EXHIBIT 10 FOR MOHAWK INDUSTRIES, INC. 10-Q
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
April 15, 1997
among
MOHAWK INDUSTRIES, INC.,
ALADDIN MANUFACTURING CORPORATION
(f/k/a Mohawk Manufacturing Corporation,
f/k/a Mohawk Carpet Corporation),
FIRST UNION NATIONAL BANK OF GEORGIA
and
WACHOVIA BANK OF GEORGIA, N.A.
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS............................. 1
SECTION 1.01. Definitions................................................ 1
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SECTION 1.02. Accounting Terms and Determinations........................ 16
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SECTION 1.03. References................................................. 17
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SECTION 1.04. Use of Defined Terms....................................... 17
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SECTION 1.05. Terminology................................................ 17
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ARTICLE II
THE CREDITS........................... 17
SECTION 2.01. Commitments to Lend........................................ 17
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SECTION 2.02. Method of Borrowing........................................ 18
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SECTION 2.03. Notes...................................................... 19
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SECTION 2.04. Maturity of Loans.......................................... 20
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SECTION 2.05. Interest Rates............................................. 20
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SECTION 2.06. Fees....................................................... 22
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SECTION 2.07. Optional Termination or Reduction of
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Commitments........................................................ 23
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SECTION 2.08. Mandatory Reduction and Termination of
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Commitments........................................................ 23
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SECTION 2.09. Optional Prepayments....................................... 23
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SECTION 2.10. Mandatory Prepayments...................................... 23
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SECTION 2.11. General Provisions as to Payments.......................... 23
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SECTION 2.12. Computation of Interest and Fees........................... 24
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SECTION 2.13. Existing Letter of Credit.................................. 24
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SECTION 2.14. Other Letters of Credit.................................... 26
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(i)
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SECTION 2.15. Ratification of Security Interest in
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Collateral; Release of Collateral................................. 26
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ARTICLE III
CONDITIONS TO BORROWINGS....................... 27
SECTION 3.01. Conditions to Closing...................................... 27
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SECTION 3.02. Conditions to All Borrowings............................... 28
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................... 28
SECTION 4.01. Corporate Existence and Power.............................. 29
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SECTION 4.02. Corporate and Governmental Authorization; No
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Contravention..................................................... 29
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SECTION 4.03. Binding Effect............................................. 29
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SECTION 4.04. Financial Information...................................... 29
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SECTION 4.05. No Litigation.............................................. 30
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SECTION 4.06. Compliance with ERISA...................................... 30
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SECTION 4.07. Taxes...................................................... 30
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SECTION 4.08. Subsidiaries............................................... 30
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SECTION 4.09. Not an Investment Company.................................. 31
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SECTION 4.10. Ownership of Property; Liens............................... 31
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SECTION 4.11. No Default................................................. 31
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SECTION 4.12. Full Disclosure............................................ 31
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SECTION 4.13. Environmental Matters...................................... 31
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SECTION 4.14. Capital Stock.............................................. 32
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SECTION 4.15. Margin Stock............................................... 32
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SECTION 4.16. Insolvency................................................. 32
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SECTION 4.17. Other Debt................................................. 33
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(ii)
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ARTICLE V
COVENANTS.............................. 33
SECTION 5.01. Information................................................ 33
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SECTION 5.02. Inspection of Property, Books and Records.................. 35
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SECTION 5.03. EBIT Ratio................................................. 35
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SECTION 5.04. Debt to Capitalization Ratio............................... 35
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SECTION 5.05. Debt to EBITDA Ratio....................................... 35
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SECTION 5.06. Restricted Payments........................................ 35
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SECTION 5.07. Loans or Advances.......................................... 36
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SECTION 5.08. Investments................................................ 36
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SECTION 5.09. Negative Pledge............................................ 36
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SECTION 5.10. Maintenance of Existence................................... 38
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SECTION 5.11. Dissolution................................................ 38
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SECTION 5.12. Consolidations, Mergers and Sales of Assets................ 38
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SECTION 5.13. Use of Proceeds............................................ 39
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SECTION 5.14. Compliance with Laws; Payment of Taxes..................... 39
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SECTION 5.15. Insurance.................................................. 39
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SECTION 5.16. Change in Fiscal Year...................................... 39
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SECTION 5.17. Maintenance of Property.................................... 39
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SECTION 5.18. Environmental Notices...................................... 40
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SECTION 5.19. Environmental Matters...................................... 40
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SECTION 5.20. Environmental Release...................................... 40
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SECTION 5.21. Future Subsidiaries........................................ 40
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SECTION 5.22. Transactions with Affiliates............................... 40
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SECTION 5.23. Ownership of Parent and the Borrower....................... 41
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(iii)
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ARTICLE VI
DEFAULTS............................... 41
SECTION 6.01. Events of Default.......................................... 41
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ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION................ 44
SECTION 7.01. Basis for Determining Interest Rate Inadequate
