ii) below; and
(ii) 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: (A) the aggregate
borrowings under the Revolving Notes by the Borrowers and their
Subsidiaries in connection with all Acquisitions does not exceed
$5,000,000; (B) 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; (C) 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; (D) if the Acquisition involves the formation or acquisition
of a new Subsidiary, the new Subsidiary complies with clause (i) above; (E)
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 (F) if the
Acquisition involves the acquisition of an existing corporation or
partnership, the written consent to or approval of such Acquisition is
obtained from the board of directors or equivalent governing body of the
Person being acquired prior to any tender or other offer for the capital
stock or equivalent equity interest in such Person being acquired.
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, provided,
---------
however, that the foregoing shall not apply to any
- - -------
- 61 -
<PAGE>
negative pledge required of New Kitchen Craft pursuant to the CIBC Loan
Documents. 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 any Subsidiary of Omega may make Restricted
Payments to Omega, and provided no Event of Default has occurred and is
continuing, Omega may make the following Restricted Payments: (x) 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(x) and any
intercompany loans to Holdings in lieu thereof may not exceed $2,500,000 per
year.
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 $450,000 during any
fiscal year, but no such management fees shall be paid (but may continue to
accrue) after the occurrence and during the continuance of an Event of Default.
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 in any fiscal year on a consolidated basis (a) exceeding $7,500,000,
plus, (b) during the 1999 fiscal year, the Borrowers may make additional Capital
- - ----
Expenditures in connection with construction and development of a new rough mill
operation at the Iowa Facility in an aggregate amount not to exceed $5,500,000.
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
- 62 -
<PAGE>
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); (c) amend or cancel the subordination provisions
applicable to any Subordinated Debt; (d) 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(a) 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 Kitchen Craft, KC Holdings, Panther, Omega KC
US, BII, KC Canada and New Kitchen Craft, and other Subsidiaries of Omega
acquired after the Closing Date in transactions that comply with Section
6.5.
6.12(i) Intercompany loans and advances permitted by Section 6.13(f).
- 63 -
<PAGE>
6.12(j) Advances to management personnel and employees made within 90
days after the Closing Date to enable such management personnel and
employees to purchase Stock of Holdings as set forth on Exhibit 6.12(j).
6.12(k) Any other Investment; provided that the maximum aggregate
cost of all Investments authorized by this clause 6.12(k) shall not exceed
$100,000.
Any Investments under clauses (c), (d), (e), (f) or (g) 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 High Yield Subordinated
Permanent Loan Documents, 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 Lenders.
6.13(f) 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 Borrower hereunder; (iii) to Kitchen Craft for intercompany
loans and advances other than the Kitchen Craft Note in an aggregate amount
at any one time outstanding not to exceed $5,000,000; and (iv) 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(g) Indebtedness incurred by Kitchen Craft and Omega, as
guarantor, pursuant to the CIBC Loan Documents.
6.13(h) Indebtedness incurred by Holdings, as guarantor of Omega KC
Canada pursuant to the Master Transaction Agreement.
6.13(i) Indebtedness incurred by Kitchen Craft pursuant to the
Kitchen Craft Note.
- 64 -
<PAGE>
6.13(j) Indebtedness with respect to judgments and awards that do not
constitute an Event of Default.
6.13(k) 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(l) Indebtedness with respect to Contingent Obligations permitted
by Section 6.15.
6.13(m) 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(m) 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 Borrowers, 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) Liens granted on assets of Kitchen Craft to secure the
obligations under the CIBC Loan Documents.
6.14(d) 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(e) 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(f) 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(g) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance or other
similar bonds.
- 65 -
<PAGE>
6.14(h) 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 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(i) 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(j) 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(k) 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. Omega will not permit the
-----------------------
Interest Coverage Ratio, as of the last day of any fiscal quarter, 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>
Minimum Interest
Fiscal Quarter Ending: Coverage Ratio
---------------------- --------------
<S> <C>
On or before October 2, 1999 1.65 to 1.0
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
before September 27, 2003
After September 27, 2003 2.7 to 1.0.
</TABLE>
- 66 -
<PAGE>
Section 6.17 Fixed Charge Coverage Ratio. Omega will not permit the
---------------------------
Fixed Charge Coverage Ratio of the Borrowers, as of the last day of any fiscal
quarter ending on or prior to October 2, 1999, for the four consecutive fiscal
quarters ending on that date, to be less than: (i) 1.05 to 1.0; and (ii) 1.1 to
1.0, for any fiscal quarter ending after October 2, 1999.
Section 6.18 Cash Flow Leverage Ratio. Omega 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>
Period: Maximum Cash
Flow Leverage Ratio.
- - --------------------------------- --------------------
<S> <C>
On or before May 29, 1999 5.3 to 1.0
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. Omega 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 Loan Payments. Omega will not, and will not permit
-------------
Kitchen Craft to, make any reductions or prepayments, whether mandatory or
optional, under the CIBC Loan Documents that do not comply with Section 2.6,
Section 2.7 or Section 2.16 hereunder, as applicable.
Section 6.21 Operating Leases. Omega 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 Lease, unless (a)
- 67 -
<PAGE>
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 $4,000,000 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 6.22 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 CIBC Loan Documents, the Kitchen Craft Note, the Kitchen
Craft Acquisition Documents, and the High Yield Subordinated Permanent Loan
Documents, in each case in any way that materially adversely affects the Banks.
Section 6.23 Acquisition Expenses. The Borrowers shall not, and
--------------------
shall not permit Kitchen Craft and any other Subsidiary of Omega, to incur
transaction expenses in excess of C$6,500,000 in connection with the Acquisition
(Kitchen Craft), excluding transaction fees to be borne by selling shareholders
and any equity contributions provided by Butler Capital Corporation pursuant to
Section 3.1(b) hereto.
Section 6.24 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),
6.13(f) or, subject to Section 6.20, 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
- 68 -
<PAGE>
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 2.7, 2.16,
5.1(f), 5.2, 5.14, 5.15 or 5.16 hereof or any Section of Article VI hereof.
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
- 69 -
<PAGE>
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.
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 CIBC
Loan Documents and 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 any Borrower or any Subsidiary of Omega
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
- 70 -
<PAGE>
$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.
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.
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 Lenders, 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 Lenders, 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 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.
- 71 -
<PAGE>
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 U.S. Bank and Affiliates. With respect to its
------------------------
Commitments and the Loans made by it, U.S. 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 U.S. 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, 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 Lenders, and such instructions shall be binding
upon all holders of Notes; provided, however,
- 72 -
<PAGE>
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 on collateral or on any guaranties,
shall (except as may otherwise be required by law) be distributed as provided in
the Intercreditor Agreement.
- 73 -
<PAGE>
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 U.S. 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 Lenders may appoint a successor Agent.
ARTICLE IX
----------
MISCELLANEOUS
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
Lenders, or all of the Lenders as provided in Section 2.1 of the Intercreditor
Agreement, 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 Lenders.) Notwithstanding the
forgoing, no such amendment, modification, waiver or consent shall:
- 74 -
<PAGE>
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) Amend any provision of this Agreement relating to the Agent in
its capacity as Agent without the consent of the Agent; or
9.1(e) 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-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
- 75 -
<PAGE>
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.
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
- 76 -
<PAGE>
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 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.
- 77 -
<PAGE>
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.
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
- 78 -
<PAGE>
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 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
- 79 -
<PAGE>
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 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.
- 80 -
<PAGE>
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 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.
- 81 -
<PAGE>
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 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 of 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
- 82 -
<PAGE>
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 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
- 83 -
<PAGE>
Code) as applicable in any proceeding in which the validity and/or
enforceability of this Agreement against Panther and any other party that
becomes a party hereto pursuant to Section 6.5, or any Specified Lien is in
issue; and (b) "Specified Lien" means any security interest, mortgage, lien
or encumbrance granted by 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 Panther and any other party that becomes a party hereto pursuant to
Section 6.5, 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 Panther and
any other party that becomes a party hereto pursuant to Section 6.5, 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 Panther. This
Section is intended solely to reserve the rights of the Banks and the Agent
hereunder against Panther and any other party that becomes a party hereto
pursuant to Section 6.5, 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
Pledge Agreement executed by Omega) of the Agent's and the Banks' rights in such
Stock upon the occurrence and during the continuation of an Event of Default.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
- 84 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
OMEGA CABINETS, LTD.
By /s/ Donald E. Cihak
------------------------
Name DONALD E. CIHAK
----------------------
Title Vice President
---------------------
PANTHER TRANSPORT, INC.
By /s/ Donald E. Cihak
------------------------
Name DONALD E. CIHAK
----------------------
Title Vice President
---------------------
Address for Borrowers:
1205 Peters Drive
Waterloo, Iowa 50703-9691
Facsimile No.: (319)235-5827
SIGNATURE PAGE TO CREDIT AGREEMENT
- 85 -
<PAGE>
Commitment Amounts
- - ------------------
Revolving Term A Term B
- - --------- ------ ------
$6,666,666.67 $11,833,333.33 $8,000,000.00
U.S. BANK NATIONAL
ASSOCIATION, formerly known as
First Bank National Association,
In its individual corporate
capacity and as Agent
By /s/ Mark Olmon
------------------------------
Mark Olmon
Vice President
Address:
U.S. Bank Place
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Mark Olmon, MPFP 0702
Facsimile No.: (612) 973-0825
$2,882,883.33 $5,117,117.92 $-0-
THE FIRST NATIONAL BANK OF
CHICAGO, as Documentation Agent
and as one of the Banks,
By: /s/ Philip Yarrow
-----------------------------
Name: PHILIP YARROW
----------------------------
Title: Officer
---------------------------
Address:
One First National Plaza
Suite 0323
Chicago, Illinois 60670
Attn: Mr. Philip Yarrow
Phone: (312) 732-7136
Facsimile No.: (312) 732-7455
$4,666,666.67 $8,283,333.33 $7,000,000.00
SIGNATURE PAGE TO CREDIT AGREEMENT
- 86 -
<PAGE>
HARRIS TRUST AND SAVINGS BANK,
By: /s/ M. James Barry III
------------------------------
Name: M. JAMES BARRY III
----------------------------
Title: Vice President
---------------------------
Address:
111 West Monroe Street
Suite 10W
Chicago, Illinois 60603
Attn: Mr. James Barry
Phone: (312) 461-2781
Facsimile No.: (312) 293-4856
$4,333,333.33 $7,691,666.67 $10,000,000.00
BANKBOSTON N.A.,
By: /s/ Donald W. Peters
-------------------------------
Name: DONALD W. PETERS
------------------------------
Title: Vice President
-----------------------------
Address:
100 Pearl Street
Hartford, Connecticut 06103
Attn: Mr. Donald Peters
Phone: (860) 727-6581
Facsimile No.: (860) 727-6573
SIGNATURE PAGE TO CREDIT AGREEMENT
- 87 -
<PAGE>
$1,450,450.00 $2,574,548.75 $-0-
CIBC, INC.
By: /s/ William J. Koslow, Jr.
---------------------------------
Name: WILLIAM J. KOSLOW, JR.
--------------------------------
Title: Executive Director
-------------------------------
Address:
425 Lexington Avenue
New York, New York 10017
Attn: Mr. Ian Palmer
Phone: (212) 856-3875
Facsimile No.: (212) 856-3991
SIGNATURE PAGE TO CREDIT AGREEMENT
- 88 -
<PAGE>
EXHIBIT 4.2
THIS CREDIT AGREEMENT is made as of the 29th day of January, 1999.
B E T W E E N:
3578275 CANADA INC.
(the "Borrower")
- and -
THE LENDERS LISTED ON SCHEDULE 1
TO THIS AGREEMENT, INCLUDING
CANADIAN IMPERIAL BANK OF COMMERCE
(the "Lenders")
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
in its capacity as Administrative Agent
(the "Agent")
RECITALS:
A. The Borrower has requested the Lenders to provide credit facilities of
up to a maximum aggregate amount of Cdn. $37,000,000.00 as follows:
(a) a Term Loan of Cdn. $22,000,000.00; and,
(b) a Revolving Loan of Cdn. $15,000,000.00, or the U.S. dollar
equivalent thereof;
B. The Lenders have each agreed to provide their respective commitments
to Borrower subject to the terms and conditions of this Agreement;
C. The parties are entering into this Agreement to provide for the terms
of the credits;
D. The Borrower is a wholly owned, indirect subsidiary of Omega Cabinets,
Ltd., a Delaware corporation, who shall be guaranteeing the Borrower's
obligations herein to the Agent on behalf of the Lenders;
E. Immediately following its acquisition of all of the issued and
outstanding shares in the capital of Kitchen Craft of Canada Ltd., the Borrower
will amalgamate with that corporation to form Kitchen Craft of Canada Ltd., and
all references to "Borrower" herein shall include the amalgamated Kitchen Craft
of Canada Ltd., as the context may require;
NOW THEREFORE, for value received, and intending to be legally
<PAGE>
2
bound by this Agreement, the parties agree as follows:
ARTICLE I
DEFINED TERMS
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):
"ADVANCE" means an availment of a Credit by the Borrower by way of
Prime Rate Advance, Base Rate Advance, Bankers' Acceptances, L/C,
including deemed Advances and conversions, renewals and rollovers of
existing Advances, and any reference relating to the amount of
Advances shall mean the sum of all outstanding Prime Rate Advances and
Base Rate Advances, plus the face amount of all outstanding Bankers'
Acceptances and the undrawn face amount of all L/Cs.
"AGENT" means CIBC in its role as administrative agent for the
Lenders, and any successor administrative agent appointed in
accordance with this Agreement.
"AGREEMENT, "HEREOF, "HEREIN", "HERETO, "HEREUNDER" or similar
expressions mean this Agreement and any Schedules hereto, as amended,
supplemented, restated and replaced from time to time.
"ACQUISITION" has the meaning ascribed thereto in Section 3.3 herein;
"ACQUISITION CLOSING DATE" means January 29/th/, 1999, or such other
date as may be proposed by the Borrower and agreed to by the Lenders
on which all of the conditions in the Acquisition Documents have been
satisfied or (with the consent of all Lenders) waived.
"ACQUISITION DOCUMENTS" means the Purchase Agreement, and all other
agreements, instruments, certificates and other documents executed and
delivered pursuant to or in connection therewith, as the same may be
supplemented, amended or otherwise modified.
"ALLOCABLE SHARE" means as of any date of determination, the ratio of
the outstanding principal balance of the Term Loan A, Term Loan B (as
those terms are defined in the Omega Credit Agreement), or Credit B,
as applicable, to the aggregate principal amount of all
<PAGE>
3
outstanding Indebtedness of the borrowers under the Term Loans (as
defined in the Omega Credit Agreement) and Credit B.
"AMALGAMATION" means the proposed amalgamation of 3578275 Canada Inc.
and Kitchen Craft of Canada Ltd.;
"APPLICABLE MARGIN" means, 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) of the Omega Credit Agreement with
respect to a month are delivered to the Agent as required herein 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 Prime Rate Advances, Base
Rate Advances, BA Fees or L/C Fees, 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:
CREDIT A
--------
<TABLE>
<CAPTION>
PRIME RATE ADVANCE
BA FEE OR OR BASE RATE
CASH FLOW LEVERAGE RATIO L/C FEE ADVANCE
<S> <C> <C>
Less than or equal to 2.50:1 1.50% 0.50%
Greater than 2.50:1 but less than or equal
to 3.5:1 2.00% 1.00%
Greater than 3.50:1 but less than 4.5:1 2.50% 1.50%
Greater than or equal to 4.5:1 2.75% 1.75%
<CAPTION>
CREDIT B
--------
CASH FLOW LEVERAGE RATIO BA FEE PRIME RATE ADVANCE
<S> <C> <C>
Less than or equal to 2.50:1 1.50% 0.50%
Greater than 2.50:1 but less than or equal 2.00% 1.00%
to 3.5:1
</TABLE>
<PAGE>
4
<TABLE>
<S> <C> <C>
Greater than 3.50:1 but less than 4.5:1 2.50% 1.50%
Greater than or equal to 4.5:1 2.75% 1.75%
</TABLE>
Notwithstanding the foregoing, however, during the period beginning on
the Closing Date and ending on the date five days after the financial
statements and compliance certificate for the period ending June 30,
1999 are delivered pursuant to Sections 5.1(c) and (d) of the Omega
Credit Agreement, and for any subsequent period beginning on a day the
financial statements and compliance certificate required by Sections
5.1(c) and (d) of the Omega Credit Agreement 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.
"ASSIGNMENT AGREEMENT" means an agreement in the form of Schedule
1.1.1 to this Agreement.
"BA PROCEEDS" means, in respect of any Bankers' Acceptance, an amount
calculated on the applicable Drawdown Date which is (rounded to the
nearest full cent, with one-half of one cent being rounded up) equal
to the face amount of such Bankers' Acceptance multiplied by the
price, where the price is calculated by dividing one by the sum of one
plus the product of (i) the BA Rate applicable thereto expressed as a
decimal fraction multiplied by (ii) a fraction, the numerator of which
is the term of such Bankers' Acceptance and the denominator of which
is 365, which calculated price will be rounded to the nearest multiple
of 0.001%.
"BA RATE" means, (a) with respect to any Bankers' Acceptance accepted
by a Lender named on Schedule I to the Bank Act (Canada), the rate
determined by the Agent as being the arithmetic average (rounded
upward to the nearest multiple of 0.01 %) of the discount rates, that
appear on the Reuters CDOR page for CIBC calculated on the basis of a
year of 365 days and determined in accordance with normal market
practice at or about 10:00 a.m. (Toronto time) on the applicable
Drawdown Date and, (b) in respect of any other Lender named on
Schedule II to the Bank Act (Canada), the lesser of the rate quoted by
such Lender as of 10:00 am (Toronto time) on the applicable Drawdown
Date, or the rate in (a) above plus 0.075%.
<PAGE>
5
"BANKERS' ACCEPTANCE" means a depository bill as defined in the
Depository Bills and Notes Act (Canada) in Canadian Dollars that is in
the form of an order signed by the Borrower and accepted by a Lender
pursuant to this Agreement or, for Lenders not participating in
clearing services contemplated in that Act, a draft or bill of
exchange in Canadian Dollars that is drawn by the Borrower and
accepted by a Lender pursuant to this Agreement. Orders that become
depository bills, drafts and bills of exchange are sometimes
collectively referred to in this Agreement as "orders".
"BANKERS' ACCEPTANCE FEE" means the amount calculated by multiplying
the face amount of each Bankers' Acceptance by the rate for the
Bankers' Acceptance Fee specified in Sections 2.6 and 3.5, and then
multiplying the result by a fraction, the numerator of which is the
duration of its term on the basis of the actual number of days to
elapse from and including the date of acceptance of a Bankers'
Acceptance by the Lender up to but excluding the maturity date of the
Bankers' Acceptance and the denominator of which is the number of days
in the calendar year in question.
"BASE RATE" means, at any time of reference, the variable reference
interest rate per year based on a 365 or 366 day year, as the case may
be, as declared by CIBC from time to time to be its base rate for US
Dollar loans made by CIBC in Canada.
"BASE RATE ADVANCE" means an Advance in US Dollars bearing interest
based on the Base Rate and includes deemed Base Rate Advances provided
for in this Agreement.
"BORROWER" means 3578275 Canada Inc., a corporation existing under the
Canada Business Corporations Act and its successors, including without
limitation Kitchen Craft of Canada Ltd. following the Amalgamation.
"BRANCH OF ACCOUNT" means CIBC, Henderson and Kimberly branch,
Winnipeg, Manitoba, or such other Winnipeg branch as may be designated
from time to time by the Agent and the Borrower.
"BUSINESS DAY" means a day of the year, other than Saturday or Sunday,
on which the Agent is open for business at its executive offices in
Toronto, Ontario, and at the Branch of Account.
"CIBC" means Canadian Imperial Bank of Commerce.
<PAGE>
6
"CANADIAN DOLLARS", "CDN. DOLLARS", "CDN. $" and "$" mean lawful money
of Canada.
"CAPITAL EXPENDITURE" has the meaning as defined in the Omega Credit
Agreement.
"CAPITAL STOCK" means, with respect to any Person, any and all present
and future shares, partnership or other interests, participations or
other equivalent rights in the Person's capital, however designated
and whether voting or non-voting.
"CAPITALIZED LEASE" has the meaning as defined in the Omega Credit
Agreement.
"CAPITALIZED LEASE OBLIGATIONS" has the meaning as defined in the
Omega Credit Agreement.
"CASH FLOW LEVERAGE RATIO" has the meaning as defined in the Omega
Credit Agreement.
"CLOSING DATE" means January 29, 1999, or such other date as is
mutually agreed between the parties hereto.
"COLLATERAL" means cash, a bank draft or a letter of credit issued by
a Canadian chartered bank, all in a form satisfactory to the Lenders,
acting reasonably.
"COMMITMENT" means in respect of each Lender from time to time, the
covenant to make Advances to the Borrower in the Lender's
Proportionate Share of the maximum amount of the Credits and, where
the context requires, the maximum amount of Advances which the Lender
has covenanted to make.
"COMPLIANCE CERTIFICATE'' means the compliance certificates as
referenced in Sections 5.1(c) and (d) of the Omega Credit Agreement.
"CONSOLIDATED FINANCIAL STATEMENTS" means the consolidated financial
statements of Omega and its Subsidiaries referred to in Sections
5.1(a) and (c) of the Omega Credit Agreement.
"CONSTATING DOCUMENTS" means, with respect to each of the Borrower and
each Guarantor, its articles or certificate of incorporation,
amalgamation or continuance, memorandum of
<PAGE>
7
association, by-laws, partnership agreement, limited liability company
agreement or other similar document, and all unanimous shareholder
agreements, other shareholder agreements, voting trust agreements and
similar arrangements.
"CONTRACTS" means agreements, franchises, leases, easements,
servitudes, privileges and other rights, other than Permits.
"CONTRIBUTING LENDER" shall have the meaning defined in Section
10.3.2.
"CREDIT A" means the credit in the amount of up to Cdn. $15,000,000.00
or the US Dollar equivalent thereof in favour of the Borrower which is
established by this Agreement as a revolving credit facility.
"CREDIT B" means the credit of up to Cdn. $22,000,000.00 thereof in
favour of the Borrower which is established by this Agreement as a
term loan.
"CREDITS" means Credit A and Credit B, and "CREDIT" means either of
them.
"CREDIT DOCUMENTS" means this Agreement, the Security and all other
documents relating to the Credits, or any of them.
"DEFAULTING LENDER" has the meaning defined in Section 10.3.2.
