EXHIBIT 99.1
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
January 28, 1999
among
MOHAWK INDUSTRIES, INC.,
FIRST UNION NATIONAL BANK
and
WACHOVIA BANK, N.A.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................ 1
SECTION 1.01. Definitions........................................................................ 1
SECTION 1.02. Accounting Terms and Determinations................................................ 16
SECTION 1.03. References......................................................................... 17
SECTION 1.04. Use of Defined Terms............................................................... 17
SECTION 1.05. Terminology........................................................................ 17
ARTICLE II THE CREDITS........................................................................... 17
SECTION 2.01. Commitments to Lend................................................................ 17
SECTION 2.02. Method of Borrowing................................................................ 18
SECTION 2.03. Notes.............................................................................. 19
SECTION 2.04. Maturity of Loans.................................................................. 20
SECTION 2.05. Interest Rates..................................................................... 20
SECTION 2.06. Fees............................................................................... 23
SECTION 2.07. Optional Termination or Reduction of Commitments................................... 23
SECTION 2.08. Mandatory Reduction and Termination of Commitments................................. 24
SECTION 2.09. Optional Prepayments............................................................... 24
SECTION 2.10. Mandatory Prepayments.............................................................. 24
SECTION 2.11. General Provisions as to Payments.................................................. 24
SECTION 2.12. Computation of Interest and Fees................................................... 25
SECTION 2.13. Letters of Credit.................................................................. 25
SECTION 2.14. Guarantee of Reimbursement Obligations............................................. 27
SECTION 2.15. Assignment of Commitment and Assumption of Loans under Original Credit Agreement... 29
(i)
ARTICLE III CONDITIONS TO BORROWINGS............................................................. 29
SECTION 3.01. Conditions to Closing.............................................................. 29
SECTION 3.02. Conditions to All Borrowings....................................................... 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................ 31
SECTION 4.01. Corporate Existence and Power...................................................... 31
SECTION 4.02. Corporate and Governmental Authorization; No Contravention......................... 31
SECTION 4.03. Binding Effect..................................................................... 31
SECTION 4.04. Financial Information.............................................................. 32
SECTION 4.05. No Litigation...................................................................... 32
SECTION 4.06. Compliance with ERISA.............................................................. 32
SECTION 4.07. Taxes.............................................................................. 32
SECTION 4.08. Subsidiaries....................................................................... 33
SECTION 4.09. Not an Investment Company.......................................................... 33
SECTION 4.10. Ownership of Property; Liens....................................................... 33
SECTION 4.11. No Default......................................................................... 33
SECTION 4.12. Full Disclosure.................................................................... 33
SECTION 4.13. Environmental Matters.............................................................. 34
SECTION 4.14. Capital Stock...................................................................... 34
SECTION 4.15. Margin Stock....................................................................... 35
SECTION 4.16. Insolvency......................................................................... 35
SECTION 4.17. Year 2000 Issues................................................................... 35
ARTICLE V COVENANTS.............................................................................. 35
SECTION 5.01. Information........................................................................ 35
SECTION 5.02. Inspection of Property, Books and Records.......................................... 37
SECTION 5.03. Year 2000 Issues................................................................... 38
SECTION 5.04. Debt to Capitalization Ratio....................................................... 38
(ii)
SECTION 5.05. Debt to EBITDA Ratio............................................................... 38
SECTION 5.06. Restricted Payments................................................................ 38
SECTION 5.07. Investments........................................................................ 38
SECTION 5.08. Negative Pledge.................................................................... 39
SECTION 5.09. Maintenance of Existence........................................................... 40
SECTION 5.10. Dissolution........................................................................ 40
SECTION 5.11. Consolidations, Mergers and Sales of Assets........................................ 40
SECTION 5.12. Use of Proceeds.................................................................... 41
SECTION 5.13. Compliance with Laws; Payment of Taxes............................................. 41
SECTION 5.14. Insurance.......................................................................... 42
SECTION 5.15. Change in Fiscal Year.............................................................. 42
SECTION 5.16. Maintenance of Property............................................................ 42
SECTION 5.17. Environmental Notices.............................................................. 42
SECTION 5.18. Environmental Matters.............................................................. 42
SECTION 5.19. Environmental Release.............................................................. 42
SECTION 5.20. Debt of Subsidiaries............................................................... 43
SECTION 5.21. Future Subsidiaries................................................................ 43
SECTION 5.22. Failure to Restructure Other Debt.................................................. 43
ARTICLE VI DEFAULTS.............................................................................. 44
SECTION 6.01. Events of Default.................................................................. 44
ARTICLE VII CHANGE IN CIRCUMSTANCES; COMPENSATION................................................ 47
SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair........................... 47
SECTION 7.02. Illegality......................................................................... 47
SECTION 7.03. Increased Cost and Reduced Return.................................................. 48
SECTION 7.04. Base Rate Loans Substituted for Euro-Dollar Loans.................................. 49
(iii)
SECTION 7.05. Compensation....................................................................... 50
ARTICLE VIII MISCELLANEOUS....................................................................... 51
SECTION 8.01. Notices............................................................................ 51
SECTION 8.02. No Waivers......................................................................... 51
SECTION 8.03. Expenses; Documentary Taxes........................................................ 51
SECTION 8.04. Indemnification.................................................................... 51
SECTION 8.05. Sharing of Setoffs................................................................. 52
SECTION 8.06. Amendments and Waivers............................................................. 53
SECTION 8.07. No Margin Stock Collateral......................................................... 53
SECTION 8.08. Successors and Assigns............................................................. 53
SECTION 8.09. Confidentiality.................................................................... 56
SECTION 8.10. Representation by Banks............................................................ 56
SECTION 8.11. Obligations Several................................................................ 56
SECTION 8.12. Georgia Law........................................................................ 56
SECTION 8.13. Interpretation..................................................................... 56
SECTION 8.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION...................................... 57
SECTION 8.15. Counterparts....................................................................... 57
(iv)
EXHIBIT A-1 Form of Tranche A Loan Note
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EXHIBIT A-2 Form of Tranche B Loan Note
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EXHIBIT B Form of Opinion of Counsel for the Borrower
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EXHIBIT C Form of Assignment and Acceptance
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EXHIBIT D Form of Notice of Borrowing
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EXHIBIT E Form of Compliance Certificate
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EXHIBIT F Form of Subsidiary Guaranty
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Schedule 4.05 Litigation
Schedule 4.08 Subsidiaries
(v)
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of January
28, 1999, among MOHAWK INDUSTRIES, INC., FIRST UNION NATIONAL BANK, (successor
by merger to First Union National Bank of Georgia) WACHOVIA BANK, N.A.
(successor by merger to Wachovia Bank of Georgia, N.A.), and the other Banks
from time to time party hereto. This Agreement is an amendment and restatement
of that certain Third Amended and Restated Credit Agreement, dated as of April
15, 1997 (the "Original Credit Agreement"; as amended and restated hereby, the
"Credit Agreement").
Upon the occurrence of the Effective Date, the parties hereto agree
that the Original Credit Agreement is hereby amended, restated and superceded in
its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01
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shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person"), (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person, or (iii) any Person (other
than a Subsidiary) of which the Borrower owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Fourth Amended and Restated Credit Agreement,
together with all amendments and modifications hereto.
"Aladdin" means Aladdin Manufacturing Corporation, a Delaware
corporation.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Applicant" means each Person which, as the initial applicant or a
Person that has assumed, pursuant to a written agreement in form reasonably
acceptable to the Required Banks, the obligations of an applicant, is liable for
the reimbursement obligations with respect to a Letter of Credit.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Approved Investment" means an Investment in compliance with the
Investment Guidelines.
"Asset Securitization" means the sale of accounts receivable and
related assets of a Person in connection with a bona fide asset securitization
program.
"Assignee" has the meaning set forth in Section 8.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 8.08(c) in the form of Exhibit C.
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"Authority" has the meaning set forth in Section 7.02.
"Banks" collectively means First Union, Wachovia, and the other Banks
from time to time party hereto.
"Base Rate" means that interest rate as denominated and publicly
announced by Wachovia from time to time as its "prime rate". The Base Rate is
but one of several interest rate bases used by Wachovia. Wachovia lends at
interest rates above and below the Base Rate.
"Base Rate Loan" means a Loan to be made as a Base Rate Loan pursuant
to the applicable Notice of Borrowing, Section 2.02(f), or Article VII, as
applicable.
"Borrower" means Mohawk Industries, Inc., a Delaware corporation, and
its successors and assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to
the Borrower at the same time by the Banks pursuant to Article II. A Borrowing
is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans.
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"Capital Stock" means any nonredeemable capital stock of the Borrower
or any Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"Catoosa Co. IRB" means that issuance of certain bonds by The
Development Authority of Catoosa County, Georgia, pursuant to the terms and
conditions set forth in that certain Indenture of Trust dated as of November 1,
1991.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. (S) 9601 et. seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 7.02.
"Closing Date" means January 28, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank in the signature pages hereof as its Tranche A
Commitment and Tranche B Commitment, as such amount may be reduced from time to
time pursuant to Sections 2.07 and 2.08.
"Compliance Certificate" has the meaning set forth in Section 5.01(d).
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Lease Expense" for any period means all rental payments,
paid or accrued during such period, of the Borrower and its Consolidated
Subsidiaries under all operating leases and rental agreements.
3
"Consolidated Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries for such period determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
Notwithstanding the foregoing, the Banks hereby agree that the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 121 ("FAS 121") relating to, among other things, the accounting for the
impairment of long-lived assets, and its effect upon the consolidated financial
statements of the Borrower as of and for the Fiscal Year ended December 31,
1996, shall be disregarded for the purposes of determining Stockholders' Equity,
provided that any charge against income for the Fiscal Year ended December 31,
1996, resulting from the impairment of long-lived assets not exceed $2,000,000.
In addition, the Banks agree that the effect of that certain non-
recurring $4,000,000 charge, incurred by Aladdin during the fourth Fiscal
Quarter of 1995 as a result of income tax reimbursements made to certain
executives of Aladdin relating to their exercise of certain stock options, shall
be disregarded when determining Stockholders' Equity.
"Consolidated Net Worth" means at any time Stockholder's Equity.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Borrower and its Consolidated Subsidiaries during such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means, at any time, (x) the total assets
of the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth or reflected on the most recent consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, prepared in accordance with
GAAP, plus (y) the accounts receivable balance reported as of the last day of
the calendar month most recently ended by the Borrower or a Subsidiary with
respect to an Asset Securitization.
"Consolidated Total Capital" means, at any time, the sum of the
following as of such time (i) Consolidated Net Worth, and (ii) Consolidated
Debt.
4
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, all of
the following as of such date (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, and (x) the total accounts receivable
reported as sold as of the last day of the calendar month most recently ended by
the Borrower or a Subsidiary with respect to an Asset Securitization. For all
purposes of this Agreement, the amount of a Person's Debt under a loan or lease
agreement between such Person and a governmental agency that has issued
industrial development bonds or similar instruments, the repayment of which is
secured by the payment obligations of such Person under such loan or lease
agreement, shall be equal to the aggregate principal amount of such bonds or
instruments outstanding at the time of determination less the amount of proceeds
of such bonds or instruments which at such time are on deposit with a trustee or
other fiduciary in a "construction" fund, or other similar fund which would be
available to such trustee or other fiduciary to repay the bonds or other
instruments if then due and payable.
"Debt to Capitalization Ratio" means the ratio of Consolidated Debt to
Consolidated Total Capital.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum of
2% plus the then highest interest rate (including the Applicable Margin) which
may be applicable to any Loans hereunder, including, without limitation, under
Section 7.06,
5
(irrespective of whether any such class of Loans are actually outstanding
hereunder).
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Dividends" means for any period the sum of all dividends paid or
declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of additional
Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia are authorized by law to close.
"Effective Date" means, so long as on such date all conditions set
forth in Section 3.01 have been satisfied or waived in writing, the earlier of
to occur of (x) February 15, 1999, or (y) the Image Acquisition Date.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of either the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether pending or,
to the knowledge of the Borrower or any Subsidiary threatened, arising from and
in any way associated with any Environmental Requirements and which would have
or create a reasonable possibility of causing a Material Adverse Effect.
6
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any, violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to any of the Borrower, any
Subsidiary, or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar Loan
pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for
7
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if
such rate is not so published for any day, the Federal Funds Rate for such day
shall be the average rate charged to Wachovia on such day on such transactions,
as determined by Wachovia.
"First Union" means First Union National Bank, a national banking
association, and its successors and, as the context requires, its permitted
assigns.
"First Union Letter of Credit" means that certain irrevocable direct-
pay letter of credit issued by First Union, on behalf of Image Industries, Inc.,
as Applicant, dated as of September 17, 1997, designated as no. S130879, for the
benefit of Reliance Trust Company, as trustee under the Summerville City IRB.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Galaxy" means Galaxy Carpet ▇▇▇▇▇, Inc., a Delaware corporation,
which corporation was liquidated into the Borrower as successor thereto.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
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not include endorsements for collection or deposit in the ordinary
8
course of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. (S) 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or in
any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation or (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Image Acquisition Date" means the date on which the Borrower or any
Subsidiary of the Borrower has acquired all or substantially all of the assets
of Image Industries, Inc.
"Intercreditor Agreement" means that certain Second Amended and
Restated Intercreditor Agreement, dated as of September 16, 1994, among First
Union, Wachovia, and the other parties thereto, together with all amendments and
supplements thereto.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
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(a) any Interest Period (other than an Interest Period determined
pursuant to paragraph (c) below) which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall,
subject to paragraph (c) below, end on the last Euro-Dollar Business Day of
the appropriate subsequent calendar month; and
9
(c) any Interest Period which begins before the Termination Date and
would otherwise end after the Termination Date shall end on the Termination
Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
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(a) any Interest Period (other than an Interest Period determined
pursuant to paragraph (b) below) which would otherwise end on a day which
is not a Domestic Business Day shall be extended to the next succeeding
Domestic Business Day; and
(b) any Interest Period which begins before the Termination Date and
would otherwise end after the Termination Date shall end on the Termination
Date.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Investment Guidelines" means the guidelines for investment of funds
of the Borrower and the Subsidiaries as approved by the Board of Directors of
the Borrower or an authorized executive committee thereof and in effect on the
Closing Date, as modified or supplemented from time to time with the approval of
the Board of Directors of the Borrower or an authorized executive committee.