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or Unfair........................................................ 44
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SECTION 7.02. Illegality................................................. 45
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SECTION 7.03. Increased Cost and Reduced Return.......................... 45
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SECTION 7.04. Base Rate Loans Substituted for Euro-Dollar
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Loans............................................................ 47
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SECTION 7.05. Compensation............................................... 47
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SECTION 7.06. HLT Classification......................................... 48
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ARTICLE VIII
MISCELLANEOUS.......................... 48
SECTION 8.01. Notices.................................................... 48
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SECTION 8.02. No Waivers................................................. 48
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SECTION 8.03. Expenses; Documentary Taxes................................ 48
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SECTION 8.04. Indemnification............................................ 49
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SECTION 8.05. Sharing of Setoffs......................................... 49
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SECTION 8.06. Amendments and Waivers..................................... 50
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SECTION 8.07. No Margin Stock Collateral................................. 50
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SECTION 8.08. Successors and Assigns..................................... 51
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SECTION 8.09. Confidentiality............................................ 53
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SECTION 8.10. Representation by Banks.................................... 53
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SECTION 8.11. Obligations Several........................................ 53
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(iv)
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SECTION 8.12. Georgia Law................................................ 53
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SECTION 8.13. Interpretation............................................. 53
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SECTION 8.14. Waiver of Jury Trial; Consent to Jurisdiction.............. 54
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SECTION 8.15. Counterparts............................................... 54
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(v)
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 Parent Guaranty
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EXHIBIT G Form of Indirect Parent Guaranty
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EXHIBIT H Form of Subsidiary Guaranty
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Schedule 4.08 Subsidiaries
Schedule 4.13 Environmental Matters
Schedule 4.17 Existing Debt
(vi)
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 15,
1997, among MOHAWK INDUSTRIES, INC., MOHAWK CARPET CORPORATION (f/k/a Mohawk
Limited), ALADDIN MANUFACTURING CORPORATION (f/k/a Mohawk Manufacturing
Corporation, f/k/a Mohawk Carpet Corporation), FIRST UNION NATIONAL BANK OF
GEORGIA, 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
Second Amended and Restated Credit Agreement, dated as of January 13, 1995, as
amended by that certain First Amendatory Agreement, dated as of June 26, 1995,
that certain Second Amendatory Agreement and Waiver, dated as of July 19, 1995,
as further amended by that certain Third Amendatory Agreement, dated as of
September 28, 1995, as further amended by that certain Fourth Amendatory
Agreement, dated as of December 22, 1995, as further amended by that certain
Fifth Amendatory Agreement, dated as of December 31, 1995, and as further
amended by that certain Sixth Amendatory Agreement, dated as of December 31,
1996 (the "Original Credit Agreement"; as amended and restated hereby, the
"Credit Agreement").
The parties hereto agree that the Original Credit Agreement is hereby
amended and restated 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 Indirect Parent or the Borrower (a
"Controlling Person"), (ii) any Person (other than the Indirect Parent, 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 Indirect Parent or 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 Third Amended and Restated Credit Agreement,
together with all amendments and modifications hereto.
"American Rug" means American Rug Craftsmen, Inc., a Tennessee
corporation, and its successors and permitted assigns, which corporation was
merged into the Borrower as successor thereto.
"Amortization" means for any period the sum of all amortization
expenses of the Indirect Parent and its Consolidated Subsidiaries for such
period, as determined in accordance with GAAP.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Asset Purchase Agreement" means that certain Asset Purchase
Agreement, dated as of June 3, 1993, between Fieldcrest Xxxxxx, Inc. and the
Indirect Parent, together with all amendments and supplements thereto in effect
as of the Closing Date.
"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 for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii) one-
half of one percent above the Federal Funds Rate. For purposes of determining
the Base Rate for any day, changes in the Prime Rate shall be effective on the
date of each such change.
"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 Aladdin Manufacturing Corporation, 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.
2
"Capital Expenditures" means for any period all amounts that would, in
accordance with GAAP, be set forth as "capital expenditures" on the consolidated
statement of cash flows of the Indirect Parent and its Consolidated
Subsidiaries, for such period and shall include all capital lease additions.
"Capital Stock" means any nonredeemable capital stock of the Indirect
Parent, the Borrower or any Consolidated Subsidiary (to the extent issued to a
Person other than the Indirect Parent or 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 April 15, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Collateral" means the capital stock pledged in favor of the Wachovia
and First Union in their collective capacity as Collateral Agent (defined in the
Original Credit Agreement) consisting of the capital stock of the Parent, the
Borrower and the Borrower's Subsidiaries pursuant to the terms of the Security
Documents.
"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 Indirect Parent
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
3
the Indirect Parent 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 Indirect Parent and its Consolidated
Subsidiaries under all operating leases and rental agreements.
"Consolidated Net Income" means, for any period, the Net Income of the
Indirect Parent and its Consolidated Subsidiaries for such period determined on
a consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Indirect Parent or any Subsidiary in the unremitted earnings of
any Person that is not a Subsidiary.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Indirect Parent 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 Indirect Parent in its consolidated financial statements as of
such date.
"Consolidated Tangible Net Worth" means at any time:
(a) Stockholder's Equity of the Indirect Parent and its
Consolidated Subsidiaries as would appear on a consolidated balance sheet
prepared in accordance with GAAP for such Persons at such times, minus
(b) the net book value of all intangibles of the Indirect Parent
and its Consolidated Subsidiaries, determined on a consolidated basis for
such Persons in accordance with GAAP at such time, arising after September
3, 1993 other than intangibles arising in connection with (i) the purchase
of stock of American Rug and Xxxxxx Carpets & Rugs, Inc., (ii) the purchase
of the assets of the Fieldcrest Division (as described in the Asset
Purchase Agreement) and (iii) up to but not exceeding a value of
$10,000,000.00, the purchase of the Capital Stock of Galaxy (as described
in the Galaxy Stock Purchase Agreement) reflected on the books and records
of the Borrower, as successor through acquisition of the liquidated assets
of Galaxy.
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 Indirect Parent as of and for the
Fiscal year ended December 31, 1996, shall be disregarded for the purposes
of determining Consolidated
4
Tangible Net Worth, 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
nonrecurring $4,000,000 charge, incurred by the Borrower during the fourth
Fiscal Quarter of 1995 as a result of income tax reimbursements made to
certain executives of the Borrower relating to their exercise of certain
stock options, shall be disregarded when determining Consolidated Tangible
Net Worth.
"Consolidated Total Assets" means, at any time, the total assets of
the Indirect Parent and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Indirect Parent and its Consolidated Subsidiaries, prepared
in accordance with GAAP.
