Exhibit 10.4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of June 13,1997, is made and given by
OMEGA HOLDINGS, INC., a Delaware corporation (the "Pledgor"), to FIRST BANK
NATIONAL ASSOCIATION, a national banking association, as "Agent" under, and for
the benefit of the "Banks" as defined in, the "Credit Agreement" as that term is
defined below (the "Secured Party").
RECITALS
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A. The Pledgor has executed, or will substantially contemporaneously
herewith execute a Guaranty dated as of the date hereof, guaranteeing
indebtedness of Omega Cabinets, Ltd., a Delaware corporation ("Omega Cabinets"),
HomeCrest Corporation, a Delaware corporation ("HomeCrest"), and Panther
Transport, Inc., an Iowa corporation ("Panther") (each a "Borrower" and
collectively, the "Borrowers"). Such guaranty, as the same may herewith be
amended, modified or supplemented and any guaranty given in replacement or
substitution therefor, is herein called the "Guaranty".
B. The Borrowers, certain financial institutions and First Bank
National Association, as Agent have entered into a Credit Agreement dated as of
June 13, 1997 (as the same may hereafter be amended, restated, or otherwise
modified from time to time, the "Credit Agreement") and the Borrowers'
obligations under the Credit Agreement are among the obligations guaranteed by
the Guaranty pursuant to which the Banks have agreed to extend to the Borrowers
certain credit accommodations .
C. The Pledgor is the owner of the shares (the "Pledged Shares") of
stock described in Part I of Schedule I hereto issued by the corporation or
corporations named therein.
D. It is a condition precedent to the obligation of the Banks to
extend credit accommodations pursuant to the terms of the Credit Agreement that
this Agreement be executed and delivered by the Pledgor.
E. Omega Cabinets is a wholly-owned subsidiary of the Pledgor.
F. HomeCrest and Panther are wholly-owned subsidiaries of Omega
Cabinets.
G. The Pledgor expects to derive benefits from the extension of
credit accommodations to the Borrowers and finds it advantageous, desirable and
in the best interests of the Pledgor to comply with the requirement that this
Agreement be executed and delivered to the Secured Party.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to extend or continue credit accommodations to the Borrowers,
the Pledgor hereby agrees with the Secured Party, for the benefit of the Banks
and the Agent, as follows:
Section 1. Defined Terms.
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1(a) As used in this Agreement, the following terms shall have
the meanings indicated:
"Affiliate": When used with reference to any Person, (a) each Person
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that, directly or indirectly, controls, is controlled by or is under common
control with, the Person referred to, (b) each Person which beneficially owns or
holds, directly or indirectly, ten percent or more of any class of voting stock
of the Person referred to (or if the Person referred to is not a corporation,
five percent or more of the equity interest), (c) each Person, ten percent or
more of the voting stock (or if such Person is not a corporation, ten percent or
more of the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's officers,
directors, joint venturers and partners. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly,
of the power to direct or cause the direction of the management and policies of
the Person in question.
"Affiliate Debt" shall mean indebtedness owing to the Pledgor from any
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Affiliate.
"Agent" shall mean First Bank National Association, acting as agent
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for the benefit of itself and the other Banks, or such other institution as may
be appointed as "Agent" under the Credit Agreement.
"Banks" shall mean the institutions that are from time to time party
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to the Credit Agreement as lenders.
"Collateral" shall have the meaning given to such term in Section 2.
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"Event of Default" shall have the meaning given to such term in
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Section 11.
"Lien" shall mean any security interest, mortgage, pledge, lien,
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charge, encumbrance, title retention agreement or analogous instrument or device
(including the interest of the lessors under capitalized leases), in, of or on
any assets or properties of the Person referred to.
"Obligations shall mean (a) all indebtedness, liabilities and
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obligations of each Borrower to the Banks and the Agent of every kind, nature or
description under the Credit Agreement, including without limitation each
Borrower's obligation on any promissory note or
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notes under the Credit Agreement and any note or notes hereafter issued in
substitution or replacement thereof and any letter of credit reimbursement
obligations and fees, (b) all liabilities of the Pledgor under the Guaranty or
any guaranty heretofore, herewith or hereafter given by the Pledgor to the Banks
or the Agent with respect to any or all of each Borrower's liabilities and
obligations to the Banks and the Agent, and (c) all liabilities of the Pledgor
under this Agreement, and in all of the foregoing cases whether due or to become
due, and whether now existing or hereafter arising or incurred.