"Issuer" means either Wachovia or First Union in its capacity as
issuer of a Letter of Credit.
"LC Commitment Percentage" means 50% of the unfunded amount under a
Letter of Credit.
"Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower.
"Letter of Credit Fee" means a letter of credit fee in an amount equal
to the Applicable Margin for Euro-Dollar Loans multiplied times the average
daily amount of the Letter of Credit Obligations, computed for the actual number
of days elapsed on the basis of a 360 day year.
10
"Letter of Credit Obligations" shall mean, at any time, the aggregate
unfunded amount of the outstanding Letters of Credit.
"Letter(s) of Credit" means (i) the Wachovia Letter of Credit, and,
(ii) on and after, and only on and after, the Tranche B Commitment Effective
Date, the First Union Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement, which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law. For
the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a Tranche A Loan, Tranche B Loan, Base Rate Loan or a
Euro-Dollar Loan and "Loans" means Tranche A Loans, Tranche B Loans, Base Rate
Loans or Euro-Dollar Loans or both.
"Loan Documents" means this Agreement, the Notes, and any other
document evidencing, relating to or securing the Loans, and any other document
or instrument delivered in connection with this Agreement, the Notes or the
Loans, as such documents and instruments may be amended or modified from time to
time.
"Loans" means Loans made from the Banks to the Borrower from time to
time pursuant to this Agreement.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Margin Stock" means "margin stock" as defined in Regulations T, U or
X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of the
Borrower and its
11
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Banks under the Loan Documents, or the ability of the Borrower to perform its
obligations under the Loan Documents to which it is a party, as applicable, or
(c) the legality, validity or enforceability of any Loan Document.
"Material Subsidiary" means, as of the date of any determination
thereof, any Subsidiary that either: (a) owns assets having a book value equal
to or greater than 5.0% of Consolidated Total Assets, or (b) had Net Income for
any prior period of four consecutive Fiscal Quarters equal to or greater than
5.0% of Consolidated Net Income for the same four Fiscal Quarter period.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Notes" means, as the context may require, the Tranche A Notes and/or
the Tranche B Notes, together with all amendments, consolidations,
modifications, renewals, and supplements thereto.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Operating Profits" means, as applied to any Person for any period,
the operating income of such Person for such period, as determined in accordance
with GAAP.
"Original Credit Agreement" has the meaning set forth in the preamble
to this Agreement.
"Other Debt" means the Debt owed by Aladdin to the parties other than
the Banks to the Intercreditor Agreement.
"Participant" has the meaning set forth in Section 8.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Performance Pricing Determination Date" has the meaning set forth in
Section 2.05(a).
"Permitted Acquisition" means a non-hostile acquisition, however
structured, of all or substantially all of the assets of, or a majority of all
the issued and outstanding capital stock of, a Person in a Permitted Line or
Business.
12
"Permitted Line of Business" means the manufacturing, marketing and/or
distribution of commercial or home furnishings and floor coverings and other
reasonably related products and any "vertical integration" with respect thereto.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, joint venture, limited liability company, a trust or
any other entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Borrower or any Subsidiary (including, without limitation,
the Borrower), wherever located.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time
13
to time, together with all official rulings and interpretations issued
thereunder.
"Reimbursement Agreement" means each reimbursement agreement executed
and delivered by an Applicant with respect to a Letter of Credit, as amended
from time to time.
"Required Banks" means at any time Banks having at least 66 2/3% of
the aggregate amount of the Commitments, or if the Commitments are no longer in
effect, holding at least 66 2/3% of the aggregate outstanding principal amount
of the Notes.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock (except shares acquired upon the conversion thereof into other
shares of its capital stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Summerville City IRB" means that issuance of certain bonds by The
Development Authority of the City of Summerville, Georgia, pursuant to the terms
and conditions set forth in that certain Trust Indenture dated as of September
1, 1997.
"Stockholders' Equity" means, at any time, the stockholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
--- ---------
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to, (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, (D) employee stock ownership plan debt guarantees, and (E)
foreign currency translation adjustments.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Subsidiary Guarantor" means a Subsidiary which has executed a
Subsidiary Guaranty in connection herewith or pursuant to Section 5.21.
14
"Subsidiary Guaranties" means any one, or more or all, as the context
shall require or permit, of those certain Subsidiary Guaranty Agreements,
substantially in the form of Exhibit F, executed and delivered by the Subsidiary
Guarantors from time to time in favor of the Banks, together with all amendments
and modifications thereto.
"Termination Date" means, respectively, as the context may require,
the Tranche A Termination Date and the Tranche B Termination Date.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Tranche A Commitment" means, with respect to each Bank, the amount
set forth opposite the name of such Bank in the signature pages hereof as its
Tranche A Commitment.
"Tranche A Loan Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A-1, evidencing the obligation of the
-----------
Borrower to repay the Tranche A Loans, together with all amendments,
consolidations, modifications, renewals, and supplements thereto.
"Tranche A Loans" means Loans made to the Borrower by the Banks
pursuant to Section 2.01(a).
"Tranche A Termination Date" means January 28, 2004.
"Tranche B Commitment" means with respect to each Bank, the amount set
forth opposite the name of such Bank in the signature pages hereof as its
Tranche B Commitment.
"Tranche B Commitment Effective Date" has the meaning set forth in
Section 2.01(b).
"Tranche B Loan Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A-2, evidencing the obligations of the
-----------
Borrower to repay the Tranche B Loans, together with all amendments,
consolidations, modifications, renewals, and supplements thereto.
"Tranche B Loans" means Loans made to the Borrower by the Banks
pursuant to Section 2.01(b).
"Tranche B Termination Date" means 364 days from the Tranche B
Commitment Effective Date.
15
"Transferee" has the meaning set forth in Section 8.08(d).
"Unused Tranche A Commitment" means at any date, with respect to any
Bank, an amount equal to its Tranche A Commitment less the aggregate outstanding
principal amount of its Tranche A Loans.
"Unused Tranche B Commitment" means at any date after the Tranche B
Commitment Effective Date, with respect to any Bank, an amount equal to its
Tranche B Commitment less the aggregate outstanding principal amount of its
Tranche B Loans.
"Wachovia" means Wachovia Bank, N.A., a national banking association,
and its successors and, as the context requires, its permitted assigns.
"Wachovia Letter of Credit" means that certain irrevocable direct-pay
letter of credit issued by Wachovia, on behalf of Aladdin, successor by merger
to Galaxy, as Applicant, dated as of January 13, 1995, designated with I.D.
Number LC870-007339, for the benefit of NationsBank of Georgia, N.A., as trustee
under the Industrial Revenue Bond referenced therein.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower
or a Consolidated Subsidiary.
"Year 2000 Issues" shall mean the actual and reasonably anticipated
costs, claims, losses, and liabilities associated with the inability of certain
computer applications to handle effectively data that includes dates on and
after January 1, 2000, as such inability in respect of the Borrower or any
Subsidiary and in respect of their respective material customers, suppliers and
vendors affects the business, operations, and financial condition of the
Borrower or any Subsidiary.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the relevant Borrower's independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the relevant Borrower delivered to the
Banks unless with respect to any such change concurred in by the relevant
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of any of the Loan Documents: (i) such
relevant Borrower shall have objected to
16
determining such compliance on such basis at the time of delivery of such
financial statements, or (ii) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events the Banks and such relevant Borrower shall negotiate in good faith
to resolve any existing disagreements regarding such calculations, provided,
that if such disagreements are not resolved within 30 days after receipt of a
notice of objection, such calculations shall be made on a basis consistent with
those used in the preparation of the latest financial statements as to which
such objection shall not have been made (which, if objection is made in respect
of the first financial statements delivered under Section 5.01, shall mean the
financial statements referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated, references in
----------
this Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to Articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this
--------------------
Agreement shall have the same defined meanings when used in any of the other
Loan Documents, unless otherwise defined therein or unless the context shall
require otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this
-----------
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDITS
17
SECTION 2.01. Commitments to Lend. (a) Each Bank severally agrees, on
-------------------
the terms and conditions set forth herein, to make Tranche A Loans to the
Borrower from time to time before the Tranche A Termination Date; provided,
--------
that, immediately after each such Loan is made, the aggregate outstanding
----
principal amount of Tranche A Loans by such Bank shall not exceed the amount of
its Tranche A Commitment. Each Base Rate Borrowing under this Section shall be
in an aggregate principal amount of $100,000 or any larger amount (except that
any such Borrowing may be in the aggregate amount of the Unused Tranche A
Commitments) and shall be made from the several Banks ratably in proportion to
their respective Tranche A Commitments. Each Euro-Dollar Borrowing under this
Section shall be in an aggregate principal amount of $2,000,000 or any larger
multiple of $500,000 and shall be made from the several Banks ratably in
proportion to their respective Tranche A Commitments. Within the foregoing
limits, the Borrower may borrow under this Section, repay, reborrow, and to the
extent permitted by Section 2.09, prepay Loans, under this Section at any time
before the Tranche A Termination Date. As of the date of this Agreement, the
outstanding Tranche A Loans are due and owing in accordance with the terms
hereof without counterclaim, offset or other defense.
(b) Provided that the Image Acquisition Date occurs on or before
February 15, 1999 (such occurrence, if the same occurs, time being of the
essence, is referred to herein as the "Tranche B Commitment Effective Date"),
each Bank severally agrees, on the terms and conditions set forth herein, to
make Tranche B Loans to the Borrower from time to time before the Tranche B
Termination Date; provided, that, immediately after each such Loan is made, the
-------- ----
aggregate outstanding principal amount of Tranche B Loans by such Bank shall not
exceed the amount of its Tranche B Commitment. Each Base Rate Borrowing under
this Section shall be in an aggregate principal amount of $100,000 or any larger
amount (except that any such Borrowing may be in the aggregate amount of the
Unused Tranche B Commitment) and shall be made from the several Banks ratably in
proportion to their respective Tranche B Commitments. Each Euro-Dollar
Borrowing under this Section shall be in an aggregate principal amount of
$2,000,000 or any larger multiple of $500,000 and shall be made from the several
Banks ratably in proportion to their respective Tranche B Commitments. Within
the foregoing limits, the Borrower may borrow under this Section, repay,
reborrow, and to the extent permitted by Section 2.09, prepay Loans, under this
Section at any time before the Tranche B Termination Date. In no event shall
any Bank be obligated to fund any Tranche B Loans in the event the Image
Acquisition Date does not occur on or before February 15, 1999.
(c) Notwithstanding the foregoing Sections 2.01(a) and (b), in no
event shall the principal amount of all Loans made by any Bank outstanding at
any one time exceed the total amount of
18
such Bank's Commitment minus such Bank's pro rata share of the Letter of Credit
-----
Obligations (whether as issuer or participant).
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give each
-------------------
Bank notice (a "Notice of Borrowing"), which shall be substantially in the form
of Exhibit D, on the same day for each Base Rate Borrowing but, in any case,
---------
prior to 12:00 P.M., and at least 3 Euro-Dollar Business Days before each Euro-
Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans,
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period, and
(v) whether the Loans comprising such Borrowing are Tranche A Loans
or Tranche B Loans.
(b) Upon receipt of a Notice of Borrowing by any Bank, such Notice
of Borrowing shall not thereafter be revocable.
(c) Not later than 4:00 P.M. (Atlanta, Georgia time) on the date of
each Borrowing, each Bank shall (except as provided in paragraph (d) of this
Section) make available its ratable share of such Borrowing, in Federal or other
funds immediately available in Atlanta, Georgia, to the Borrower at such Bank's
Lending Office.
(d) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank, such
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the Borrower as
provided in paragraph (c) of this Section, or remitted by the Borrower to such
Bank as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived.
19
(f) In the event that a Notice of Borrowing fails to specify whether
the Loans comprising such Borrowing are to be Base Rate Loans or Euro-Dollar
Loans, such Loans shall be made as Base Rate Loans. If the Borrower is
otherwise entitled under this Agreement to repay any Loans maturing at the end
of an Interest Period applicable thereto with the proceeds of a new Borrowing,
and the Borrower fails to repay such Loans using its own moneys and fails to
give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an amount
equal to the principal amount of the Loans so maturing, and the Loans comprising
such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein, there
shall not be more than 12 interest rates (including the Applicable Margins)
applicable to the Loans at any given time.
SECTION 2.03. Notes. (a) The Tranche A Loans of each Bank shall be
-----
evidenced by a single Tranche A Note made by the Borrower payable to the order
of such Bank for the account of its Lending Office in an amount equal to the
original principal amount of such Bank's Tranche A Commitment. The Tranche B
Loans of each Bank shall be evidenced by a single Tranche B Note made by the
Borrower payable to the order of such Bank for the account of its Lending Office
in an amount equal to the original principal amount of such Bank's Tranche B
Commitment.
(b) Each Bank shall record, and prior to any transfer of its Notes
shall endorse on the schedule forming a part thereof appropriate notations to
evidence the date, amount and maturity of each Loan made by it, the date and
amount of each payment of principal made by the Borrower with respect thereto
and whether such Loan is a Base Rate Loan or Euro-Dollar Loan, and such schedule
shall constitute rebuttable presumptive evidence of the principal amount owing
and unpaid on such Bank's Notes; provided that the failure of any Bank to make
--------
any such recordation or endorsement shall not affect the obligation of the
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included in any Borrowing
-----------------
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing (subject to
subsequent refundings thereof) and all Loans shall mature and be due and payable
in
20
full (without further refundings thereof) on the applicable Termination Date.