"Consolidated Total Tangible Capital" means, at any time, the sum of
the following as of such time (i) Consolidated Tangible Net Worth, and (ii)
Consolidated Debt.
"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 Indirect Parent, 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, and (ix) all
Debt of others Guaranteed by such Person. 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
5
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 Tangible 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, (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 Indirect Parent 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.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of either the Indirect Parent, 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
6
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 Indirect Parent, the Parent, 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.
"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 Indirect Parent,
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.
7
"Existing LC Commitment" means the respective amounts set forth
opposite the names of the Issuer and First Union in the signature pages hereof
as their Existing LC Commitment.
"Existing Letter of Credit" means that certain irrevocable direct-pay
letter of credit dated as of January 13, 1995, designated with I.D. Number
LC870-007339, issued by the Issuer in the face amount of the Existing LC
Commitment for the benefit of NationsBank of Georgia, N.A., as trustee under the
Industrial Revenue Bond referenced therein.
"Existing Letter of Credit Application" shall mean the application and
agreement of the Issuer executed and delivered by Galaxy for the Existing Letter
of Credit. In the event of any inconsistency between the terms of the Existing
Letter of Credit Application and this Agreement, the terms of this Agreement
shall control and shall supersede the terms of the Existing Letter of Credit
Application.
"Existing Letter of Credit Obligations" shall mean, at any time, the
aggregate unfunded amount of the outstanding Existing Letter of Credit.
"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 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.
"Fieldcrest Division" means the Carpet and Rug Division of Fieldcrest
Xxxxxx, Inc., as such Division is more particularly defined in the Asset
Purchase Agreement.
"First Union" means First Union National Bank of Georgia, a national
banking association, and its successors and, as the context requires, its
permitted assigns.
"First Union Prime Rate" refers to that interest rate so denominated
and set by First Union from time to time as an interest rate basis for
borrowings. The First Union Prime Rate is but one of several interest rate
bases used by First Union. First Union lends at interest rates above and below
the First Union Prime Rate.
8
"Fiscal Quarter" means any fiscal quarter of the Indirect Parent.
"Fiscal Year" means any fiscal year of the Indirect Parent.
"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 Xxxxx, Inc., a Delaware corporation,
which corporation was liquidated into the Borrower as successor thereto.
"Galaxy Stock Purchase Agreement" means that certain stock purchase
agreement dated as of December 1, 1994, by and between the stockholders of
Galaxy as listed therein, as the seller, and the Indirect Parent as the buyer,
whereby the Indirect Parent purchased all of the issued and outstanding Capital
Stock of Galaxy.
"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 course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means any one, or more, or all, as the context requires,
of the Indirect Parent, the Parent, Mohawk Marketing, Inc., Mohawk Xxxxx, Inc.,
the other Subsidiary Guarantors, and any other guarantor of the Loans from time
to time.
"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
9
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.
"HLT Classification" has the meaning set forth in Section 7.06.
"HLT Rate" means the sum of (i) the Base Rate plus (ii) 2.50%.
"Indirect Parent" means Mohawk Industries, Inc., a Delaware
corporation, and its successors and permitted assigns.
"Indirect Parent Guaranty" means that certain Guaranty Agreement
substantially in the form of Exhibit F, dated as of even date herewith, executed
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by the Indirect Parent in favor of the Banks, as amended and modified from time
to time, which amends, restates and supersedes any prior guaranty by the
Indirect Parent of the Loans.
"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
10
(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:
--------
(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.
"Issuer" means Wachovia.
"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 following percentages of the average daily amount of the Existing Letter
of Credit Obligations, computed for the actual number of days elapsed on the
basis of a 360 day year: so long as the Debt to Capitalization Ratio is (aa)
greater than or equal to 0.55 to 1.0, 0.50%, (bb) greater than or equal to 0.50
to 1.0 but less than 0.55 to 1.0, 0.375%, (cc) greater than or equal to 0.45 to
1.0 but less than 0.50 to 1.0, 0.275%, (dd) greater than or equal to 0.35 to 1.0
but less than 0.45 to 1.0, 0.25%, and (ee) less than 0.35 to 1.0, 0.20%.
"Letter of Credit Obligations" means the sum of (x) the Existing
Letter of Credit Obligations, plus (y) the aggregate unfunded amount of all
----
other outstanding letters of credit issued by any Bank for the benefit of the
Borrower or any Guarantor.
"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
11
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 Indirect Parent, 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, the Indirect Parent
Guaranty, the Parent Guaranty, the Subsidiary Guaranties, the Security
Documents, 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 G, 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 Indirect
Parent and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Banks under the Loan Documents, or the ability of the Borrower
or any Guarantor 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.
"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.
12
"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.
"Parent" means Mohawk Carpet Corporation (f/k/a Mohawk Limited), a
Delaware corporation, and its successors and permitted assigns.
"Parent Guaranty" means that certain Guaranty Agreement substantially
in the form of Exhibit G, dated as of even date herewith, executed by the Parent
---------
in favor of the Banks, as amended and modified from time to time, which amends,
restates and supersedes any prior guaranty by the Parent of the Loans.
"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.
"Permitted Acquisition" means a non-hostile acquisition, however
structured, of all or substantially all of the assets or stock of a Person whose
business primarily consists of the manufacturing, marketing or distribution of
floor covering.
"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.
13
"Prime Rate" means, on any day, the average of the (i) Wachovia Prime
Rate and (ii) First Union Prime Rate.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Indirect Parent 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 G" means Regulation G 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 to time, together with all
official rulings and interpretations issued thereunder.
"Reporting Entity" means, as the context requires in connection with
the furnishing of information under this Agreement or any of the other Loan
Documents, either the Indirect Parent or the Borrower.
"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 Indirect Parent'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
Indirect
14
Parent'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 Indirect Parent's capital stock.