"DESIGNATED ACCOUNT" means, in respect of any Advance, the account or
accounts maintained by the Borrower at a branch of the Agent in
Winnipeg that the Borrower designates in its notice requesting an
Advance.
"DRAWDOWN DATE" means the date, which shall be a Business Day, of any
Advance.
"EBITDA" has the meaning as defined in the Omega Credit Agreement.
"ENCUMBRANCE" means any mortgage, debenture, pledge, hypothec, lien,
charge, assignment by way of security, consignment, lease,
hypothecation, security interest or other security agreement, trust or
arrangement having the effect of security for the payment of any debt,
liability or obligation, and "ENCUMBRANCES",
<PAGE>
8
"ENCUMBRANCER", "ENCUMBER" and "ENCUMBERED" shall have
corresponding meanings.
"EVENT OF DEFAULT" has the meaning as set forth in Section 9.1.
"EXCESS CASH FLOW" has the meaning as defined in the Omega Credit
Agreement.
"EXCHANGE RATE" means, on any day, with respect to the exchange of
either of Canadian Dollars or US Dollars (the "First Currency") into
the other of those currencies (the "Other Currency"), the spot buying
rate quoted by the Agent for purchases of the First Currency with the
Other Currency at noon (Toronto time) on such day, or if such rate is
not or has not yet been quoted on such day, such rate on the last day
on which it was quoted by the Agent except that, if the Exchange Rate
is required to determine the outstanding amount of Advances for a
purpose that does not involve the purchase of Canadian Dollars or US
Dollars, the Exchange Rate shall be the noon spot rate of the Bank of
Canada on that day.
"EXCLUDED TAXES" means any Taxes now or hereafter imposed, levied,
collected, withheld or assessed on a Lender by Canada or any other
jurisdiction in which that Lender is subject to Tax as a result of the
Lender (i) carrying on a trade or business in such jurisdiction or
being deemed to do so, or having a permanent establishment in such
jurisdiction; (ii) being organized under the laws of such
jurisdiction; (iii) being resident or deemed to be resident in such
jurisdiction or (iv) not dealing at arm's length with the Borrower or
any other Lender; but does not include any sales, goods or services
Tax payable under the laws of any such jurisdiction with respect to
any goods or services made available by a Lender to the Borrower under
this Agreement or any withholding tax payable under the laws of
Canada.
"FEE AGREEMENT" means the letter from Canadian Imperial Bank of
Commerce to Butler Capital Corp. and U.S. Bank National Association
dated January 13, 1999, which is hereby acknowledged and accepted by
the Borrower, to the extent that it provides for fees payable by the
Borrower to CIBC in connection with the Credits, as the letter is
amended, supplemented, restated and replaced from time to time.
"FISCAL YEAR END" has the meaning as defined in the Omega Credit
Agreement.
<PAGE>
9
"FIXED CHARGE COVERAGE RATIO" has the meaning as defined in the Omega
Credit Agreement.
"GAAP", has the meaning as defined in the Omega Credit Agreement.
"GLOBAL LENDERS" means collectively all of the Lenders, and all of the
US Banks.
"GUARANTORS" means Omega, Kitchen Craft Cabinetry Ltd. and any other
Subsidiary (other than the Transitory Subsidiary) of the Borrower now
or hereafter existing or acquired.
"HAZARDOUS MATERIALS" means any hazardous substance or any pollutant
or contaminant, toxic or dangerous waste, substance or material, as
defined in or regulated by any applicable law, regulation or
governmental authority from time to time, including, without
limitation, friable asbestos and poly-chlorinated biphenyls.
"HOLDINGS" has the meaning as defined in the Omega Credit Agreement.
"INDEBTEDNESS" has the meaning as defined in the Omega Credit
Agreement.
"INTELLECTUAL PROPERTY" means all data bases, patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or
necessary for the conduct of the Borrower's business as currently
conducted that are material to the financial condition, business or
operations of the Borrower;
"INTERBANK REFERENCE RATE" means the interest rate expressed as a
percentage per annum which is customarily used by the Agent when
calculating interest due by it or owing to it arising from correction
of errors between it and other Canadian chartered Lenders.
"INTERCOMPANY LOAN OBLIGATIONS" means all present and future debts,
liabilities and obligations of any kind owing or remaining unpaid by
the Borrower to any of its Subsidiaries or to Omega or any of its
Subsidiaries, or to the Borrower by any of its Subsidiaries or Omega
or any of its Subsidiaries, in respect of loans or advances made.
"INTERCOMPANY OBLIGATIONS" means all present and future debts,
liabilities and obligations of any kind owing or remaining unpaid by
the
<PAGE>
10
Borrower to any of its Subsidiaries or to Omega or any of its
Subsidiaries, or to the Borrower by any of its Subsidiaries or Omega
or any of its Subsidiaries, including but not limited to Intercompany
Loan Obligations and indebtedness for goods and services supplied.
"INTERCREDITOR AGREEMENT" has the meaning as defined in the Omega
Credit Agreement.
"INTEREST COVERAGE RATIO" has the meaning as defined in the Omega
Credit Agreement.
"INTEREST EXPENSE" has the meaning as defined in the Omega Credit
Agreement.
"INTEREST PAYMENT DATE" means (in connection with Prime Rate Advances
and Base Rate Advances) the 1/st/ day of each calendar month or if
that day is not a Business Day, the Business Day next following.
"L/C" means a standby letter of credit, letter of guarantee or
commercial letter of credit in a form satisfactory to CIBC, issued by
CIBC at the request of the Borrower in favour of a third party to
secure the payment or performance of an obligation of the Borrower or
one of its Subsidiaries to the third party.
"LENDERS" means CIBC, First Chicago NBD Bank, Canada and other lenders
that agree from time to time to become Lenders in accordance with
Article XI of this Agreement, and "Lender" means any one of the
Lenders.
"LIEN" has the meaning as defined in the Omega Credit Agreement.
"LOAN DOCUMENTS" means this Agreement and the Security contemplated
thereby.
"MAJORITY GLOBAL LENDERS" means "Majority Lenders" as defined in the
Intercreditor Agreement.
"OBLIGATIONS" means all monetary obligations of the Borrower to the
Lenders under or in connection with this Agreement, including but not
limited to all debts and liabilities (including those arising from
indemnities of any nature of type), present or future, direct or
indirect, absolute or contingent, matured or not, at any time owing by
the Borrower to the Lenders in any currency or remaining unpaid by the
<PAGE>
11
Borrower to the Lenders in any currency under or in connection with
this Agreement, whether arising from dealings between the Lenders and
the Borrower, and wherever incurred, and whether incurred by the
Borrower alone or with another or others and whether as principal or
surety, and all interest, fees, legal and other costs, charges and
expenses payable by the Borrower to the Lenders under or pursuant to
this Agreement. In this definition, "the Lenders" shall be interpreted
as "the Lenders, or any of them."
"OMEGA" means Omega Cabinets, Ltd. a Delaware corporation.
"OMEGA CREDIT AGREEMENT" means the First Amended and Re-Stated Credit
Agreement dated as of January 29/th/, 1999 among Omega, Panther
Transport, Inc., the U.S. Banks, and U.S. Bank National Association as
agent for the U.S. Banks and First National Bank of Chicago as
documentation agent for the U.S. Banks.
"PENDING EVENT OF DEFAULT" means An event which, with the giving of
notice (whether such notice is required under Article 9.1 or under
some other provision of this Agreement, or otherwise) or lapse of
time, or both, would constitute an Event of Default.
"PENSION PLAN" means a pension plan or benefit plan which is subject
to the funding requirements of applicable pension benefits legislation
in any jurisdiction and is applicable to employees of any Person.
"PERMITS" means governmental licenses, authorizations, consents,
registrations, exemptions, permits and other approvals required by
law.
"PERMITTED ENCUMBRANCES" means, with respect to any Person, the
following:
(a) Encumbrances for taxes, rates, assessments or other governmental
charges or levies not yet due, or for which installments have
been paid based on reasonable estimates pending final
assessments, or if due, the validity of which is being contested
diligently and in good faith by appropriate proceedings by that
Person;
(b) undetermined or inchoate Encumbrances, rights of distress and
charges incidental to current operations which have not at such
time been filed or exercised and of which none of the
<PAGE>
12
Lenders has been given notice, or which relate to obligations not
due or payable or if due, the validity of which is being
contested diligently and in good faith by appropriate proceedings
by that Person;
(c) reservations, limitations, provisos and conditions expressed in
any original grants from the Crown or other grants of real or
immovable property, or interests therein, which do not materially
affect the use of the affected land for the purpose for which it
is used by that Person;
(d) licenses, easements, rights-of-way and rights in the nature of
easements (including, without limiting the generality of the
foregoing, licenses, easements, rights-of-way and rights in the
nature of easements for sidewalks, public ways, sewers, drains,
gas, steam and water mains or electric light and power, or
telephone and telegraph conduits, poles, wires and cables) and
zoning, land use and building restrictions, by-laws, regulations
and ordinances of federal, provincial, municipal and other
governmental authorities, which will not materially impair the
use of the affected land for the purpose for which it is used by
that Person;
(e) title defects, encroachments or irregularities which are of a
minor nature and which in the aggregate will not materially
impair the use of the affected property for the purpose for which
it is used by that Person;
(f) the right reserved to or vested in any municipality or
governmental or other public authority by the terms of any lease,
license, franchise, grant or permit acquired by that Person or by
any statutory provision to terminate any such lease, license,
franchise, grant or permit, or to require annual or other
payments as a condition to the continuance thereof;
(g) the Encumbrance resulting from the deposit of cash or securities
in connection with contracts, tenders or expropriation
proceedings, or to secure workers' compensation, unemployment
insurance, surety or appeal bonds, costs of litigation when
required by law, liens and claims incidental to current
construction, mechanics', warehousemen's, carriers' and other
similar liens, and public, statutory and other like obligations
incurred in the ordinary course of business;
<PAGE>
13
(h) security given to a public utility or any municipality or
governmental authority when required by such utility or authority
in connection with the operations of that Person in the ordinary
course of its business;
(i) the Security;
(j) the Encumbrance created by a judgment of a court of competent
jurisdiction, as long as the judgment is being contested
diligently and in good faith by appropriate proceedings by that
Person and does not result in an Event of Default;
(k) the interest of any lessor under any Capitalized Lease entered
into after the Closing Date or purchase money Encumbrances on
property acquired after the Closing Date; provided that (i) the
Indebtedness secured thereby is otherwise permitted by this
Agreement, (ii) such Encumbrances 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 Encumbrances outstanding at any time, together with all
other indebtedness secured by Liens permitted pursuant to 6.14(j)
of the Omega Credit Agreement, does not exceed $3,000,000 U.S.
(l) other Encumbrances agreed to in writing by CIBC.
(m) encumbrances identified in the title opinion of Thompson Dorfman
Sweatman dated January 29, 1999.
"PERMITTED OBLIGATIONS" means the following:
(a) the Obligations;
(b) Intercompany Obligations;
(c) other debts, liabilities and obligations secured by Permitted
Encumbrances, other than the Security;
(d) accounts payable not more than 60 days past due, accrued expenses
and other similar debts, liabilities and obligations
<PAGE>
14
incurred in the ordinary course of business which are not for
borrowed money;
(e) deferred taxes;
(f) obligations and liabilities incurred in the ordinary course of
business which do not constitute Indebtedness;
(g) obligations arising from guarantees by the Borrower or its
Subsidiary of debts, liabilities and obligations of any of its
Subsidiaries that are themselves Permitted Obligations;
(h) other debts, liabilities and obligations expressly permitted
under this Agreement or consented to by the Majority Global
Lenders in writing.
"PERSON" has the meaning as described in the Omega Credit Agreement.
"PRIME RATE" means, at any time of reference, the rate of interest
expressed as a percentage per annum, expressed on the basis of a year
of 365 or 366 days, as the case may be, announced by CIBC as being its
reference rate for commercial loans made by it in Canada in Canadian
Dollars, at the relevant time.
"PRIME RATE ADVANCE" means an Advance in Canadian Dollars bearing
interest based on the Prime Rate and includes deemed Prime Rate
Advances provided for in this Agreement.
"PROPERTY" means, with respect to any Person, any or all of its
undertaking, property and assets.
"PROPORTIONATE SHARE" means, with respect to any Lender, at any time,
the ratio expressed as a percentage of:
(a) such Lender's commitment at such time to;
(b) the aggregate Commitments of all of the Lenders at such
time
as set out on Schedule 1.1.3, which shall be amended and distributed
to all parties by the Agent from time to time as other Persons become
Lenders.
<PAGE>
15
"PURCHASE AGREEMENT" means a Master Transaction Agreement dated as of
January 29/th/, 1999 between the Borrower, as purchaser, Omega
Holdings, Inc., Bill Rademaber, Ernie Boschmann, Peter Neufeld, HEB2
Holdings Ltd., Herbert Buller, Erna Buller, MEB2 Holdings, Ltd., MEB
Family Trust, JWB2 Holdings, Ltd., JWB Family Trust, PCB2 Holdings
Ltd., PBC Family Trust, DHB2 Holdings, Ltd., DHB Family Trust, Mark
Buller, Philip Buller, David Buller and James Bulleras in effect on
the date hereof, and as the same may be supplemented, amended or
otherwise modified after the date hereof.
"REGISTER" has the meaning defined in Section 11.2.3.
"REQUIREMENT OF LAW" means, as to any Person, any law, treaty,
regulation, ordinance, decree, judgment, order or similar requirement
made or issued under sovereign or statutory authority and applicable
to or binding upon that Person, or to which that Person or any of its
Property is subject.
"RESPONSIBLE OFFICER" has the meaning as described in the Omega Credit
Agreement.
"SCHEDULE" means the designated schedule of this Agreement.
"SECTION" means the designated section of this Agreement.
"SECURITY" means the security held from time to time by the Lenders or
the Agent on behalf of the Lenders, securing or intended to secure
repayment of the Obligations, including without limitation the
security described in Section 4.1.
"SUBSIDIARY" has the meaning as defined in the Omega Credit Agreement.
"SUCCESSOR AGENT" has the meaning defined in Section 10.11.
"SYSTEMS" means all computer software, hardware and other products
incorporating embedded software or microcode, owned or leased by the
Borrower, which are used in operating Property or carrying on
business, including but not limited to financial, production and order
processing systems.
"TAXES" means all taxes, levies, imposts, stamp taxes, duties,
deductions, withholdings and similar impositions payable, levied,
collected, withheld or assessed as of the date of this Agreement or at
<PAGE>
16
any time in the future, and "Tax" shall have a corresponding meaning.
"TRANSITORY SUBSIDIARY" means Kitchen Craft of Canada Ltd. (prior to
the Amalgamation).
"U.S. BANKS" means the banks which are signatories to the Omega Credit
Agreement or which become a party thereto pursuant to section 9.6
thereof or pursuant to any amendment thereto, including without
limitation U.S. Bank National Association, as agent for such banks;
"US DOLLARS" and "US $" mean lawful money of the United States of
America.
"U.S. LOAN DOCUMENTS" means collectively, the Omega Credit Agreement,
and all related documents, as the same may hereafter be amended,
supplemented, extended, restated or otherwise modified from time to
time.
1.2 OMEGA CREDIT AGREEMENT
The parties hereto acknowledge and agree that all or a portion of
Credit B (at the Borrower's discretion) is to be advanced for the purpose of
assisting with and/or concluding the acquisition by the Borrower of Kitchen
Craft of Canada Ltd. and its business. The Credits are, subject as herein
provided, being granted to the Borrower upon concurrent terms with those
provided for from the U.S. Banks to Omega pursuant to the Omega Credit
Agreement. Where capitalized terms used in this Agreement are not otherwise
defined herein, they shall be deemed to have the same meaning as such
capitalized terms used in the Omega Credit Agreement. A true copy of the Omega
Credit Agreement is attached hereto as Schedule 1.2.
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".
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, Schedules,
exhibits, and like references are to this Agreement unless otherwise expressly
provided. The words "include", "includes" and "including" shall be deemed to be
followed by
<PAGE>
17
pharse "without limitation".
ARTICLE II
CREDIT A
2.1 AMOUNT AND AVAILMENT OPTIONS
Upon and subject to the terms and conditions of this Agreement, the
Lenders agree to provide a credit for the use of the Borrower in the amount of
up to Cdn. $15,000,000.00 or the US Dollar equivalent thereof. At the option of
the Borrower, Credit A may be used by requesting Prime Rate Advances to be made
by the Lenders, by requesting Base Rate Advances to be made by the Lenders or by
presenting orders to a Lender for acceptance as Bankers' Acceptances, or by
requesting that L/Cs be issued by CIBC on behalf of all Lenders. The aggregate
face amount of L/Cs outstanding under Credit A at any time shall not, however,
exceed Cdn. $500,000.00.
2.2 REVOLVING CREDIT
Credit A is a revolving credit and the principal amount of any Advance
under Credit A that is repaid may be reborrowed, if the Borrower is otherwise
entitled to an Advance under Credit A.
2.3 USE OF CREDIT A
Credit A shall be used:
(a) to finance the general corporate requirements of the Borrower;
(b) in connection with the Acquisition; and,
(c) to make the Employee Loans.
2.4 TERM AND REPAYMENT
Credit A shall be repaid in full and cancelled on December 26, 2003,
unless it is extended on or before that date at the discretion of the Lenders.
2.5 OPTIONAL REDUCTION OR TERMINATION OF CREDIT A
The Borrower may from time to time, by giving not less than two
Business Days express written notice to the Agent and paying all accrued and
unpaid standby fees relating to the amount of the Credit being cancelled or
reduced to the effective date of cancellation or reduction, irrevocably notify
the Agent of the cancellation of Credit A or of the permanent reduction of the
committed amount of Credit A by an amount which shall be a minimum of
$1,000,000.00 or, if more, in an
<PAGE>
18
integral multiple of $250,000.00; provided however, that the Borrower may not
reduce the committed amount of Credit A below the total amount outstanding under
Credit A as at the effective date of such reduction. The Borrower shall have no
right to any increase in the committed amount of Credit A thereafter. Upon
termination of the Credit A Commitment pursuant to this section, the Borrower
shall pay to the Agent for the account of the Lenders the full amount of all
outstanding Advances under Credit A, all accrued and unpaid interest thereon,
all unpaid fees accrued to the date of such termination, and all other unpaid
obligations of the Borrower to the Agent and the Lenders hereunder in respect of
Credit A. The Borrower covenants and agrees that any optional reduction of
Credit A or termination of Credit A hereunder, or any optional reduction or
termination of Revolving Commitment Amounts pursuant to the U.S. Loan Documents,
shall be made ratably between Credit A hereunder and the outstanding Revolving
Commitments under the U.S. Loan Documents.
2.6 INTEREST RATES AND FEES
Interest rates, Bankers' Acceptance Fees and L/C Fees will be adjusted
based on the Cash Flow Leverage Ratio and will be as follows:
(a) Each Prime Rate Advance shall bear interest on the unpaid principal
amount thereof at a varying rate per annum equal to the sum of (i)
the Prime Rate, and (ii) the Applicable Margin.
(b) Each Base Rate Advance shall bear interest on the unpaid principal
amount thereof at a varying rate per annum equal to the sum of (i) the
Base Rate, and (ii) the Applicable Margin.
(c) The Bankers' Acceptance Fee for any Bankers' Acceptance shall be equal
to the Applicable Margin therefor.
(d) The fee for any L/C issued shall be equal to the Applicable Margin
therefor.
Interest and fees shall be promptly distributed by the Agent to the
Lenders based on their respective Proportionate Shares. In addition, a fronting
fee of 0.25% per annum on the amount of each L/C shall be payable to CIBC for
its own account. Notwithstanding anything to the contrary contained herein,
fees relating to Bankers' Acceptances advanced before the effective date of an
increase or decrease of the Applicable Margin will not be adjusted.
2.7 STANDBY FEES
The Borrower shall pay a standby/commitment fee on the daily
<PAGE>
19
unadvanced portion of Credit A at a rate of 0.50% per annum. The
standby/commitment fee shall be calculated daily beginning on the Closing Date
and shall be payable on the days principal payments are scheduled for Credit B
loans. Upon final payment of the Obligations under Credit A, the Borrower shall
also pay the accrued standby fee for the elapsed portion of the quarter in which
the final payment is made. Standby fees shall be promptly distributed by the
Agent to the Lenders based on their respective Proportionate Shares.
2.8 AGENT FEES
The Borrower hereby acknowledges and agrees for its own account to be
bound by the Fee Agreement. For avoidance of doubt, the Borrower shall pay or
shall have arranged for payment to the Agent, for the Agent's own account, an
annual agent's fee in the amount provided in the Fee Agreement. This fee shall
be payable to the Agent annually in advance, commencing on the Closing Date and
on each anniversary thereafter. No Lender (other than the Agent) shall be
entitled to any portion of such agent's fee.
On the Closing Date, the Borrowers shall pay to the Agent, for the
Agent's own account, an up front fee in the amount provided in the Fee
Agreement. No Lender (other than the Agent) shall be entitled to any portion of
such agent's fee.
ARTICLE III
CREDIT B
3.1 AMOUNT AND AVAILMENT OPTIONS
Upon and subject to the terms and conditions of this Agreement, the
Lenders agree to provide a credit for the one-time single draw-down use of the
Borrower in the amount of up to Cdn. $22,000,000.00 (provided that the Advance
made in connection with such drawdown may be converted or rolled over into
another Prime Rate Advance). Credit B may be used by requesting Prime Rate
Advances to be made by the Lenders, or by presenting orders to a Lender for
acceptance as Bankers' Acceptances. In no event will the Advance under Credit B
be made after February 15, 1999. Credit B may be prepaid at any time on 3 days
notice.
3.2 NON-REVOLVING CREDIT
Credit B is a non-revolving credit and the principal amount of any
Advance under Credit B that is repaid (other than in connection with a rollover
or conversion of an Advance) may not be reborrowed.
<PAGE>
20
3.3 USE OF CREDIT B
Proceeds of the Credit B Advance shall be used in connection with the
acquisition of Kitchen Craft of Canada Ltd. by the Borrower, and to refinance
the existing Indebtedness of the Borrower and Kitchen Craft of Canada Ltd. (the
"Acquisition").