SECTION 2.05. Interest Rates. (a) "Applicable Margin" means at all
--------------
times:
(i) -1.0% (negative) for all Base Rate Loans outstanding at any
time in an amount less than or equal to $10,000,000.00, and -0.25%
(negative) for all Base Rate Loans outstanding at any time in an amount
greater than $10,000,000.00 (provided, however, in no event shall the
amount of (x) the Applicable Margin for any Base Rate Loan plus the Base
Rate, be less than (y) the higher of (a) the Federal Funds Rate plus one-
half of one percent, or (b) the corresponding amount of the Applicable
Margin for any Euro-Dollar Loan plus the Adjusted London Interbank Offered
Rate);
(ii) for the period commencing on the Effective Date to and
including the first Performance Pricing Determination Date, for each Euro-
Dollar Loan, the percentage determined by reference to the table set forth
below as to such type of Loan and the Debt to Capitalization Ratio
calculated on a pro forma basis, as indicated on the Notice of Borrowing
delivered with respect to the Effective Date, subject to verification by
the Banks; and
(iii) from and after the first Performance Pricing Determination
Date, for each Euro-Dollar Loan, the percentage determined on each
Performance Pricing Determination Date by reference to the table set forth
below as to such type of Loan and the Debt to Capitalization Ratio for the
quarterly or annual period ending immediately prior to such Performance
Pricing Determination Date.
Debt to
Capitalization
Ratio Applicable Margin
-------------- -----------------
more than or equal to 0.50 to 1.0 0.500%
more than or equal to 0.45 to 1.0 but
less than 0.50 to 1.0 0.375%
more than or equal to 0.40 to 1.0 but
less than 0.45 to 1.0 0.275%
more than or equal to 0.30 to 1.0 but
less than 0.40 to 1.0 0.250%
less than 0.30 to 1.0 0.200%
21
In determining interest for purposes of this Section 2.05 and fees for
purposes of Section 2.06, the Borrower and the Banks shall refer to the
Borrower's most recent consolidated quarterly and annual (as the case may be)
financial statements delivered pursuant to Section 5.01(a) or (b), as the case
may be. The "Performance Pricing Determination Date" is the date which is the
last date on which such financial statements are permitted to be delivered
pursuant to Section 5.01(a) or (b), as applicable. Any such required change in
interest and fees shall become effective on such Performance Pricing
Determination Date, and shall be in effect until the next Performance Pricing
Determination Date, provided that no fees or interest shall be decreased
--------
pursuant to this Section 2.05 or Section 2.06 if an Event of Default is in
existence on the Performance Pricing Determination Date.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day plus (or
minus) the Applicable Margin. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of and, to the extent
permitted by applicable law, overdue interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin plus the applicable Adjusted
London Interbank Offered Rate for such Interest Period; provided that if any
--------
Euro-Dollar Loan shall, as a result of paragraph (1)(c) of the definition of
Interest Period, have an Interest Period of less than one month, such Euro-
Dollar Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 3 months, at intervals of 3 months after the first day
thereof. Any overdue principal of and, to the extent permitted by law, overdue
interest on any Euro-Dollar Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such
22
Euro-Dollar Loan, the rate per annum determined on the basis of the offered rate
for deposits in Dollars of amounts equal or comparable to the principal amount
of such Euro-Dollar Loan offered for a term comparable to such Interest Period,
which rates appear on Telerate Page 3750 effective as of 11:00 A.M., London
time, 2 Euro-Dollar Business Days prior to the first day of such Interest
Period, provided that (i) if more than one such offered rate appears on Telerate
Page 3750, the "London Interbank Offered Rate" will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of such offered
rates; (ii) if no such offered rates appear on such page, the "London Interbank
Offered Rate" for such Interest Period will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of rates quoted by not
less than two major banks in New York City, selected by Wachovia, at
approximately 10:00 A.M., New York City time, 2 Euro-Dollar Business Days prior
to the first day of such Interest Period, for deposits in Dollars offered to
leading European banks for a period comparable to such Interest Period in an
amount comparable to the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means, with respect to a given Bank,
for any day that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the actual reserve requirement for such Bank in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) Wachovia shall determine the interest rates applicable to the
Loans hereunder. Wachovia shall give prompt notice to the Borrower by
telecopier or hand delivery of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
SECTION 2.06. Fees. (a) The Borrower shall pay to each Bank, for the
----
ratable account of such Bank, a facility fee, calculated in the manner provided
in the last paragraph of Section 2.05(a)(iii), on the aggregate amount of such
Bank's Commitment (without taking into account the amount of the outstanding
Loans made by such Bank), at a rate per annum equal to: (i) for the period
commencing on the Closing Date to and including the first Performance Pricing
Determination Date, 0.15%; and (ii) from and after the first Performance Pricing
23
Determination Date, the percentage determined on each Performance Pricing
Determination Date by reference to the table set forth below and the Debt to
Capitalization Ratio for the quarterly or annual period ending immediately prior
to such Performance Pricing Determination Date:
Debt to
Capitalization
Ratio Facility Fee
-------------- ------------
more than or equal to 0.45 to 1.0 0.25%
more than or equal to 0.40 to 1.0 but
less than 0.45 to 1.0 0.20%
less than 0.40 to 1.0 0.15%
Such facility fees shall accrue from and including the Closing Date to (but
excluding the Termination Date) and shall be payable on each December 31, March
31, June 30, and September 30 and on the Termination Date.
(b) The Borrower shall pay to each Bank the fees payable in accordance
with the terms of that certain commitment letter among the Banks and the
Borrower dated as of January 5, 1999.
SECTION 2.07. Optional Termination or Reduction of Commitments. The
------------------------------------------------
Borrower may, upon at least 3 Domestic Business Days' notice to the Banks,
terminate at any time, or proportionately reduce the Unused Tranche A
Commitments or Unused Tranche B Commitments from time to time by an aggregate
amount of at least $10,000,000. Upon a reduction of the Unused Tranche A
Commitments or Unused Tranche B Commitments, each Bank's Commitments shall be
permanently and ratably reduced.
SECTION 2.08. Mandatory Reduction and Termination of Commitments. The
--------------------------------------------------
Tranche A Commitments shall terminate on the Tranche A Termination Date and the
Tranche B Commitments shall terminate on the Tranche B Termination Date and any
Tranche A or B Loans, as the case may be, then outstanding (together with
accrued interest thereon) shall be due and payable by the Borrower on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower may, upon notice
--------------------
to the Banks on the same day, prepay any Base Rate Borrowing in whole at any
time, or from time to time in part in amounts aggregating at least $100,000 or
any larger amount, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment.
24
(b) Subject to Section 7.05, the Borrower may, upon at least 2 Euro-
Dollar Business Days' notice to the Banks, prepay any Euro-Dollar Loan in whole
at any time, or from time to time in part, prior to the maturity thereof, in
amounts aggregating at least $1,000,000 or any larger multiple of $100,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of the prepayment.
(c) Upon any Bank's receipt of a notice of prepayment pursuant to this
Section, such notice shall not thereafter be revocable by the Borrower.
SECTION 2.10. Mandatory Prepayments. On each date on which the
---------------------
Commitments are reduced pursuant to Section 2.07 or Section 2.08, the Borrower
shall repay or prepay such principal amount of the outstanding Loans, if any
(together with interest accrued thereon), as may be necessary so that after such
payment the aggregate unpaid principal amount of the Loans does not exceed the
aggregate amount of the Commitments as then reduced.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
---------------------------------
shall make each payment of principal of, and interest on, each Bank's Loans and
of each Bank's fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time)
on the date when due, in Federal or other funds immediately available at the
place where payment is due, to such Bank at its address set forth on the
signature pages hereof.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of or interest on, the
Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding Euro-
Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day.
SECTION 2.12. Computation of Interest and Fees. Interest on Base Rate
--------------------------------
Loans shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day). Interest on Euro-Dollar Loans shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed, calculated as to each
Interest Period from and including the first day thereof to but excluding the
last day thereof. Any fees payable hereunder shall be computed on the basis of
a year of 360 days and paid for the actual number of days elapsed (including the
first day but excluding the last day).
25
SECTION 2.13. Letters of Credit. (a) Subject to the terms and
-----------------
conditions contained in this Agreement, with respect to the Letters of Credit,
the Borrower shall pay to the order of each Issuer the amount of the Letter of
Credit Fee payable with respect to its Letter of Credit (and such Issuer shall
pay to the other Bank such Bank's pro rata share thereof) (A) on the first day
of each Fiscal Quarter, (B) on the Termination Date and (C) if there are any
Letter of Credit Obligations on the Termination Date, on the first date
thereafter on which there are no Letter of Credit Obligations, in each case for
the previous period. Any payments made by the Issuers in honoring a draft or
other demand for payment presented in accordance with the terms of the Letters
of Credit shall be deemed to constitute a Borrowing of Base Rate Loans and which
shall be evidenced by the Tranche A Notes. After the occurrence and during the
continuation of an Event of Default, or upon the termination of this Agreement,
to the extent of any Letter of Credit Obligations, the Issuers may, as separate
collateral security to be held by the Banks for reimbursement of amounts of the
Letter of Credit Obligations which are subsequently funded by an Issuer (and for
which the other Bank has purchased a participation therein as set forth below),
either (x) immediately advance the principal amount thereof as Loans, and set
aside the amounts so advanced as such collateral security, or (y) demand from
the Borrower cash collateral in an amount equal to 100% of such Letter of Credit
Obligations with respect to each Letter of Credit as such collateral security.
The Borrower hereby agrees that the Banks shall have a right of setoff against
and security interest in such collateral reserve. After a Letter of Credit has
been canceled and all Letter of Credit Obligations with respect to such Letter
of Credit have been satisfied, and the Issuer (or participant) has been
reimbursed all amounts funded by the Issuer with respect thereto, any balance
remaining in said collateral reserve with respect to such Letter of Credit may
be applied to other unpaid obligations of the Borrower hereunder, and, if none,
shall be remitted to the Borrower.
(b) Purchase of Participations. Each Bank has irrevocably and
---------------------------
unconditionally purchased and received from each Issuer, without recourse or
warranty, an undivided interest and participation, equal to the amount of such
Bank's LC Commitment Percentage in each Letter of Credit issued by such Issuer.
(c) Sharing of Letters of Credit Payments. In the event that an
--------------------------------------
Issuer makes any payment under a Letter of Credit issued by it for which the
Borrower shall not have repaid such amount to such Issuer pursuant to this
Section, such Issuer shall promptly notify the other Banks of such failure, and
each other Bank shall promptly and unconditionally pay to such Issuer the LC
Commitment Percentage of the amount of such payment in Dollars and in same day
funds. If an Issuer so notifies the other Banks
26
prior to 10:00 A.M. (Atlanta, Georgia time) on any Domestic Business Day, such
other Banks shall make available to such Issuer the LC Commitment Percentage of
the amount of such payment on such Domestic Business Day in same day funds. If
and to the extent and such other Bank shall not have so made its LC Commitment
Percentage of the amount of such payment available to such Issuer, such other
Bank agrees to pay to such Issuer forthwith on demand such amount together with
interest thereon, for each day from the date such payment was first due until
the date such amount is paid to such Issuer at the Federal Funds Rate.
(d) Sharing of Reimbursement Obligation Payments. Whenever an Issuer
---------------------------------------------
receives a payment from the Borrower or any guarantor on account of Letter of
Credit Obligations owing in respect of a Letter of Credit issued by such Issuer
including any interest thereon, as to which such Issuer has received any
payments from the other Banks pursuant to this Section, such Issuer shall
promptly pay to each other Bank its participating interest therein, in Dollars
and in the kind of funds so received, an amount equal to the other Bank's LC
Commitment Percentage thereof. Each such payment shall be made by such Issuer
on the Domestic Business Day on which the funds are paid to such Person, if
received prior to 10:00 am. (Atlanta, Georgia time) on such Domestic Business
Day, and otherwise on the next succeeding Domestic Business Day. Each Bank
agrees that letter of credit fees (other than the Letter of Credit Fee) payable
under an Issuer's Reimbursement Agreement are solely for the account of such
Issuer, notwithstanding any provision contained herein to the contrary.
(e) Obligations Irrevocable. The obligations of each Bank to make
------------------------
payments to an Issuer with respect to a Letter of Credit shall be irrevocable,
not subject to any qualification or exception whatsoever and shall be made in
accordance with, but not subject to, the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in the
Letters of Credit or any transferee of the Letters of Credit (or any Person
for whom any such transferee may be acting), an Issuer, any Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions;
27
(iii) any draft, certificate or any other document presented
under a Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(v) payment an the Issuer under a 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;
(vi) payment by an Issuer under a Letter of Credit against
presentation of any draft or certificate that does not comply with the
terms of such Letter of Credit, except payment resulting from the gross
negligence or willful misconduct of an Issuer; or
(vii) any other circumstances or happenings whatsoever, whether
or not similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the Issuer.
(f) Amendments to Reimbursement Agreements. Neither Issuer shall
--------------------------------------
agree to an amendment or modification to its Reimbursement Agreement unless the
Requisite Banks have granted their prior written consent thereto which consent
shall not be unreasonably withheld or delayed.
SECTION 2.14. Guarantee of Reimbursement Obligations. The following
--------------------------------------
provisions of this Section 2.14 shall apply solely to each Reimbursement
Agreement for which the Borrower is not the Applicant.
(a) The Borrower hereby absolutely and unconditionally, guarantees
the due and punctual payment and performance of the Letter of Credit
Obligations. Upon failure by an Applicant to pay any such amount in accordance
with the terms of its Reimbursement Agreement, the Borrower agrees that it shall
forthwith on demand pay the amount not so paid at the place and in the manner
specified in the Reimbursement Agreement.