"Person" shall mean any individual, corporation, partnership, limited
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partnership or liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Pledged Shares" shall have the meaning given to such term in Recital
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B above.
"Security Interest" shall have the meaning given to such term in
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Section 2.
1(b) Terms Defined in Uniform Commercial Code. All other terms
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used in this Agreement that are not specifically defined herein or the
definitions of which are not incorporated herein by reference shall have
the meaning assigned to such terms in the Uniform Commercial Code in effect
in the State of Minnesota as of the date first above written to the extent
such other terms are defined therein.
1(c) Singular/Plural, Etc. Unless the context of this Agreement
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otherwise clearly requires, references to the plural include the singular,
the singular, the plural and "or" has the inclusive meaning represented-by
the phrase "and/or." The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The words
"hereof," "herein," "hereunder," and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections are references to Sections in this
Pledge Agreement unless otherwise provided.
Section 2. Pledge and Security Interest. As security for the payment
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and performance of all of the Obligations, the Pledgor hereby pledges to the
Secured Party a security interest, for the benefit of the Banks and the Agent
(the "Security Interest") in the following (the "Collateral"):
2(a) The Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares.
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2(b) All additional shares of stock of any issuer of the Pledged
Shares from time to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares, and all dividends, cash,
' instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares.
2(c) Affiliate Debt.
2(d) All proceeds of any and all of the foregoing (including
proceeds that constitute property of types described above).
Notwithstanding Sections 2(a), (b), (c) and (d) above, the payment and
performance of the Obligations shall not be secured by more than sixty-six
percent (66%) of the outstanding stock or other equity interests in any foreign
corporation.
Section 3. Delivery of Collateral. All certificates and instruments
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representing or evidencing the Pledged Shares shall be delivered to the Secured
Party contemporaneously with the execution of this Agreement. All certificates
and instruments representing or evidencing Collateral received by the Pledgor
after the execution of this Agreement shall be delivered to the Secured Party
promptly upon the Pledgor's receipt thereof. All such certificates and
instruments shall be held by or on behalf of the Secured Party pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party. The Secured Party shall have the
right at any time, whether before or after an Event of Default, to cause any or
all of the Collateral to be transferred of record into the name of the Secured
Party or its nominee (but subject to the rights of the Pledgor under Section 6)
and to exchange certificates representing or evidencing Collateral for
certificates of smaller or larger denominations. Notwithstanding any of the
foregoing, as to any Collateral consisting of book-entry or uncertificated
securities or securities which are held by a third Person, the Pledgor shall
deliver to the Secured Party evidence satisfactory to the Secured Party that
such Collateral has been registered in the name of, or as pledged to, the
Secured Party. Such evidence shall include the acknowledgment of the issuer or
Person holding such Collateral that such issuer or Person holds such Collateral
as agent for the Secured Party and that such Collateral is identified on the
books of such issuer or third Person as belonging to or pledged to the Secured
Party.
Section 4. Certain Warranties and Covenants. The Pledgor makes the
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following warranties and covenants:
4(a) The Pledgor has title to the Pledged Shares and will have
title to each other item of Collateral hereafter acquired, free of all
Liens except the Security Interest.
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4(b) The Pledgor has full power and authority to execute this
Pledge Agreement, to perform the Pledgor's obligations hereunder and to
subject the Collateral to the Security Interest created hereby.
4(c) No financing statement covering all or any part of the
Collateral is on file in any public office (except for any financing
statements filed by the Secured Party).
4(d) The Pledged Shares have been duly authorized and validly
issued by the issuer thereof and are fully paid and non-assessable. The
certificates representing the Pledged Shares are genuine. Neither the
Pledged Shares are subject to any offset or similar right or claim of the
issuers thereof.
4(e) The Pledged Shares constitute the percentage of the issued
and outstanding shares of stock of the respective issuers thereof indicated
on Schedule I (if any such percentage is so indicated).
Section 5. Further Assurances. The Pledgor agrees that at any time
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and from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be necessary or that the Secured Party may reasonably request,
in order to perfect and protect the Security Interest or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral (but any failure to request or assure that the Pledgor execute
and deliver such instruments or documents or to take such action shall not
affect or impair the validity, sufficiency or enforceability of this Agreement
and the Security Interest, regardless of whether any such item was or was not
executed and delivered or action taken in a similar context or on a prior
occasion).
Section 6. Voting Rights; Dividends; Etc.