3.4 TERM AND REPAYMENT
The principal amount of Credit B shall be payable in equal quarterly
installments as follows:
(a) on each of April 3, 1999, July 2, 1999, October 1, 1999, and December
31, 1999, $425,000.00;
(b) on each of March 31, 2000, June 30, 2000, September 29, 2000, and
December 29, 2000, $525,000.00;
(c) on each of March 30, 2001, June 29, 2001, September 28, 2001, and
December 28, 2001, $612,500.00;
(d) on each of March 29, 2002, June 28, 2002, September 25, 2002, and
December 27, 2002, $750,000.00;
(e) on each of March 28, 2003, June 27, 2003, September 26, 2003, and
December 26, 2003, $912,500.00;
(f) on each of March 31, 2004, June 30, 2004, September 30, 2004, and
December 31, 2004, $2,275,000.00; and
(g) on December 31, 2004, any other amount then remaining unpaid with
respect to Credit B.
Provided, however, that if the aggregate principal amount outstanding
under Credit B 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.
3.5 INTEREST RATES AND FEES
Interest rates and Bankers' Acceptance fees for Credit B will be
adjusted based on the Cash Flow Leverage Ratio and will be as follows:
(a) Each Prime Rate Advance shall bear interest on the unpaid principal
amount thereof at a varying rate per annum equal to the sum of (i) the
<PAGE>
21
Prime Rate, and (ii) the Applicable Margin.
(b) The Bankers' Acceptance Fee for any Bankers' Acceptance shall be
equal to the Applicable Margin therefor.
Interest and fees shall be promptly distributed by the Agent to the
Lenders based on their respective Proportionate Shares. Notwithstanding
anything to the contrary contained herein, fees relating to Bankers' Acceptances
advanced before the effective date of an increase or decrease of the Applicable
Margin will not be adjusted.
3.6 MANDATORY PREPAYMENTS
(a) The Borrower shall cause Omega, on the Borrower's behalf, to make a
capital contribution through its Subsidiaries to the Borrower, to be
used by the Borrower to prepay Credit B, in the event of a prepayment
being made by Omega to the U.S. Banks pursuant to sections 2.6(d),
(e), (f) or 2.7(a) of the Omega Credit Agreement, such that in the
aggregate such prepayment will reduce the Commitments of the U.S.
Banks and the Lenders based upon their Allocable Shares.
(b) Any mandatory prepayments pursuant to this Section 3.6 shall be
applied to Credit B until Credit B is paid in full and then to Credit
A. Any mandatory prepayments of Credit B shall be applied to the
installments due thereunder pro rata to the amount of each such
installment. Any prepayments that are applied to Credit A shall reduce
the Credit A Commitment by the same amount. Amounts prepaid on Credit
B under this Section 3.6, or prepaid under Credit A and resulting in a
reduction of the Credit A Commitment under this Section 3.6, may not
be reborrowed.
(d) Amounts paid or prepaid on Credit A under this Section 3.6 shall be
made to the Agent for the account of each Lender in proportion to its
share of the outstanding amount of Credit A. Amounts paid or prepaid
on Credit B under this Section 3.6 shall be made to the Agent for the
account of each Lender in proportion to its share of the outstanding
amount under Credit B.
(e) In any event of mandatory prepayment pursuant to this Section 3.6, all
amounts prepaid hereunder shall be made ratably between the
outstanding Term Loans owing pursuant to the Omega Credit Agreement
and the outstanding amount of Credit B based upon the parties'
Allocable Shares. In the event of a mandatory prepayment
<PAGE>
22
being required by the Borrower pursuant to Section 3.6(a), it is
acknowledged that the Allocable Share of such prepayment to be applied
to the U.S. Banks' loans shall be contributed by the Borrower to Omega
by way of repayment of its Intercompany Loan Obligations in order that
Omega may use such funds to reduce its debt to the U.S. Banks. All
funds which may be received by Borrower from Omega under Section 2.6
and 2.7 of the Omega Credit Agreement shall be applied by Borrower or
paid to Agent for use in the manner specified in Section 3.6.
(f) Notwithstanding the foregoing, the Borrower acknowledges that Bankers'
Acceptances may not be prepaid or repaid in whole or in part until
maturity thereof. In the event that any prepayment or repayment is
required to be made by the Borrower or Omega on the Borrower's behalf
in accordance with the foregoing provisions of this Agreement that
would otherwise require a payment to reduce an unmatured Bankers'
Acceptance, such payment shall be deposited with the Agent as
Collateral against such payment until maturity of the Bankers'
Acceptances. The Borrower shall be entitled to interest upon any such
deposit in accordance with Section 12.15.
ARTICLE IV
SECURITY AND EXCHANGE RATE FLUCTUATIONS
4.1 SECURITY
The Security hereunder shall include without limitation the following,
all in form and substance and duly registered and perfected and satisfactory to
the Lenders and subject only to Permitted Encumbrances:
(a) security over all present and future Property of the Borrower
(including but not limited to a fixed charge over the real property in
Winnipeg, Manitoba that will be owned by the Borrower following the
Amalgamation) in the form of a $37,000,000.00 Debenture and a General
Security Agreement in the form annexed hereto as Schedule 4.1(a)
(Debenture) and 4.1(a) (GSA) by the Borrower in favour of the Agent
for the benefit of the Lenders;
(b) unconditional guarantees of the monetary Obligations of the Borrower
from each of the Subsidiaries of the Borrower (other than the
Transitory Subsidiary) wheresoever incorporated or otherwise created
substantially in the form annexed hereto as Schedule 4.1(b);
(c) General Security Agreement substantially in the form annexed
hereto
<PAGE>
23
as Schedule 4.1(a) in favour of the Agent for the benefit of the
Lenders in support of the guarantees referred to in (b) above;
(d) an unconditional guarantee of the monetary Obligations of the Borrower
from Omega in the form annexed hereto as Schedule 4.1(d), which shall
be unlimited;
(e) any security in favour of the Collateral Agent as defined in the
Intercreditor Agreement taken pursuant to the U.S. Loan Documents in
support of the unconditional guarantee of Omega as referred to in (d)
above;
If at any time hereafter the Borrower owns, establishes or acquires an
interest in a Subsidiary directly or indirectly, the Borrower shall, within 60
days of that establishing or acquiring, cause that Subsidiary to deliver a
guarantee substantially in the form annexed hereto as Schedule 4.1(b) and a
general security agreement substantially in the form annexed hereto as Schedule
4.1(c), which shall become part of the Security. The Borrower shall also cause
the delivery of legal opinions, opining on the valid existence of such
Subsidiary, its due authorization, execution and delivery of such guarantee and
general security agreement and the enforceability of these documents and other
supporting documents as the Agent may reasonably require.
4.2 EXCHANGE RATE FLUCTUATIONS
If fluctuations in rates of exchange in effect between Canadian
Dollars and US Dollars cause the amount of Advances (expressed in Canadian
Dollars based on the Exchange Rate in effect from time to time) to the Borrower
under any Credit to exceed the maximum amount of that Credit permitted herein by
five (5%) percent or more then fifteen (15) days after demand by Agent, the
Borrower shall pay the Agent on behalf of the Lenders such amount as is
necessary to repay the excess.
ARTICLE V
DISBURSEMENT CONDITIONS
5.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE
At or before the time of the first Advance under this Agreement, the
Agent, for and on behalf of the Lenders, shall have received the following, each
in full force and effect and in form and substance satisfactory to the Lenders,
acting reasonably (unless delivery has been waived in accordance with Section
10.7.2):
(a) all conditions precedent to the loans to be advanced to
Omega
<PAGE>
24
by the U.S. Banks as referenced in Article [3] of the Omega
Credit Agreement are satisfied and completed in full to the
satisfaction of the Agent, and that duplicate original executed
copies of all certificates and other documents to be provided by
Omega to the U.S. Banks as provided in Article [3] of the Omega
Credit Agreement are provided to the Agent;
(b) evidence satisfactory to the Agent that all debts, liabilities
and obligations owing under Kitchen Craft of Canada Ltd.'s
existing credit arrangements with CIBC and any other debt not
forming part of the Permitted Obligations will be paid in full
concurrently with the initial Advance;
(c) a letter of undertaking from Omega that duplicate original copies
of all deliveries to be made to the U.S. Banks pursuant to
section [5.1] of the Omega Credit Agreement shall be concurrently
made and delivered to the Agent during the term of this
Agreement, such letter to be in the form attached hereto as
Schedule 5.1(c);
(d) certified copies of the Constating Documents of the Borrower and
all of its Subsidiaries (other than the Transitory Subsidiary),
and certificates of good standing from the jurisdictions in which
each of them carries on business;
(e) certified copies of the corporate proceedings taken by the
Borrower and all of its Subsidiaries (other than the Transitory
Subsidiary) and Omega, authorizing them to execute, deliver and
perform their respective obligations under the Credit Documents;
(f) an incumbency certificate showing the names and titles and
bearing copies of the signatures of the officers of the Borrower
authorized to execute the Credit Documents and to request
Advances, certified as of the Closing Date by the Secretary or
Assistant Secretary of the Borrower;
(g) duly executed copies of this Agreement and the Security,
(h) certificates of insurance with loss payable to the Agent on
behalf of the Lenders, or other evidence that the covenants and
conditions of the Credit Documents concerning insurance coverage
are being complied with;
<PAGE>
25
(i) phase 1 environmental assessment reports (or other evidence
satisfactory to the Lenders concerning environmental matters) in
respect of material real property owned or occupied by the
Borrower that are in the possession of the Borrower;
(j) releases, discharges and postponements (in registerable form
where appropriate) covering all Encumbrances affecting the
collateral Encumbered by the Security which are not Permitted
Encumbrances, and all statements and acknowledgments that are
required in respect of other security interests affecting the
Property of the Borrower and its Subsidiaries or other parties
delivering Security to confirm that the collateral Encumbered by
those Encumbrances does not include the collateral Encumbered by
the Security or is a Permitted Encumbrance;
(k) title opinions satisfactory to the Lenders covering all mortgages
of freehold real property in Canada;
(l) the opinion of Messrs. Thompson Dorfman Sweatman, counsel to the
Borrower, addressed to the Lenders in form satisfactory to the
Lenders' counsel, acting reasonably;
(m) the opinion of Messrs. Ropes & Gray, counsel to Omega in the
United States addressed to the Lenders in form satisfactory to
the Lenders' counsel, acting reasonably;
(n) An Intercreditor Agreement by and among the Agent, the Lenders,
U.S. Bank and the other banks party to the U.S. Loan Documents
(collectively, the "Creditors") in form and substance acceptable
to the Agent and the Lenders, executed by a duly authorized
officer of each of the Creditors and dated on or prior to the
Closing Date;
(o) An Order to Pay from the Borrower directing the Agent as to the
disbursement of the Credits;
(p) A solvency certificate and such other assurances as the Agent may
require from each of the Borrower, its Subsidiaries and Omega so
as to address the matter of financial assistance between such
Persons;
(q) True copies of the U.S. Loan Documents, all of which shall be in
form and substance acceptable to the Agent and the
<PAGE>
26
Majority Global Lenders; and
In addition to the foregoing, the following conditions shall be
required to be satisfied on or before the Closing Date:
(r) the conditions referenced in section 3.1(b) of the Omega Credit
Agreement shall have been satisfied;
(s) the Agent shall have received for itself and for the account of
the Lenders all fees and other amounts due and payable by the
Borrower on or prior to the Closing Date, including the fees
payable on the Closing Date pursuant to Section 2.8, and the
reasonable fees and expenses of counsel to the Agent payable
pursuant to Section 8.7;
(t) 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; and,
(u) The Agent shall have received satisfactory evidence that all
conditions to the making of the initial U.S. loan advances
thereunder have been satisfied.
Notwithstanding Section 5.1(h) the Lenders may, in their sole
discretion, agree to advance all or part of Credit A and/or Credit B prior to
completion of registration of the Security, upon terms and conditions
satisfactory to the Lenders, and if such advance is made and the Lenders'
conditions are not satisfied by the Borrower within 30 days of the date of the
Advance, an Event of Default shall be deemed to have occurred entitling the
Lenders to demand full payment of all Credits and to exercise all enforcement
rights available to them pursuant to any of the Credit Documents.
5.2 CONDITIONS PRECEDENT TO ALL ADVANCES
The obligation of the Lenders to make any Advance is subject to the
conditions precedent that:
(a) no Event of Default or Pending Event of Default has occurred and
is continuing on the Drawdown Date, or would result from making
the Advance;
<PAGE>
27
(b) the Agent has received timely notice as required under Section
6.4;
(c) all other terms and conditions of this Agreement upon which the
Borrower may obtain an Advance are fulfilled.
ARTICLE VI
ADVANCES
6.1 LENDERS' OBLIGATIONS RELATING TO L/CS
Notwithstanding that L/Cs under Credit A are issued by CIBC, it is the
intention of the parties that the ultimate credit risk and exposure of any
Lender be in accordance with its overall Proportionate Share of Credit A. Each
Lender shall (and hereby absolutely, unconditionally and irrevocably agrees to)
indemnify CIBC for that Lender's Proportionate Share of any payment made by CIBC
in respect of an L/C for which CIBC is not immediately reimbursed by the
Borrower, and shall do all such things, including delivery of indemnity
agreements and assignments to other Lenders of Advances made by CIBC, as shall
be required to ensure that result. Any such action on the part of the Lenders
shall be binding on the Borrower.
CIBC shall not issue any L/C's unless the conditions precedent set out
in 5.2 hereof at the applicable time, are met.
Similarly, it is the intention of the parties that the ultimate credit
risk and exposure of any Lender in respect of all Credits be in accordance with
its Proportionate Share of the entire amount of all Credits. Accordingly, upon
the Obligations becoming due and payable under Section 9.2, each Lender shall
(and hereby absolutely, unconditionally and irrevocably agrees to) do all such
things, including delivery of indemnity agreements and assignments to other
Lenders of Advances made by CIBC as shall be required to ensure that result.
Any such action on the part of the Lenders shall be binding on the Borrower.
If any Lender fails to take the actions required under this Section,
the Agent may, without prejudice to the other rights of the Lenders, make such
adjustments to the payments to the defaulting Lender under this Agreement as are
necessary to compensate the other Lenders for the defaulting Lender's failure.
6.2 EVIDENCE OF INDEBTEDNESS
The Obligations resulting from Prime Rate Advances and Base Rate
Advances made by the Lenders shall be evidenced by records maintained by the
Agent, and by each Lender concerning those Advances it has made. The Agent
shall also maintain records of the Obligations resulting from Advances by way of
<PAGE>
28
Bankers' Acceptances and L/Cs, and each Lender shall also maintain records
relating to Bankers' Acceptances that it has accepted. The records maintained
by the Agent shall constitute, in the absence of manifest error, prima-facie
evidence of the Obligations and all details relating thereto. The failure of
the Agent or any Lender to correctly record any such amount or date shall not,
however, adversely affect the obligation of the Borrower to pay the Obligations
in accordance with this Agreement.
6.3 CONVERSIONS
Subject to the other terms of this Agreement, the Borrower may from
time to time convert all or any part of the outstanding amount of any Advance
into another form of Advance permitted by this Agreement; provided, however that
the Borrower may only convert a maturing Bankers' Acceptance into a Prime Rate
Advance if:
(a) the sum of the BA Rate plus the Banker's Acceptance Fee;
is less than
(b) the sum of the Prime Rate plus the Applicable Margin to Prime Rate
Advances;
on that maturity date.
6.4 NOTICE OF ADVANCES AND PAYMENTS
The Borrower shall give the Agent irrevocable written notice, in the
form attached as Schedule 6.4 to this Agreement, of any request for any Advance
to it under the Credits. The Borrower shall also give the Agent irrevocable
written notice in the same form of any payment by it (whether resulting from
repayment, prepayment, rollover or conversion) of any Advance under the Credits.
Notice shall be given on the Business Day prior to the date of any
Advance, except that notice shall be given in respect of an Advance by way of
L/C at such earlier time not exceeding two Business Days as CIBC may reasonably
require so that it has sufficient time to review the proposed form of L/C.
Notices shall be given not later than 1:00 p.m. (Winnipeg time) on the
date for notice. Payments (other than those being made solely from the proceeds
of rollovers and conversions) must be made prior to 1:00 p.m. (Winnipeg time) on
the date for payment. If a notice or payment is not given or made by those
times, it shall be deemed to have been given or made on the next Business Day,
unless all Lenders affected by the late notice or payment agree, in their sole
discretion, to
<PAGE>
29
accept a notice or payment at a later time as being effective on the date it is
given or made.
6.5 PREPAYMENTS AND REDUCTIONS
Subject to giving notice required by section 6.4, and further subject
to the restrictions upon repayment of Bankers' Acceptances contained in Section
3.6 (f) and restrictions upon conversion of Bankers' Acceptances contained in
Section 6.3, the Borrower may from time to time repay Advances outstanding under
any Credit without penalty.
6.6 PRIME RATE AND BASE RATE ADVANCES
Upon timely fulfillment of all applicable conditions as set forth in
this Agreement, the Agent, in accordance with the procedures set forth in
Section 6.7, will make the requested amount of a Prime Rate Advance or Base Rate
Advance available to the Borrower on the Drawdown Date requested by the Borrower
by crediting the Designated Account with such amount. Each Prime Rate Advance or
Base Rate Advance shall be in an aggregate minimum amount of Cdn. $250,000.00
for Prime Rate Advances or US $250,000.00 for Base Rate Advances and in whole
multiples of Cdn. $50,000.00 or US $50,000.00, respectively. The Borrower shall
pay interest to the Agent for the account of the Lenders at the Branch of
Account on any such Advances outstanding to it from time to time hereunder at
the applicable rate of interest specified in Sections 2.6 and 3.5.
Interest on Prime Rate Advances and Base Rate Advances shall be
payable monthly on each Interest Payment Date. All interest shall accrue from
day to day and shall be payable in arrears for the actual number of days elapsed
from and including the date of Advance or the previous date on which interest
was payable, as the case may be, to but excluding the date on which interest is
payable, both before and after maturity, default and judgment, with interest on
overdue interest at the same rate payable on demand.
Interest calculated with reference to the Prime Rate and Base Rate
shall be calculated daily on the basis of a calendar year. Each rate of
interest which is calculated with reference to a period (the "deemed interest
period") that is less than the actual number of days in the calendar year of
calculation is, for the purposes of the Interest Act (Canada), equivalent to a
rate based on a calendar year calculated by multiplying such rate of interest by
the actual number of days in the calendar year of calculation and dividing by
the number of days in the deemed interest period.
6.7 CO-ORDINATION OF PRIME RATE AND BASE RATE ADVANCES
Each Lender shall advance its Proportionate Share of each Prime
<PAGE>
30
Rate and Base Rate Advance in accordance with the following provisions:
(a) the Agent shall advise each Lender of its receipt of a notice
from the Borrower pursuant to Section 6.4 on the day such notice
is received and shall, as soon as possible, advise each Lender of
such Lender's Proportionate Share of any Advance requested by
the notice;
(b) each Lender shall deliver its Proportionate Share of the Advance
to the Agent not later than 11:00 a.m. (Winnipeg time) on the
Drawdown Date;
(c) if the Agent determines that all the conditions precedent to an
Advance specified in this Agreement have been met, it shall
advance to the Borrower the amount delivered by each Lender by
crediting the Designated Account prior to 3:00 p.m. (Winnipeg
time) on the Drawdown Date, but if the conditions precedent to
the Advance are not met by 3:00 p.m. (Winnipeg time) on the
Drawdown Date, the Agent shall return the funds to the Lenders or
invest them in an overnight investment as orally instructed by
each Lender until such time as the Advance is made; and
(d) if the Agent determines that a Lender's Proportionate Share of an
Advance would not be a whole multiple of Cdn. $25,000.00, in the
case of an Advance in Canadian currency, or US $25,000.00 in the
case of an Advance in U.S. currency, the amount to be advanced by
that Lender may be increased or reduced by the Agent in its sole
discretion to the extent necessary to reflect the requirements of
this sub-paragraph.
6.8 FORM OF BANKERS' ACCEPTANCES
To facilitate the acceptance of Bankers' Acceptances hereunder, the
Borrower hereby appoints each Lender as its attorney to sign and endorse on its
behalf, as and when considered necessary by the Lender, an appropriate number of
orders in the form prescribed by that Lender.
Each Lender may, at its option, execute any order in handwriting or by
the facsimile or mechanical signature of any of its authorized officers, and the
Lenders are hereby authorized to accept or pay, as the case may be, any order of
the Borrower which purports to bear such a signature notwithstanding that any
such individual has ceased to be an authorized officer of the Lender. Any such
order or Bankers' Acceptance shall be as valid as if he or she were an
authorized officer at
<PAGE>
31
the date of issue of the order or Bankers' Acceptance.
Any order or Bankers' Acceptance signed by a Lender as attorney for
the Borrower, whether signed in handwriting or by the facsimile or mechanical
signature of an authorized officer of a Lender may be dealt with by the Agent or
any Lender to all intents and purposes and shall bind the Borrower as if duly
signed and issued by the Borrower.
The receipt by the Agent of a request for an Advance by way of
Bankers' Acceptances shall be each Lender's sufficient authority to execute, and
each Lender shall, subject to the terms and conditions of this Agreement,
execute orders in accordance with such request and the advice of the Agent given
pursuant to Section 6.7, and the orders so executed shall thereupon be deemed to
have been presented for acceptance.
6.9 SALE OF BANKERS' ACCEPTANCES
It shall be the responsibility of each Lender to arrange, in
accordance with normal market practice, for the sale on each Drawdown Date of
the Bankers' Acceptances issued by the Borrower and to be accepted by that
Lender, failing which such Lender shall purchase such Bankers' Acceptances.
In accordance with the procedures set forth in Section 6.11, the Agent
will make the net proceeds of the requested Advance by way of Bankers'
Acceptances received by it from the Lenders available to the Borrower on the
Drawdown Date no later than 3:00 p.m. (Winnipeg time) by crediting the
Designated Account with such amount.
Notwithstanding the foregoing, if in the determination of the Agent
acting reasonably, by reason of circumstances affecting the Canadian money
market, a market for Bankers' Acceptances does not exist at any time, then upon
at least four days written notice by the Agent to the Borrower, the Borrower's
right to request Advances by way of Bankers' Acceptances shall be and remain
suspended until the Agent notifies the Borrower that such circumstances causing
such determination no longer exists.
6.10 SIZE AND MATURITY OF BANKERS' ACCEPTANCES AND ROLLOVERS
Each Advance of Bankers' Acceptances shall be in a minimum amount of
Cdn. $1,000,000.00 and each Bankers' Acceptance shall be in the amount of Cdn.