(b) The obligations of the Borrower under this Section 2.14 shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by: (i) any
extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of an Applicant under the Reimbursement Agreement, by operation of
law or otherwise or any obligation of any other guarantor of any of the Letter
of Credit Obligations; (ii) any
28
modification or amendment of or supplement to the Reimbursement Agreement; (iii)
any release, nonperfection or invalidity of any direct or indirect security for
any obligation of an Applicant under the Reimbursement Agreement, or any
obligations of any other guarantor of any of the Letter of Credit Obligations;
(iv) any change in the corporate existence, structure or ownership of an
Applicant or any other guarantor of any of the Letter of Credit Obligations, or
any insolvency, bankruptcy, reorganization or other similar proceeding affecting
an Applicant, or any other guarantor of the Letter of Credit Obligations, or its
assets or any resulting release or discharge of any obligation of an Applicant,
or any other guarantor of any of the Letter of Credit Obligations; (v) the
existence of any claim, setoff or other rights which the Borrower may have at
any time against an Applicant, any other guarantor of any of the Letter of
Credit Obligations, any Bank or any other Person, whether in connection herewith
or any unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim; (vi)
any invalidity or unenforceability relating to or against an Applicant, or any
other guarantor of any of the Letter of Credit Obligations, for any reason
related to the Reimbursement Agreement, or any other Guaranty, or any provision
of applicable law or regulation purporting to prohibit the payment of the Letter
of Credit Obligations by an Applicant, or any other guarantor of the Letter of
Credit Obligations; and (vii) any other act or omission to act or delay of any
kind by an Applicant, any other guarantor of the Letter of Credit Obligations,
any Bank or any other Person or any other circumstance whatsoever which might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the Borrower's obligations hereunder, including without limitation,
any failure, omission, delay or inability on the part of any Bank to enforce,
assert or exercise any right power or remedy conferred on any Bank under the
Reimbursement Agreement or any other Loan Documents.
(c) The Borrower's obligations hereunder shall remain in full force
and effect until all Letter of Credit Obligations shall have been paid in full
and the relevant Reimbursement Agreement shall have terminated or expired. If
at any time any amount payable by an Applicant under a Reimbursement Agreement
or any other Loan Document is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of an Applicant or
otherwise, the Borrower's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
(d) The Borrower irrevocably waives any requirement that at any time
any action be taken by any Person against an
29
Applicant, any other guarantor of the Letter of Credit Obligations, or any other
Person.
SECTION 2.15. Assignment of Commitment and Assumption of Loans under
------------------------------------------------------
Original Credit Agreement. Aladdin, the Borrower and each Bank agree that, upon
-------------------------
and after the Effective Date, the commitments of the Banks to make loans to, and
all indebtedness, obligations and liabilities with respect to such loans owed
by, Aladdin under the terms of the Original Credit Agreement have been assigned
by Aladdin to and assumed by the Borrower, as evidenced by this Agreement.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Closing. The obligations of each Bank
---------------------
under this Agreement are subject to the satisfaction of the conditions set forth
in Section 3.02 and receipt by the Banks of the following (in sufficient number
of counterparts (except as to the Notes) for delivery of a counterpart to each
Bank):
(a) from each of the parties thereto a duly executed counterpart of
this Agreement;
(b) duly executed Notes by the Borrower for the account of each Bank
complying with the provisions of Section 2.03 and Subsidiary Guaranties
from each Subsidiary (other than the Subsidiaries listed in Section
4.08(b));
(c) an opinion (together with any opinions of local counsel relied on
therein) of ▇▇▇▇▇▇ & Bird LLP, counsel for the Borrower, dated as of the
Closing Date, substantially in the form of Exhibit B;
---------
(d) the Borrower's most recent audited consolidated financial
statements, including, without limitation, a balance sheet and income
statement and its most recent 10-K filed with the Securities and Exchange
Commission, in such form and substance satisfactory to the Banks in their
sole discretion;
(e) a certificate, dated as of the Closing Date, signed by a principal
financial officer of the Borrower, to the effect that (i) no Default has
occurred and is continuing on the Closing Date and (ii) the representations
and warranties of the Borrower contained in Article IV are true on and as
of the Closing Date;
30
(f) all documents which any Bank may reasonably request relating to
the existence of the Borrower, the corporate authority for and the validity
of the Loan Documents to which the Borrower, is a party, and any other
matters relevant thereto, all in form and substance satisfactory to the
Banks, including, without limitation, a certificate of incumbency of the
Borrower, signed by the Secretary or an Assistant Secretary of the
Borrower, certifying as to the names, true signatures and incumbency of the
officer or officers of the Borrower, authorized to execute and deliver the
Loan Documents, and certified copies of the following items as to the
Borrower: (i) its Certificate of Incorporation, (ii) its Bylaws, (iii) a
certificate of the Secretary of State of the State of Delaware as to the
good standing of the Borrower as a Delaware corporation, and (iv) the
action taken by its Board of Directors (or a duly authorized committee
thereof) authorizing its execution, delivery and performance of the Loan
Documents to which it is a party; and
(g) a Notice of Borrowing, if necessary.
SECTION 3.02. Conditions to All Borrowings. The obligation of each
----------------------------
Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Banks of a Notice of Borrowing;
(b) the fact that, immediately after such Borrowing, no Default shall
have occurred and be continuing;
(c) the fact that the representations and warranties contained in
Article IV of this Agreement shall be true on and as of the date of such
Borrowing except for changes permitted by this Agreement and except to the
extent they relate solely to an earlier date; and
(d) the fact that, immediately after such Borrowing, the sum of (x)
the aggregate outstanding principal amount of the Tranche A Loans plus
Tranche B Loans plus the Letter of Credit Obligations of the Banks will not
exceed (y) the amount of the aggregate Commitments.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
paragraphs (b), (c) and (d) of this Section.
ARTICLE IV
31
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
-----------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary and where failure to be so qualified could have or create a
reasonable possibility of causing a Material Adverse Effect, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
--------------------------------------------
Contravention. The execution, delivery and performance by the Borrower of this
-------------
Agreement, the Notes and the other Loan Documents to which it is a party (i) are
within its corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official (other than routine filings with the
Securities and Exchange Commission), (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of the Borrower enforceable in accordance with its terms, and
the Notes and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower (provided that the Borrower is a party to any such Loan Document)
enforceable in accordance with their respective terms, provided that the
--------
enforceability hereof and thereof is subject in each case to general principles
of equity and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The consolidated balance
---------------------
sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 1997,
and the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by KPMG Peat Marwick LLP,
copies of which have been delivered to each of the Banks, and the unaudited
consolidated financial statements of the
32
Borrower for the interim period ended September 30, 1998, copies of which have
been delivered to each of the Banks, fairly present in all material respects, in
conformity with GAAP, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since December 31, 1997, there has been no event, act, condition
or occurrence having, or which could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.05. No Litigation. Except as set forth on Schedule 4.05, as
-------------
of the date hereof, there is no action, suit or proceeding pending, or to the
knowledge of the Borrower threatened in writing, against or affecting the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to have
a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each member
---------------------
of the Controlled Group have fulfilled their obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and are in
compliance with the presently applicable provisions of ERISA and the Code
(except where such noncompliance could not reasonably be expected to have a
Material Adverse Effect), and have not incurred any liability to the PBGC under
Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group is or
ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the Borrower
-----
and its Subsidiaries all Federal, state and local income, excise, property and
other tax returns which are required to be filed by them and all taxes due
pursuant to such returns or pursuant to any assessment received by or on behalf
of the Borrower or any Subsidiary have been paid or valid and effective
extensions therefor have been obtained. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. United
States income tax returns of the Borrower and its Subsidiaries' have been
examined and closed through the Fiscal Year ended 1993.
SECTION 4.08. Subsidiaries. (a) Each of the Borrower's Subsidiaries
------------
is duly organized or formed, validly existing and in good standing under the
laws of the jurisdiction of its creation and organization, and has all powers
(by virtue of its creation and organization) and all material governmental
licenses, authorizations, consents and approvals required to carry on its
33
business as now conducted. As of the date hereof, the Borrower has no
Subsidiaries except for those Subsidiaries listed on Schedule 4.08, which
accurately sets forth each such Subsidiary's complete name and jurisdiction of
creation and organization.
(b) In order to induce the Banks to exclude Horizon Europe, Inc.,
Delaware Valley Wool Scouring, Inc., and Mohawk International, Inc. FSC as
guarantors of the Loans, the Borrower hereby represents and warrants to the
Banks that neither Horizon Europe, Inc., Delaware Valley Wool Scouring, Inc.,
nor Mohawk International, Inc. FSC have any assets of a material nature.
SECTION 4.09. Not an Investment Company. The Borrower is not an
-------------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. Ownership of Property; Liens. Each of the Borrower and
----------------------------
its Consolidated Subsidiaries has title to its properties sufficient for the
conduct of its business, and none of such property is subject to any Lien except
as permitted in Section 5.09.
SECTION 4.11. No Default. Neither the Borrower nor any of its
----------
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could reasonably be expected to have or cause a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All information heretofore furnished
---------------
by the Borrower to any Bank for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such information hereafter
furnished by the Borrower to any Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified. The Borrower has disclosed to the
Banks in writing any and all facts which would have or create a reasonable
possibility of causing a Material Adverse Effect.
SECTION 4.13. Environmental Matters. To the best knowledge of the
---------------------
Borrower, after due inquiry (which does not necessarily mean the performance of
a phase I environmental audit), (a) neither the Borrower nor any Subsidiary is
subject to any Environmental Liability and (b) neither the Borrower nor any
Subsidiary has been designated as a potentially responsible party under CERCLA
or under any state statute similar to CERCLA. To the best knowledge of the
Borrower, after due inquiry (which does not necessarily mean the performance of
a phase I environmental audit), none of the Properties has been identified on
any current
34
or proposed (i) National Priorities List under 40 C.F.R. Section 300, (ii)
CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.
(b) To the best knowledge of the Borrower, after due inquiry (which
does not necessarily mean the performance of a phase I environmental audit), no
Hazardous Materials have been or are being used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of, managed or
otherwise handled at, or shipped or transported to or from the Properties or are
otherwise present at, on, in or under the Properties, or, to the best of the
knowledge of the Borrower, at or from any adjacent site or facility, except for
(i) Hazardous Materials, such as cleaning solvents, combustion enhancers,
pesticides and other materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or otherwise handled in the
ordinary course of business in compliance with all applicable Environmental
Requirements, and (ii) Hazardous Materials with respect to which the presence
thereof, any required remediation with respect thereto, or the expenses, fines,
penalties and other costs relating thereto could not reasonably be expected to
have a Material Adverse Effect.
(c) Except for non-compliance which could not reasonably be expected
to have a Material Adverse Effect, the Borrower, and each of its Subsidiaries is
in compliance with all Environmental Requirements in connection with the
operation of the Properties and each of the Borrower's and its Subsidiary's
respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock, debentures, bonds,
-------------
notes and all other securities of the Borrower and its Subsidiaries presently
issued and outstanding are validly and properly issued in accordance with all
applicable laws, including but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. At least a majority of the
issued shares of capital stock of each of the Borrower's other Subsidiaries, if
any, (other than Wholly Owned Subsidiaries) is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor any of its
------------
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
35
SECTION 4.16. Insolvency. After giving effect to the execution and
----------
delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such term
as used in O.C.G.A. (S) 18-2-22 or as defined in (S) 101 of Title 11 of the
United States Code, as amended from time to time, or be unable to pay its debts
generally as such debts become due, or have an unreasonably small capital to
engage in any business or transaction, whether current or contemplated.
SECTION 4.17. Year 2000 Issues. The Borrower and its Subsidiaries
----------------
(i) have initiated a comprehensive review of their computer programs to identify
the systems that could give rise to Year 2000 Issues as the same pertains to the
computer programs and systems of the Borrower and the Subsidiaries (but not
those of their third party customers, suppliers, or vendors), and are in the
process of reviewing their Year 2000 Issues exposure to third party customers,
suppliers and vendors, and evaluating the costs of modifications to program
logic control systems, (ii) have developed or are in the process of developing a
realistic and achievable program for remediating in all material respects all
currently known Year 2000 Issues on a timely basis as such Issues pertain to the
computer programs and systems of the Borrower and its Subsidiaries (but not
those of their third party customers, suppliers, or vendors), and (iii) based on
their review, consultants' reports, and all other information currently
available to them, do not reasonably anticipate that Year 2000 Issues will have
a Material Adverse Effect.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Commitment shall remain in
effect, any Letter of Credit Obligations are outstanding or any amount payable
hereunder or under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
-----------
Banks:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, shareholders' equity and cash flows for
such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, including the related unqualified
audit opinion
36
issued by KPMG Peat Marwick or other independent public accountants of
nationally recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Required Banks;
(b) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter (other than the fourth Fiscal Quarter), a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
consolidated statements of income and statements of cash flows for such
quarter and for the portion of the Fiscal Year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous Fiscal
Year, all certified (subject to normal year-end adjustments) as to fairness
of presentation, GAAP (except for the failure to provide footnotes thereto)
and consistency by the chief financial officer or the corporate controller
of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"), of the
---------
chief financial officer or the corporate controller of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.04, 5.05, and Section 5.08, on the date of such financial statements and
(ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in paragraph (a) above, operations and cash flow
projections (indicating projected earnings and significant cash sources and
uses) prepared by the Borrower for the Fiscal Year following the Fiscal
Year reported on in such statements referred to in paragraph (a), in such
form and substance as is acceptable to the Required Banks, in their sole
discretion;
(e) within 1 Domestic Business Day after the Borrower becomes aware of
the occurrence of any Default, telephonic notice to each of the Banks of
the occurrence of a Default (which telephonic notice shall set forth the
details thereof), followed, within 10 Domestic Business Days after the date
of such telephonic notice, with a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting forth the
details thereof and the
37
action which the Borrower is taking or proposes to take with respect
thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Borrower shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA,
a copy of such notice; or (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, a copy of such notice; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as any
Bank may reasonably request, including, without limitation, consolidating
balance sheets and statements of income of the Borrower and the Borrower's
Subsidiaries, in existence at such time, as at the end of any fiscal
period.