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6(a) Subject to paragraph (d) of this Section 6, the Pledgor
shall be entitled to exercise or refrain from exercising any and all voting
and other consensual rights pertaining to the Pledged Shares or any other
stock that becomes part of the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, however, that the Pledgor shall not exercise or
refrain from exercising any such right if such action could reasonably be
expected to have a material adverse effect on the value of the Collateral
or any material part thereof.
6(b) Subject to paragraph (e) of this Section 6, the Pledgor
shall be entitled to receive, retain, and use in any manner not prohibited
by the Credit Agreement any and all interest and dividends paid in respect
of the Collateral; provided, however, that any and all
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(i) dividends paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Collateral,
(ii) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Collateral,
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by the Pledgor, be received in trust for
the benefit of the Secured Party, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Secured Party as
Collateral in the same form as so received (with any necessary endorsement
or assignment). The Pledgor shall, upon request by the Secured Party,
promptly execute all such documents and do all such acts as may be
necessary or desirable to give effect to the provisions of this Section
6(b).
6(c) The Secured Party shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights that it is
entitled to exercise pursuant to Section 6(a) hereof and to receive the
dividends and interest that it is authorized to receive and retain pursuant
to Section 6(b) hereof.
6(d) Upon the occurrence and during the continuance of any Event
of Default, the Secured Party shall have the right in its sole discretion,
and the Pledgor shall execute and deliver all such proxies and other
instruments as may be necessary or appropriate to give effect to such
right, to terminate all rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 6(a) hereof, and all such
rights shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights; provided, however, that the Secured
Party shall not be deemed to possess or have control over any voting rights
with respect to any Collateral unless and until the Secured Party has given
written notice to the Pledgor that any further exercise of such voting
rights by the Pledgor is prohibited and that the Secured Party and/or its
assigns will henceforth exercise such voting rights; and provided, further,
that neither the registration of any item of Collateral in the Secured
Party's name nor the exercise of any voting rights with respect thereto
shall be deemed to constitute a retention by the
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Secured Party of any such Collateral in satisfaction of the Obligations or
any part thereof.
6(e) Upon the occurrence and during the continuance of any Event
of Default:
(i) all rights of the Pledgor to receive the dividends and interest
that it would otherwise be authorized to receive and retain pursuant
to Section 6(b) hereof shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have
the sole right to receive and hold such dividends as Collateral, and
(ii) all payments of interest and dividends that are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section
6(e) shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Secured Party as Collateral in the same
form as so received (with any necessary endorsement).
Section 7. Transfers and Other Liens; Additional Shares.
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7(a) Except as may be permitted by the Credit Agreement, the
Pledgor agrees that it will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to,
any of the Collateral, or (ii) create or permit to exist any Lien, upon or
with respect to any of the Collateral.
7(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares that it controls not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to the Pledgor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each issuer of the
Pledged Shares.
Section 8. Secured Party Appointed Attorney-in-Fact. Effective upon
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and during the continuance of an Event of Default, the Pledgor hereby appoints
the Secured Party the Pledgor's attorney-in-fact, with full authority in the
place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in the Secured Party's good-faith discretion, to take any
action and to execute any instrument that the Secured Party may reasonably
believe necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of the Pledgor under Section 6 hereof), in a manner
consistent with the terms hereof, including, without limitation, to receive,
indorse and collect all instruments made payable to the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
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Section 9. Secured Par1y May Perform. Upon the occurrence and during
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the continuance of an Event of Default, if the Pledgor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by the Pledgor under Section
14 hereof.
Section 10. The Secured Party's Duties. The powers conferred on the
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Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Secured Party
shall be deemed to have exercised reasonable care in the safekeeping of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to the safekeeping which the Secured Party accords its own
property of like kind. Except for the safekeeping of any Collateral in its
possession and the accounting for monies and for other properties actually
received by it hereunder, the Secured Party shall have no duty, as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral. The
Secured Party will take action in the nature of exchanges, conversions,
redemption, tenders and the like requested in writing by the Pledgor with
respect to any of the Collateral in the Secured Party's possession if the
Secured Party in its reasonable judgment determines that such action will not
impair the Security Interest or the value of the Collateral, but a failure of
the Secured Party to comply with any such request shall not of itself be deemed
a failure to exercise reasonable care.