$100,000.00 Canadian or whole multiples thereof. Each Bankers' Acceptance shall
have a term which is not less than 30 days nor more than 180 days after the date
of acceptance of the order by a Lender, but no Bankers' Acceptance may mature on
a date which is not a Business Day or on a date which
<PAGE>
32
is later than the date on which the principal amount of any Credit is required
to be reduced (in whole or in part) if that would adversely affect the
Borrower's ability to cause the reduction of the Credit in question. The face
amount at maturity of a Bankers' Acceptance may be renewed as a Bankers'
Acceptance or converted into another form of Advance permitted by this
Agreement.
6.11 CO-ORDINATION OF BA ADVANCES
Each Lender shall advance its Proportionate Share of each Advance by
way of Bankers' Acceptances in accordance with the provisions set forth below.
6.11.1 The Agent, promptly following receipt of a notice from the Borrower
pursuant to Section 6.4 requesting an Advance by way of Bankers' Acceptances,
shall advise each Lender of the aggregate face amount and term(s) of the
Bankers' Acceptances to be accepted by it, which term(s) shall be identical for
all Lenders. The aggregate face amount of Bankers' Acceptances to be accepted
by a Lender shall be determined by the Agent by reference to the respective
Commitments of the Lenders, except that, if the face amount of a Bankers'
Acceptance would not be Cdn. $100,000.00 or a whole multiple thereof, the face
amount shall be increased or reduced by the Agent in its sole discretion to the
nearest whole multiple of Cdn. $100,000.00.
6.11.2 Each Lender shall transfer to the Agent at the Branch of Account for
value on each Drawdown Date immediately available Cdn. Dollars in an aggregate
amount equal to the BA Proceeds of all Bankers' Acceptances accepted and sold or
purchased by the Lender on such Drawdown Date net of the applicable Bankers'
Acceptance Fee and net of the amount required to pay any of its previously
accepted Bankers' Acceptances that are maturing on the Drawdown Date or any of
its other Advances that are being converted to Bankers' Acceptances on the
Drawdown Date. Provided that no costs in excess of costs associated with
payment at the Branch of Account would be incurred by the Borrower or any of the
Lenders, the Agent may designate such other offices in Canada as it may see fit
for the purposes referred to in the preceding sentence.
6.11.3 If the Agent determines that all the conditions precedent to an
Advance specified in this Agreement have been met, it shall advance to the
Borrower the amount delivered by each Lender by crediting the Designated Account
prior to 3:00 p.m. (Winnipeg time) on the Drawdown Date, but if the conditions
precedent to the Advance are not met by 3:00 p.m. (Winnipeg time) on the
Drawdown Date, the Agent shall return the funds to the Lenders or invest them in
an overnight investment as orally instructed by each Lender until such time as
the Advance is made.
<PAGE>
33
6.11.4 Notwithstanding any other provision hereof, for the purpose of
determining the amount to be transferred by a Lender to the Agent for the
account of the Borrower in respect of the sale of any Bankers' Acceptance issued
by the Borrower and accepted by such Lender, the proceeds of sale thereof shall
be deemed to be an amount equal to the BA Proceeds calculated with respect
thereto. Accordingly, in respect of any particular Bankers' Acceptance accepted
by it, a Lender in addition to its entitlement to retain the applicable Bankers'
Acceptance Fee for its own account (i) shall be entitled to retain for its own
account the amount, if any, by which the actual proceeds of sale thereof exceed
the BA Proceeds calculated with respect thereto, and (ii) shall be required to
pay out of its own funds the amount, if any, by which the actual proceeds of
sale thereof are less than the BA Proceeds calculated with respect thereto.
6.12 PAYMENT OF BANKERS' ACCEPTANCES
The Borrower shall provide for the payment to the Agent at the Branch
of Account for the account of the applicable Lenders of the full face amount of
each Bankers' Acceptance on the earlier of (i) the date of maturity of a
Bankers' Acceptance and (ii) the date on which any Obligations become due and
payable pursuant to Section 9.2. The Lenders shall be entitled to recover
interest from the Borrower at a rate of interest per annum equal to the rate
applicable to Prime Rate Advances under Credit A, compounded monthly, upon any
amount payment of which has not been provided for by the Borrower in accordance
with this Section. Interest shall be calculated from and including the date of
maturity of each Bankers' Acceptance up to but excluding the date such payment,
and all interest thereon, both before and after demand, default and judgment, is
provided for by the Borrower.
If the Borrower provides cash in response to any Obligations becoming
due and payable under Section 9.2, the Borrower shall be entitled to receive
interest on the cash provided in accordance with Section 12.15 as long as the
cash is held as Collateral.
6.13 DEEMED ADVANCE - BANKERS' ACCEPTANCES
Except for amounts which are paid from the proceeds of a rollover of a
Bankers' Acceptance or for which payment has otherwise been funded by the
Borrower, any amount which a Lender pays to any third party on or after the date
of maturity of a Bankers' Acceptance in satisfaction thereof or which is owing
to the Lender in respect of such a Bankers' Acceptance, shall be deemed to be a
Prime Rate Advance to the Borrower under this Agreement. Each Lender shall
forthwith give notice of the making of such a Prime Rate Advance to the Borrower
and the Agent (which shall promptly give similar notice to the other Lenders).
<PAGE>
34
6.14 WAIVER
The Borrower shall not claim from a Lender any days of grace for the
payment at maturity of any Bankers' Acceptances presented and accepted by the
Lender pursuant to this Agreement. The Borrower waives any defence to payment
which might otherwise exist if for any reason a Bankers' Acceptance shall be
held by a Lender in its own right at the maturity thereof, and the doctrine of
merger shall not apply to any Bankers' Acceptance that is at any time held by a
Lender in its own right.
6.15 DEGREE OF CARE
Any executed orders to be used as Bankers' Acceptances which are
delivered to a Lender shall be held in safekeeping with the same degree of care
as if they were the Lender's own property, and shall be kept at the place at
which such orders are ordinarily held by such Lender.
6.16 INDEMNITY
The Borrower shall indemnify and hold the Lenders, and each of them,
harmless from any loss, cost, damage or expense with respect to any Bankers'
Acceptance dealt with by the Lenders, or any of them, but shall not be obliged
to indemnify a Lender for any loss, cost, damage or expense caused by the
negligence or wilful misconduct of that Lender
6.17 OBLIGATIONS ABSOLUTE
The obligations of the Borrower with respect to Bankers' Acceptances
under this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including without limitation, the following circumstances:
(i) any lack of validity or enforceability of any order accepted by a
Lender as Bankers' Acceptance; or
(ii) the existence of any claim, set-off, defence or other right which the
Borrower may have at any time against the holder of a Bankers'
Acceptance, a Lender or any other Person or entity, whether in
connection with this Agreement or otherwise.
6.18 SHORTFALL ON DRAWDOWNS, ROLLOVERS AND CONVERSIONS
The Borrower agrees that:
(a) the amount, if any, by which the amount of the maturing Bankers'
Acceptance exceeds the actual proceeds of the
<PAGE>
35
Bankers' Acceptance being issued;
(b) the amount, if any, by which the amount required to repay any
Advance which is being converted to a Banker's Acceptance exceeds
the actual proceeds of the Bankers' Acceptance being issued.
shall be funded and paid by the Borrower from its own resources, by 3:00p.m. on
the day of the Advance or may be advanced as a Prime Rate Advance under a Credit
if the Borrower is otherwise entitled to an Advance under the Credit.
6.19 PROHIBITED USE OF BANKERS' ACCEPTANCES AND L/CS
The Borrower shall not enter into any agreement or arrangement of any
kind with any Person to whom Bankers' Acceptances have been delivered whereby
the Borrower undertakes to replace such Banker's Acceptances on a continuing
basis with other Bankers' Acceptances, nor shall the Borrower directly or
indirectly take, use or provide Bankers' Acceptances or L/Cs as security for
loans or advances from any other Person.
6.20 ISSUANCE AND MATURITY OF L/CS
A request for an Advance by way of L/C shall be made by the Borrower
in accordance with Section 6.4. The Agent shall promptly notify the Lenders of
the receipt of the request, but L/Cs shall only be issued by CIBC as fronting
bank for all Lenders. A request shall include the details of the L/C to be
issued. CIBC shall promptly notify the Borrower of any comment concerning the
form of the L/C requested by the Borrower and shall, if the Borrower is
otherwise entitled to an Advance, issue the L/C to the Borrower at the branch
where its account is maintained on the Drawdown Date or as soon thereafter as
CIBC is satisfied with the form of L/C to be issued.
Each L/C issued under this Agreement shall have a term which is not
more than one year after its issuance date or renewal date. An L/C may be
renewed by the Borrower subject to complying with the terms of this Agreement
applicable to an Advance by way of L/C. No L/C shall be issued which would
mature past the term of this Agreement as set out in 2.4 hereof.
6.21 PAYMENT OF L/C FEES
Payment of L/C fees shall be made to the Agent for the account of the
Lenders (other than the fronting fee payable to CIBC under Credit A which shall
be solely for CIBC's account) at the Branch of Account and shall be made at the
time of issuance or renewal of al L/C. L/C fees shall be calculated at the rate
specified in Section 2.6 on the face amount of each L/C for the duration of its
term on the
<PAGE>
36
basis of the actual number of days to elapse from and including the date of
issuance or renewal by CIBC to but not including the expiry date of the L/C. L/C
fees shall be calculated on the basis of a 365 or 366 day year, as the case may
be. The Borrower shall be entitled to a pro rata refund of fees paid in
connection with any L/C that is terminated as a result of payment or otherwise
before its expiry.
6.22 PAYMENT OF L/CS
The Borrower shall provide for the payment to CIBC at the branch where
the L/C was issued (for the account of the Lenders) of the full face amount of
each L/C (or the amount actually paid in the case of a partial payment) on the
earlier of (i) the date on which CIBC makes a payment to the beneficiary of an
L/C, and (ii) the date on which any Obligations become due and payable pursuant
to Section 9.2. The Lenders shall be entitled to recover interest from the
Borrower at a rate of interest per annum equal to the rate applicable to Prime
Rate Advances (in the case of Canadian Dollar L/C's) or Base Rate Advances (in
the case of US Dollar L/C's).
The obligation of the Borrower to reimburse the Lenders for a payment
to a beneficiary of an L/C shall be absolute and unconditional, except for
matters arising from a Lender's wilful misconduct or negligence, and shall not
be reduced by any demand or other request for payment of an L/C (a "Demand")
paid or acted upon in good faith and in conformity with laws, regulations or
customs applicable thereto being invalid, insufficient, fraudulent or forged,
nor shall the Borrower's obligation be subject to any defence or be affected by
any right of set-off, counterclaim or recoupment which the Borrower may now or
hereafter have against the beneficiary, the Lender or any other Person for any
reason whatsoever, including the fact that CIBC paid a Demand or Demands (if
applicable) aggregating up to the amount of the L/C notwithstanding any contrary
instructions from the Borrower to CIBC or the occurrence of any event including,
but not limited to, the commencement of legal proceedings to prohibit payment by
CIBC of a Demand. Any action, inaction or omission taken or suffered by CIBC
under or in connection with an L/C or any Demand, if in good faith and in
conformity with laws, regulations or customs applicable thereto shall be binding
on the Borrower and shall not place any Lender under any resulting liability to
the Borrower. Without limiting the generality of the foregoing, CIBC may
receive, accept, or pay as complying with the terms of the L/C, any Demand
otherwise in order which may be signed by, or issued to, any administrator,
executor, trustee in bankruptcy, receiver or other Person or entity acting as
the representative or in place of, the beneficiary.
If the Borrower provides cash in response to any Obligations becoming
due and payable under Section 9.2, it shall be entitled to receive interest on
the cash provided in accordance with Section 12.15 as long as the cash is held
<PAGE>
37
as Collateral.
6.23 DEEMED ADVANCE - L/CS
Except for amounts which have been funded by the Borrower, any amount
which CIBC pays to any third party in respect of an L/C in satisfaction or
partial satisfaction hereof shall also be deemed to be a Prime Rate Advance in
the case of Canadian Dollar L/Cs or a Base Rate Advance in the case of US Dollar
L/Cs, in each case under Credit A. CIBC shall forthwith give notice of the
making of such an Advance to the Borrower and the Agent (which shall promptly
give similar notice to the other Lenders). Interest shall be payable on such
Advances in accordance with the terms applicable to such Advances.
6.24 PROHIBITED RATES OF INTEREST
Notwithstanding any other provisions of this Agreement or any other
Credit Document, the Borrower shall not be obliged to make any payment of
interest or other amounts payable to the Lenders or the Agent under this
Agreement or under any other Credit Document in an amount or at a rate that
would be prohibited by law or would result in the receipt by the Lenders or the
Agent of interest at a criminal rate, as the terms "interest" and "criminal
rate" are defined under the Criminal Code (Canada), or that would contravene any
local usury laws which may be applicable to any obligations of the Borrower to
the Lenders or the Agent under or in connection with this Agreement. In any
such case, any payment, collection or demand for interest in excess of the
maximum permitted rate shall be deemed to have been made by mutual mistake of
the Borrower, Agent and Lenders, any excess payment shall be refunded to the
Borrower and the amount or rate otherwise payable under the terms of any Credit
Document shall be reduced to the maximum amount or rate payable in accordance
with applicable law. For the purposes of this Agreement, the effective annual
rate of interest shall be determined in accordance with generally accepted
actuarial practices and principles and in the event of any dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the
Agent shall be conclusive for the purpose of such determination.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to advance the
Credits hereunder and to induce CIBC to issue L/C's, the Borrower represents and
warrants to the Lenders that:
(a) it is a duly incorporated and validly existing corporation, and
has the power and authority, and all material Permits required
<PAGE>
38
as of the date hereof, to enter into and perform its obligations
under any Credit Documents to which it is or will be a party, to
own its Property and to carry on the business in which it is
engaged;
(b) the entering into and the performance by it of the Credit
Documents to which it is or will be a party (i) have been duly
authorized by all necessary corporate action on its part, and
(ii) do not and will not violate its Constating Documents, any
Requirement of Law, or any Contract to which it is a party;
(c) its Constating Documents do not restrict the power of its
directors to borrow money or to encumber any or all of its
present and future Property to secure the Obligations, except for
restrictions under any Constating Document which have been
complied with in connection with the Credit Documents and the
Permitted Obligations;
(d) the Credit Documents to which it is or will be a party have been
or will be duly executed and delivered by it and constitute
legal, valid and binding obligations enforceable against it in
accordance with their respective terms, subject to the
availability of equitable remedies and the effect of bankruptcy,
insolvency and similar laws affecting the rights of creditors
generally;
(e) as of the date of execution of this Agreement, there are no
litigation, arbitration or administrative proceedings outstanding
and, to its knowledge after having made reasonable inquiry, there
are no proceedings pending or threatened, against it which, in
either case, could materially and adversely affect its ability to
perform its obligations under the Credit Documents, except as
disclosed on Schedule 7.1(e);
(f) no Event of Default or Pending Event of Default has occurred and
is continuing;
(g) it is not in violation of any term of its Constating Documents,
and to its knowledge after having made reasonable inquiry, is not
in violation of any Requirement of Law or Contract, the violation
of which would materially and adversely affect its ability to own
its Property and conduct its business, nor will its execution,
delivery and performance of any Credit Documents
<PAGE>
39
to which it is a party result in any such violation;
(h) from and after the date on which the relevant Security is
delivered, the Agent on behalf of the Lenders will have legal,
valid and enforceable security upon all of its present and future
Property (as to which it has a good and marketable title as owner
or lessee) subject only to Permitted Encumbrances, the
availability of equitable remedies, and the effect of bankruptcy,
insolvency and similar laws affecting the rights of creditors
generally;
(i) it is not in default under any of the Permitted Encumbrances;
(j) its Property (other than accounts receivable) and its places of
business are located only in the respective places specified on
Schedule 7.1(j), and its accounts receivable are billed from and
payment thereof is customarily received only in the respective
places specified on Schedule 7.1(j);
(k) to its knowledge having made all due inquiry of those employees
or officers or agents who are responsible therefore or who would
ordinarily have knowledge or conduct of such matters, (i) there
are no Hazardous Materials located on, above or below the surface
of any land which it occupies or controls (except those being
stored, used or otherwise handled in substantial compliance with
applicable laws) or contained in the soil or water constituting
such land except those being in substantial compliance with
applicable law, guideline or policy of applicable regulatory
authority and (ii) no reportable release, spill, leak, emission,
discharge, leaching, dumping or disposal of Hazardous Materials
has occurred on or from such land which, as to either (i) or
(ii), would materially and adversely affect its financial
condition, its Property or operations or its ability to perform
its obligations under the Credit Documents to which it is or will
be a party;
(l) except as noted in Schedule 7.1(l), to its knowledge, having made
all due inquiry of those employees or officers or agents who are
responsible therefore or who would ordinarily have knowledge or
conduct of such matters, (i) its business and assets are being
operated in substantial compliance with applicable laws intended
to protect the environment (including, without limitation, laws
respecting the disposal or emission of
<PAGE>
40
Hazardous Materials), (ii) there are no breaches thereof and no
enforcement actions in respect thereof are threatened or pending
which materially and adversely affect its ability to perform its
obligations under the Credit Documents to which it is or will be
a party;
(m) there is no fact that it has not disclosed to the Agent and the
Lenders in writing that materially adversely affects its ability
to perform its obligations under the Credit Documents to which it
is or will be a party. Neither this Agreement nor any other
Credit Document, report, instrument or certificate delivered by
the Borrower or Omega hereunder 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;
(n) it has (i) duly filed on a timely basis all material tax returns,
elections and reports required to be filed by it and has paid,
collected and remitted all material Taxes due and payable,
collectible or remittable by it, and (ii) made adequate provision
for material Taxes payable by it for the current period and any
previous period for which tax returns are not yet required to be
filed and, except as disclosed in writing to the Agent from time
to time, there are no actions, proceedings or claims pending or,
to its knowledge, threatened, against it in respect of material
Taxes (it being agreed that, for purposes of this paragraph, the
amount of a Tax is material if it equals or exceeds Cdn.
$500,000.00 or the equivalent thereof in another currency);
(o) it has (i) withheld from each payment made to any of its past or
present employees, officers or directors, and to any non-resident
of the country in which it is resident, the amount of all
material Taxes and other deductions required to be withheld
therefrom and has paid the same to the proper tax or other
receiving officers within the time required under any applicable
legislation, and (ii) collected and remitted to the appropriate
tax authority when required by law to do so all material amounts
collectible and remittable in respect of goods and services tax
and similar provincial or state Taxes, and has paid all such
material amounts payable by it on account of sales Taxes
including goods and services and value-added taxes (it being
agreed that, for purposes of this paragraph, the
<PAGE>
41
amount of a Tax is material if it equals or exceeds Cdn.
$500,000.00 or the equivalent thereof in another currency);
(p) during the twelve-consecutive-month period before the date of the
execution and delivery of this Agreement and before the date of
any Advance hereunder, (i) no contribution failure has occurred
with respect to any Pension Plan under any applicable pension
benefits laws of any jurisdiction, (ii) no condition exists and
no event or transaction has occurred with respect to any Pension
Plan which might result in the incurrence by the Borrower or any
Subsidiary, or to their knowledge, Omega, of any liability, fine
or penalty in excess of $100,000.00, and (iii) except as
disclosed in the financial statements required to be provided
pursuant to this Agreement or as otherwise disclosed in writing
from time to time to the Agent, the Borrower has no contingent
liability with respect to any post-retirement benefit of any
nature or type;
(q) (i) each Pension Plan of the Borrower or any Subsidiary, or to
their knowledge, Omega, is in compliance in all material respects
with all applicable pension benefits and tax laws, (ii) all
contributions (including employee contributions made by
authorized payroll deductions or other withholdings) required to
be made to the appropriate funding agency in accordance with all
applicable laws and the terms of each Pension Plan have been made
in accordance with all applicable laws and the terms of each
Pension Plan, (iii) all liabilities under each Pension Plan are
fully funded, on a going concern and solvency basis, in
accordance with the terms of the respective Pension Plans, the
requirements of applicable pension benefits laws and of
applicable regulatory authorities and the most recent actuarial
report filed with respect to the Pension Plan, and (iv) no event
has occurred and no conditions exist with respect to any Pension
Plan that has resulted or could reasonably be expected to result
in any Pension Plan having its registration revoked or refused
for the purposes of any applicable pension benefits or tax laws
or being placed under the administration of any relevant pension
benefits regulatory authority or being required to pay any taxes
or penalties under any applicable pension benefits or tax laws,
except for any exceptions to clauses (ii) through (iv) above
that, individually or in the aggregate, could not reasonably be
expected to have
<PAGE>
42
a material adverse effect on the Borrower;
(r) the Borrower owns, has the right to use, or otherwise has the
rights to, its 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 Schedule 7.1(r). 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 Schedule 7.1(r), to
the best of the Borrower's 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 Schedule 7.1(r), to the best of the Borrower's
knowledge, the use of such Intellectual Property by Holdings and
the Borrower 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 the Borrower
in an infringement action) is not reasonably expected to have a
material adverse effect upon the financial condition, business,
operations or prospects of the Borrower;
(s) Schedule 7.1(s) 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 shares in the capital
stock of each such Subsidiary owned beneficially or of record by
the Borrower or any Subsidiary therein, and the jurisdiction of
incorporation of each Subsidiary;
(t) as of the Closing Date, the 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 the Borrower owns
property the fair saleable value of which is greater than the
amount required to pay the 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 the Borrower;
(u) except as disclosed on Schedule 7.1(u), as of the Closing Date,
the Borrower has not assumed corporate names or
<PAGE>
43
business names and the Borrower is not doing business under any
corporate or business name other than 3578275 Canada Inc.;
(v) Schedule 7.1(v) 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, all of which
shall provide that the Agent be named as first loss payee and,
where applicable, as an additional named insured. 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;
(w) The Borrower owns no property outside of Canada, save and except
for accounts receivable and the property described in Schedule
7.1.(j) and except as noted on Schedule 7.1(w); and,
(x) all representations and warranties made by Omega and other
"Borrowers" (as that term is defined in the Omega Credit
Agreement) to the U.S. Banks are true and correct at all material
times;
(y) Borrower and its Subsidiaries have reviewed and assessed their
respective business operations and Systems and applications to
address the "Year 2000 Problem" (that is whether or not the
computer applications, equipment and systems used by Borrower and
Subsidiaries and directly or indirectly through third parties may
be unable to properly perform date sensitive functions before,
during and after January 1, 2000). Based on that review and
assessment, the Borrower and its Subsidiaries reasonably believe
that the Year 2000 problem will not result in a material adverse
effect on the Borrower and Omega taken as a whole.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Unless expressly stated to be made as of a specific date, the
representations and warranties in this Agreement shall survive the execution of
this Agreement and all other Credit Documents, and shall be deemed to be
repeated as of the date of each Advance (including any deemed Advance) and as of
the date of delivery of each Compliance Certificate, subject to modifications
made by the
<PAGE>
44
Borrower to the Lenders in writing and accepted by the Lenders. The Lenders
shall be deemed to have relied upon such representations and warranties at each
such time as a condition of making an Advance hereunder or continuing to extend
the Credits hereunder.