"Security Documents" means all stock pledge agreements executed and
delivered by the Indirect Parent, the Parent and the Borrower in favor of
Wachovia and First Union in their collective capacity as Collateral Agent
(defined in the Original Credit Agreement) under the Intercreditor Agreement,
including, without limitation, the Borrower Security Agreement (defined in the
Original Credit Agreement) and the Parent Security Agreement (defined in the
Original Credit Agreement).
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Indirect Parent and its Consolidated Subsidiaries, as set forth or reflected
on the most recent consolidated balance sheet of the Indirect Parent and its
Consolidated Subsidiaries prepared in accordance with GAAP, but excluding any
--- ---------
Redeemable Preferred Stock of the Indirect Parent 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 Indirect Parent or the Borrower.
"Subsidiary Guarantor" means a Subsidiary which has executed a
Subsidiary Guaranty in connection herewith or pursuant to Section 5.21.
"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 H, executed and delivered by the Subsidiary
---------
Guarantors from time to time in favor of the Banks, together with all amendments
and modifications thereto.
"Transaction Losses" has the meaning set forth in Section 5.22.
"Termination Date" means, respectively, as the context may require,
the Tranche A Termination Date and the Tranche B Termination Date.
15
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of either the Indirect Parent's or 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, which
promissory notes amend, restate and supersede any prior promissory notes issued
by the Borrower to evidence the Tranche A Loans.
"Tranche A Loans" means Loans made to the Borrower by the Banks
pursuant to Section 2.01(a).
"Tranche A Termination Date" means May 15, 2002.
"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 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, which
promissory notes amend, restate and supersede any prior promissory notes issued
by the Borrower to evidence the Tranche B Loans.
"Tranche B Loans" means Loans made to the Borrower by the Banks
pursuant to Section 2.01(b).
"Tranche B Termination Date" means December 26, 1997.
"Transferee" has the meaning set forth in Section 8.08(d).
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
16
"Unused Tranche A Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Tranche A Loans.
"Unused Tranche B Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Tranche B Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a national banking
association, and its successors and, as the context requires, its permitted
assigns.
"Wachovia Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Wachovia Prime Rate is but one of several interest rate bases used by Wachovia.
Wachovia lends at interest rates above and below the Wachovia Prime Rate.
"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 Indirect
Parent or a Consolidated 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 Reporting Entity's independent public accountants
or otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the relevant Reporting Entity delivered to
the Banks unless with respect to any such change concurred in by the relevant
Reporting Entity'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 Reporting Entity shall have objected to 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 Reporting Entity 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).
17
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
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 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 $500,000 or any larger
multiple of $100,000 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
Tranche A Loans are due and owing in accordance with the terms hereof without
counterclaim, offset or other defense.
(b) 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 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
18
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 $500,000 or any larger multiple of $100,000
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. As of the date of this Agreement, the Tranche B Loans are due
and owing in accordance with the terms hereof without counterclaim, offset or
other defense.
(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 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 2 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.
19
(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.
(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
20
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 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 corresponding amount of the
Applicable Margin for any Euro-Dollar Loan plus the Adjusted London
Interbank Offered Rate); and
(ii) for any Euro-Dollar Loan, for so long as the Debt to
Capitalization Ratio is (aa) greater than or equal to 0.55 to 1.0,
0.50%, (bb) greater than or equal to 0.50 to 1.0 but less than 0.55 to
1.0, 0.375%, (cc) greater than or equal to 0.45 to 1.0 but less than
0.50 to 1.0, 0.275%, (dd) greater than or equal to 0.35 to 1.0 but
less than 0.45 to 1.0, 0.25%, (ee) less than 0.35 to 1.0, 0.20%.
(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
21
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 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 the Reuters
Screen LIBOR Page 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 the Reuters Screen LIBO Page, 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.
22
(d) Wachovia shall determine the interest rates applicable to the
Loans hereunder. Each Bank 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(b) contains provisions relating to the determination of the
Applicable Margin from time to time.
SECTION 2.06. Fees. (a) The Borrower shall pay to each Bank, on the
----
first day of each Fiscal Quarter, a facility fee for each Bank's pro rata share
of the Commitments for the immediately preceding 3 fiscal months of the Indirect
Parent, as calculated at the end of each fiscal month of the Indirect Parent,
equal to the sum of the facility fees for such 3 fiscal months as determined by
the following:
(i) if the Debt to Capitalization Ratio was less than 0.45 to
1.0 as at the end of any relevant fiscal month of the Indirect Parent,
1/12th of the sum of (i) the product of (x) 0.0015 times (y) the
-----
average aggregate principal amount of the Commitments during such
period;
(ii) if the Debt to Capitalization Ratio was equal to or greater
than 0.45 to 1.0 but less than 0.50 to 1.0 as at the end of any
relevant fiscal month of the Indirect Parent, 1/12th of the sum of the
product of (x) 0.0020 times (y) the average aggregate principal amount
-----
of the Commitments during such period; and
(iii) if the Debt to Capitalization Ratio was equal to or greater
than 0.50 to 1.0 as at the end of any relevant fiscal month of the
Indirect Parent, 1/12th of the sum of the product of (x) 0.0025 times
-----
(y) the average aggregate principal amount of the Commitments during
such period.
In determining the amount to be paid by the Borrower to the Banks pursuant to
Section 2.05(a) or this Section 2.06, the Borrower shall estimate in good faith
the Debt to Capitalization Ratio for each of the immediately preceding 3 fiscal
months and shall provide the Banks with a written explanation, in form and
substance satisfactory to the Required Banks, of how such estimate was
determined at the time it makes any payment pursuant to Section 2.05(a) or this
Section 2.06. If the actual Debt to Capitalization Ratio, as determined by the
financial statements delivered pursuant to Sections 5.01(a), (b) or (j), is
other than the Borrower's estimate of same, then, as appropriate, either (i) the
Borrower shall immediately make a payment to the Banks in an amount sufficient
to cause the Banks to have received the appropriate amount required by Section
2.05(a) or this Section 2.06, as applicable, or (ii) so long as no Default shall
exist, the Banks shall credit the Borrower's account for any amounts paid to
them in excess of the amount required to be paid pursuant
23
to Section 2.05(a) or this Section 2.06, as applicable provided, that, no such
-------- ----
adjustments shall be made following the Termination Date in the absence of a
material misstatement.