Section 11. Default. Each of the following occurrences shall
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constitute an Event of Default under this Agreement: (a) the Pledgor shall fail
to observe or perform any covenant or agreement applicable to the Pledgor under
this Agreement within fifteen (15) days after the earlier to occur of (i) the
date the Pledgor gives notice of such failure to the Secured Party, or (ii) the
date the Secured -Party gives notice of such failure to the Pledgor; or (b) any
representation or warranty made by the Pledgor in this Agreement or in any
financial statements, reports or certificates heretofore or at any time
hereafter submitted by or on behalf of the Pledgor to the Secured Party shall
prove to have been false or materially misleading when made; or (c) any Event of
Default shall occur under the Credit Agreement (beyond the applicable cure
period specified therein).
Section 12. Remedies upon Default. If any Event of Default shall have
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occurred and be continuing:
12(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the Uniform Commercial Code of the State of Minnesota (the
"Code") in effect at that time (whether or not the Code then applies to the
affected Collateral), and may, without notice except
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as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at
any of the Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Secured Party may
reasonably believe are commercially reasonable. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days'
prior notice to the Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by applicable law, the Pledgor hereby
waives all requirements of law, if any, relating to the marshalling of
assets which would be applicable in connection with the enforcement by the
Secured Party of its remedies hereunder, absent this waiver.
12(b) The Secured Party may notify any Person obligated on any
of the Collateral that the same has been assigned or transferred to the
Secured Party and that the same should be performed as requested by, or
paid directly to, the Secured Party, as the case may be. The Pledgor shall
join in giving such notice, if the Secured Party so requests. The Secured
Party may, in the Secured Party's name or in the Pledgor's name, demand,
xxx for, collect or receive any money or property at any time payable or
receivable on account of, or securing, any such Collateral or grant any
extension to, make any compromise or settlement with or otherwise agree to
waive, modify, amend or change the obligation of any such Person.
12(c) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, or then or at any time thereafter be
applied in whole or in part by the Secured Party against, all or any part
of the Obligations (including any expenses of the Secured Party payable
pursuant to Section 14 hereof).
Section 13. Waiver of Certain Claims. The Pledgor acknowledges that
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because of present or future circumstances, a question may arise under the
Securities Act of 1933, as from time to time amended (the "Securities Act"),
with respect to any disposition of the Collateral permitted hereunder. The
Pledgor understands that compliance with the Securities Act may very strictly
limit the course of conduct of the Secured Party if the Secured Party were to
attempt to dispose of all or any portion of the Collateral and may also limit
the extent to which or the manner in which any subsequent transferee of the
Collateral or any portion thereof may dispose of the same. There may be other
legal restrictions or limitations affecting the Secured Party in any attempt to
dispose of all or any portion of the Collateral
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under the applicable Blue Sky or other securities laws or similar laws analogous
in purpose or effect. The Secured Party may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such Collateral for their own account for
investment only and not to engage in a distribution or resale thereof. The
Pledgor agrees that to the extent not in violation of applicable law, the
Secured Party shall not incur any liability, and any liability of the Pledgor
for any deficiency shall not be impaired, as a result of the sale of the
Collateral or any portion thereof at any such private sale in a manner that the
Secured Party reasonably believes is commercially reasonable (within the meaning
of Section 9-504(3) of the Uniform Commercial Code). The Pledgor hereby waives
any claims against the Secured Party arising by reason of the fact that the
price at which the Collateral may have been sold at such sale was less than the
price that might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Secured Party shall accept the
first offer received and does not offer any portion of the Collateral to more
than one possible purchaser. The Pledgor further agrees that to the extent not
in violation of applicable law (including federal and state securities laws),
the Secured Party has no obligation to delay sale of any Collateral for the
period of time necessary to permit the issuer of such Collateral to qualify or
register such Collateral for public sale under the Securities Act, applicable
Blue Sky laws and other applicable state and federal securities laws, even if
said issuer would agree to do so. Without limiting the generality of the
foregoing, the provisions of this Section would apply if, for example, the
Secured Party were to place all or any portion of the Collateral for private
placement by an investment banking firm, or if such investment banking firm
purchased all or any portion of the Collateral for its own account, or if the
Secured Party placed all or any portion of the Collateral privately with a
purchaser or purchasers.