ARTICLE VIII
COVENANTS AND CONDITIONS
8.1 INTERCOMPANY OBLIGATIONS
8.1.1 The Borrower acknowledges that, under the terms of the Security
given, all Intercompany Obligations owing to it are or may be assigned as
security for the benefit of the Lenders to the Agent. The assignment as
security shall not prevent the Borrower from receiving payment of Intercompany
Obligations unless an Event of Default or Pending Event of Default has occurred
and is continuing.
8.1.2 Intercompany Obligations owed to the Borrower assigned to the Agent
under the Security shall be paid free of any set-off, counterclaim or defence.
8.2 AFFIRMATIVE COVENANTS
Until any obligation of the Lender hereunder to make Credit A and
Credit B available and of the Agent to issue L/C's shall have expired or been
terminated 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 L/C's shall have expired or the liability of the Agent thereon
shall have otherwise been discharged, unless the Majority Global Lenders shall
otherwise consent in writing, the Borrower shall:
(a) duly and punctually pay the Obligations at the times and places
and in the manner required by the terms thereof;
(b) operate its businesses in accordance with sound business practice
and in compliance in all material respects with all applicable
Requirements of Law;
(c) permit any Person designated by the Agent at the request of any
Lender, to visit and inspect any of the properties, corporate
books and financial records of the Borrower and its Subsidiaries,
to examine and to make copies of the books of accounts and other
financial records of the Borrower, and each Subsidiary of
Borrower, and to discuss the affairs, finances
<PAGE>
45
and accounts of the Borrower and each Subsidiary of Borrower
with, and to be advised as to the same by, the officers of the
Borrower and each Subsidiary of Borrower at such reasonable times
and intervals as the Agent or Lenders may designate. The first
visit, inspection or examination by the Agent during each
calendar year shall be at the Borrower's expense. Except as
provided in the previous sentence, so long as no Event of Default
exists, the expenses of the Agent or the Lenders for such visits,
inspections and examinations shall be at the expense of the Agent
and the Lenders, but any such visits, inspections and
examinations made while any Event of Default is continuing shall
be at the expense of the Borrower;
(d) Borrower shall maintain, and shall cause each Subsidiary of
Borrower 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 and to cause policies of insurance
referred to above to contain a standard mortgage clause and other
customary endorsements for the benefit of lenders, all in a form
acceptable to the Lenders acting reasonably;
(e) whenever reasonably requested in writing by the Agent cause
certified copies of the policies of insurance carried pursuant to
this Section to be delivered to the Agent;
(f) obtain, as and when required, all permits and licenses to permit
it to acquire, own, operate and maintain its business and
Property and perform its obligations under the Credit Documents
to which it is or will be a party, the failure of which to comply
could reasonably be expected to have a material adverse effect,
and preserve and maintain those permits and licenses and all such
permits and licenses now held by it in good standing, except
where the failure to preserve and maintain such permits and
licenses could not reasonably be expected to have a material,
adverse effect.;
(g) pay all Taxes as they become due and payable unless they are
being contested in good faith by appropriate proceedings;
<PAGE>
46
(h) immediately notify the Lenders of any Event of Default or Pending
Event of Default, or of any material default by Borrower or any
Subsidiary of Borrower under any contract, permit, license, or
contract or of any event which, with or without the giving of
notice, lapse of time or any other condition subsequent, would be
expected to have a material adverse effect on the financial
condition, business operations or prospects of the Borrower and
Omega, taken as a whole;
(i) promptly notify the Agent on becoming aware of the occurrence of
any litigation, dispute, arbitration, proceeding or other
circumstance affecting it, the result of which if determined
adversely would have a material and adverse effect on its ability
to perform its obligations under this Agreement, or the Credit
Documents to which it is or will be a party and from time to time
provide the Lenders with all reasonable information requested by
any of the Lenders concerning the status thereof;
(j) promptly notify the Agent upon (i) learning of the existence of
Hazardous Materials located on, above or below the surface of any
land which it occupies or controls (except those being stored,
used or otherwise handled in substantial compliance with
applicable Requirements of Law), or contained in the soil or
water constituting such land ( except those being in substantial
compliance with the Requirements of Law) and (ii) the occurrence
of any reportable release, spill, leak, emission, discharge,
leaching, dumping or disposal of Hazardous Materials that has
occurred on or from such land which, as to either (i) or (ii),
would materially and adversely affect its ability to perform its
obligations under the Credit Documents to which it is or will be
a party;
(k) withhold from each payment made to any of its past or present
employees, officers or directors, and to any non-resident of the
country in which it is resident, the amount of all Taxes and
other deductions required to be withheld therefrom and pay the
same to the proper tax or other receiving officers within the
time required under any applicable Requirement of Law;
(l) collect from all Persons the amount of all Taxes required to be
collected from them and remit the same to the proper tax or other
receiving officers within the time required under any
<PAGE>
47
applicable Requirement of Law;
(m) provide such evidence of on-going compliance with Requirements of
Law relating to Hazardous Materials as the Agent or any Lender
may reasonably require from time to time including, without
limitation, if so requested by the Agent or any Lender, acting
reasonably upon reasonable cause, having conducted one or more
environmental site assessment and/or compliance audits (each
consisting of a non-intrusive phase I environmental assessment
and recommendations with respect to the findings described
therein and such other audits or investigations recommended in
each such phase I environmental assessment, including, without
limitation, an intrusive phase II environmental assessment) and
reports thereon by an independent consultant engaged by the
Borrower and acceptable to the Agent or any Lender, acting
reasonably;
(n) provide notice to the Agent and copies of all relevant
documentation promptly upon becoming aware of (i) the institution
of any steps by the Borrower or any applicable regulatory
authority to terminate any Pension Plan (wholly or in part) which
could result in the Borrower being required to make an additional
contribution to the Pension Plan in excess of $500,000.00, (ii)
the failure to make a required contribution to any Pension Plan
if such failure is sufficient to give rise to a lien or charge
under any applicable pension benefits laws of any jurisdiction,
(iii) the taking of any action with respect to a Pension Plan
which could reasonably be expected to result in the requirement
that the Borrower furnish a bond or other security to such
Pension Plan or any applicable regulatory authority in excess of
$500,000.00, or (iv) the occurrence of any event with respect to
any Pension Plan which could reasonably be expected to result in
the incurrence by the Borrower of any material liability, fine or
penalty, or any increase in the contingent liability of the
Borrower in excess of $500,000.00 with respect to any post-
retirement benefit;
(o) promptly upon request by the Agent or any Lender, the Borrower
shall promptly correct, and cause its Subsidiaries to correct,
any defect or error that may be discovered in any Credit Document
to which it or they are a party or in the execution,
acknowledgment or recordation thereof. Promptly
<PAGE>
48
upon request by the Agent or any Lender, the 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, estoppel
certificates, financing statements and continuations thereof,
notices of assignment, transfers, certificates, assurances and
other instruments, as the Agent or any Lender 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 Credit Documents to which
it is a party including, without limitation, the delivery of a
landlord waiver from any landlord required by the Agent or any
Lender; and (b) to assure, convey, grant, assign, transfer,
preserve, protect and confirm unto the Lender the rights granted
now or hereafter intended to be granted to the Lender under any
Credit Document or under any other instrument executed in
connection with any Credit Document or that the any Borrower may
be or become bound to convey, mortgage or assign to the Agent for
the benefit of the Lenders in order to carry out the intention or
facilitate the performance of the provisions of any Credit
Document. The Borrower shall furnish to the Lender evidence
satisfactory to the Agent or Lender of every such recording,
filing or registration.
8.3 REPORTING REQUIREMENTS
In this Section "Borrowers", "Kitchen Craft", "Loan Documents",
"Fiscal Year End", "High Yield Subordinated Permanent Loan Documents", ,
"Holdings", "Default" and "Event of Default" have the meanings as defined in the
Omega Credit Agreement, but all other capitalized terms shall otherwise have the
meanings ascribed to them in this Agreement.
During the term of this Agreement and for so long as any Obligations
remain unpaid, the Borrower shall furnish to the Lenders
(a) each of the financial statements and other documents required by
Section 5.1 of the Omega Credit Agreement to be furnished to the
U.S. Banks contemperaneously with the furnishings of such
statements and other documents to the U.S. Banks.
(b) Promptly upon the transmission or receipt thereof by Borrowers or
Holdings, copies of all notices, certificates and
<PAGE>
49
reports sent by or to any of the Borrowers, Holdings or Kitchen
Craft under any of the High Yield Subordinated Permanent Loan
Documents, 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.
8.4 NEGATIVE COVENANTS
8.4.1 Until any obligation of the Lender hereunder to make Credit A and
Credit B available and of the Agent to issue L/C's shall have expired or been
terminated 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 L/C's shall have expired or the liability of the Agent thereon
shall have otherwise been discharged, unless the Majority Global Lenders shall
otherwise consent in writing:
(a) except for the Amalgamation, the Borrower will not amalgamate,
merge or consolidate or enter into any analogous reorganization
or transaction with any Person or liquidate, windup or dissolve
itself (or suffer any liquidation or dissolution);
(b) the Borrower will not create, incur or assume or suffer to exist
or cause or permit any Encumbrance upon or in respect of any of
its Property, except for Permitted Encumbrances; or
(c) the Borrower will not do or permit anything to adversely affect
the ranking or validity of the Security except by incurring a
Permitted Encumbrance.
8.4.2 During the term of this Agreement, the Borrower shall not, without the
prior written consent of the Majority Global Lenders, which shall not be
unreasonably withheld:
(a) create, incur, assume or permit any debts or liabilities of any
kind to remain outstanding, other than Permitted Obligations;
(b) prepay, redeem, defease, repurchase or make other payments in
respect of any of its Indebtedness for borrowed money, other
than:
(i) the Obligations;
<PAGE>
50
(ii) the purchase money and other obligations contemplated in
item (k) of the definition of "Permitted Encumbrances;"
(iii) Intercompany Loan Obligations, provided that the proceeds
of principal payments of the Kitchen Craft Note (as defined
in the Omega Credit Agreement) are used to prepay
obligations of the Borrowers under the Omega Credit
Agreement;
(c) effect any material change in its business, being the
manufacturing, distribution and sale of kitchen, bath and home
cabinetry and related products, and other activities incidental
thereto;
(d) make loans to any other Person, guarantee, endorse or otherwise
become liable for any debts, liabilities or obligations of any
other Person, or give other financial assistance of any kind to
any other Person, except for:
(i) the guarantees given as part of the Security;
(ii) loans and advances resulting in Intercompany Loan
Obligations;
(e) change its name without providing the Lenders with prior written
notice thereof and promptly taking other steps, if any, as the
Lenders reasonably request to permit the Agent to perfect the
Security with respect to the change in name;
(f) permit its chief executive office to be located out of the
respective jurisdictions specified on Schedule 8.4.2(g) without
providing the Agent with prior written notice thereof and
promptly taking other steps, if any, as the Lenders reasonably
request to permit the Agent to perfect the Security with respect
to the change in location;
8.5 USE OF INSURANCE PROCEEDS
8.5.l Unless otherwise specified in this Section, all proceeds of insurance
required to be maintained by the Borrower under the terms of this Agreement
shall be paid to the Agent to be applied by it on account of the Obligations.
8.5.2 Proceeds of liability insurance shall be paid to the Person to whom
the
<PAGE>
51
Borrower is liable. Proceeds of insurance covering loss of or damage to property
in an amount of less than $100,000.00 per claim may be paid by the insurer
directly to the Borrower unless, if an Event of Default or Pending Event of
Default has occurred and is continuing, the Agent requires that payment be made
to the Agent to be applied by it on account of the Obligations.
8.5.3 Proceeds of insurance covering loss of or damage to property in an
amount of $100,000.00 per claim or more shall be paid to the Agent provided that
so long as no Event of Default exists, the Borrower shall be entitled to all
insurance proceeds with respect to its property, provided further that any
proceeds received in excess of the said $100,000.00 threshold in respect of
equipment, inventory, buildings, structures and fixtures, shall be applied to
the cost of replacement of such equipment, inventory, buildings, structures and
fixtures and the Lenders are satisfied, acting reasonably, that such proceeds of
insurance, together with other resources available to the Borrower are
sufficient to fully repair or replace the equipment, inventory, buildings,
structures and fixtures in respect of which the insurance proceeds are payable
within the remaining term of the then outstanding credits or within 365 days,
whichever is less.
8.5.4 The proceeds of business interruption insurance shall be paid to the
Agent to be applied by it on account of the Obligations and any other
obligations secured by the Security (payment of which is permitted in accordance
with this Agreement) as the same fall due from time to time (including as a
result of any demand for payment of the Obligations) and, to the extent of any
surplus, shall be used to repay Credit A without prejudice to the Borrower's
rights to further Advances under Credit A.
8.5.5 All insurance proceeds held by the Agent shall, unless and until the
same are applied to payment of the Obligations or released to the Borrower, be
held as part of the Security. The Agent shall place all such funds in an
interest-bearing account with the interest thereon to accrue to the benefit of
the Borrower.
8.6 EXPENSES
Whether or not the transactions contemplated hereby are consummated,
the Borrower shall to reimburse the Agent upon demand for all reasonable out-of-
pocket expenses paid or incurred by the Agent (including filing and recording
costs and reasonable fees and expenses of Taylor McCaffrey, 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 Credit Documents and any commitment letters or
term sheets relating thereto. The Borrower shall also reimburse the Agent and
each Lender upon demand for all reasonable out-of-
<PAGE>
52
pocket expenses (including reasonable expenses of legal counsel) paid or
incurred by the Agent or any Lender in connection with the collection under and
enforcement of this Agreement and any other Credit Document. The obligations of
the Borrower under this Section shall survive any termination of this Agreement.
8.7 OWNERSHIP OF THE BORROWER
During the term of this Agreement, there shall not, without the prior written
consent of the Majority Global Lenders (which shall not be unreasonably
withheld), be any change in the ownership or control of the Borrower from that
described in Schedule 8.7.
ARTICLE IX
DEFAULT
9.1 EVENTS OF DEFAULT
Each of the following events shall constitute an Event of Default
under this Agreement:
(a) the Borrower fails to pay any amount of principal or interest
(including any amount relating to a Bankers' Acceptance or L/C)
within three days of when due or, to pay fees or other
Obligations (apart from principal and interest) within five days
of when due; or
(b) any representation or warranty made by the Borrower (other than
representations or warranties made to the knowledge of the
Borrower) under any of the Credit Documents which is incorrect or
incomplete in any material respect when made or deemed to be
made, it being agreed that an incorrect representation that there
is no Pending Event of Default shall not result in the Borrower
being disentitled to any cure period otherwise associated with
the Pending Event of Default; or
(c) the Borrower ceases or threatens to cease to carry on its
business, or admits its inability or fails to pay its debts
generally; or
(d) the Borrower permits any default under one or more agreements or
instruments relating to its Indebtedness other than the
Obligations or permits any other event to occur and to continue
after any applicable grace period specified in such agreements or
instruments, if the effect of one or more of such
<PAGE>
53
events is to accelerate, or to permit (in accordance with any
applicable inter-creditor and subordination arrangements) the
acceleration of, the date on which such Indebtedness becomes due
(whether or not acceleration actually occurs); or
(e) the Borrower is adjudged a bankrupt (voluntarily or
involuntarily); or becomes subject to any proceeding seeking
liquidation, arrangement, relief of creditors or the appointment
of a receiver or trustee over, or any judgment or order which has
or would have a material and adverse effect on, any material part
of its Property, and such proceeding, if instituted against the
Borrower, or such judgment or order, is not contested diligently,
in good faith and on a timely basis and dismissed or stayed
within 60 days of its commencement or issuance; or
(f) the Borrower denies, to any material extent, its obligations
under the Credit Documents or claims any of the Credit Documents
to be invalid or withdrawn in whole or in part; or any of the
Credit Documents is invalidated by any act, regulation or
governmental action or is determined to be invalid by a court or
other judicial entity and such determination has not been stayed
pending appeal; or
(g) a final judgment, writ of execution, garnishment or attachment or
similar process is issued or levied for the payment of moneys in
excess of $150,000.00 against any of the Property of the Borrower
and such judgment, writ, execution, garnishment, attachment or
similar process is not released, bonded, satisfied, discharged,
vacated or stayed within 60 days after its entry, commencement or
levy, to the satisfaction of the Agent; or
(h) an Encumbrancer takes possession of all or a substantial portion
of the Property of the Borrower by appointment of a receiver,
receiver and manager, or otherwise; or
(i) there is a breach of any other covenant, term, condition,
representation, warranty or provision of any of the Credit
Documents and such breach is not corrected or otherwise satisfied
within 30 days after the Agent, for and on behalf of the Lenders,
gives written notice thereof; or
<PAGE>
54
(j) Omega ceases to control the Borrower; or
(k) any Event of Default (as that term is defined in the Omega Credit
Agreement) occurs on the part of Omega or any of its Subsidiaries
pursuant to the provisions of the Omega Credit Agreement, unless
such Event of Default shall also be waived in writing by the
Majority Global Lenders; or
(l) there occurs any failure on the part of Omega to ensure that:
(i) any mandatory or optional prepayment of Loans under sections
2.6 and 2.7 of the Omega Credit Agreement is made in
accordance therewith, such that in the aggregate such
prepayment will reduce the Commitments of the U.S. Banks and
the Lenders based upon their Allocable Shares; or
(ii) any reduction of Revolving Commitments pursuant to section
2.16 of the Omega Credit Agreement is made ratably between
the Lenders and the U.S. Banks as required by this Agreement
and the Omega Credit Agreement; or
(m) there is any change, modification or amendment to the Omega
Credit Agreement without the prior consent of the Majority Global
Lenders.
9.2 ACCELERATION AND TERMINATION OF RIGHTS
During the continuance of an Event of Default, no Lender shall be
under any further obligation to make Advances or to accept orders as Bankers'
Acceptance and the Majority Global Lenders may instruct the Agent to give notice
to the Borrower (i) declaring the Lenders' obligations to make Advances to be
terminated, whereupon the same shall forthwith terminate, (ii) declaring the
Obligations or any of them to be forthwith due and payable, whereupon they shall
become and be forthwith due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, and/or (iii) demanding that the Borrower deposit forthwith with the
Agent for the Lenders' benefit Collateral equal to the full principal amount at
maturity of all Bankers' Acceptances and L/Cs then outstanding for its account.
Notwithstanding the preceding paragraph, if there is an Event of
Default under 9.1(e) hereof, then without prejudice to the other rights of the
Lenders as a result of any such event, without any notice or action of any kind
by the Agent
<PAGE>
55
or the Lenders, and without presentment, demand or protest, the Lenders'
obligation to make Advances shall immediately terminate, the Obligations shall
immediately become due and payable and the Borrower shall be obligated to
deposit forthwith with the Agent for the Lenders' benefit Collateral equal to
the full principal amount at maturity of all Bankers' Acceptances and L/Cs then
outstanding for its account.
9.3 PAYMENT OF BANKERS' ACCEPTANCES AND L/CS
Immediately upon any Obligations becoming due and payable under
Section 9.2, the Borrower shall, without necessity of further act or evidence,
be and become thereby unconditionally obligated to deposit forthwith with the
Agent for the Lenders' benefit Collateral equal to the full principal amount at
maturity of all Bankers' Acceptances and L/Cs then outstanding for its account
and the Borrower hereby unconditionally promises and agrees to deposit with the
Agent immediately upon such demand Collateral in the amount so demanded. The
Borrower authorizes the Lenders, or any of them, to debit its accounts with the
amount required to pay such L/Cs, and to pay such Bankers' Acceptances,
notwithstanding that such Bankers' Acceptances may be held by the Lenders, or
any of them, in their own right at maturity. Amounts paid to the Agent pursuant
to such a demand in respect of Bankers' Acceptances and L/Cs shall be applied
against, and shall reduce, pro rata among the Lenders, to the extent of the
amounts paid to the Agent in respect of Bankers' Acceptances and L/Cs,
respectively, the obligations of the Borrower to pay amounts then or thereafter
payable under Bankers' Acceptances and L/Cs, respectively, at the times amounts
become payable thereunder.
9.4 REMEDIES
Upon the occurrence of any event by which any of the Obligations
become due and payable under Section 9.2, the Security shall become immediately
enforceable and the Majority Global Lenders may instruct the Agent to take such
action or proceedings on behalf of the Lenders as the Majority Global Lenders in
their sole discretion deem expedient to enforce the same, all without any
additional notice, presentment, demand, protest or other formality, all of which
are hereby expressly waived by the Borrower except as may be prohibited by law.
9.5 SAVING
The Lenders shall not be under any obligation to the Borrower or any
other Person to realize any collateral or enforce the Security or any part
thereof or to allow any of the collateral to be sold, dealt with or otherwise
disposed of. The Lenders shall not be responsible or liable to the Borrower or
any other Person for any loss or damage upon the realization or enforcement of,
the failure to realize or enforce the collateral or any part thereof or the
failure to allow any of the collateral to be sold, dealt with or otherwise
disposed of or for any act or omission on their
<PAGE>
56
respective parts or on the part of any director, officer, agent, servant or
advisor in connection with any of the foregoing, except that a Lender may be
responsible or liable for any loss or damage arising from the wilful misconduct
or negligence of that Lender.
9.6 PERFORM OBLIGATIONS
If an Event of Default has occurred and is continuing and if the
Borrower has failed to perform any of its covenants or agreements in the Credit
Documents, the Majority Global Lenders, may, but shall be under no obligation
to, instruct the Agent on behalf of the Lenders to perform any such covenants or
agreements in any manner deemed fit by the Majority Global Lenders without
thereby waiving any rights to enforce the Credit Documents. The reasonable
expenses (including any legal costs) paid by the Agent and/or the Lenders in
respect of the foregoing shall be secured by the Security.
9.7 THIRD PARTIES
No Person dealing with the Lenders or any agent of the Lenders shall be
concerned to inquire whether the Security has become enforceable, or whether the
powers which the Lenders are purporting to exercise have become exercisable, or
whether any Obligations remain outstanding upon the security thereof, or as to
the necessity or expediency of the stipulations and conditions subject to which
any sale shall be made, or otherwise as to the propriety or regularity of any
sale or other disposition or any other dealing with the collateral charged by
such Security or any part thereof.