SECTION 5.02. Inspection of Property, Books and Records. The Borrower
-----------------------------------------
will (i) keep, and cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries in conformity with GAAP shall be
made of all dealings and transactions in relation to its business and
activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of a
Default and at the Borrower's expense after the occurrence of a Default to visit
and inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants. The Borrower agrees to cooperate and assist in
such visits and
38
inspections, in each case upon reasonable notice, at such reasonable times and
as often as may reasonably be desired.
SECTION 5.03. Year 2000 Issues. The Borrower shall take, and cause its
----------------
Subsidiaries to take, all actions reasonably necessary to assure that the Year
2000 Issues, as such Year 2000 Issues pertain to the computer programs and
systems of the Borrower and its Subsidiaries, will not have a Material Adverse
Effect. The Borrower and its Subsidiaries will use commercially reasonable
efforts to assure that their third-party customers, suppliers and vendors
develop and implement programs to remediate, in all material respects, all Year
2000 Issues reasonably anticipated by Borrower and its Subsidiaries to have a
Material Adverse Effect. Upon written request by the Banks, Borrower will
provide the Banks a written description of its program for assessing Year 2000
Issues, including updates and progress reports. The Borrower will advise the
Banks promptly of any reasonably anticipated Material Adverse Effect as a result
of Year 2000 Issues.
SECTION 5.04. Debt to Capitalization Ratio. The Debt to
----------------------------
Capitalization Ratio shall be less than 0.60 to 1.0 at the end of each Fiscal
Quarter.
SECTION 5.05. Debt to EBITDA Ratio. The ratio of the Borrower's (a)
--------------------
Consolidated Debt to (b) the sum of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on the Borrower's consolidated pre-
tax income, and (iv) Depreciation and Amortization shall not be greater than 3.5
to 1.0 at the end of each Fiscal Quarter. Clause (b) in this Section 5.05 shall
be calculated on a trailing 4 quarter basis as at the end of each such Fiscal
Quarter.
SECTION 5.06. Restricted Payments. The Borrower shall not declare or
-------------------
make any Restricted Payment unless, after giving effect thereto, no Default
shall exist.
SECTION 5.07. Investments. The Borrower will not, and will not permit
-----------
any of its Subsidiaries to, make or maintain any Investments except (a)
Investments in the Borrower or any Subsidiary, including without limitation,
advances or loans between or among the Borrower or any Subsidiary and loans and
advances to officers and employees of the Borrower or any Subsidiary in the
ordinary course of business; (b) Investments in Persons engaged in a Permitted
Line of Business (whether or not such Person is, or after giving effect to any
such Investment becomes, a Subsidiary); (c) Investments in Persons in connection
with Permitted Acquisitions; and (d) Investments in Approved Investments;
provided, however, during the existence of an Event of Default, neither the
Borrower nor any of its Subsidiaries may
39
make any new Investments without the prior written consent of the Required
Banks.
SECTION 5.08. Negative Pledge. Neither the Borrower nor any of its
---------------
Subsidiaries will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $5,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
--------
concurrently with or within 18 months after the acquisition or completion
of construction thereof;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Borrower or a Consolidated Subsidiary and not created in contemplation
of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the Borrower;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section, provided that (i) such Debt is not secured by
--------
any additional assets, and (ii) the amount of such Debt secured by any such
Lien is not increased;
(h) Liens incidental to the conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the
use thereof in the operation of its business;
(i) any Lien on Margin Stock;
40
(j) Liens in connection with an Asset Securitization permitted under
Section 5.11;
(k) Liens involuntarily imposed and being contested in good faith,
subject to the Borrower or such Subsidiary having established reasonable
reserves therefor to the extent required under GAAP;
(l) Liens against the assets of Aladdin (formerly owned by Galaxy)
under the Catoosa Co. IRB solely to the extent existing as of the date
hereof; and
(m) Liens against the assets of Aladdin (formerly owned by Image
Industries, Inc.) under the Summerville City IRB solely to the extent
existing as of the date of the Image Acquisition.
provided that Liens permitted by the foregoing paragraphs (a) through (i) shall
--------
at no time secure Debt in an aggregate amount exceeding the greater of (x)
$90,000,000 or (y) 15% of Consolidated Net Worth.
SECTION 5.09. Maintenance of Existence. Other than as permitted by
------------------------
Section 5.10 or 5.11, the Borrower shall, and shall cause each Subsidiary to,
maintain its corporate existence and carry on its business in a Permitted Line
of Business.
SECTION 5.10. Dissolution. Neither the Borrower nor any of its
-----------
Subsidiaries shall suffer or permit dissolution or liquidation either in whole
or in part or redeem or retire any shares of its own stock or that of any
Subsidiary, except through corporate reorganization to the extent permitted by
Section 5.11 or in connection with a Restricted Payment which is permitted
pursuant to Section 5.06.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
-------------------------------------------
Borrower will not, nor will the Borrower permit any Subsidiary to, consolidate
or merge with or into, or sell, lease or otherwise transfer all or any
substantial part of its assets to, any other Person, provided that (a) the
--------
Borrower may merge with another Person if (i) such Person was organized under
the laws of the United States of America or one of its states, (ii) the Borrower
is the corporation surviving such merger and (iii) immediately after giving
effect to such merger, no Default shall have occurred and be continuing, (b)
Subsidiaries of the Borrower may merge with and into the Borrower, any other
Subsidiary, or any other Person if after giving effect thereto such other Person
would be a Subsidiary, (c) assets may be transferred from a Subsidiary to the
Borrower or another Subsidiary, (d) any Wholly-Owned Subsidiary may dissolve or
liquidate so long as the assets of such Subsidiary at the time of such
dissolution or liquidation
41
are transferred to such Subsidiary's shareholder and such shareholder assumes
all of the liabilities of such Subsidiary at the time of such dissolution or
liquidation, (e) the Borrower and its Subsidiaries may factor receivables, and
(f) the Borrower and its Subsidiaries may effect Asset Securitizations; (g) the
foregoing limitation on the sale, lease or other transfer of assets shall not
prohibit, during any Fiscal Quarter, a transfer of assets by the Borrower or any
Subsidiary (in a single transaction or in a series of related transactions)
unless (x) the proceeds thereof are not reinvested within 180 days thereafter in
a Permitted Line of Business owned by the Borrower or such Subsidiary or (y) the
aggregate assets to be so transferred or utilized in a business line or segment
to be so discontinued, when combined with all other assets transferred, and all
other assets utilized in all other business lines or segments discontinued,
during such Fiscal Quarter and the immediately preceding three Fiscal Quarters,
constituted more than 20% of Consolidated Total Assets at the end of the fourth
Fiscal Quarter immediately preceding such Fiscal Quarter.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans shall be
---------------
used by the Borrower to provide for working capital, to finance capital
expenditures, to finance Investments permitted under Section 5.07, and for the
other general corporate purposes of the Borrower and its Subsidiaries. In no
event shall any portion of the proceeds of the Loans be used by the Borrower
(i) except for Permitted Acquisitions, in connection with any tender offer for,
or other acquisition of, stock of any corporation with a view towards obtaining
control of such other corporation, (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any Margin
Stock, or (iii) for any purpose in violation of any applicable law or
regulation.
SECTION 5.13. Compliance with Laws; Payment of Taxes. The Borrower
--------------------------------------
will, and will cause each of its Subsidiaries to, comply in all material
respects with applicable laws (including but not limited to ERISA), regulations
and similar requirements of governmental authorities (including but not limited
to PBGC), except where the necessity of such compliance is being contested in
good faith through appropriate proceedings or where noncompliance would not have
or create a reasonable possibility of causing a Material Adverse Effect. The
Borrower will, and will cause each of its Subsidiaries to, pay promptly when
due, giving regard for any extensions obtained, all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of either the
Borrower or any Subsidiary, except liabilities being contested in good faith and
against which, if requested by the Banks, either the Borrower or such Subsidiary
will set up reserves in accordance with GAAP.
42
SECTION 5.14. Insurance. The Borrower will maintain, and will cause
---------
each of its Subsidiaries to maintain (either in the name of the Borrower or in
such Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business, subject
to the Borrower's right to self-insure with respect to loss or damage to
property in an amount reasonably acceptable to the Banks.
SECTION 5.15. Change in Fiscal Year. The Borrower shall give the
---------------------
Banks 30 day's prior written notice of any change in the determination of its
Fiscal Year.
SECTION 5.16. Maintenance of Property. Subject to the rights of the
-----------------------
Borrower or any Subsidiary to discontinue certain operations under Section 5.10
or 5.11, the Borrower shall, and shall cause each Subsidiary to, maintain all of
its properties and assets in good working order, ordinary wear and tear and
obsolescence excepted (excluding losses due to fully insured, subject to
commercially reasonable deductibles, casualties).
SECTION 5.17. Environmental Notices. The Borrower shall furnish to
---------------------
the Banks prompt written notice of all Environmental Liabilities, pending,
threatened or anticipated Environmental Proceedings, Environmental Notices,
Environmental Judgments and Orders, and Environmental Releases at, on, in, under
or in any way affecting the Properties or any adjacent property which would have
a Material Adverse Effect, and all facts, events, or conditions that could lead
to any of the foregoing.
SECTION 5.18. Environmental Matters. The Borrower will not, nor will
---------------------
it permit any Third Party to, use, produce, manufacture, process, treat,
recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for Hazardous
Materials such as cleaning solvents, combustion enhancers, pesticides and other
similar materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed, or otherwise handled in the ordinary
course of business in compliance with all applicable Environmental Requirements.
SECTION 5.19. Environmental Release. The Borrower agrees that upon
---------------------
the occurrence of an Environmental Release which would have a Material Adverse
Effect and which violates any Environmental Requirement it will promptly
investigate the extent of, and take appropriate action to remediate such
Environmental
43
Release, whether or not ordered or otherwise directed to do so by any
Environmental Authority.
SECTION 5.20. Debt of Subsidiaries. The Borrower shall not permit any
--------------------
Subsidiary to incur any Debt except for (i) Debt owed by a Subsidiary to the
Borrower or another Subsidiary, (ii) Debt deemed incurred in connection with an
Asset Securitization permitted under Section 5.11; (iii) Debt Guaranteed by a
Subsidiary under the Subsidiary Guaranties; (iv) Debt of Subsidiaries arising in
connection with the Summerville City IRB and the Catoosa Co. IRB and incurrence
of reimbursement obligations with respect to the Letters of Credit; and (v) in
addition to Debt incurred under clauses (i) through (iv) of this Section, other
Debt of Subsidiaries not exceeding in the aggregate amount outstanding at any
time the greater of (x) $105,000,000 or (y) 15% of Consolidated Net Worth.
SECTION 5.21. Future Subsidiaries. The Borrower shall cause all
-------------------
Persons who become Subsidiaries from time to time after the date hereof
(excluding any (i) "foreign controlled corporation" as defined in Section 957(a)
of the Code, and (ii) any "bankruptcy remote" Subsidiary created in connection
with an Asset Securitization) to execute and deliver Subsidiary Guaranties and
other Loan Documents related thereto, within 10 Business Days of the creation or
acquisition of any such Subsidiary. The delivery of such documents and
instruments shall be accompanied by such other documents as the Banks may
reasonably request (e.g., certificates of incorporation, articles of
----
incorporation, bylaws, or such similar organizational documents, opinions of
counsel, and appropriate resolutions of the Board of Directors or other
governing body of any such Subsidiary Guarantor). Upon the release of the
Guarantees of the Subsidiaries with respect to the Other Debt, the Banks shall
release the Subsidiary Guaranties and this Section 5.21 shall no longer be in
effect after the date of such release.
SECTION 5.22. Failure to Restructure Other Debt. In the event that
---------------------------------
the Other Debt is not restructured upon terms and conditions substantially the
same as the terms and conditions set forth in this Agreement on or before 90
days after the Effective Date, then, in such event, the Borrower and each of the
Banks agrees to enter into an amendment and restatement of this Agreement and
the other Loan Documents solely for the purpose of effecting: (a) the assignment
by the Borrower of all of its rights and obligations under this Agreement in
favor of Aladdin, (b) the assumption by Aladdin of all such rights and
obligations of the Borrower, including all loans borrowed by the Borrower, under
this Agreement, and (c) the Borrower's guarantee of Aladdin's obligations under
this Agreement.
44
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
-----------------
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal or any
interest on any Loan or any fee or other amount payable hereunder within 5
Domestic Business Days after such principal, interest, fee or other amount
shall become due (except at maturity on the applicable Termination Date);
or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.02(ii), 5.03 through 5.12, inclusive, or 5.20; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other
than those covered by paragraph (a) or (b) above) and such failure shall
not have been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to the Borrower by the Banks or (ii)
the Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
the Borrower in Article IV of this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement
or any of the other Loan Documents shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Debt in excess of $25,000,000 in the aggregate outstanding
(other than (A) under the immediately preceding clause (i), or (B) the
Notes or pursuant to any of the other Loan Documents) when due or within
any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt in excess of $25,000,000 in the
aggregate outstanding of the Borrower or any Subsidiary (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary) or
enables or, with the giving of notice or lapse of time or both, would
enable, the holders of such Debt or any Person acting on such holders'
behalf to accelerate the maturity thereof
45
(including, without limitation, any "put" of such Debt to the Borrower or
any Subsidiary); or
(g) the Borrower or any Material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Material Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Material Subsidiary under the federal bankruptcy laws
as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay
to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans (other than pursuant to a standard termination)
shall be filed under Title IV of ERISA by the Borrower, any member of the
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary of any
such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $25,000,000
46
(exclusive of insurance coverage if any insurer shall have acknowledged
such coverage in writing) shall be rendered against the Borrower or any
Material Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days; or
(k) one or more federal tax liens securing an aggregate amount in
excess of $5,000,000 shall be filed against the Borrower or any Material
Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower or any Material Subsidiary under Section 4068 of
ERISA and in either case such lien shall remain undischarged for a period
of 25 days after the date of filing; or
(l) (i) any Person or two or more Persons acting in concert shall have
acquired, after February 24, 1995, beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares
of the voting stock of the Borrower; or (ii) as of any date a majority of
the Board of Directors of the Borrower consists of individuals who were not
either (A) directors of the Borrower, as appropriate, as of the
corresponding date of the previous year, (B) selected or nominated to
become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A), or (C) selected
or nominated to become directors by the Board of Directors of the Borrower
of which a majority consisted of individuals described in clause (A) and
individuals described in clause (B); or
(m) an "Event of Default" shall occur under any of the other Loan
Documents; or
(n) (i) any of the Loan Documents shall cease to be enforceable, or
(ii) the Borrower shall assert that any Loan Document shall cease to be
enforceable.
then, and in every such event, the Required Banks may (i) by notice to the
Borrower terminate the Commitments or and they shall thereupon terminate, and
(ii) by notice to the Borrower declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower together with interest at the Default
Rate accruing on the principal amount thereof from and after the date of such
Event of Default; provided that if any Event of Default specified in paragraph
--------
(g) or (h) above occurs with respect to the Borrower, without any notice to the
Borrower or any other act by the Banks, the
47
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower together with interest thereon at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default.