(b) The Borrower shall pay to each Bank a non-refundable, fully earned
amendment and restructuring fee in the amount of $50,000.00 payable to each Bank
on the Closing Date.
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.
(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
24
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).
SECTION 2.13. Existing Letter of Credit. (a) Subject to the terms and
-------------------------
conditions contained in this Agreement, with respect to the Existing Letter of
Credit, the Borrower shall pay to the order of the Issuer the Letter of Credit
Fee (A) on each anniversary date hereof, (B) on the Termination Date and (C) if
there are any Existing Letter of Credit Obligations on the Termination Date, on
the first date thereafter on which there are no Existing Letter of Credit
Obligations, in each case for the previous period. Any payments made by the
Issuer in honoring a draft or other demand for payment presented in accordance
with the terms of the Existing Letter of Credit shall be deemed to constitute a
Borrowing, which shall bear interest at the highest rate payable under and shall
be evidenced by the Tranche A Notes. After the occurrence and during the
continuation of an Event of Default, to the extent of any Existing Letter of
Credit Obligations, the Issuer and First Union may immediately advance the
principal amount thereof as Loans, and set aside the amounts so advanced as
separate collateral reserves to be held by the Issuer for reimbursement of
amounts of the Existing Letter of Credit Obligations which are subsequently
funded by the Issuer (and for which First Union has purchased a participation
therein as set forth below), the Borrower hereby agreeing that the Issuer and
First Union shall have a right of setoff against and security interest in such
collateral reserve. After the Existing Letter
25
of Credit has been cancelled and all Existing Letter of Credit Obligations have
been satisfied, and the Issuer (and First Union as participant) has been
reimbursed all amounts funded by the Issuer with respect thereto, any balance
remaining in said collateral reserve may be applied to other unpaid obligations
of the Borrower hereunder, and, if none, shall be remitted to the Borrower.
(b) Purchase of Participations. First Union has irrevocably and
---------------------------
unconditionally purchased and received from Issuer, without recourse or
warranty, an undivided interest and participation, to the extent of First
Union's Existing LC Commitment, as provided on the signature page hereto in such
Existing Letter of Credit.
(c) Sharing of Existing Letter of Credit Payments. In the event that
----------------------------------------------
the Issuer makes any payment under the Existing Letter of Credit for which the
Borrower shall not have repaid such amount to the Issuer pursuant to this
Section, the Issuer shall promptly notify First Union of such failure, and First
Union shall promptly and unconditionally pay to the Issuer First Union's
Existing LC Commitment share of the amount of such payment in Dollars and in
same day funds. If the Issuer so notifies First Union prior to 10:00 A.M.
(Atlanta, Georgia time) on any Domestic Business Day, First Union shall make
available to the Issuer its Existing LC Commitment share of the amount of such
payment on such Domestic Business Day in same day funds. If and to the extent
First Union shall not have so made its Existing LC Commitment share of the
amount of such payment available to the Issuer, First Union agrees to pay to the
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 the Issuer at the Base Rate for the first 5 days and thereafter at the
Default Rate.
(d) Sharing of Reimbursement Obligation Payments. Whenever the Issuer
---------------------------------------------
receives a payment from the Borrower or any guarantor on account of the Existing
Letter of Credit Obligations, including any interest thereon, as to which the
Issuer has received any payments from First Union pursuant to this Section, the
Issuer shall promptly pay to First Union its participating interest therein, in
Dollars and in the kind of funds so received, an amount equal to First Union's
Existing LC Commitment share thereof. Each such payment shall be made by the
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.
(e) Obligations Irrevocable. The obligations of the First Union to
------------------------
make payments to the Issuer with respect to the Existing 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
26
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
Existing Letter of Credit or any transferee of the Existing Letter of
Credit (or any Person for whom any such transferee may be acting), the
Issuer, any Bank or any other Person, whether in connection with this
Agreement, any Existing Letter of Credit, the transactions contemplated
herein or any unrelated transactions;
(iii) any draft, certificate or any other document presented
under the Existing 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 by the Issuer under the Existing 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 the Issuer under the Existing Letter of Credit
against presentation of any draft or certificate that does not comply with
the terms of such Existing Letter of Credit, except payment resulting from
the gross negligence or willful misconduct of the 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.
SECTION 2.14. Other Letters of Credit. The Borrower and the Guarantors
-----------------------
may apply with any of the Banks for the issuance of additional letters of credit
from time to time provided that: (i) no Event of Default is in existence, (ii)
the Borrower or such Guarantor executes and delivers such Bank's customary
letter of credit application and reimbursement agreement and other customary
documentation therefor, (iii) the Borrower or such Guarantor agrees to pay the
letter of credit fees therefor as may be mutually agreed upon, (iv) such Bank
notifies the other Banks in writing of the proposed issuance of a letter of
credit, and the face amount and term thereof, and (v) the sum of (x) all Letter
of Credit Obligations after the issuance of such
27
additional letter(s) of credit plus (y) all outstanding Loans shall not exceed
----
the aggregate Commitments. NOTWITHSTANDING THE FOREGOING, THIS SECTION 2.14
SHALL IN NO EVENT BE CONSTRUED TO BE A COMMITMENT BY ANY BANK TO ISSUE ANY
LETTER(S) OF CREDIT TO THE BORROWER OR TO ANY GUARANTOR.