Section 14. Costs and Expenses; Indemnity. The Pledgor will pay or
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reimburse the Secured Party on demand for all reasonable out-of-pocket expenses
(including in each case all filing and recording fees and taxes and all
reasonable fees and expenses of counsel and of any experts and agents) incurred
by the Secured Party in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Security Interest. The Pledgor shall indemnify and hold the
Secured Party harmless from and against any and all claims, losses and
Liabilities (including reasonable attorneys' fees) resulting from this Agreement
(including enforcement of this Agreement) or the Secured Party's actions
pursuant hereto, except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct. Any liability of the Pledgor to
indemnify and hold the Secured Party harmless pursuant to the preceding sentence
shall be part of the Obligations secured by the Security Interest. The
obligations of the Pledgor under this Section shall survive any termination of
this Agreement.
Section 15. Waivers and Amendments; Remedies. Notwithstanding any
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provisions to the contrary herein, any term of this Agreement may be amended
with the
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written consent of the Pledgor; provided that no amendment, modification or
waiver of any provision of this Agreement or consent to any departure herefrom
by the Pledgor or other party thereto shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the purpose for which given. The Security Interest
can be released, only explicitly in a writing signed by the Secured Party. A
waiver so signed shall be effective only in the specific instance and for the
specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured
Party. All rights and remedies of the Secured Party shall be cumulative and may
be exercised singly in any order or sequence, or concurrently, at the Secured
Party's option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other.
Section 16. Waiver of Defenses. The Pledgor waives the benefit of
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any and all defenses and discharges available to a guarantor, surety, indorser
or accommodation party, dependent on its character as such. Without limiting
the generality of the foregoing, the Pledgor (in such capacity) waives
presentment, demand for payment, and notice of nonpayment or protest of the Note
or any other instrument evidencing any of the Obligations; and the Pledgor
agrees that the Pledgor's liability hereunder and the Security Interest hereby
created shall not be affected or impaired in any way by any of the following
acts and things (which the Secured Party may do from time to time without notice
to the Pledgor): (a) by any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification, or other disposition of any of the Obligations or any
evidence thereof or any collateral therefor, (b) by any acceptance or release of
collateral for or guarantors of any of the Obligations, (c) by any failure,
neglect or omission to realize upon or protect any of the Obligations or to
obtain, perfect, enforce or realize upon any collateral therefor or to exercise
any Lien upon or right of appropriation of any moneys, credits or property
toward the liquidation of any of the Obligations, or (d) by any application of
payments or credits upon any of the Obligations. The Secured Party shall not be
required, before exercising its rights under this Agreement, to first resort for
payment of any of the Obligations to any Borrower or any other Persons, its or
their properties or estates, or any collateral, property, Liens or other rights
or remedies whatsoever. The Pledgor agrees not to exercise any right of
contribution, recourse, subrogation or reimbursement available to the Pledgor
against any Borrower or any other Person or property, unless and until all
Obligations and all other debts, liabilities and obligations owed by each
Borrower and the Pledgor to the Banks and the Agent have been paid and
discharged. The Pledgor expects to derive benefits from the transactions
resulting in the creation of the Obligations. The Secured Party may rely
conclusively on the continuing warranty, hereby made, that the Pledgor continues
to be benefitted by the Banks' extension of credit accommodations to each
Borrower and the Secured Party shall have no duty to inquire into or confirm the
receipt of any such benefits, and this Agreement shall be effective and
enforceable by the Secured Party without regard to the receipt, nature or value
of any such benefits.
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Section 17. Notices. Except when telephonic notice is expressly
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authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from three days after the date of mailing if mailed.
Section 18. Representations and Warranties. The Pledgor hereby
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represents and warrants to the Secured Party that:
18(a) The Pledgor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal right
to own and operate its properties and to conduct the business in which it
is currently engaged.
18(b) The Pledgor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Agreement and has taken all necessary corporate action to
authorize such execution, delivery and performance.
18(c) This Agreement constitutes a legal, valid and binding
obligation of the Pledgor enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
18(d) The execution, delivery and performance of this
Agreement will not (i) violate any provision of any law, statute, rule or
regulation or any order, writ, judgment, injunction, decree, determination
or award of any court, governmental agency or arbitrator presently in
effect having applicability to the Pledgor, (ii) violate or contravene any
provision of the Articles (Certificate) of Incorporation or bylaws of the
Pledgor, or (iii) result in a breach of or constitute a default under any
indenture, loan or credit agreement or any other agreement, lease or
instrument to which the Pledgor is a party or by which it or any of its
properties may be bound or result in the creation of any Lien thereunder.
The Pledgor is not in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or
other agreement, lease or instrument in any case in which the consequences
of such default
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or violation could have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the
Pledgor.