Notwithstanding the foregoing, each of the Banks shall have available to it all
other remedies at law or equity.
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 7.01. Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If on or prior to the first day of any Interest Period:
------
(a) any Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest
Period, or
(b) any Bank determines that the London Interbank Offered Rate, as the
case may be, as determined by Wachovia will not adequately and fairly
reflect the cost to such Bank of funding the relevant Euro-Dollar Loan for
such Interest Period,
such Bank shall forthwith give notice thereof to the Borrower, whereupon until
such Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of such Bank to make any Euro-Dollar
Loan specified in such notice shall be suspended. Unless the Borrower notifies
such Bank at least 2 Domestic Business Days before the date of any Borrowing of
such Euro-Dollar Loan for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 7.02. Illegality. If, after the date hereof, the adoption of
----------
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof (any such agency being referred to as an "Authority" and
any such event being referred to as a "Change of Law"), or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or impossible
for any Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans, such Bank shall forthwith give notice thereof to the
48
Borrower, whereupon until such Bank notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, shall be suspended. Before giving any notice to the
Borrower pursuant to this Section, such Bank shall designate a different Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise materially disadvantageous to
such Bank. If such Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall
so specify in such notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each Euro-Dollar Loan of such Bank,
together with accrued interest thereon. Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 7.03. Increased Cost and Reduced Return. (a) If after the
---------------------------------
date hereof, a Change of Law or compliance by any Bank (or its Lending Office)
with any request or directive (whether or not having the force of law) of any
Authority:
(i) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to its Euro-Dollar Loans, its Notes or its
obligation to make Euro-Dollar Loans, or shall change the basis of taxation
of payments to any Bank (or its Lending Office) of the principal of or
interest on its Euro-Dollar Loans or any other amounts due under this
Agreement in respect of its Euro-Dollar Loans or its obligation to make
Euro-Dollar Loans (except for changes in the rate of tax on the overall net
income of such Bank or its Lending Office imposed by the jurisdiction in
which such Bank's principal executive office or Lending Office is located);
or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on the
United States market for certificates of deposit or the London interbank
market any other condition affecting
49
its Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar
Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Rate Loan, or to
reduce the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank, the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any Authority, has or would have the effect of reducing the rate of return on
such Bank's capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank, the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank for
such reduction.
(c) Each Bank will promptly notify the Borrower 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 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
materially disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 7.03 shall be applicable with
respect to any Participant, Assignee or other Transferee (unless the date of any
such assignment or transfer, a condition listed under Section 7.02 or 7.03
existed with respect to any such Participant, Assignee or other Transferee), and
any calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
50
SECTION 7.04. Base Rate Loans Substituted for Euro-Dollar Loans. If
--------------------------------------------------
(i) the obligation of any Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 7.02 or (ii) any Bank has demanded compensation
under Section 7.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank have elected that the provisions of this Section
shall apply to such Bank, then, unless and until such Bank notifies the Borrower
that the circumstances giving rise to such suspension or demand for compensation
no longer apply:
(a) all Loans which would otherwise be made by such Bank as Euro-
Dollar Loans, as the case may be, shall be made instead as Base Rate Loans;
provided, that interest and principal on such Loans shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Bank),
and
(b) after each of its Euro-Dollar Loan, has been repaid, all payments
of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
SECTION 7.05. Compensation. Upon the request of any Bank, the
------------
Borrower shall pay to such Bank such amount or amounts as shall compensate such
Bank for any loss, cost or expense actually incurred by such Bank and not
compensated pursuant to Section 7.03 as a result of:
(a) any payment or prepayment (pursuant to Section 2.09(b), Section
7.02 or otherwise) of a Euro-Dollar Loan on a date other than the last day of an
Interest Period for such Euro-Dollar Loan; or
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the
date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a part
specified in the applicable Notice of Borrowing delivered pursuant to Section
2.02;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of
51
interest for such Euro-Dollar Loan provided for herein over (y) the amount of
interest (as reasonably determined by such Bank) such Bank would have paid on
deposits in Dollars of comparable amounts having terms comparable to such period
placed with it by leading banks in the London interbank market.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including bank wire, telecopier or
similar writing) and shall be given to such party at its address or telecopier
number set forth on the signature pages hereof or such other address or
telecopier number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified in this Section and the appropriate confirmation is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails, certified or registered mail, with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided, that notices to the Banks under
Article II shall not be effective until received.
SECTION 8.02. No Waivers. No failure or delay by any Bank in
----------
exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.03. Expenses; Documentary Taxes. The Borrower shall pay (i)
---------------------------
all out-of-pocket expenses of the Banks, including reasonable fees and
disbursements actually incurred of special counsel for the Banks in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default occurs,
all out-of-pocket expenses incurred by any Bank, including reasonable fees and
disbursements of counsel, actually incurred in connection with such Default and
collection and other enforcement proceedings resulting therefrom, including out-
of-pocket expenses incurred in enforcing this Agreement and the other Loan
Documents. The Borrower shall indemnify each Bank against any transfer taxes,
documentary
52
taxes, assessments or charges made by any Authority by reason of the execution
and delivery of this Agreement or the other Loan Documents but not by reason of
any participation or assignment by the Banks, their successors or assigns.
SECTION 8.04. Indemnification. The Borrower shall indemnify the Banks
---------------
and each affiliate thereof and their respective directors, officers, employees
and agents from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from any
actual or proposed use by the Borrower of the proceeds of any extension of
credit by any Bank hereunder or breach by the Borrower of this Agreement or any
other Loan Document or from any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, and the Borrower shall reimburse each Bank, and each affiliate
thereof and their respective directors, officers, employees and agents, upon
demand for any expenses (including, without limitation, legal fees) incurred in
connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or wilful misconduct of the Person to be indemnified.
SECTION 8.05. Sharing of Setoffs. Each Bank agrees that if it shall,
------------------
by exercising any right of setoff or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest owing with
respect to the Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of all principal and interest
owing with respect to the Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Bank owing to such other Bank, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Bank owing to such other Bank
shall be shared by the Banks pro rata; provided that (i) nothing in this Section
--------
shall impair the right of any Bank to exercise any right of setoff or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Notes, and (ii) if all or any portion of such payment received by the purchasing
Bank is thereafter recovered from such purchasing Bank, such purchase from such
other Bank shall be rescinded and such other Bank shall repay to the purchasing
Bank the purchase price of such participation to the extent of such recovery
together with an amount equal to such other Bank's ratable share (according to
the proportion of (x) the amount of such other Bank's required repayment to (y)
the total amount so recovered from the
53
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the foregoing arrangements, may exercise rights of setoff or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 8.06. Amendments and Waivers. (a) Any provision of this
----------------------
Agreement, the Notes or any other Loan Documents may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks; provided that, no such amendment or waiver
--------
shall, unless signed by all Banks, (i) change the Commitments of any Bank or
subject any Bank to any additional obligation, (ii) change the principal of or
decrease the rate of interest on any Loan or decrease any fees hereunder, (iii)
extend the date fixed for any payment of principal of or interest on any Loan or
any fees hereunder, (iv) change the amount of principal, interest or fees due on
any date fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of them to take
any action under this Section or any other provision of this Agreement, (vi)
change the manner of application of any payments made under this Agreement or
the Notes, (vii) release or substitute all or any substantial part of the
collateral (if any) held as security for the Loans, or (viii) release any
Guarantee (if any) given to support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement unless each Bank shall be informed thereof by the Borrower and shall
be afforded an opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be delivered
by the Borrower to each Bank forthwith following the date on which the same
shall have been executed and delivered by the requisite percentage of Banks.
The Borrower will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to each of the Banks.
54
SECTION 8.07. No Margin Stock Collateral. Each of the Banks
--------------------------
represents to the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 8.08. Successors and Assigns. (a) The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to such Bank, any Note
held by such Bank, its Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participating interest
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. In no event shall a Bank that sells a participation be
obligated to the Participant to take or refrain from taking any action hereunder
except that such Bank may agree that it will not (except as provided below),
without the consent of the Participant, agree to (i) extend any date fixed for
the payment of principal of or interest on the related loan or loans, (ii) the
change of the amount of any principal, interest or fees due on any date fixed
for the payment thereof with respect to the related loan or loans, (iii) the
change of the principal of the related loan or loans, (iv) any decrease in the
rate at which either interest is payable thereon or (if the Participant is
entitled to any part thereof) commitment fee is payable hereunder from the rate
at which the Participant is entitled to receive interest or commitment fee (as
the case may be) in respect of such participation, (v) the release or
substitution of all or any substantial part of the collateral (if any) held as
security for the Loans, or (vi) the release of any Guarantee (if any) given to
support payment of the Loans. Each Bank selling a participating interest in any
Loan, Note, Commitment or other interest under this Agreement shall, within 10
Domestic Business Days of such sale, provide the Borrower and the other Bank
with written notification stating that such sale has occurred and identifying
the Participant and the interest purchased by such Participant. The Borrower
agrees that each Participant shall be entitled to the benefits of Article VII
with respect to its participation in Loans outstanding from time to time.
55
(c) Any Bank may at any time assign to one or more banks or financial
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume all such rights and obligations, pursuant to an Assignment and
Acceptance in the form attached hereto as Exhibit C, executed by such Assignee
---------
and such transferor Bank; provided that (i) no interest may be sold by a Bank
pursuant to this paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the transferor Bank's Commitment, (ii) the amount of the
Commitment of the assigning Bank subject to such assignment (determined as of
the effective date of the assignment) shall be equal to $10,000,000 (or any
larger multiple of $1,000,000), and (iii) no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank without
the consent of the Borrower, which shall not be unreasonably withheld or
delayed, (iv) a Bank may not have more than 2 Assignees that are not then Banks
at any one time, and (v) neither Wachovia nor First Union (each an "Initial
Bank") may assign an interest to any Person except the other Initial Bank unless
it has first offered such interest in writing to the other Initial Bank, and the
other Initial Bank has failed to accept in writing such offer within 10 Business
Days of receipt of such offer. Upon (A) execution of the Assignment and
Acceptance by such transferor Bank, such Assignee, and the Borrower, (B)
delivery of an executed copy of the Assignment and Acceptance to the Borrower,
and (C) payment by such Assignee to such transferor Bank of an amount equal to
the purchase price agreed between such transferor Bank and such Assignee, such
Assignee shall for all purposes be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank under this Agreement to the same extent
as if it were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by the Borrower or the Banks shall be required. Upon the consummation of
any transfer to an Assignee pursuant to this paragraph (c), the transferor Bank
and the Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to such Assignee.
(d) Subject to the provisions of Section 8.09, the Borrower authorizes
each Bank to disclose to any Participant, Assignee or other transferee (each a
"Transferee") and any prospective Transferee any and all financial information
in such Bank's possession concerning the Borrower which has been delivered to
such Bank by the Borrower pursuant to this Agreement or which has been delivered
to such Bank by the Borrower in connection with such Bank's credit evaluation
prior to entering into this Agreement.
56
(e) No Transferee shall be entitled to receive any greater payment
under Section 7.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 7.02
or 7.03 requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 8.09. Confidentiality. Each Bank agrees to exercise its best
---------------
efforts to keep any information delivered or made available by the Borrower to
it which is clearly indicated to be confidential information, confidential from
any one other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, however that nothing herein shall prevent any
-------- -------
Bank from disclosing such information (i) to any other Bank, (ii) upon the order
of any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in connection
with any litigation to which any Bank or its respective Affiliates may be a
party, (vi) to the extent reasonably required in connection with the exercise of
any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors and (viii) to any actual or proposed Participant, Assignee or other
Transferee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 8.09.
SECTION 8.10. Representation by Banks. Each Bank hereby represents
-----------------------
that it is a commercial lender or financial institution which makes Loans in the
ordinary course of its business and that it will make its Loans hereunder for
its own account in the ordinary course of such business; provided, however that,
-----------------
subject to Section 8.08, the disposition of the Note or Notes held by that Bank
shall at all times be within its exclusive control.
SECTION 8.11. Obligations Several. The obligations of each Bank
-------------------
hereunder are several, and no Bank shall be responsible for the obligations or
commitment of any other Bank hereunder. Nothing contained in this Agreement and
no action taken by Banks pursuant hereto shall be deemed to constitute the Banks
to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document,
subject to any restrictions
57
requiring actions to be taken upon the consent of the Required Banks, and it
shall not be necessary for any other Bank to be joined as an additional party in
any proceeding for such purpose.
SECTION 8.12. Georgia Law. This Agreement and each Note shall be
-----------
construed in accordance with and governed by the law of the State of Georgia.