SECTION 2.15. Ratification of Security Interest in Collateral; Release
--------------------------------------------------------
of Collateral. (a) Each of the Indirect Parent, the Parent and the Borrower
-------------
hereby restates, ratifies and reaffirms each and every term, covenant and
condition set forth in the Security Documents effective as of the date hereof
and agrees that the same shall remain in full force and effect unless and until
the same may be released pursuant to Section 2.15(b) below.
(b) So long as no Default or Event of Default shall be in existence at
such time, upon receipt by Wachovia and First Union of the written agreement of
the requisite parties to the Intercreditor Agreement authorizing and directing
the release of the Collateral and termination of the Intercreditor Agreement,
Wachovia and First Union shall promptly execute and deliver releases of the
Collateral and terminate any financing statements recorded in connection
therewith.
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, the Indirect Parent Guaranty, the Parent Guaranty, and each
Subsidiary Guaranty, signed by each party thereto;
(b) duly executed Notes by the Borrower for the account of each Bank
complying with the provisions of Section 2.03;
(c) an opinion (together with any opinions of local counsel relied on
therein) of Xxxxxx & Bird, counsel for the Borrower and the Guarantors,
dated as of the Closing Date, substantially in the form of Exhibit B;
---------
(d) the Indirect Parent'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
28
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;
(f) all documents which any Bank may reasonably request relating to
the existence of the Borrower and each Guarantor, the corporate authority
for and the validity of the Loan Documents to which either the Borrower, or
any Guarantor 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 and each Guarantor,
signed by the Secretary or an Assistant Secretary of the Borrower and each
Guarantor, certifying as to the names, true signatures and incumbency of
the officer or officers of the Borrower, and each Guarantor authorized to
execute and deliver the Loan Documents, and certified copies of the
following items as to each of the Borrower, and each Guarantor: (i) its
Certificate of Incorporation, (ii) its Bylaws, (iii) a certificate of the
Secretary of State of the States of Delaware and Georgia as to the good
standing of the Borrower and the Indirect Parent as a Delaware corporation,
and (iv) the action taken by its Board of Directors 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 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.
29
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower and the Indirect Parent on the date of such Borrowing as to the
facts specified in paragraphs (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Indirect Parent and the Borrower represents and warrants
that:
SECTION 4.01. Corporate Existence and Power. Each of the Borrower,
-----------------------------
the Parent and the Indirect Parent 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 would not 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 each of the Parent,
-------------
the Indirect Parent and 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 either the Parent, the Indirect Parent or the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
either the Parent, the Indirect Parent or the Borrower or any of their
Subsidiaries, and (v) do not result in the creation or imposition of any Lien on
any asset of either the Parent, the Indirect Parent or the Borrower or any of
their Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of each of the Parent, the Indirect Parent and 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 Parent, the Indirect Parent and
the Borrower (provided that the Parent, the Indirect Parent or the Borrower, as
appropriate, is a party to any such Loan Document) enforceable in accordance
with their respective terms, provided that the enforceability hereof and
--------
30
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 Indirect Parent and its Consolidated Subsidiaries as of December
31, 1996, and the related consolidated statements of income, shareholders'
equity and cash flows for the Fiscal Year then ended, reported on by KPMG Peat
Marwick, copies of which have been delivered to each of the Banks, and the
unaudited consolidated financial statements of the Indirect Parent for the
interim period ended March 31, 1997, 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 Indirect Parent 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, 1996, there has been no event, act, condition
or occurrence having a Material Adverse Effect on either the Indirect Parent,
the Borrower, or any of their Subsidiaries.
SECTION 4.05. No Litigation. There is no action, suit or proceeding
-------------
pending, or to the knowledge of either the Indirect Parent or the Borrower
threatened, against or affecting either the Indirect Parent or the Borrower or
any of their 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 Indirect Parent, 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 in all material respects with the
presently applicable provisions of ERISA and the Code, and have not incurred any
liability to the PBGC or a Plan under Title IV of ERISA.
(b) Neither the Indirect Parent, 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 Indirect
-----
Parent, the Borrower and their 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 Indirect Parent, 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 Indirect Parent, the
Borrower and their Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Indirect Parent and the Borrower,
31
adequate. United States income tax returns of the Indirect Parent, the Borrower
and their Subsidiaries' have been examined and closed through the Fiscal Year
ended 1992.
SECTION 4.08. Subsidiaries. Each of the Indirect Parent's
------------
Subsidiaries is duly organized, 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
business as now conducted. Neither of the Borrower nor the Indirect Parent have
any 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. In order to induce the Banks to exclude Horizon
Europe, Inc., Delaware Valley Wool Scouring, Inc., and Mohawk International,
Inc. FSC as Guarantors, the Indirect Parent, the Parent and the Borrower hereby
represent and warrant 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. Neither the Parent, the
-------------------------
Indirect Parent nor the Borrower is 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 Indirect
----------------------------
Parent and its Consolidated Subsidiaries (including, without limitation, the
Borrower) 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 Indirect Parent nor any of its
----------
Consolidated Subsidiaries (including, without limitation, the Borrower) 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
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 or the Indirect Parent 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 or the Indirect Parent
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 Indirect Parent and the Borrower have disclosed to the Banks
in writing any and all facts which would have or create a reasonable possibility
of causing a Material Adverse Effect.