9.8 POWER OF ATTORNEY
Effective upon occurrence of an Event of Default, the Borrower hereby
irrevocably constitutes and appoints any Vice-President or more senior officer
of the Agent as its due and lawful attorney with full power of substitution in
its name and on its behalf, during the continuance of an Event of Default, to
enforce any right, title or interest of the Lenders in, to or under the Security
or any part thereof or any obligation to the Borrower or remedy available to the
Borrower. This appointment is irrevocable to the maximum extent permitted by
applicable law.
9.9 REMEDIES CUMULATIVE
The rights and remedies of the Lenders under the Credit Documents are
cumulative and are in addition to and not in substitution for any rights or
remedies provided by law. Any single or partial exercise by the Lenders of any
right or remedy for a default or breach of any term, covenant, condition or
agreement herein contained shall not be deemed to be a waiver of or to alter,
affect, or prejudice any other right or remedy or other rights or remedies to
which the Lenders may be lawfully entitled for the same default or breach. Any
waiver by the Lenders
<PAGE>
57
of the strict observance, performance or compliance with any term, covenant,
condition or agreement herein contained, and any indulgence granted by the
Lenders shall be deemed not to be a waiver of any subsequent default.
9.10 SET-OFF OR COMPENSATION
In addition to and not in limitation of any rights now or hereafter granted
under applicable law, if the Obligations become due and payable pursuant to
Section 9.2, the Lenders, or any of them, may at any time and from time to time
without notice to the Borrower or any other Person, any notice being expressly
waived by the Borrower, set-off and compensate and apply any and all deposits,
general or special, time or demand, provisional or final, matured or unmatured,
and any other indebtedness at any time owing by the Lenders, or any of them, to
or for the credit of or the account of the Borrower against and on account of
the Obligations notwithstanding that any of them are contingent or unmatured.
ARTICLE X
THE AGENT AND THE LENDERS
10.1 AUTHORIZATION OF AGENT AND RELATIONSHIP
Each Lender hereby appoints CIBC as Agent and CIBC hereby accepts such
appointment. The appointment may only be terminated as expressly provided in
this Agreement. Each Lender hereby authorizes the Agent to take all action on
its behalf and to exercise such powers and perform such duties under this
Agreement as are expressly delegated to the Agent by its terms, together with
all powers reasonably incidental thereto. The Agent shall have only those
duties and responsibilities which are of a solely mechanical and administrative
nature and which are expressly specified in this Agreement, and it may perform
such duties by or through its agents or employees, but shall not by reason of
this Agreement have a fiduciary duty in respect of any Lender. As to any
matters not expressly provided for by this Agreement, the Agent is not required
to exercise any discretion or to take any action, but is required to act or to
refrain from acting (and is fully protected in so acting or refraining from
acting) upon the instructions of the Lenders or the Majority Global Lenders, as
the case may be. Those instructions shall be binding upon all Lenders, but the
Agent is not required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law.
Without limiting the foregoing, each of the Lenders hereby grants to
the Agent a power of attorney, for the purposes of laws applicable to the
Security from time to time, to sign documents comprising the Security from time
to time (as the party accepting the grant of the security), and also grants to
the Agent the right to delegate its authority as attorney to any other Person,
whether or not an officer or employee of the Agent.
<PAGE>
58
10.2 DISCLAIMER OF AGENT
The Agent makes no representation or warranty, and assumes no
responsibility with respect to the due execution, legality, validity,
sufficiency, enforceability or collectability of this Agreement or any other
Credit Document. The Agent assumes no responsibility for the financial
condition of the Borrower or Guarantors, or for the performance of the
obligations of the Borrower or Guarantors under this Agreement or any other
Credit Document. The Agent assumes no responsibility with respect to the
accuracy, authenticity, legality, validity, sufficiency or enforceability of any
documents, papers, materials or other information furnished by the Borrower or
Guarantors to the Agent on behalf of the Lenders. The Agent shall not be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
as to the use of the proceeds of the Credits or (unless the officers or
employees of the Lender acting as Agent active in their capacity as officers or
employees on the Borrower's accounts have actual knowledge thereof, or have been
notified thereof in writing by the Borrower or a Lender) of the existence or
possible existence of any Event of Default or Pending Event of Default. Neither
the Agent nor any of its directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them as Agent under
or in connection with the Agreement except for its or their own negligence or
wilful misconduct. With respect to its own Commitment, the Lender acting as
Agent shall have the same rights and powers hereunder as any other Lender, and
may exercise the same as though it were not performing the duties and functions
delegated to it as Agent hereunder.
10.3 FAILURE OF LENDER TO FUND
10.3.1 Unless the Agent has actual knowledge that a Lender has not made or
will not make available to the Agent for value on a Drawdown Date the applicable
amount required from such Lender pursuant to Article VI, the Agent shall be
entitled to assume that such amount has been or will be received from such
Lender when so due and the Agent may (but shall not be obliged to), in reliance
upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not in fact received by the Agent from such Lender on such
Drawdown Date and the Agent has made available a corresponding amount to the
Borrower on such Drawdown Date as aforesaid, such Lender shall pay to the Agent
on demand an amount equal to the product of (i) the Interbank Reference Rate per
annum multiplied by (ii) the amount that should have been paid to the Agent by
such Lender on such Drawdown Date and was not, multiplied by (iii) a fraction,
the numerator of which is the number of days that have elapsed from and
including such Drawdown Date to but excluding the date on which the amount is
received by the Agent from such Lender and the denominator of which is 365. A
certificate of the Agent containing details of the amount owing by a Lender
under this Section
<PAGE>
59
shall be binding and conclusive in the absence of manifest error. If any such
amount is not in fact received by the Agent from such Lender on such Drawdown
Date, the Agent shall be entitled to recover from the Borrower, on demand, the
related amount made available by the Agent to the Borrower as aforesaid together
with interest thereon at the applicable rate per annum payable by the Borrower
hereunder.
10.3.2 Notwithstanding the provisions of Section 10.3.1, if any Lender
wrongfully fails to make available to the Agent its Proportionate Share of any
Advance (such Lender being herein called the "Defaulting Lender"), the Agent
shall forthwith give notice of such failure by the Defaulting Lender to the
Borrower and the other Lenders. The Agent shall then forthwith give notice to
the other Lenders that any Lender may make available to the Agent all or any
portion of the Defaulting Lender's Proportionate Share of such Advance (but in
no way shall any other Lender or the Agent be obliged to do so) in the place of
the Defaulting Lender. If more than one Lender gives notice that it is prepared
to make funds available in the place of a Defaulting Lender in such
circumstances and the aggregate of the funds which such Lenders (herein
collectively called the "Contributing Lenders" and individually called the
"Contributing Lender") are prepared to make available exceeds the amount of the
Advance which the Defaulting Lender failed to make, then each Contributing
Lender shall be deemed to have given notice that it is prepared to make
available its Proportionate Share of such Advance based on the Contributing
Lenders' relative commitments to advance in such circumstances. If any
Contributing Lender makes funds available in the place of a Defaulting Lender in
such circumstances, then the Defaulting Lender shall pay to any Contributing
Lender making the funds available in its place, forthwith on demand, any amount
advanced on its behalf together with interest thereon at the rate applicable to
such Advance from the date of advance to the date of payment, against payment by
the Contributing Lender making the funds available of all interest received in
respect of the Advance from the Borrower. The failure of any Lender to make
available to the Agent its Proportionate Share of any Advance as required herein
shall not relieve any other Lender of its obligations to make available to the
Agent its Proportionate Share of any Advance as required herein.
10.4 PAYMENTS BY THE BORROWER
All payments made by or on behalf of the Borrower pursuant to this
Agreement shall be made to and received by the Agent and shall be distributed by
the Agent to the Lenders as soon as possible upon receipt by the Agent. Except
as required to make payments as otherwise provided in this Agreement (including
without limitation Sections 6.1 and 10.5), the Agent shall distribute:
(a) payments of interest in accordance with each Lender's
<PAGE>
60
Proportionate Share of the relevant Credit;
(b) repayments of principal in accordance with each Lender's
Proportionate Share of the relevant Credit; or
(c) all other payments received by the Agent including, without
limitation, amounts received upon the realization of Security, in
accordance with each Lender's Proportionate Share of the relevant
Credit provided, however, that with respect to proceeds of
realization, no Lender shall receive an amount in excess of the
amounts owing to it in respect of the Obligations.
If the Agent does not distribute a Lender's share of a payment made by the
Borrower to that Lender for value on the later of the day that payment is made
or the day it is deemed to have been made to the Agent, the Agent shall pay to
the Lender on demand an amount equal to the product of (i) the Interbank
Reference Rate per annum multiplied by (ii) the Lender's share of the amount
received by the Agent from the Borrower and not so distributed, multiplied by
(iii) a fraction, the numerator of which is the number of days that have elapsed
from and including the date of receipt of the payment by the Agent to but
excluding the date on which the payment is made by the Agent to such Lender and
the denominator of which is 365.
10.5 PAYMENTS BY AGENT
10.5.1 For greater certainty, the following provisions shall apply to any and
all payments made by the Agent to the Lenders hereunder:
(a) the Agent shall be under no obligation to make any payment
(whether in respect of principal, interest, fees or otherwise) to
any Lender until an amount in respect of such payment has been
received by the Agent from the Borrower;
(b) if the Agent receives less than the full amount of any payment of
principal, interest, fees or other amount owing by the Borrower
under this Agreement, the Agent shall have no obligation to remit
to each Lender any amount other than such Lender's Proportionate
Share of that amount which is the amount actually received by the
Agent;
(c) if any Lender advances more or less than its Proportionate Share
of a Credit, such Lender's entitlement to such payment shall be
increased or reduced, as the case may be, in proportion to the
amount actually advanced by such Lender;
<PAGE>
61
(d) if a Lender's Proportionate Share of an Advance has been
advanced, or a Lender's Commitment has been outstanding, for less
than the full period to which any payment (other than a payment
of principal) by the Borrower relates, such Lender's entitlement
to such payment shall be reduced in proportion to the length of
time such Lender's Proportionate Share of the relevant Credit or
such Lender's Commitment, as the case may be, has actually been
outstanding;
(e) the Agent acting reasonably and in good faith shall, after
consultation with the Lenders in the case of any dispute,
determine in all cases the amount of all payments to which each
Lender is entitled and such determination shall, in the absence
of manifest error, be binding and conclusive; and
(f) upon request, the Agent shall deliver a statement detailing any
of the payments to the Lenders referred to herein.
10.5.2 Unless the Agent has actual knowledge that the Borrower has not made
or will not make a payment to the Agent for value on the date in respect of
which the Borrower has notified the Agent that the payment will be made, the
Agent shall be entitled to assume that such payment has been or will be received
from the Borrower when due and the Agent may (but shall not be obliged to), in
reliance upon such assumption, pay the Lenders corresponding amounts. If the
payment by the Borrower is in fact not received by the Agent on the required
date and the Agent has made available corresponding amounts to the Lenders, the
Borrower shall, without limiting its other obligations under this Agreement,
indemnify the Agent against any and all liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on or incurred by the Agent as a result, except
for those arising from the Agent's negligence or willful misconduct. A
certificate of the Agent with respect to any amount owing by the Borrower under
this Section shall be prima facie evidence of the amount owing in the absence of
manifest error. If the payment is not received by the Agent from the Borrower
within a reasonable time following the disbursement to the Lenders by the Agent,
the Lenders shall return the amounts received by them to the Agent with interest
at the Interbank Reference Rate.
10.6 DIRECT PAYMENTS
The Lenders agree among themselves that, except as otherwise provided
for in this Agreement (including but not limited to Sections 12.13 and 12.14),
except as necessary to adjust for Advances that are not in each Lender's
Proportionate Share under the Credits, all sums received by a Lender relating to
this
<PAGE>
62
Agreement or by virtue of the Security, whether received by voluntary
payment, by the exercise of the right of set-off or compensation or by
counterclaim, cross-action or as proceeds of realization of any Security or
otherwise, shall be shared by each Lender in its Proportionate Share under the
Credits and each Lender undertakes to do all such things as may be reasonably
required to give full effect to this Section, including without limitation, the
purchase from other Lenders of such notes or a portion thereof by the Lender who
has received an amount in excess of its Proportionate Share under the Credits as
shall be necessary to cause such purchasing Lender to share the excess amount
ratably in its Proportionate Share under the Credits with the other Lenders. If
any sum which is so shared is later recovered from the Lenders who originally
received it, the Lender shall restore its Proportionate Share under the Credits
of such sum to such Lenders, without interest. If any Lender shall obtain any
payment of moneys due under this Agreement as referred to above, it shall
forthwith remit such payment to the Agent and, upon receipt, the Agent shall
distribute such payment in accordance with the provisions of Section 10.5.
10.7 ADMINISTRATION OF THE CREDITS
10.7.1 Unless otherwise specified herein, the Agent shall perform the
following duties under this Agreement:
(a) prior to an Advance, ensure that all conditions precedent have
been fulfilled in accordance with the terms of this Agreement,
subject to Section 10.8.2 and any other applicable terms of this
Agreement;
(b) take delivery of each Lender's Proportionate Share of an Advance
and make all Advances hereunder in accordance with the procedures
set forth in Article VI hereof;
(c) use reasonable efforts to collect promptly all sums due and
payable by the Borrower pursuant to this Agreement;
(d) make all payments to the Lenders in accordance with the
provisions hereof;
(e) hold the Security on behalf of the Lenders and take all necessary
steps to comply with registration requirements so that the
Security remains perfected under applicable laws, but each Lender
shall notify the Agent of any circumstance that might affect the
perfection of the Security of which the Lender becomes aware;
<PAGE>
63
(f) hold all legal documents relating to the Credits, maintain
complete and accurate records showing all Advances made by the
Lenders, all remittances and payments made by the Borrower to the
Agent, all remittances and payments made by the Agent to the
Lenders and all fees or any other sums received by the Agent and,
except for accounts, records and documents relating to the fees
payable under the Fee Agreement, allow each Lender and their
respective advisors to examine such accounts, records and
documents at their own expense, and provide any Lender, upon
reasonable notice, with such copies thereof as such Lender may
reasonably require from time to time at the Lender's expense;
(g) except as otherwise specifically provided for in this Agreement,
promptly advise each Lender upon receipt of each notice and
deliver to each Lender, promptly upon receipt, all other written
communications furnished by the Borrower to the Agent on behalf
of the Lenders pursuant to this Agreement, including without
limitation copies of financial reports and certificates which are
to be furnished to the Agent;
(h) forward to each of the Lenders, upon request and at the expense
of the Lender so requesting (other than customary record books
which shall be provided at the expense of the Borrower), copies
of this Agreement, the Security and other Credit Documents other
than the Fee Agreement;
(i) promptly forward to each Lender, upon request, an up-to-date loan
status report; and
(j) upon learning of same, promptly advise each Lender in writing of
the occurrence of an Event of Default or Pending Event of Default
or the occurrence of any event, condition or circumstance which
would have a material adverse effect on the Borrower's ability to
comply with this Agreement or the Security or of any material
adverse information coming to the attention of the Agent (using
reasonable efforts) relative to the Security or of the occurrence
of any material adverse change in the financial condition or
property of the Borrower, provided that, except as aforesaid, the
Agent shall be under no duty or obligation whatsoever to provide
any notice to the Lenders and further provided that each Lender
hereby agrees to notify the Agent of any Event of Default or
Pending Event of Default of
<PAGE>
64
which it may reasonably become aware.
10.7.2 The Agent may take the following actions only with the prior consent
of the Majority Global Lenders, unless otherwise specified in this Agreement:
(a) subject to Section 10.7.3, exercise any and all rights of
approval conferred upon the Lenders by this Agreement;
(b) give written notice to the Borrower in respect of any matter in
respect of which notice may be required, permitted, necessary or
desirable in accordance with or pursuant to this Agreement,
promptly after receiving the consent of the Lenders, except that
the Agent shall, without direction from the Lenders, immediately
give the Borrower notice of any payment that is due or overdue
under the terms of this Agreement unless the Agent considers that
it should request the direction of the Lenders, in which case the
Agent shall promptly request that direction;
(c) subject to 10.7.3amend, modify or waive any of the terms of this
Agreement, including waiver of an Event of Default or Pending
Event of Default;
(d) give notice of or declare an Event of Default, accelerate the
amount outstanding under the Credits or take action to enforce
performance of the Obligations of the Borrower and to realize
upon the Security including the appointment of a receiver, the
exercise of powers of distress, lease or sale given by the
Security or by law and take foreclosure proceedings and/or pursue
any other legal remedy necessary; and
(e) pay insurance premiums, taxes and any other sums as may be
reasonably required to protect the interests of the Lenders.
10.7.3 Notwithstanding any provisions to the contrary herein, any term of
this Agreement may be amended with the written consent of the Borrower; provided
that no amendment, modification or waiver of any provision of this Agreement or
any other Loan Document or consented 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 consented to by the Majority Global Lenders, 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
<PAGE>
65
of, those Loan Documents to which the Lenders are not signatories without the
Lenders joining therein, provided the Agent has first obtained the separate
prior written consent to such amendment, modification, consent or waiver from
the Majority Global Lenders.) Notwithstanding the forgoing, no such amendment,
modification, waiver or consent shall:
(a) Reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof without
the consent of such Lender; or
(b) Increase the amount or extend the time of any Commitment of any
Lender, without the consent of such Lender; or
(c) Reduce the rate or extend the time of payment of any fee payable
to a Lender, without the consent of the Lender affected; or
(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 Lenders; or
(e) Amend the definition of Majority Global Lenders or otherwise
reduce the percentage of the Lenders required to approve or
effectuate any such amendment, modification, waiver, or consent,
without the consent of all the Lenders; or
(f) Amend any of the foregoing Sections 9.1 (a) through (e) or this
Section 9.1 (f) without the consent of all the Lenders; or
(g) Amend any provision of this Agreement relating to the Agent in
its capacity as Agent without the consent of the Agent; or
(h) Amend any provision of this Agreement relating to the issuance of
Letters of Credit without the consent of the Agent.
10.7.4 Whether or not the transactions contemplated hereby are consummated,
the Borrowers agree to reimburse the Agent upon demand for all reasonable out-
of-pocket expenses paid or incurred by the Agent (including filing and recording
costs and reasonable fees and expenses of Taylor McCaffrey, 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
<PAGE>
66
commitment letters or term sheets relating thereto. The Borrowers shall also
reimburse the Agent and each Lender upon demand for all reasonable out-of-pocket
expenses (including reasonable expenses of legal counsel) paid or incurred by
the Agent or any Lender 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.
10.7.5 Notwithstanding Sections 10.7.2, the Agent may, without the consent
of the Lenders, make amendments to the Credit Documents that are for the sole
purpose of curing any immaterial or administrative ambiguity, defect or
inconsistency, but shall immediately notify the Lenders of any such action. The
Agent may also discharge any Security to the extent necessary to allow the
Borrower to complete any sale or other disposition of Property not prohibited
by this Agreement.
10.7.6 As between the Borrower, on the one hand, and the Agent and the
Lenders, on the other hand:
(a) all statements, certificates, consents and other documents which
the Agent purports to deliver on behalf of the Lenders or the
Majority Global Lenders shall be binding on each of the Lenders,
and the Borrower shall not be required to ascertain or confirm
the authority of the Agent in delivering such documents;
(b) all certificates, statements, notices and other documents which
are delivered by the Borrower to the Agent in accordance with
this Agreement shall be deemed to have been duly delivered to
each of the Lenders;
(c) all payments which are delivered by the Borrower to the Agent in
accordance with this Agreement shall be deemed to have been duly
delivered to each of the Lenders;
(d) unless an Event of Default or Pending Event of Default has
occurred and is continuing, the Borrower's consent to the
appointment of any Successor Agent must be obtained, but the
Borrower's consent shall not be unreasonably withheld.
10.8 RIGHTS OF AGENT
10.8.1 In administering the Credits, the Agent may retain, at the expense of
the Lenders if such expenses are not recoverable from the Borrower, such
solicitors, counsel, auditors and other experts and agents as the Agent may
select,
<PAGE>
67
in its sole discretion, acting reasonably and in good faith after consultation
with the Lenders.
10.8.2 The Agent shall be entitled to rely on any communication, instrument
or document believed by it to be genuine and correct and to have been signed by
the proper individual or individuals, and shall be entitled to rely and shall be
protected in relying as to legal matters upon opinions of independent legal
advisors selected by it. The Agent may also assume that any representation made
by the Borrower is true and that no Event of Default or Pending Event of Default
has occurred unless the officers or employees of the Lender acting as Agent,
active in their capacity as officers or employees responsible for the Borrower's
account have actual knowledge to the contrary or have received notice to the
contrary from any other party to this Agreement.
10.8.3 Except in its own right as a Lender, the Agent shall not be required
to advance its own funds for any purpose, and in particular, shall not be
required to pay with its own funds insurance premiums, taxes or public utility
charges or the cost of repairs or maintenance with respect to the assets which
are the subject matter of the Security, nor shall it be required to pay with its
own funds the fees of solicitors, counsel, auditors, experts or agents engaged
by it as permitted hereby.
10.8.4 The Agent shall be entitled to receive a fee for acting as Agent as
agreed in the Fee Agreement or as otherwise agreed between the Agent and the
Borrower from time to time.
10.9 ACKNOWLEDGEMENTS, REPRESENTATIONS AND COVENANTS OF LENDERS
10.9.1 It is acknowledged and agreed by each Lender that it has itself been,
and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
property, affairs, status and nature of the Borrower and Guarantors.
Accordingly, each Lender confirms to the Agent that it has not relied, and will
not hereafter rely, on the Agent (a) to check or inquire on its behalf into the
adequacy or completeness of any information provided by the Borrower or
Guarantors under or in connection with this Agreement or the transactions herein
contemplated (whether or not such information has been or is hereafter
distributed to such Lender by the Agent) or (b) to assess or keep under review
on its behalf the financial condition, creditworthiness, property, affairs,
status or nature of the Borrower or Guarantors.
10.9.2 Each Lender represents and warrants that it has the legal capacity to
enter into this Agreement pursuant to its charter and any applicable legislation
and has not violated its charter, constating documents or any applicable
legislation by
<PAGE>
68
so doing.