SECTION 8.13. Interpretation. No provision of this Agreement or any
--------------
of the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 8.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. TO THE
---------------------------------------------
FULLEST EXTENT PERMITTED BY LAW, THE BORROWER (A) AND EACH OF THE BANKS
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE UNITED
STATES DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT,
THE NOTES AND THE OTHER LOAN DOCUMENTS, (C) WAIVES ANY AND ALL PERSONAL RIGHTS
UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT
LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE OF
GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT, THE NOTES OR
THE OTHER LOAN DOCUMENTS, AND (D) AGREE THAT SERVICE OF PROCESS MAY BE MADE UPON
IT IN THE MANNER PRESCRIBED IN SECTION 8.01 FOR THE GIVING OF NOTICE TO THE
BORROWER. NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT THE BANKS FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST
THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER WITHIN ANY OTHER
STATE OR JURISDICTION.
SECTION 8.15. Counterparts. This Agreement may be signed in any
------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
[SIGNATURES ON THE FOLLOWING PAGES]
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of the
day and year first above written.
MOHAWK INDUSTRIES, INC. (SEAL)
By: ______________________________________
Title:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chairman & Chief Executive
Officer
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation number: ▇▇▇-▇▇▇-▇▇▇▇
59
COMMITMENTS: WACHOVIA BANK, N.A. (SEAL)
-----------
Tranche A Loans:
$125,000,000
By: ______________________________________
Tranche B Loans: Title:
$100,000,000
Lending Office
--------------
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation number: ▇▇▇-▇▇▇-▇▇▇▇
60
Tranche A Loans: FIRST UNION NATIONAL BANK (SEAL)
$125,000,000
Tranche B Loans:
$100,000,000
By:_______________________________________
Title:
Lending Office
--------------
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation number: ▇▇▇-▇▇▇-▇▇▇▇
_______________
TOTAL COMMITMENTS:
Total Tranche A Loans:
$250,000,000
Total Tranche B Loans:
$200,000,000
Total Loans:
$250,000,000
61
Exhibit A-1
-----------
TRANCHE A LOAN NOTE
Atlanta, Georgia
As of January [__], 1999
For value received, MOHAWK INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), promises to pay to the order of
_____________________________________________________, a national banking
association, (the "Bank"), for the account of its Lending Office, the principal
sum of _________________________________ MILLION DOLLARS ($____________), or
such lesser amount as shall equal the unpaid principal amount of each Tranche A
Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred
to below, on the dates and in the amounts provided in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of this Note on
the dates and at the rate or rates provided for in the Credit Agreement referred
to below. Interest on any overdue principal of and, to the extent permitted by
law, overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of the Bank located
at _______________________________, or such other address as may be specified
from time to time pursuant to the Credit Agreement.
All Tranche A Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and, prior to
any transfer hereof, endorsed by the Bank on the schedule attached hereto, or on
a continuation of such schedule attached to and made a part hereof; provided
--------
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Credit
Agreement.
This Note is one of the "Tranche A Loan Notes" referred to in the
Fourth Amended and Restated Credit Agreement of even date herewith among the
Borrower, First Union National Bank, Wachovia Bank, N.A., and the other banks
from time to time party thereto (as the same may be amended and modified from
time to time, the "Credit Agreement") and amends, restates and supercedes that
certain Tranche A Loan Note dated April 15, 1997 issued by the Borrower payable
to the order of the Bank. Terms
62
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional and
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
MOHAWK INDUSTRIES, INC. (SEAL)
By: __________________________
Title:
63
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Base Rate
or Euro-
Maturity Amount of Amount of
Dollar Loan Notation Principal
Date Made By Loan Repaid Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
64
Exhibit A-2
-----------
TRANCHE B LOAN NOTE
Atlanta, Georgia
As of January [__], 1999
For value received, MOHAWK INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), promises to pay to the order of
_____________________________________________________, a national banking
association, (the "Bank"), for the account of its Lending Office, the principal
sum of ______________________________ MILLION DOLLARS ($____________), or such
lesser amount as shall equal the unpaid principal amount of each Tranche B Loan
made by the Bank to the Borrower pursuant to the Credit Agreement referred to
below, on the dates and in the amounts provided in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of this Note on
the dates and at the rate or rates provided for in the Credit Agreement referred
to below. Interest on any overdue principal of and, to the extent permitted by
law, overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of the Bank located
at ______________________________, or such other address as may be specified
from time to time pursuant to the Credit Agreement.
All Tranche B Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and, prior to
any transfer hereof, endorsed by the Bank on the schedule attached hereto, or on
a continuation of such schedule attached to and made a part hereof; provided
--------
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Credit
Agreement.
This Note is one of the "Tranche B Loan Notes" referred to in the
Fourth Amended and Restated Credit Agreement of even date herewith among the
Borrower, First Union National Bank, Wachovia Bank, N.A., and the other banks
from time to time party thereto (as the same may be amended and modified from
time to time, the "Credit Agreement") and reinstates that certain Tranche B Loan
Note dated April 15, 1997 issued by the Borrower payable to the order of the
Bank. Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
optional and
65
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
MOHAWK INDUSTRIES, INC. (SEAL)
By: __________________________
Title:
66
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Base Rate
or Euro-
Maturity Amount of Amount of
Dollar Loan Notation Principal
Date Made By Loan Repaid Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
67
Exhibit B
---------
OPINION OF
COUNSEL FOR THE BORROWER
------------------------
[Dated as provided in Section 3.01 of
the Credit Agreement]
[IN SUBSTANTIALLY THE SAME FORM USED FOR THE ORIGINAL CREDIT AGREEMENT]
68
Exhibit C
---------
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated __________ __, 19__
Reference is made to the Third Amended and Restated Credit Agreement
dated as of January 28, 1999 (together with all amendments and modifications
thereto, the "Credit Agreement") among Mohawk Industries, Inc., a Delaware
corporation (the "Borrower"), First Union National Bank, Wachovia Bank, N.A.,
and the other banks from time to time partner thereto (collectively, the
"Banks"). Terms defined in the Credit Agreement are used herein with the same
meaning.
_________________________________________ (the "Assignor") and
________________________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a ______% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below) (including, without limitation, a
_____% interest (which on the Effective Date hereof is $_______________) in the
aggregate principal amount of the Assignor's total Commitments and a ______
interest (which on the Effective Date hereof is $_______________) in the Tranche
A Loans and a __________ interest (which on the Effective Date hereof is
$__________) in the Tranche B Loans owing to the Assignor and a ___% interest
in the Tranche A Note[s] held by the Assignor and a _____% interest in the
Tranche B Note[s] (which on the Effective Date hereof equals the total amount of
$__________________).
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other Loan Documents furnished pursuant thereto, other than
that it is the legal and beneficial owner of the interest being assigned by it
hereunder, that such interest is free and clear of any adverse claim and that as
of the date hereof the aggregate principal amount of the Assignor's Commitments
(without giving effect to assignments thereof which have not yet become
effective) is $_________________ and the aggregate outstanding principal amount
of all Loans owing to it (without giving effect to assignments thereof which
have not yet become effective) is $_________________; (ii) makes no
representation or warranty and assumes no responsibility with
69
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto; and (iii)
requests that the Borrower execute [a new Tranche A Note dated ________________,
____ in the principal amount of $______________ payable to the order of the
Assignee] [a new Tranche B Note dated _______________ in the principal amount of
$__________ payable to the order of the Assignee] [new Notes as follows: a
__________ Note dated ____________, ____ in the principal amount of
$_______________ payable to the order of the Assignor and a __________ Note
dated ___________________, ____ in the principal amount of $______________
payable to the order of the Assignee].
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.04(a) thereof (or any more recent financial statements of the
Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Assignor or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) confirms that it is a bank or financial
institution; (iv) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; (v) specifies as its Lending Office (and address for
notices) the office set forth beneath its name on the signature pages hereof,
(vi) represents and warrants that the execution, delivery and performance of
this Assignment and Acceptance are within its corporate powers and have been
duly authorized by all necessary corporate action[, and (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes or such other documents as are necessary to
indicate that all such payments are subject to such taxes at a rate reduced by
an applicable tax treaty].
4. The Effective Date for this Assignment and Acceptance shall be
_______________ (the "Effective Date").
5. From and after the Effective Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent rights and obligations have
been transferred to it by this Assignment and Acceptance, have the rights and
obligations of a
70
Bank thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Assignment and
Acceptance, relinquish its rights (other than under Section 7.03 of the Credit
Agreement) and be released from its obligations under the Credit Agreement.
6. From and after the Effective Date, the Borrower shall make all
payments in respect of the interest assigned hereby to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments for
periods prior to such acceptance by the Borrower directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
[NAME OF ASSIGNOR]
By:___________________________
Title:
[NAME OF ASSIGNEE]
By:___________________________
Title:
Lending Office:
[Address]
CONSENTED AND AGREED TO:
MOHAWK INDUSTRIES, INC.
By:_______________________
Title:
71
Exhibit D
---------
NOTICE OF BORROWING
-------------------
_____________________, 199__
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: SouthEast Corporate Loan Unit
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Re: Fourth Amended and Restated Credit Agreement (as amended and modified
from time to time, the "Credit Agreement") dated as of January 28,
1999 by and among MOHAWK INDUSTRIES, INC., FIRST UNION NATIONAL BANK,
WACHOVIA BANK, N.A., and the other Banks from time to time party
thereto.
Ladies and Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02 of
the Credit Agreement.
The Borrower hereby requests a Borrowing under the [Tranche A or B] Loans
in the aggregate principal amount of $___________ to be made on ______________,
199__, and for interest to accrue thereon at the rate established by the Credit
Agreement for [Base Rate Loans] [Euro-Dollar Loans]. [First Union] [Wachovia]
is hereby requested to fund $_____________ (50.0%) of such Borrowing. The
duration of the Interest Period with respect thereto shall be [1 month] [2
months] [3 months] [6 months].
The Borrower hereby represents and warrants that on the date the Borrowing
requested hereunder is made (both before and after giving effect to the making
of such and after giving effect to the application, directly or indirectly, of
the proceeds thereof):
72
(a) no Default has occurred and is continuing; and
(b) the representations and warranties of the Borrower contained in
Article IV of the Credit Agreement are true on and as of the date hereof
except for changes permitted by the Credit Agreement and except to the
extent that such representations and warranties relate solely to an earlier
date.
[TO BE INSERTED IN THE NOTICE OF BORROWING FOR THE EFFECTIVE DATE ONLY: On
a pro forma basis, as detailed on Schedule 1 attached hereto, after giving
effect to the Debt incurred as of the end of the day on the Effective Date, the
Debt to Capitalization Ratio equals ____ to ____.]
The Borrower has caused this Notice of Borrowing to be executed and
delivered and the representation and warranty contained herein to be made, by
its duly authorized officer this _____ day of __________, 199__.
MOHAWK INDUSTRIES, INC.
By:___________________________
Title:
73
Exhibit E
---------
COMPLIANCE CERTIFICATE
----------------------
Reference is made to the Fourth Amended and Restated Credit Agreement
dated as of January 28, 1999 (as modified and supplemented and in effect from
time to time, the "Credit Agreement") among Mohawk Industries, Inc., First Union
National Bank, Wachovia Bank, N.A., and the other Banks from time to time party
thereto. Capitalized terms used herein shall have the meanings ascribed thereto
in the Credit Agreement.
Pursuant to Section 5.01(d) of the Credit Agreement, ________________,
the duly authorized _____________________________ of Mohawk Industries, Inc.
hereby certifies, on behalf of the Borrower, to the Banks that the information
contained in the Compliance Check List attached hereto is true, accurate and
complete as of __________, 199_, and that no Defaults or Events of Default
exist.
By:___________________________
Title:
74
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
1. Debt to Capitalization Ratio (Section 5.04)
The Debt to Capitalization Ratio shall be less than 0.60 to 1.0 at the end
of each Fiscal Quarter.
(a) Consolidated Debt $______________
(b) Consolidated Net Worth $______________
Actual Ratio of (a) to (b) _______________
Maximum Ratio less than 0.60 to 1.0
Applicable Margin ______________%*
Facility Fee ______________%*
2. Debt to EBITDA Ratio (Section 5.05)
The ratio of the Borrower's (a) Consolidated Debt to (b) the sum of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) taxes on
the Borrower's consolidated pre-tax income, and (iv) Depreciation and
Amortization shall not be greater than 3.5 to 1.0 at the end of each Fiscal
Quarter. Clause (b) in this Section 5.05 shall be calculated on a trailing
4 quarter basis as at the end of each such Fiscal Quarter.
(a) Consolidated Debt $_____________
(b) Consolidated Net Income $_____________
(c) Consolidated Interest Expense $_____________
(d) Taxes on the Borrower's
consolidated pre-tax income $_____________
_______________
*Subject to verification by the Banks.
75
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
(e) Depreciation $_____________
(f) Amortization $_____________
(e) The sum of (b) plus (c)
----
plus (d) plus (e) plus (f) $_____________
---- ---- ----
Actual Ratio of (a) to (e) ______________
Maximum Ratio less than 3.5 to 1.0
3. Negative Pledge (Section 5.09)
Liens permitted under paragraphs (a)
through (i) $_____________
Limitation -- greater of (x)
$90,000,000 or (y) 15% of
Consolidated Net Worth $_____________
4. Calculations with respect to Asset Securitizations:
(a) Accounts receivable balance reported
as of the last day of the calendar month
most recently ended in such Fiscal Quarter
by the Borrower or a Subsidiary with respect
to an Asset Securitization $_____________
(b) Total accounts receivable reported
as sold as of the last day of the calendar
month most recently ended in such Fiscal
Quarter by the Borrower or a Subsidiary
with respect to an Asset Securitization $_____________
76
EXHIBIT F
---------
[FORM OF SUBSIDIARY GUARANTY]
[AMENDED AND RESTATED] GUARANTY AGREEMENT
-----------------------------------------
THIS [AMENDED AND RESTATED] GUARANTY AGREEMENT (this "Agreement") is dated
as of _______________, [1999] by _________________________, a
_______________(the "Subsidiary Guarantor") in favor of the Banks (defined in
the "Credit Agreement" defined below);
WHEREAS, pursuant to that certain Fourth Amended and Restated Credit
Agreement dated as of [even date herewith] (together with all amendments and
modifications thereto from time to time, the "Credit Agreement") among Mohawk
Industries, Inc., (the "Borrower"), Wachovia Bank, N.A. and First Union National
Bank, the Banks have provided certain financial accommodations to the Borrower;
WHEREAS, the Subsidiary Guarantor will benefit from the financing provided
by the Banks to the Borrower pursuant to the Credit Agreement as the continued
success of the Subsidiary Guarantor's business operations is directly dependent
upon the ability of the Borrower to obtain adequate financing for its business
operations and the expansion of such business operations; and
WHEREAS, it is a condition precedent to obtaining the financing to be
provided by the Banks pursuant to the Credit Agreement that the Subsidiary
Guarantor guarantee the payment of the principal of, and interest on, the Notes
and all other amounts payable by the Borrower to the Banks under the Credit
Agreement or any of the other Loan Documents (as such term is defined in the
Credit Agreement) and the Subsidiary Guarantor is therefore willing to execute
and deliver this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Subsidiary Guarantor, the
Subsidiary Guarantor hereby agrees as follows:
Section 1. Definitions. Capitalized terms contained herein but not
-----------
defined herein shall have the meanings attributed thereto in the Credit
Agreement.