32
SECTION 4.13. Environmental Matters. To the best knowledge of each of
---------------------
the Indirect Parent and the Borrower, after due inquiry (which does not
necessarily mean the performance of a phase I environmental audit), (a) neither
the Indirect Parent, the Borrower nor any Subsidiary is subject to any
Environmental Liability and (b) neither the Indirect Parent, 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
each of the Indirect Parent and 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 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 each of the Indirect Parent and 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 each of the Indirect Parent and the
Borrower, at or from any adjacent site or facility, except for (i) Hazardous
Materials, such as cleaning solvents, combustion enhances, pesticides and other
materials used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed, or otherwise handled in minimal amounts 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 Indirect Parent, the Borrower, and each
of their Subsidiaries is in compliance with all Environmental Requirements in
connection with the operation of the Properties and each of the Indirect
Parent's, the Borrower's and their Subsidiary's respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock, debentures, bonds,
-------------
notes and all other securities of the Indirect Parent and its Subsidiaries
(including, without limitation, the Borrower) 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. The issued shares of capital stock of the Borrower
are owned by the Parent free and clear of any Lien or adverse claim (except as
contemplated by the
33
Intercreditor Agreement). 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 Indirect Parent, the Borrower
------------
nor any of their 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.
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, neither the Parent, the Indirect Parent nor the Borrower will 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. Other Debt. As of the end of the day on the date
----------
hereof, neither the Indirect Parent, the Borrower nor any of their Subsidiaries
has any Debt outstanding other than as described on Schedule 4.17 attached
hereto and made a part hereof.
ARTICLE V
COVENANTS
The Indirect Parent and the Borrower agree 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 Indirect Parent and 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 Indirect Parent
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 issued by KPMG Peat Marwick or other independent public
34
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, a consolidated balance sheet of the Indirect
Parent 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 Indirect Parent;
(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 Indirect Parent
(i) setting forth in reasonable detail the calculations required to
establish whether the Indirect Parent and the Borrower were in compliance
with the requirements of Sections 5.03 through 5.07, inclusive, and Section
5.09, 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 Indirect
Parent (or 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, (i) a statement of the firm
of independent public accountants which reported on such statements to the
effect that nothing has come to their attention to cause them to believe
that any Default existed on the date of such financial statements and (ii)
operations and cash flow projections (indicating projected earnings and
significant cash sources and uses) prepared by the Indirect Parent 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 Indirect Parent or 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
35
a certificate of the chief financial officer or the chief accounting
officer of the Indirect Parent or the Borrower, as appropriate, setting
forth the details thereof and the action which the Indirect Parent or the
Borrower, as appropriate, is taking or proposes to take with respect
thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Indirect Parent or 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 Indirect Parent or 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 Indirect Parent or the Borrower and
its Subsidiaries as any Bank may reasonably request, including, without
limitation, consolidating balance sheets and statements of income of the
Indirect Parent, 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
-----------------------------------------
Indirect Parent and 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
36
their respective officers, employees and independent public accountants. Each
of the Indirect Parent and the Borrower agrees to cooperate and assist in such
visits and inspections, in each case upon reasonable notice, at such reasonable
times and as often as may reasonably be desired.
SECTION 5.03. EBIT Ratio. The ratio of (a) the sum of (i)
----------
Consolidated Net Income, (ii) Consolidated Interest Expense, and (iii) taxes on
the Indirect Parent's consolidated pre-tax income to (b) Consolidated Interest
Expense shall not be less than 2.25 to 1.0. Compliance with this Section 5.03
shall be calculated on a trailing 4 quarter basis as at the end of each Fiscal
Quarter.
SECTION 5.04. Debt to Capitalization Ratio. The Debt to
----------------------------
Capitalization Ratio shall at all times be less than 0.60 to 1.0.
SECTION 5.05. Debt to EBITDA Ratio. The ratio of the Indirect Parent's
--------------------
(a) Consolidated Debt to (b) the sum of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on the Indirect Parent's consolidated
pre-tax income, and (iv) Depreciation and Amortization shall not be greater than
3.5 to 1.0. Clause (b) in this Section 5.05 shall be calculated on a trailing 4
quarter basis as at the end of each Fiscal Quarter.
SECTION 5.06. Restricted Payments. The Indirect Parent shall not
-------------------
declare or make any Restricted Payment unless, after giving effect thereto, both
(i) no Default shall exist and (ii) the aggregate of all Restricted Payments
declared or made after February 24, 1994 does not exceed the sum of (v) net
proceeds from the sale of Capital Stock, plus (w) $10,000,000, plus (x) 50.0% of
Consolidated Net Income after February 24, 1994 minus (y) 100.0% of cumulative
net losses after February 24, 1994 minus (z) Restricted Payments made after
February 24, 1994.
SECTION 5.07. Loans or Advances. Neither the Indirect Parent nor the
-----------------
Borrower nor any of their Subsidiaries shall make loans or advances to any
Person except: (i) deposits required by government or regulatory agencies,
insurers, or public utilities, (ii) advances for suppliers in the ordinary
course of business which advances have been obtained from customers of the
Borrower, (iii) so long as no Default shall be in existence or be caused
thereby, advances or loans between the Indirect Parent, the Borrower or any
Subsidiary Guarantor, (iv) loans and advances to an officer or employee of the
Borrower, the Indirect Parent or of any Subsidiary provided that the aggregate
amount of all such loan and advances (taken as a whole) outstanding at any time
shall not exceed $10,000,000, and/or (v) loans and advances which are
Investments permitted by Section 5.08.
SECTION 5.08. Investments. Neither the Indirect Parent nor the
-----------
Borrower nor any of their Subsidiaries shall make
37
Investments in any Person (except as permitted by Section 5.07) except
Investments in (i) direct obligations of the United States Government maturing
within one year, (ii) certificates of deposit issued by a commercial bank whose
credit is satisfactory to the Required Banks, (iii) commercial paper rated A-1
or the equivalent thereof by Standard & Poor's Corporation or P1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc. and in either case
maturing within 6 months after the date of acquisition, (iv) tender bonds the
payment of the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates of deposit
are rated at least AA or the equivalent thereof by Standard & Poor's Corporation
and Aa or the equivalent thereof by Xxxxx'x Investors Service, Inc., (v) Horizon
& Xxxxx Properties Partnership and Subsidiaries in existence as of the Closing
Date, but which are not Guarantors, not exceeding $15,000,000 in the aggregate
outstanding, (vi) Persons whose business primarily consists of the
manufacturing, marketing or distribution of commercial or home furnishings
(where such Investments are not Permitted Acquisitions), (vii) other Investments
in Horizon & Xxxxx Properties Partnership and Subsidiaries in existence as of
the Closing Date, but which are not Guarantors, (viii) the Parent, the Borrower
and the other Guarantors, and/or (ix) so long as no Default shall be in
existence or be caused thereby, Permitted Acquisitions. Notwithstanding the
foregoing, the aggregate amount of the Investments described in the immediately
preceding clauses (vi) and (vii) plus the amount of Transaction Losses under
Section 5.22 may not exceed an amount equal to 20.0% of Consolidated Tangible
Net Worth.
