DIAMOND HOME SERVICES, INC.
WAIVER TO CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank Bank of America National Trust and
Chicago, Illinois Savings Association
Chicago, Illinois
LaSalle National Bank
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
April 20, 1998, as amended by that certain letter agreement dated as of April
23, 1998, that certain First Amendment dated as of August 13, 1998 and that
certain Second Amendment (the "SECOND AMENDMENT") dated as of November 13, 1998
(such Credit Agreement as so amended being hereinafter referred to as the
"CREDIT AGREEMENT"), and currently in effect by and among, Diamond Home
Services, Inc., a Delaware corporation (the "BORROWER"), and you (the "BANKS").
All capitalized terms used herein without definition shall have the same
meanings herein as such terms have in the Credit Agreement.
The Second Amendment waives the Borrower's noncompliance with the
minimum EBITDA covenant set forth in Section 8.26(b) of the Credit Agreement.
The effectiveness of this waiver is conditioned upon the effectiveness no later
than December 31, 1998 (the "EXISTING AMENDMENT DEADLINE") of an amendment to
the Credit Agreement (the "AMENDMENT TO RESET FINANCIAL COVENANTS") described in
the Second Amendment. The Borrower hereby requests that the Banks (i) extend the
Existing Amendment Deadline and (ii) waive any noncompliance by the Borrower as
of December 31, 1998 with the Interest Coverage Ratio set forth in Section 8.25
of the Credit Agreement, and the Banks are willing to do so under the terms and
conditions set forth in this Waiver.
1. EXTENSION OF AMENDMENT DEADLINE. Effective upon the Borrower's
acceptance of this Waiver in the space provided for that purpose below, the
Banks hereby extend the Existing Amendment Deadline to January 20, 1999 (the
"NEW AMENDMENT DEADLINE").
2. WAIVER. The Borrower may not be in compliance with Section 8.25 of
the Credit Agreement by virtue of the borrower's allowing the Interest Coverage
Ratio to be less than 3.0 to 1.0 at the end of its fiscal quarter ending on or
about December 31, 1998. The Borrower has requested that the Banks waive such
noncompliance (if any) with Section 8.25. Accordingly, subject to the Borrower's
acceptance of this Waiver in the space provided for that purpose below, and
subject as well to the satisfaction of the conditions subsequent set forth below
in this Section, the Banks hereby waive (subject to satisfaction of such
conditions) compliance with such Section 8.25 as of the Borrower's fiscal
quarter ending on or about December 31, 1998. Notwithstanding anything in this
Waiver to the contrary, the waiver given in this Section is subject to, and its
effectiveness is contingent upon, the effectiveness of the Amendment to Reset
Financial Covenants no later than the New Amendment Deadline. If the Amendment
to Reset Financial Covenants does not take effect before the New Amendment
Deadline, this Waiver shall immediately have no further force and effect, and an
Event of Default shall immediately exist under Section 9.1(b) of the Credit
Agreement by virtue of the Borrower's noncompliance with such Section 8.25 as of
any fiscal quarter of the Borrower ending after January 1, 1999 and also does
not waive compliance with any other terms, conditions and provisions of the
Credit Agreement.
3. SECOND AMENDMENT FEE. The Banks agree to defer until the New
Amendment Deadline the $168,750 balance of the Amendment Fee due and payable
pursuant to the Second Amendment. The Borrower's failure to pay the balance of
this Amendment Fee when due and payable shall constitute an Event of Default. No
additional fee is due and payable in consideration of this Waiver.
4. REPRESENTATIONS. In order to induce the Banks to execute and deliver
this Waiver, the Borrower hereby represents to the Banks that as of the date
upon which this Waiver becomes effective, after giving effect to this Waiver,
the Borrower is in full compliance with all of the terms and conditions of the
Credit Agreement, as amended hereby, and no Default or Event of Default shall
have occurred and be continuing under the Credit Agreement.
5. MISCELLANEOUS.
5.01 Except as specifically waived hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Waiver need not be made in the Credit Agreement, the
Notes, or any other instrument or document executed in connection therewith, or
in any certificate, letter or communication issued or made pursuant to or with
respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as
specifically waived hereby.
5.02 This Waiver may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Waiver by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This Waiver
shall be governed by the internal laws of the State of Illinois.
5.03 The Borrower agrees to pay all reasonable out-of-pocket costs and
expenses incurred by the Banks in connection with the preparation, execution and
delivery of this Waiver and the documents and transactions contemplated hereby,
including the reasonable fees and expenses of counsel for the Agent with respect
to the foregoing.
Dated as of December 23, 1998
DIAMOND HOME SERVICES, INC.
By /s/
Its Vice President and Chief Financial Officer
Accepted and agreed to in Chicago, Illinois as of the date and year last above
written.
XXXXXX TRUST AND SAVINGS BANK
By /s/
Its Vice President
LASALLE NATIONAL BANK
By /s/
Its Assistant Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (successor by merger
to Bank of America Illinois)
By /s/
Its Senior Vice President