Section 2. Guaranty. The Subsidiary Guarantor hereby absolutely and
--------
unconditionally, guarantees the due and punctual payment and performance of: (i)
the principal of, and accrued
77
interest on, the Notes (as such term is defined in the Credit Agreement) when
due (whether at stated maturity, by acceleration or otherwise), (ii) all other
monetary and nonmonetary obligations of the Borrower owed to the Banks under the
Credit Agreement and any of the other Loan Documents including all fees, charges
and other amounts payable by the Borrower to the Banks thereunder, (iii) any and
all extensions, renewals, modifications or substitutions of the foregoing, and
(iv) the Letter of Credit Obligations (the items set forth in subparagraphs (i)
through (iv) hereunder are collectively referred to herein as the "Guaranteed
Obligations"). Upon failure by the Borrower to pay any such amount in accordance
with the terms of the Credit Agreement, the Subsidiary Guarantor agrees that it
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement, the relevant Note or the relevant Loan
Document, as the case may be. [This Agreement amends and restates any prior
guaranty of the Subsidiary Guarantor of the Guaranteed Obligations.]
Section 3. Guaranty of Payment and Not of Collection. This Agreement
-----------------------------------------
shall be a guaranty of payment and not of collection. Accordingly, the Banks
shall not be obliged before enforcing this Agreement against the Subsidiary
Guarantor: (a) to take any action in any court against the Borrower, or any
other Guarantor of the Guaranteed Obligations or otherwise take any action to
enforce the rights and remedies of the Banks under the Credit Agreement or the
Notes or any other Loan Document, (b) to make any claim in a liquidation or
bankruptcy of the Borrower, or any other Guarantor of the Guaranteed Obligations
or (c) to make demand of the Borrower, or any other Guarantor of the Guaranteed
Obligations or to enforce or seek to enforce any collateral or other security
held by any of the Banks or any other Person securing or otherwise in respect of
the Guaranteed Obligations. The Subsidiary Guarantor agrees that it shall be
liable hereunder notwithstanding (x) the dissolution or liquidation, or the
merger, consolidation or other change in form of the Borrower, or any other
Guarantor of the Guaranteed Obligations, (y) any defect, limitation or
insufficiency in the borrowing powers of the Borrower or in the exercise thereof
or (z) the invalidity, illegality or unenforceability of any Loan Document.
Section 4. No Discharge. The Subsidiary Guarantor shall not be discharged
------------
from its obligations hereunder by any concession, waiver or arrangement granted
to or made with the Borrower, any other Guarantor or by anything done or omitted
which but for this provision might operate to so discharge the Subsidiary
Guarantor from its obligations hereunder or by any invalidity, unenforceability,
limitation, release or the lapse of any collateral security granted to the Banks
by the Borrower, or any other Guarantor or other Person to secure any of the
Guaranteed Obligations.
78
Section 5. Action with respect to Guaranteed Obligations. The Banks may,
---------------------------------------------
at any time and from time to time, without the consent of the Subsidiary
Guarantor (except as otherwise provided in the Credit Agreement or any other
Loan Documents), and without discharging the Subsidiary Guarantor from its
obligations hereunder: (a) change the manner, place or terms of payment, or
change or extend the time of payment of, or renew or alter the Guaranteed
Obligations in any manner; (b) sell, exchange, release or otherwise deal with
all or any part of any collateral security at any time granted, pledged or
mortgaged by the Borrower, any other Guarantor or any other Person to secure the
Guaranteed Obligations; (c) release anyone liable in any manner for the payment
or collection of the Guaranteed Obligations; (d) amend or otherwise alter the
terms of the Credit Agreement, the Notes or any other Loan Document; (e)
exercise, or refrain from exercising, any rights against the Borrower, any other
Guarantor or any other Person (including any other guarantor of the Guaranteed
Obligations); and (f) apply any sum, by whomsoever paid or however realized, to
the Guaranteed Obligations in such order as the Banks shall elect.
Section 6. Waiver. The Subsidiary Guarantor, in its capacity as guarantor
------
hereunder, hereby waives notice of acceptance hereof or any presentment, demand,
protest or notice of any kind and any other act or thing or omission or delay to
do any other act or thing which might in any manner or to any extent vary the
risk of the Subsidiary Guarantor or which might otherwise operate as a discharge
of the Subsidiary Guarantor.
Section 7. Inability to Accelerate Note. If an Event of Default shall
----------------------------
have occurred and be continuing and the Banks or the holder of any of the
Guaranteed Obligations is prevented from demanding or accelerating payment
thereof by reason of any automatic stay or otherwise, the Banks or such holder
shall be entitled to receive hereunder from the Subsidiary Guarantor, upon
demand therefor, the sums which would have otherwise been due had such
acceleration occurred.
Section 8. Reinstatement of Guaranteed Obligations. The Subsidiary
---------------------------------------
Guarantor further confirms that this Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time payment of any of the
Guaranteed Obligations is rescinded or must otherwise be restored by the Banks
upon the bankruptcy or reorganization of the Borrower, any other Guarantor, or
otherwise.
Section 9. Payments Free and Clear. All sums payable by the Subsidiary
-----------------------
Guarantor hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or
79
withholding whatsoever, or, in the event that the Subsidiary Guarantor is
required by law to make any such deduction or withholding, the Subsidiary
Guarantor shall pay to the Banks such additional amount as will result in the
receipt by the Banks of the full amount payable hereunder.
Section 10. GOVERNING LAW/WAIVER OF JURY TRIAL/JURISDICTION. THIS
-----------------------------------------------
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF
THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF GEORGIA. THE
SUBSIDIARY GUARANTOR (A) AND EACH OF THE BANKS IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT,
ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL JURISDICTION IN THE STATE
OF GEORGIA, THE COURTS THEREOF AND THE UNITED STATES DISTRICT COURTS SITTING
THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND
(C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY JURISDICTION TO
OBJECT TO ANY BASIS (INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO
JURISDICTION OR VENUE WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION
TO ENFORCE THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. NOTHING HEREIN
CONTAINED, HOWEVER, SHALL PREVENT THE BANKS FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST THE SUBSIDIARY GUARANTOR
PERSONALLY, AND AGAINST ANY ASSETS OF THE SUBSIDIARY GUARANTOR, WITHIN ANY OTHER
STATE OR JURISDICTION.
Section 11. Note Accounts. The Banks shall maintain books and accounts
-------------
setting forth the amounts of principal, interest and other sums paid and payable
with respect to the Notes, the Credit Agreement, and the Guaranteed Obligations,
and in the case of any dispute relating to any amounts outstanding with respect
to any of the Guaranteed Obligations, the entries in such account shall be
binding upon the Subsidiary Guarantor absent manifest error.
Section 12. Waiver of Remedies. No delay or failure on the part of the
------------------
Banks in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Banks of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right or
remedy.
Section 13. Bankruptcy of Subsidiary Guarantor. In case of bankruptcy of
----------------------------------
the Subsidiary Guarantor, the Subsidiary Guarantor authorizes and directs the
court, any trustee or the debtor-in-possession to deliver to the Banks a
sufficient amount of property or money claimed as exempt or otherwise outside
the estate of the Subsidiary Guarantor to pay or satisfy any outstanding
Guaranteed Obligations.
80
Section 14. Limitation on Guaranteed Obligations. It is the intention of
------------------------------------
the Subsidiary Guarantor and the Banks that the Subsidiary Guarantor's
obligations hereunder shall be in, but not in excess of, as of any date, the
greater of the following (such greater amount determined hereunder being
referred to as the "Maximum Liability"): (i) the aggregate amount of all monies
received by the Subsidiary Guarantor from the Borrower or any other guarantor on
or after the date hereof (whether by loan, capital infusion or other means), or
(ii) the maximum amount (such amount being the Subsidiary Guarantor's
"Alternative Limitation") not subject to avoidance under Title 11 of the United
States Code, as same may be amended from time to time, or any applicable state
law (collectively, the "Bankruptcy Code"). To that end, but as to the
Alternative Limitation of the Subsidiary Guarantor, only to the extent such
obligations would otherwise be subject to avoidance under the Bankruptcy Code if
the Subsidiary Guarantor is not deemed to have received valuable consideration,
fair value or reasonably equivalent value for its obligations hereunder, the
Subsidiary Guarantor's obligations hereunder shall be reduced to that amount
which, after giving effect thereto, would not render the Subsidiary Guarantor
insolvent, or leave the Subsidiary Guarantor with an unreasonably small capital
to conduct its business, or cause the Subsidiary Guarantor to have incurred
debts (or intended to have incurred debts) beyond its ability to pay such debts
as they mature, at the time such obligations are deemed to have been incurred
under the Bankruptcy Code. As used herein, the terms "insolvent" and
"unreasonably small capital" shall likewise be determined in accordance with the
Bankruptcy Code. This Section 14 with respect to the Alternative Limitation of
the Subsidiary Guarantor is intended solely to preserve the rights of the Banks
hereunder to the maximum extent not subject to avoidance under the Bankruptcy
Code, and neither the Subsidiary Guarantor nor any other person or entity shall
have any right or claim under this Section 14 with respect to the Alternative
Limitation, except to the extent necessary so that the obligations of the
Subsidiary Guarantor hereunder shall not be rendered voidable under the
Bankruptcy Code.
Section 15. Successors and Assigns. Each reference herein to the Banks
----------------------
shall be deemed to include the Bank's successors and assigns (including, but not
by way of limitation, any subsequent holder or Transferee of any Notes or the
Guaranteed Obligations) in whose favor the provisions or this Agreement shall
also inure, and each reference herein to the Subsidiary Guarantor shall be
deemed to include the Subsidiary Guarantor's successors and assigns, upon whom
this Agreement shall also be binding.
Section 16. Amendments. This Agreement may not be amended or waived
----------
except in a writing signed by the Banks and the Subsidiary Guarantor.
81
Section 17. Payments. All payments made by the Subsidiary Guarantor
--------
pursuant to this Agreement shall be made in the lawful currency of the United
States, in immediately available funds to the account of the Banks at their
respective addresses set forth in the Credit Agreement from time to time, not
later than 11:00 a.m. New York time on the date one Business Day after demand
therefor. All notices or demands to the Subsidiary Guarantor shall be in
writing and shall be telecopied, mailed or hand delivered to the address for the
Subsidiary Guarantor set forth in the Credit Agreement from time to time.
Section 18. Severability. In case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired thereby
and the Subsidiary Guarantor shall use its best efforts to replace such
provision.
Section 19. Headings. Section headings used in this Agreement are for
--------
convenience only and shall not affect the construction of this Agreement.
IN WITNESS WHEREOF, the Subsidiary Guarantor has duly executed and
delivered this Agreement as of the date first written above.
[NAME OF SUBSIDIARY GUARANTOR] (SEAL)
By:______________________________
Title:
82
Schedule 4.08
-------------
Subsidiaries
------------
----------------------------------------------------------------------------------------------------
Jurisdiction Holders of Equity
Name of Subsidiary of Formation Interest
----------------------------------------------------------------------------------------------------
Mohawk Carpet Corporation Delaware Borrower
----------------------------------------------------------------------------------------------------
World Carpets, Inc. Georgia Borrower
----------------------------------------------------------------------------------------------------
World Commercial Carpets, Inc. Georgia World Carpets, Inc.
----------------------------------------------------------------------------------------------------
Mohawk Servicing, Inc. Delaware Mohawk Carpet Corporation
----------------------------------------------------------------------------------------------------
Mohawk Factoring, Inc. Delaware Mohawk Carpet Corporation
----------------------------------------------------------------------------------------------------
Aladdin Manufacturing Corporation Delaware Mohawk Carpet Corporation
----------------------------------------------------------------------------------------------------
Mohawk International FSC, Inc. Barbados Mohawk Carpet Corporation
----------------------------------------------------------------------------------------------------
Mohawk Commercial, Inc. Delaware Mohawk Carpet Corporation
----------------------------------------------------------------------------------------------------
Mohawk Marketing, Inc. Georgia Aladdin Manufacturing Corporation
----------------------------------------------------------------------------------------------------
Newmark & ▇▇▇▇▇, Inc. Georgia Aladdin Manufacturing Corporation
----------------------------------------------------------------------------------------------------
Horizon Europe, Inc. Georgia Aladdin Manufacturing Corporation
----------------------------------------------------------------------------------------------------
Delaware Valley Wool Scouring, Inc. Pennsylvania Aladdin Manufacturing Corporation
----------------------------------------------------------------------------------------------------
Mohawk ▇▇▇▇▇, Inc. Delaware Aladdin Manufacturing Corporation
----------------------------------------------------------------------------------------------------
Aladdin Manufacturing Corporation
------------------------------------------
American Weavers LLC Tennessee Mohawk Marketing, Inc.
----------------------------------------------------------------------------------------------------
83