10.9.3 Each Lender agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower), ratably according to its Proportionate Share 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, incurred by, or asserted against the
Agent in any way relating to or arising out of the Credit Documents or the
transactions therein contemplated, provided that no Lender 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 negligence or wilful misconduct. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Agent for its Proportionate Share
of any out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preservation of any rights of the Agent or the Lenders
under, or the enforcement of, or legal advice in respect of rights or
responsibilities under this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrower. The obligation of the Lenders to
indemnify the Agent shall survive the termination of this Agreement and shall be
performed by the Lenders promptly upon demand by the Agent.
10.9.4 Each of the Lenders acknowledges and confirms that in the event that
the Agent does not receive payment in accordance with this Agreement, it shall
not be the obligation of the Agent to maintain the Credits in good standing nor
shall any Lender have recourse to the Agent in respect of any amounts owing to
such Lender under this Agreement.
10.9.5 Each Lender acknowledges and agrees that its obligation to advance its
Proportionate Share of Advances in accordance with the terms of this Agreement
is independent and in no way related to the obligation of any other Lender
hereunder.
10.9.6 Each Lender hereby acknowledges receipt of a copy of this Agreement
and the Security (to the extent that the Security has been delivered) and
acknowledges that it is satisfied with the form and content of such documents.
10.10 COLLECTIVE ACTION OF THE LENDERS
Each of the Lenders hereby acknowledges that to the extent permitted
by applicable law, the Security and the remedies provided under the Credit
Documents to the Lenders are for the benefit of the Lenders collectively and
acting together and not severally and further acknowledges that its rights
hereunder and under the Security are to be exercised not severally, but by the
Agent upon the decision of the Majority Global Lenders or Lenders as required by
this Agreement.
<PAGE>
69
Accordingly, notwithstanding any of the provisions contained herein or in the
Security each of the Lenders hereby covenants and agrees that it shall not be
entitled to take any action hereunder or thereunder including, without
limitation, any declaration of default hereunder or thereunder but that any such
action shall be taken only by the Agent with the prior written agreement of the
Majority Global Lenders. Each of the Lenders hereby further covenants and agrees
that upon any such written agreement being given by the Majority Global Lenders,
it shall co-operate fully with the Agent to the extent requested by the Agent.
Notwithstanding the foregoing, in the absence of instructions from the Lenders
and where in the sole opinion of the Agent, acting reasonably and in good faith,
the exigencies of the situation warrant such action, the Agent may without
notice to or consent of the Lenders take such action on behalf of the Lenders as
it deems appropriate or desirable in the interest of the Lenders.
10.11 SUCCESSOR AGENT
Subject to the appointment and acceptance of a Successor Agent as
provided in this Section, and subject to Section 10.7.5(d), the Agent may resign
at any time by giving 30 days' written notice thereof to the Lenders and the
Borrower, and may be removed at any time by the Majority Global Lenders upon 30
days' written notice. Upon receipt of notice by the Lenders of the resignation
of the Agent, or upon giving notice of termination to the Agent, the Majority
Global Lenders may, within 21 days, appoint a successor from among the Lenders
or, if no Lender is willing to accept such an appointment, from among other
Lenders to which the Bank Act (Canada) applies, which each have combined capital
and reserves in excess of $250,000,000, and which have offices in Winnipeg and
Toronto (the "Successor Agent"). If no Successor Agent has been so appointed
and has accepted such appointment within 21 days after the retiring Agent's
giving of notice of resignation or receiving of notice of termination, then the
retiring Agent may, on behalf of the Lenders, appoint a Successor Agent. Upon
the acceptance of any appointment as Agent hereunder by a Successor Agent, the
retiring Agent shall pay the Successor Agent any unearned portion of any fee
paid to the Agent for acting as such, and the Successor Agent shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its further
duties and obligations as Agent under this Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article shall continue to inure to its benefit and be binding
upon it as to any actions taken or omitted to be taken by it while it was Agent
hereunder.
10.12 PROVISIONS OPERATIVE BETWEEN LENDERS AND AGENT ONLY
Except for the provisions of Sections 10.7.5, 10.9.2, 10.9.5, 10.10,
10.11 and 10.12, the provisions of this Article relating to the rights and
obligations
<PAGE>
70
of the Lenders and the Agent inter se shall be operative as between the Lenders
and the Agent only, and the Borrower or Guarantors shall not have any rights or
obligations under or be entitled to rely for any purpose upon such provisions.
ARTICLE XI
ADDITIONAL LENDERS,
SUCCESSORS AND ASSIGNS
11.1 SUCCESSORS AND ASSIGNS
11.1.1 The Credit Documents shall be binding upon and inure to the benefit of
the Agent, each Lender, the Borrower and their respective successors and
permitted assigns, except that the Borrower shall not assign any rights or
obligations with respect to this Agreement or any of the other Credit Documents
without the prior written consent of each Lender.
The collective rights and obligations of the Lenders under this Agreement are
assignable in whole or in part (pro rata) and any Lender shall be entitled to
assign in whole or in part its individual rights and obligations hereunder or to
permit other financial institutions to participate in the Credits, all in
accordance with the provisions of Section 11.2 and the other terms of this
Agreement. The Borrower hereby consents to the disclosure of any information
relating to the Borrower and Guarantors to any potential Lender or participant
provided that the potential Lender or participant agrees in writing to keep the
information confidential.
Each assignment shall be of a uniform, and not a varying, percentage
of all rights and obligations of the assignor(s) under or in respect of the
Credits. No assignment may result in the Commitment of any Lender, determined as
of the effective date of the Assignment Agreement with respect to such
assignment, being less than $5,000,000.00, unless the assignment deals with the
Lenders entire interest in which case it may be assigned if under $5,000,000.00.
Notwithstanding any other provisions of this Agreement, each Lender
agrees that it shall not offer to assign or assign or offer to sell or sell
participations in any portion of its rights and obligations under this Agreement
including, without limitation, any portion of its Commitment without the prior
written consent of the Agent and, unless an Event of Default has occurred and is
continuing, the Borrower. The consents of the Agent and the Borrower shall not
be unreasonably withheld. The Lenders agree that the Borrower's consent shall
not be considered to be unreasonably withheld if the proposed assignment or
participation would result in any material additional cost being incurred by the
Borrower, including but not limited to any gross-up for withholding tax under
Section 12.14, but excluding any increase in the interest rate applicable to
Bankers' Acceptances of the proposed assignee
<PAGE>
71
compared to the assignor.
11.1.2 A participation by a Lender of its interest (or a part thereof)
hereunder or a payment by a participant to a Lender as a result of the
participation will not constitute a payment hereunder to the Lender or an
Advance to the Borrower. A payment made by an assignee to an assigning Lender
in order for the assignee to assume its Proportionate Share of Advances made by
the assigning Lender will reduce the Advances owing by the Borrower to the
assigning Lender and will be deemed to be Advances by the assignee to the
Borrower as of the date that the payment is made, excluding in each case the
effect of any premium or discount.
11.2 ASSIGNMENTS
11.2.1 Subject to Section 11.1 and the other terms of this Agreement, the
Lenders collectively or individually may assign to one or more assignees all or
a portion of their respective rights and obligations under this Agreement
(including, without limitation, all or a portion of their respective
Commitments). The parties to each such assignment shall execute and deliver an
Assignment Agreement to the Agent, for its consent and recording in the Register
and, except in the case of an assignment by the Lenders collectively or an
assignment by a Lender to an affiliate of that Lender, shall pay a processing
and recording fee of $3,000.00 to the Agent. After such execution, delivery,
consent and recording (i) the assignee thereunder shall be a party to this
Agreement and, to the extent that rights and obligations hereunder have been
assigned to it, have the rights and obligations of a Lender hereunder and (ii)
the assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights and be released from its obligations under this Agreement,
other than obligations in respect of which it is then in default and liabilities
arising from its actions prior to the assignment. In the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto.
11.2.2 The agreements of an assignee contained in an Assignment Agreement
shall benefit the assigning Lender thereunder, the other Lenders and the Agent
in accordance with the terms of the Assignment Agreement.
11.2.3 The Agent shall maintain at its address referred to herein a copy of
each Assignment Agreement delivered to and acknowledged by it and a register for
recording the names and addresses of the Lenders and the Commitment under the
Credits of each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error. The Borrower, the Agent and each of the Lenders may treat each Person
whose
<PAGE>
72
name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement, and need not recognize any Person as a Lender unless it is
recorded in the Register as a Lender. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
11.2.4 Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee and approved by the Borrower and the Agent, the Agent
shall, if the Assignment Agreement has been completed and is in the required
form with such immaterial changes as are acceptable to the Agent:
(a) record the information contained therein in the Register; and
(b) give prompt notice thereof to the Borrower and the other Lenders,
and provide them with an updated version of Schedule 1.1.3.
11.3 PARTICIPATIONS
Each Lender may (subject to the provisions of Section 11.1) sell
participations to one or more financial institutions or other Persons in or to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment), but the participant
shall not become a Lender and:
(a) the Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(b) the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(c) the Borrower, the Agent and the other Lenders shall continue to
deal solely and directly with the Lender in connection with the
Lender's rights and obligations under this Agreement;
(d) no participant shall have any right to approve any amendment or
waiver of any provision of this Agreement, or any consent to any
departure by any Person therefrom.
Notwithstanding the foregoing, each participant shall have the same
benefit, as if it was a Lender, with respect to the rights provided to the
Lenders in Section 12.15. Each participant shall also have the right to be
provided by the Lender from whom it has obtained its participation with all
information relating to the Borrower or any Guarantor which is provided to any
Lender. Without limiting the
<PAGE>
73
foregoing, no participant shall have the benefit of Section 12.14 except to the
extent that the Lender from whom it has obtained its participation is itself
entitled to compensation under that Section.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 CONSENT
Notwithstanding any other provision contained herein or in the other
Credit Documents, the Lenders hereby consent to the Acquisition, the Employee
Loans, the Amalgamation and all other transactions contemplated by the Purchase
Agreement including the redemption/retraction of Class B shares in the capital
of the Borrower and no such transaction shall be prohibited by such provisions.
12.2 HEADINGS AND TABLE OF CONTENTS
The headings of the Articles and Sections and the Table of Contents
are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
12.3 ACCOUNTING TERMS
Each accounting term used in this Agreement, unless otherwise defined
herein, has the meaning assigned to it under GAAP.
12.4 CAPITALIZED TERMS
All capitalized terms used in any of the Credit Documents (other than
this Agreement) which are defined in this Agreement shall have the meaning
defined herein unless otherwise defined in the other document.
12.5 SEVERABILITY
Any provision of this Agreement which is or becomes prohibited or
unenforceable in any relevant jurisdiction shall not invalidate or impair the
remaining provisions hereof which shall be deemed severable from such prohibited
or unenforceable provision and any such prohibition or unenforceability in any
such jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Should this Agreement fail to provide for any relevant
matter, the validity, legality or enforceability of this Agreement shall not
thereby be affected.
12.6 NUMBER AND GENDER
Unless the context otherwise requires, words importing the singular
number shall include the plural and vice versa, words importing any gender
include all genders and references to agreements and other contractual
instruments shall
<PAGE>
74
be deemed to include all present or future amendments, supplements, restatements
or replacements thereof or thereto.
12.7 AMENDMENT, SUPPLEMENT OR WAIVER
No amendment, supplement or waiver of any provision of the Credit
Documents, nor any consent to any departure by the Borrower therefrom, shall in
any event be effective unless it is in writing, makes express reference to the
provision affected thereby and is signed by the Agent for and on behalf of the
Lenders or the Majority Global Lenders, as the case may be, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No waiver or act or omission of the Agent, the
Lenders, or any of them, shall extend to or be taken in any manner whatsoever to
affect any subsequent Event of Default or breach by a Restricted Party of any
provision of the Credit Documents or the rights resulting therefrom.
12.8 GOVERNING LAW
Each of the Credit Documents, except for those which expressly provide
otherwise, shall be conclusively deemed to be a contract made under, and shall
for all purposes be governed by and construed in accordance with, the laws of
the Province of Manitoba and the laws of Canada applicable in Manitoba. Each
party to this Agreement hereby irrevocably and unconditionally attorns to the
non-exclusive jurisdiction of the courts of Manitoba and all courts competent to
hear appeals therefrom.
12.9 THIS AGREEMENT TO GOVERN
In the event of any conflict between the terms of this Agreement and the terms
of any other Credit Document, the provisions of this Agreement shall govern to
the extent necessary to remove the conflict, provided however, that as between
U.S. Banks and the Lenders, the Intercreditor Agreement will govern.
12.10 PERMITTED ENCUMBRANCES
The designation of an Encumbrance as a Permitted Encumbrance is not,
and shall not be deemed to be, an acknowledgment by the Lenders that the
Encumbrance shall have priority over the Security.
12.11 CURRENCY
All payments made hereunder shall be made in the currency in respect
of which the obligation requiring such payment arose. Unless the context
otherwise requires, all amounts expressed in this Agreement in terms of money
shall refer to Canadian Dollars.
<PAGE>
75
Except as otherwise expressly provided in this Agreement, wherever
this Agreement contemplates or requires the calculation of the equivalent in
Canadian Dollars of an amount expressed in US Dollars, or vice versa, the
calculation shall be made on the basis of the Exchange Rate at the effective
date of the calculation.
12.12 LIABILITY OF LENDERS
The liability of the Lenders in respect of all matters relating to
this Agreement and the other Credit Documents is several and not joint or joint
and several. Without limiting that statement, the obligations of the Lenders to
make Advances is limited to their respective Proportionate Shares of any Advance
that is requested, and, in the aggregate, to their respective Proportionate
Shares of the total amounts of the Credits.
12.13 EXPENSES AND INDEMNITY
All statements, reports, certificates, opinions, and other documents
or information required to be furnished to the Lenders, the Agent, or any of
them, by the Borrower or any Guarantor under this Agreement shall be supplied
without cost to the Lenders, the Agent, or any of them. The Borrower shall pay
on demand all reasonable third party costs and expenses of the Lenders, or any
of them (including, without limitation, the reasonable fees and expenses of
counsel for the Lenders and the Agent collectively, but not separately for
individual Lenders and the Agent, on a solicitor and own client basis), incurred
in connection with (i) the preparation, execution, delivery, administration,
periodic review and enforcement of the Credit Documents; (ii) obtaining advice
as to their rights and responsibilities in connection with the Credits and the
Credit Documents; (iii) reviewing, inspecting and appraising the collateral that
is the subject of the Security at reasonable intervals; and (iv) other matters
relating to the Credits, excluding any assignment or participation of an
interest in the Credits following the initial Advance under this Agreement.
Such costs and expenses shall be payable whether or not an Advance is made under
this Agreement.
The Borrower shall indemnify the Lenders, the Agent, and each of them,
against any liability, obligation, loss or expense which any of them may sustain
or incur as a consequence of (i) any representation or warranty made herein by
the Borrower which was incorrect at the time it was made or deemed to have been
made, (ii) a default by the Borrower in the payment of any sum due from it under
or in connection with the Credit Documents (irrespective of whether an Advance
is deemed to be made to the Borrower to pay the amount that it has failed to
pay), including, but not limited to, all sums (whether in respect of principal,
interest or any other amount) paid or payable to lenders of funds borrowed by
the Lenders, the Agent, or any of them, in order to fund the amount of any such
unpaid
<PAGE>
amount to the extent the Lenders, the Agent, or any of them, are not reimbursed
pursuant to any other provisions of this Agreement, (iii) the failure of the
Borrower to complete any Advance or make any payment after notice therefor has
been given under this Agreement, (iv) any breach by the Borrower of its
representations and covenants in this Agreement relating to Hazardous Materials
and other environmental matters, (v) any other default by the Borrower
hereunder, and (vi) generally, the Lenders and the Agent having entered into
this Agreement and the other Credit Documents and made Advances to the Borrower.
A certificate of a Lender or the Agent as to the amount of any such loss or
expense shall be prima-facie evidence as to the amount thereof, in the absence
of manifest error provided that the Lender determines the amount owing to it in
good faith using any reasonable method and provides a detailed description of
its calculation of the amount owing to it.
The agreements in this Section shall survive the termination of this
Agreement and repayment of the Obligations.
12.14 MANNER OF PAYMENT AND TAXES
All payments to be made by or on behalf of the Borrower (or in the
case of upfront fees and indemnity fees, by the Agent or any Lender to another
Lender or to an assignee of an interest in the Credits) in connection with the
Credit Documents are to be made without set-off, compensation or counterclaim,
free and clear of and without deduction for or on account of any Tax, including
but not limited to withholding taxes, other than Excluded Taxes, except if such
deduction is required by law or the administration thereof. If any Tax, other
than Excluded Taxes, is deducted or withheld from any payments under the Credit
Documents (including the remittance provided for in this Section), the Borrower
making payment shall promptly remit to the Agent for the Lenders' benefit in the
currency in which such payment was made, the equivalent of the amount of Tax so
deducted or withheld together with the relevant receipt issued by the taxing or
other receiving authority. If any Borrower is prevented by operation of law or
otherwise from paying, causing to be paid or remitting such Tax, the interest or
other amount payable under the Credit Documents will be increased to such rates
as are necessary to yield and remit to the Lenders the principal sum advanced or
made available together with interest at the rates specified in the Credit
Documents after provision for payment of such Tax.
If any Lender or the Agent becomes liable for any tax in the
jurisdiction in which the Person making a payment under the Credit Documents is
located as a result of a payment being made without the required tax in that
jurisdiction having been deducted or withheld, the payer shall indemnify the
Lender or the Agent, as the case may be, for such tax and any interest and
penalties thereon, and the
<PAGE>
77
indemnity payment shall be increased as necessary so that after the imposition
of any tax in that jurisdiction on the indemnity payment (including tax in
respect of any such increase in the indemnity payment), the Lender or the Agent
shall receive the full amount of taxes, interest and penalties for which it is
liable in that jurisdiction.
12.15 INCREASED COSTS ETC.
If the introduction of or any change in or in the interpretation of, or any
change in the application to the Borrower or any Lender of, any law or any
regulation or guideline from any central bank or other governmental authority
that is binding on the Borrower or any Lender (whether or not having the force
of law), including but not limited to any reserve or special deposit requirement
or any Tax (other than Excluded Taxes) or any capital requirement, has due to
the Lenders' compliance therewith the effect, directly or indirectly, of (i)
increasing the cost to the Lenders, or any of them, of performing their
respective obligations hereunder; (ii) reducing any amount received or
receivable by the Lenders, or any of them, hereunder or its effective return
hereunder or on its capital; or (iii) causing the Lenders, or any of them, to
make any payment or to forego any return based on any amount received or
receivable by the Lenders, or any of them, hereunder, then upon demand from time
to time the Borrower shall pay such amount as shall compensate the Lenders for
any such cost, reduction, payment or foregone return that is not fully offset by
an increase in the applicable interest rate or rates or fees hereunder. Any
certificate of a Lender in respect of the foregoing will be prima facie evidence
of the foregoing, except for manifest error, provided that the Lender determines
the amounts owing to it in good faith using any reasonable averaging and
attribution methods and provides a detailed description of its calculation of
the amounts owing to it.
12.16 INTEREST ON MISCELLANEOUS AMOUNTS
If the Borrower fails to pay any amount payable hereunder (other than
principal, interest thereon or interest upon interest which is payable as
otherwise provided in this Agreement) on the due date, the Borrower shall, on
demand, pay interest on such overdue amount to the Agent from and including such
due date up to but excluding the date of actual payment, both before and after
demand, default or judgment, at a rate of interest per annum equal to the sum of
the Prime Rate plus 2.5 % per annum, compounded monthly.
If the Borrower deposits cash as Collateral pursuant to a requirement
under this Agreement, the Lender or Lenders holding the cash shall pay the
Borrower interest on the cash while it continues to be held as Collateral at the
rate offered by the relevant Lenders from time to time for deposits in the
relevant currency of comparable size and term.
<PAGE>
78
12.17 CURRENCY INDEMNITY
In the event of a judgment or order being rendered by any court or
tribunal for the payment of any amounts owing to the Lenders or any of them
under this Agreement or for the payment of damages in respect of any breach of
this Agreement or under or in respect of a judgment or order of another court or
tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency ("the Judgment Currency) other than the currency
payable hereunder or thereunder ("the Agreed Currency"), the party against whom
the judgment or order is made shall indemnify and hold the Lenders harmless
against any deficiency in terms of the Agreed Currency in the amounts received
by the Lenders arising or resulting from any variation as between (i) the
Exchange Rate at which the Agreed Currency is converted into the Judgment
Currency for the purposes of such judgment or order, and (ii) the Exchange Rate
at which each Lender is able to purchase the Agreed Currency with the amount of
the Judgment Currency actually received by the Lender on the date of such
receipt. The indemnity in this Section shall constitute a separate and
independent obligation from the other obligations of the Borrower hereunder,
shall apply irrespective of any indulgence granted by the Lenders, and shall be
secured by the Security.
12.18 ADDRESS FOR NOTICE
Notice to be given under the Credit Documents shall, except as
otherwise specifically provided, be in writing addressed to the party for whom
it is intended and, unless the law deems a particular notice to be received
earlier, a notice shall not be deemed received until actual receipt thereof by
the other party. The addresses of the parties hereto for the purposes hereof
shall be the addresses specified beside their respective signatures to this
Agreement or on any Assignment Agreement, or such other mailing or telecopier
addresses as each party from time to time may notify the other as aforesaid.
12.19 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
12.20 FURTHER ASSURANCES
The Borrower shall, at the request of the Agent acting on the
instructions of the Majority Global Lenders, do all such further acts and
execute and deliver all such further documents as may, in the reasonable opinion
of the Majority Global Lenders, be necessary or desirable in order to fully
perform and carry out the purpose and intent of the Credit Documents.
<PAGE>
79
12.21 TERM OF AGREEMENT
Except as otherwise provided herein, this Agreement shall remain in
full force and effect until the payment and performance in full of all of the
Obligations.
12.22 PAYMENTS ON BUSINESS DAY
Whenever any payment or performance under the Credit Documents would
otherwise be due on a day other than a Business Day, such payment shall be made
on the following Business Day, unless the following Business Day is in a
different calendar month, in which case the payment shall be made on the
preceding Business Day.
12.23 COUNTERPARTS AND FACSIMILE
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and such
counterparts together shall constitute one and the same agreement. For the
purposes of this Section, the delivery of a facsimile copy of an executed
counterpart of this Agreement shall be deemed to be valid execution and delivery
of this Agreement, but the party delivering a facsimile copy shall deliver an
original copy of this Agreement as soon as possible after delivering the
facsimile copy.
12.24 ENTIRE AGREEMENT
This Agreement and the Fee Agreement constitute the entire agreement
between the parties hereto concerning the matters addressed in this Agreement,
and cancel and supersede any prior agreements, undertakings, declarations or
representations, written or verbal, in respect thereof.