18(e) Except for any filings, recordings-and registrations to
perfect the Security Interest, no order, consent, approval, license,
authorization or validation of, or filing, recording or registration with,
or exemption by, any governmental or public body or authority is required
on the part of the Pledgor to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity,
binding effect or enforceability of, this Agreement.
18(f) There are no actions, suits or proceedings pending or,
to the knowledge of the Pledgor, threatened against or affecting the
Pledgor or any of its properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Pledgor, would have a material adverse effect
on the business, operations, property or condition (financial or otherwise)
of the Pledgor or on the ability of the Pledgor to perform its obligations
hereunder.
Section 19. Pledgor Acknowledgements. The Pledgor hereby
------------------------
acknowledges that (a) the Pledgor has been advised by counsel in the
negotiation, execution and delivery of this Agreement, (b) the Banks and the
Secured Party have no fiduciary relationship to the Pledgor, the relationship
being solely that of debtor and creditor, and (c) no joint venture exists
between the Pledgor, the Secured Party and the Banks.
Section 20. Continuing Security Interest; Assignments under Credit
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Agreement. This Agreement shall create a continuing security interest in the
---------
Collateral and shall (a) remain in full force and effect until the payment in
full of the Obligations (except for contingent indemnity and other contingent
obligations not yet due and payable) and the expiration of the obligation, if
any, of the Banks to extend credit accommodations to any Borrower, (b) be
binding upon the Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of the Secured Party hereunder, to the benefit of
the Banks and the Agent, and be enforceable by, the Secured Party, and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), the Banks or the Agent may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement to any other Person to the extent and in the manner provided in the
Credit Agreement, and may transfer all or any portion of its rights under this
Pledge Agreement to such Persons in connection therewith.
Section 21. Termination of Security Interest. Upon payment in full
--------------------------------
of the Obligations (except for contingent indemnity and other contingent
Obligations not yet due and payable) and the expiration of any obligation of the
Banks to extend credit accommodations to any Borrower, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Pledgor. Upon any such termination, the Secured Party will
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return to the Pledgor such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination. Any reversion or return of the Collateral upon termination of this
Agreement and any instruments of transfer or termination shall be at the expense
of the Pledgor and shall be without warranty by, or recourse on, the Secured
Party. As used in this Section, "Pledgor" includes any assigns of Pledgor, any
Person holding a subordinate security interest in any part of the Collateral or
whoever else may be lawfully entitled to any part of the Collateral.
Section 22. Governing Law and Construction. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED
STATES APPLICABLE TO NATIONAL BANKS; PROVIDED, HOWEVER, THAT NO EFFECT SHALL BE
GIVEN TO CONFLICT OF LAWS PRINCIPLES OF THE STATE OF MINNESOTA, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF MINNESOTA.
Whenever possible, each provision of this Agreement and any other statement,
instrument or transaction contemplated hereby or relating hereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement or any other statement, instrument
or transaction contemplated hereby or relating hereto shall be held to be
prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement or any other statement, instrument or transaction contemplated hereby
or relating hereto.
Section 23. Consent to Jurisdiction. AT THE OPTION OF THE BANK,
-----------------------
THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT
SITTING IN HENNEPIN COUNTY OR XXXXXX COUNTY, MINNESOTA; AND THE PLEDGOR CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE PLEDGOR COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
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Section 24. Waiver of July Trial. EACH OF THE PLEDGOR AND THE
--------------------
BANK, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREB Y.
Section 25. Counterparts. This Agreement may be executed in any
--------------
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 26. General. All representations and warranties contained
-------
in this Agreement or in any other agreement between the Pledgor and the Bank
shall survive the execution, delivery and performance of this Agreement and the
creation and payment of the Obligations. The Pledgor waives notice of the
acceptance of this Agreement by the Bank. Captions in this Agreement are for
reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PLEDGOR:
OMEGA HOLDINGS, INC.
By___________________________________
Name_________________________________
Title________________________________
Address for Pledgor:
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Address for the Bank:
First Bank National Association
First Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, XXXX0000
Telecopier No.: (000) 000-0000
S-1
SCHEDULE TO
HOLDINGS PLEDGE
AGREEMENT
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PERCENTAGE CLASS OF CERTIFICATE NUMBER OF
ISSUER OWNERSHIP STOCK NO.'S PAR VALUE SHARES
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1. Omega Cabinets, Ltd. 100% Common 2, 8 $.01 1000
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