12.25 DATE OF AGREEMENT
This Agreement may be referred to as being dated the _____ day of
______________, 1999 notwithstanding the actual date of execution.
<PAGE>
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their authorized representatives or officers in that regard, as of the date
first above written.
3578275 CANADA INC. CANADIAN IMPERIAL BANK OF
COMMERCE
Per: /s/ Donald E. Cihak Per: /s/ signature appears here
----------------------------- -----------------------------
Per: Per: /s/ signature appears here
----------------------------- -----------------------------
FIRST CHICAGO NBD BANK, CANADA
Per: /s/ signature appears here
-----------------------------
Per:
-----------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINED TERMS............................................ 2
1.1 Defined Terms............................................... 2
1.2 Omega Credit Agreement...................................... 15
1.3 Computation of Time Periods................................. 15
1.4 Other Definitional Terms.................................... 16
ARTICLE II CREDIT A................................................ 16
2.1 Amount and Availment Options................................ 16
2.2 Revolving Credit............................................ 16
2.3 Use of Credit A............................................. 16
2.4 Term and Repayment.......................................... 16
2.5 Optional Reduction or Termination of Credit A............... 17
2.6 Interest Rates and Fees..................................... 17
2.7 Standby Fees................................................ 18
2.8 Agent Fees.................................................. 18
ARTICLE III CREDIT B............................................... 18
3.1 Amount and Availment Options................................ 18
3.2 Non-Revolving Credit........................................ 18
3.3 Use of Credit B............................................. 19
3.4 Term and Repayment.......................................... 19
3.5 Interest Rates and Fees..................................... 19
3.6 Mandatory Prepayments....................................... 20
ARTICLE IV SECURITY AND EXCHANGE RATE FLUCTUATIONS................. 21
4.1 Security.................................................... 21
4.2 Exchange Rate Fluctuations.................................. 22
ARTICLE V DISBURSEMENT CONDITIONS.................................. 22
5.1 Conditions Precedent to Initial Advance..................... 22
5.2 Conditions Precedent to all Advances........................ 25
ARTICLE VI ADVANCES................................................ 25
6.1 Lenders' Obligations Relating to L/Cs....................... 25
6.2 Evidence of Indebtedness.................................... 26
6.3 Conversions................................................. 26
6.4 Notice of Advances and Payments............................. 27
6.5 Prepayments and Reductions.................................. 27
6.6 Prime Rate and Base Rate Advances........................... 27
6.7 Co-ordination of Prime Rate and Base Rate Advances.......... 28
6.8 Form of Bankers' Acceptances................................ 29
6.9 Sale of Bankers' Acceptances................................ 29
6.10 Size and Maturity of Bankers' Acceptances and Rollovers..... 30
6.11 Co-ordination of BA Advances................................ 30
6.12 Payment of Bankers' Acceptances............................. 31
6.13 Deemed Advance - Bankers' Acceptances....................... 31
</TABLE>
<PAGE>
82
<TABLE>
<S> <C>
6.14 Waiver...................................................... 32
6.15 Degree of Care.............................................. 32
6.16 Indemnity................................................... 32
6.17 Obligations Absolute........................................ 32
6.18 Shortfall on Drawdowns, Rollovers and Conversions........... 32
6.19 Prohibited Use of Bankers' Acceptances and L/Cs............. 33
6.20 Issuance and Maturity of L/Cs............................... 33
6.21 Payment of L/C Fees......................................... 33
6.22 Payment of L/Cs............................................. 34
6.23 Deemed Advance - L/Cs....................................... 35
6.24 Prohibited Rates of Interest................................ 35
ARTICLE VII REPRESENTATIONS AND WARRANTIES......................... 35
7.1 Representations and Warranties.............................. 35
7.2 Survival of Representations and Warranties.................. 41
ARTICLE VIII COVENANTS AND CONDITIONS.............................. 41
8.1 Intercompany Obligations.................................... 41
8.2 Affirmative Covenants....................................... 42
8.3 Reporting Requirements...................................... 45
8.4 Negative Covenants.......................................... 46
8.5 Use of Insurance Proceeds................................... 48
8.6 Expenses.................................................... 48
8.7 Ownership of the Borrower................................... 49
ARTICLE IX DEFAULT................................................. 49
9.1 Events of Default........................................... 49
9.2 Acceleration and Termination of Rights...................... 51
9.3 Payment of Bankers' Acceptances and L/Cs.................... 52
9.4 Remedies.................................................... 52
9.5 Saving...................................................... 52
9.6 Perform Obligations......................................... 53
9.7 Third Parties............................................... 53
9.8 Power of Attorney........................................... 53
9.9 Remedies Cumulative......................................... 53
9.10 Set-Off or Compensation..................................... 54
ARTICLE X THE AGENT AND THE LENDERS................................ 54
10.1 Authorization of Agent and Relationship..................... 54
10.2 Disclaimer of Agent......................................... 54
10.3 Failure of Lender to Fund................................... 55
10.4 Payments by the Borrower.................................... 56
10.5 Payments by Agent........................................... 57
10.6 Direct Payments............................................. 58
10.7 Administration of the Credits............................... 59
10.8 Rights of Agent............................................. 63
</TABLE>
<PAGE>
83
<TABLE>
<S> <C>
10.9 Acknowledgements, Representations and Covenants of Lenders.. 64
10.10 Collective Action of the Lenders............................ 65
10.11 Successor Agent............................................. 65
10.12 Provisions Operative Between Lenders and Agent Only......... 66
ARTICLE XI ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS.............. 66
11.1 Successors and Assigns...................................... 66
11.2 Assignments................................................. 67
11.3 Participations.............................................. 68
ARTICLE XII MISCELLANEOUS PROVISIONS............................... 69
12.1 Consent..................................................... 69
12.2 Headings and Table of Contents.............................. 69
12.3 Accounting Terms............................................ 69
12.4 Capitalized Terms........................................... 69
12.5 Severability................................................ 69
12.6 Number and Gender........................................... 70
12.7 Amendment, Supplement or Waiver............................. 70
12.8 Governing Law............................................... 70
12.9 This Agreement to Govern.................................... 70
12.10 Permitted Encumbrances...................................... 70
12.11 Currency.................................................... 70
12.12 Liability of Lenders........................................ 71
12.13 Expenses and Indemnity...................................... 71
12.14 Manner of Payment and Taxes................................. 72
12.15 Increased Costs etc......................................... 73
12.16 Interest on Miscellaneous Amounts........................... 73
12.17 Currency Indemnity.......................................... 73
12.18 Address for Notice.......................................... 74
12.19 Time of the Essence......................................... 74
12.20 Further Assurances.......................................... 74
12.21 Term of Agreement........................................... 74
12.22 Payments on Business Day.................................... 74
12.23 Counterparts and Facsimile.................................. 75
12.24 Entire Agreement............................................ 75
12.25 Date of Agreement........................................... 75
</TABLE>
<PAGE>
EXHIBIT 99.1
THIS FIRST SUPPLEMENTAL INDENTURE is dated as of January 28, 1999 between
Omega Cabinets, Ltd., a Delaware corporation (the "Company"), Panther Transport,
Inc., an Iowa corporation and a subsidiary of the Company (the "Guarantor"), and
The Chase Manhattan Bank, as trustee under the Indenture hereinafter mentioned
(the "Trustee").
WHEREAS, the Company, the Guarantor and HomeCrest Corporation have
heretofore executed and delivered to the Trustee an indenture dated as of July
24, 1997 (the "Existing Indenture", and the Existing Indenture, as it may from
time to time be supplemented or amended by one or more additional indentures
supplemental thereto entered into pursuant to the applicable provisions thereof,
being hereinafter called the "Indenture"), providing for the creation of and
issuance of $100,000,000 in aggregate principal amount of the Company's 10-1/2%
Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, HomeCrest Corporation has been merged with and into the Company
with the Company as the surviving corporation;
WHEREAS, the Company and the Guarantor have solicited the consent of the
Holders of the Notes pursuant to a Consent Solicitation Statement dated January
12, 1999 as supplemented by Supplement No. 1 thereto dated January 26, 1999,
Supplement No. 2 thereto dated January 27, 1999 and Supplement No. 3 thereto
dated January 27, 1999 (collectively, the "Consent Solicitation Statement") to
amend the Indenture to (i) modify the definitions of "Board of Directors",
"Guarantors", "Permitted Investments", "Permitted Junior Securities", "Permitted
Liens", "Permitted Refinancing Indebtedness", "Senior Debt" and "Unrestricted
Subsidiary" contained in the Existing Indenture, (ii) add the definitions of
"Guarantor Subsidiary" and "Kitchen Craft Subsidiary" to the Indenture, and
(iii) modify Sections 4.07, 4.08, 4.09, 4.10, 4.17, 10.01, 10.02 and 10.10 of
the Existing Indenture;
WHEREAS, pursuant to Section 9.02 of the Indenture, the Company and the
Guarantor may amend or supplement the Indenture provided that the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding
have consented and, with respect to the amendments to Article 10 of the Existing
Indenture, the holders of all Senior Debt outstanding have consented;
WHEREAS, the Company has received the consent of the Holders of a majority
in aggregate principal amount of the Notes to the amendments to the Existing
Indenture set forth in the Consent Solicitation Statement and has received the
consent of all holders of Senior Debt to the amendments to Article 10 of the
Existing Indenture set forth in the Consent Solicitation Statement;
WHEREAS, following the execution of this First Supplemental Indenture, the
terms of Article 1 hereof will become operative (the "Operative Date") upon the
consummation of the acquisition by the Company (or any Subsidiary thereof) of at
least 50% of the outstanding capital stock of Kitchen Craft of Canada Ltd., a
Canadian corporation, (the "Acquisition Condition"); and
<PAGE>
WHEREAS, the terms of Article 1 of this First Supplemental Indenture shall
be null and void if the Acquisition Condition does not occur.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That, for and in consideration of the premises herein contained and in
order to effect the amendments to the Existing Indenture set forth in the
Consent Solicitation Statement, pursuant to Section 9.02 of the Existing
Indenture, the Company and the Guarantor agree with the Trustee as follows:
ARTICLE 1
Amendment of Existing Indenture
-------------------------------
Section 1.01. Amendment of Section 1.01. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 1.01 of the Existing Indenture is hereby amended by:
(a) Amending and restating in its entirety the definition of "Board of
Directors" contained in the Existing Indenture to read as follows:
"Board of Directors" means the Board of Directors of the Company, Holdings
or a Restricted Subsidiary, as context requires, or any authorized committee of
such Board of Directors.
(b) Amending and restating in its entirety the definition of "Guarantors"
contained in the Existing Indenture to read as follows:
"Guarantors" means (i) Panther and (ii) each of the Guarantor Subsidiaries
of the Company that executes a Subsidiary Guarantee in accordance with the
provisions of this Indenture.
(c) Inserting the following definition of "Guarantor Subsidiary" after the
definition of "Guarantors":
"Guarantor Subsidiary" means, with respect to the Company, any Restricted
Subsidiary other than a Kitchen Craft Subsidiary.
(d) Inserting the following definition of "Kitchen Craft Subsidiary" after the
definition of "Guarantor Subsidiary":
2
<PAGE>
"Kitchen Craft Subsidiary" means, with respect to the Company, (i) Kitchen
Craft of Canada Ltd., a Canadian corporation, (ii) Kitchen Craft Cabinetry Ltd.,
a British Columbia corporation, (iii) Omega Kitchen Craft Holdings Corp., a
Delaware corporation, for so long as the principal asset of Omega Kitchen Craft
Holdings Corp. is the capital stock of Kitchen Craft of Canada Ltd. or any
successor entity thereto, and (iv) any successor entity to any of the foregoing.
(e) Amending and restating in its entirety the definition of "Permitted
Investments" contained in the Existing Indenture to read as follows:
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary; provided, however, that an Investment in a Kitchen Craft
Subsidiary will not be a Permitted Investment if, at the time of such
Investment, the total assets of all of the Kitchen Craft Subsidiaries, taken as
a whole (measured as of the Company's most recently ended fiscal quarter giving
pro forma effect to all Investments made since the end of such fiscal quarter
and determined in good faith by the Board of Directors in accordance with GAAP
consistently applied), represent greater than 50% of the total assets of the
Company and its Subsidiaries, taken as a whole (measured as of the Company's
most recently ended fiscal quarter giving pro forma effect to all Investments
made since the end of such fiscal quarter and determined in good faith by the
Board of Directors in accordance with GAAP consistently applied); (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 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 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.
(f) Amending and restating in its entirety the definition of "Permitted Junior
Securities" contained in the Existing Indenture to read as follows:
3
<PAGE>
"Permitted Junior Securities" means (i) Equity Interests (other than
Disqualified Stock, including other Equity Interests containing mandatory
redemption provisions) of the Company or any Restricted Subsidiary or (ii) debt
securities of the Company or any Restricted Subsidiary 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 its Restricted Subsidiaries pursuant to Article 10
hereof.
(g) Amending and restating in its entirety the definition of "Permitted Liens"
contained in the Existing Indenture to read as follows:
"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 Restricted Subsidiaries to secure Senior Debt of such
Restricted Subsidiaries 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.
4
<PAGE>
(h) Amending and restating in its entirety the definition of "Permitted
Refinancing Indebtedness" contained in the Existing Indenture to read as
follows:
"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;
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, except as otherwise
provided in Section 4.17, 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.
(i) Amending and restating in its entirety the definition of "Senior Debt"
contained in the Existing Indenture to read as follows:
"Senior Debt" means (i) all Indebtedness of the Company and its Restricted
Subsidiaries outstanding under the New Bank Credit Facility and all Permitted
Hedging Obligations with respect thereto, (ii) any other Indebtedness of the
Company and its Restricted Subsidiaries 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 of its Restricted Subsidiaries, or any claim
5
<PAGE>
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 of its Restricted
Subsidiaries, (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.
(j) Amending and restating in its entirety the definition of "Unrestricted
Subsidiary" contained in the Existing Indenture to read as follows:
"Unrestricted Subsidiary" means, with respect to any Person, (i) any
Subsidiary of such Person (other than Panther, 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 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
6
<PAGE>
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,
except as otherwise provided in Section 4.17, such Subsidiary shall execute a
Subsidiary Guarantee and deliver an Opinion of Counsel, in accordance with the
terms of this Indenture.
Section 1.02. Amendment of Section 4.07. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 4.07 of the Existing Indenture is hereby amended and
restated in its entirety to read as follows:
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 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 of
7
<PAGE>
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 Operative Date of (and as defined in)
the First Supplemental Indenture dated as of January 28, 1999 between the
Company, Panther Transport, Inc. and The Chase Manhattan Bank, as trustee (the
"First Supplemental Indenture"), 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 Operative Date
of the First Supplemental Indenture, 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 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
8
<PAGE>
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 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
9
<PAGE>
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) 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 1.03. Amendment of Section 4.08. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 4.08 of the Existing Indenture is hereby amended and
restated in its entirety to read as follows:
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 Operative Date of the First Supplemental Indenture, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such
10
<PAGE>
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 Operative Date of the First
Supplemental Indenture, (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
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 1.04. Amendment of Section 4.09. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 4.09 of the Existing Indenture is hereby amended and
restated in its entirety to read as follows:
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 2.25 to
11
<PAGE>
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;
(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;
12
<PAGE>
(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 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 1.05. Amendment of Section 4.10. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 4.10 of the Existing Indenture is hereby amended and
restated in its entirety to read as follows:
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
13
<PAGE>
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
Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary, (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 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
14
<PAGE>
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 1.06. Amendment of Section 4.17. Pursuant to Section 9.02 of the
------------ -------------------------
Existing Indenture, Section 4.17 of the Existing Indenture is hereby amended and
restated in its entirety to read as follows:
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, except (i) if the issuance of a
Guarantee by a Kitchen Craft Subsidiary is not permitted under applicable law or
would have a material adverse tax or accounting effect on the Company or its
Subsidiaries, as determined in good faith by the Board of Directors and
evidenced by a copy of applicable board resolutions or an Officers' Certificate
delivered to the Trustee, then such Kitchen Craft Subsidiary shall not be
subject to the provisions of this Section 4.17, and (ii) for all 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 1.07. Amendment of Section 10.01. Pursuant to Section 9.02 of the
------------ --------------------------
Existing Indenture, Section 10.01 of the Existing Indenture is hereby amended
and restated in its entirety to read as follows:
Section 10.01. Agreement to Subordinate.
(a) The Company and its Restricted Subsidiaries agree, 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 and its
Restricted Subsidiaries (whether outstanding on the date hereof or hereafter
created, incurred, assumed or
15
<PAGE>
guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt of the Company and its Restricted Subsidiaries.
(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 1.08. Amendment of Section 10.02. Pursuant to Section 9.02 of the
------------ --------------------------
Existing Indenture, Section 10.02 of the Existing Indenture is hereby amended
and restated in its entirety to read as follows:
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
16
<PAGE>
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 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).
(c) Upon any distribution to creditors of any Restricted Subsidiary
of the Company in a liquidation or dissolution of such Restricted Subsidiary or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Restricted Subsidiary or its property, in an assignment for the
benefit of creditors or any marshalling of such Restricted Subsidiary's assets
and liabilities:
(1) holders of Senior Debt of such Restricted Subsidiary 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 such Restricted Subsidiary (as provided
in subsection (c)(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 Restricted Subsidiary 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).
17
<PAGE>
Section 1.09. Amendment of Section 10.10. Pursuant to Section 9.02 of the
------------ --------------------------
Existing Indenture, Section 10.10 of the Existing Indenture is hereby amended
and restated in its entirety to read as follows:
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, any of its
Restricted Subsidiaries, 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, any of its Restricted Subsidiaries, 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.
ARTICLE 2
The Trustee
-----------
Section 2.01. Privileges and Immunities of Trustee. The Trustee accepts
------------ ------------------------------------
the amendment of the Indenture effected by this First Supplemental Indenture but
only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and responsibilities
of the Trustee, which terms and provisions shall in like manner define and limit
its liabilities and responsibilities in the performance of the trust created by
the Indenture as hereby amended. The Trustee shall not be responsible for the
adequacy or sufficiency of the First Supplemental Indenture, for the due
execution thereof by the Company and the Guarantor or for the recitals contained
herein, which are the Company's and the Guarantor's responsibilities.
ARTICLE 3
Miscellaneous Provisions
------------------------
18
<PAGE>
Section 3.01. Instruments to be Read Together. This First Supplemental
------------ -------------------------------
Indenture is an indenture supplemental to and in implementation of the Existing
Indenture, and said Existing Indenture and this First Supplemental Indenture
shall henceforth be read together.
Section 3.02. Confirmation. The Existing Indenture as amended and
------------ ------------
supplemented by this First Supplemental Indenture is in all respects confirmed
and preserved.
Section 3.03. Terms Defined. Capitalized terms used herein without
------------ -------------
definition shall have the meanings assigned to them in the Existing Indenture.
Section 3.04. Counterparts. This First Supplemental Indenture may be
------------ ------------
signed in any number of counterparts each of which so executed shall be deemed
to be an original, but all such counterparts shall together constitute but one
and the same instrument.
Section 3.05. Effectiveness. The provisions of this First Supplemental
------------ -------------
Indenture will take effect immediately upon execution thereof by the parties
hereto and will become operative on the Operative Date of this First
Supplemental Indenture. If the Acquisition Condition does not occur, the terms
of this First Supplemental Indenture shall be null and void.
Section 3.06. Governing Law. The internal law of the State of New York
------------ -------------
shall govern and be used to construe this First Supplemental Indenture. This
First Supplemental Indenture is subject to the provisions of the Trust Indenture
Act that are required to be part of the Indenture and shall, to the extent
applicable, be governed by such provisions.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the date first above written.
OMEGA CABINETS, LTD.
By: /s/ Robert L. Moran
-----------------------------
Name: Robert L. Moran
Title: President and Chief Executive Officer
PANTHER TRANSPORT, INC.
By: /s/ Robert L. Moran
-----------------------------
Name: Robert L. Moran
Title: President and Chief Executive Officer
THE CHASE MANHATTAN BANK,
AS TRUSTEE
By: /s/ Glenn G. McKeever
-----------------------------
Name: Glenn G. McKeever
Title: Vice President
20
<PAGE>
EXHIBIT 99.2
THIS SECOND SUPPLEMENTAL INDENTURE is dated as of January 29, 1999 between
Omega Cabinets, Ltd., a Delaware corporation (the "Company"), Panther Transport,
Inc., an Iowa corporation and a subsidiary of the Company (the "Existing
Guarantor"), Omega Kitchen Craft U.S. Corp., a Delaware corporation ("KC U.S.
Corp."), Bulrad Illinois, Inc., an Illinois corporation ("Bulrad and together
with KC U.S. Corp., collectively, the "New Guarantors"), and The Chase Manhattan
Bank, as trustee under the Indenture hereinafter mentioned (the "Trustee").
WHEREAS, the Company, the Existing Guarantor and HomeCrest Corporation have
heretofore executed and delivered to the Trustee an indenture dated as of July
24, 1997 (the "Existing Indenture", and the Existing Indenture, as it may from
time to time be supplemented or amended by one or more additional indentures
supplemental thereto entered into pursuant to the applicable provisions thereof,
being hereinafter called the "Indenture"), providing for the creation of and
issuance of $100,000,000 in aggregate principal amount of the Company's 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 a 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 Second 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 Existing Guarantor, the New Guarantors 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 Guarantee Notes. The New Guarantors hereby agree, 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 Second
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
<PAGE>
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 SECOND SUPPLEMENTAL INDENTURE.
5. Counterparts. The parties may sign any number of copies of this Second
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
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 Second
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
Guarantors.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed as of the date first above written.
OMEGA CABINETS, LTD.
By: /s/ Robert L. Moran
-------------------------------
Name: Robert L. Moran
Title: President and Chief Executive Officer
PANTHER TRANSPORT, INC.
By: /s/ Robert L. Moran
-------------------------------
Name: Robert L. Moran
Title: President and Chief Executive Officer
OMEGA KITCHEN CRAFT U.S. CORP.
By: /s/ Robert L. Moran
-------------------------------
Name: Robert L. Moran
Title: President and Chief Executive Officer
BULRAD ILLINOIS, INC.
By: /s/ Robert L. Moran
-------------------------------
Name: Robert L. Moran
Title: Vice President
THE CHASE MANHATTAN BANK,
AS TRUSTEE
By: /s/ Glenn G. McKeever
-------------------------------
Name: Glenn G. McKeever
Title: Vice President
3