SECTION 5.09. Negative Pledge. Neither the Indirect Parent nor the
---------------
Borrower nor any of their Subsidiaries will create, assume or suffer to exist
any Lien on (i) so long as the Security Documents remain in force and effect,
the Collateral (except for Liens created expressly pursuant to the Security
Documents), and (ii) 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;
38
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Indirect
Parent, 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 Indirect Parent, the Borrower or a Consolidated Subsidiary and not
created in contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the Indirect
Parent or 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;
(j) Liens involuntarily imposed and being contested in good faith,
subject to the Borrower having established reasonable reserves therefor if
any Bank so requests; and
(k) Liens against the assets of the Borrower formerly owned by Galaxy
solely to the extent existing as of the date hereof under the Catoosa Co.
IRB.
Provided Liens permitted by the foregoing paragraphs (a) through (j) shall at no
--------
time secure Debt in an aggregate amount greater than 10% of Consolidated
Tangible Net Worth.
SECTION 5.10. Maintenance of Existence. Other than as permitted by
------------------------
Section 5.12, each of the Indirect Parent and the Borrower shall, and shall
cause each Subsidiary to, maintain its corporate existence and carry on its
business in substantially the same manner and in substantially the same fields
as such business is now carried on and maintained.
SECTION 5.11. Dissolution. Neither the Indirect Parent, the Borrower
-----------
nor any of their 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 5.12 or in connection with a Restricted Payment which is
permitted pursuant to Section 5.06.
39
SECTION 5.12. Consolidations, Mergers and Sales of Assets. Neither
-------------------------------------------
the Indirect Parent nor the Borrower will, nor will either of them 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, or
discontinue or eliminate any business line or segment, 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)
Wholly-Owned Subsidiaries of the Borrower may merge with and into the Borrower
or any Guarantor, (c) assets may be transferred from a Subsidiary, the Indirect
Parent or the Borrower (provided that any such transfer of the assets of the
Borrower, whether by a single transaction or several transactions taken as a
whole, must not consist of all or substantially all of the Borrower's assets) to
the Borrower or a Guarantor, (d) any Wholly-Owned Subsidiary (other than the
Borrower) may dissolve or liquidate so long as the assets of such Subsidiary at
the time of such dissolution or liquidation 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 Indirect
Parent, the Borrower and their Subsidiaries may factor with recourse receivables
provided that (x) not more than $25,000,000 in factored receivables with
recourse may, in the aggregate, be outstanding at any given time, and (y) there
shall be no limitation on the factoring of receivables without recourse, and (f)
the foregoing limitation on the sale, lease or other transfer of assets and on
the discontinuation or elimination of a business line or segment shall not
prohibit, during any Fiscal Quarter, a transfer of assets by the Borrower or any
Subsidiary or the discontinuance or elimination of a business line or segment
(in a single transaction or in a series of related transactions) unless 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 seven Fiscal Quarters,
either (x) constituted more than 5% of Consolidated Total Assets at the end of
the eighth Fiscal Quarter immediately preceding such Fiscal Quarter, or (y)
contributed more than 10% of Consolidated Operating Profits during the eight
Fiscal Quarters immediately preceding such Fiscal Quarter.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans shall be
---------------
used by the Borrower solely for its working capital needs in the ordinary course
of business. 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,
40
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 5.14. Compliance with Laws; Payment of Taxes. The Indirect
--------------------------------------
Parent and the Borrower will, and will cause each of their 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 Indirect Parent and the Borrower will, and will
cause each of their 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 Indirect Parent, the Borrower or any
Subsidiary, except liabilities being contested in good faith and against which,
if requested by the Banks, either the Indirect Parent or the Borrower or
Subsidiary will set up reserves in accordance with GAAP.
SECTION 5.15. Insurance. The Indirect Parent and the Borrower will
---------
maintain, and will cause each of their Subsidiaries to maintain (either in the
name of the Indirect Parent, 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 5.16. Change in Fiscal Year. The Indirect Parent shall give
---------------------
the Banks 30 day's prior written notice of any change in the determination of
its Fiscal Year.
SECTION 5.17. Maintenance of Property. Subject to the rights of the
-----------------------
Borrower or any Subsidiary to discontinue certain operations under Section 5.12,
the Indirect Parent and 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 5.18. Environmental Notices. The Indirect Parent, the
---------------------
Borrower, and Parent 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
41
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 5.19. Environmental Matters. Neither the Indirect Parent, the
---------------------
Borrower, nor Parent will, nor will either of them 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 5.20. Environmental Release. Each of the Indirect Parent, the
---------------------
Borrower and Parent 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 Release, whether or not ordered or
otherwise directed to do so by any Environmental Authority.
SECTION 5.21. Future Subsidiaries. Each of the Indirect Parent and
-------------------
the Borrower shall cause all of its Subsidiaries not existing as of the date
hereof to execute and deliver Subsidiary Guaranties and other Loan Documents
related thereto, as requested by the Required Banks, within 3 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
Required 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).
SECTION 5.22. Transactions with Affiliates. Neither the Indirect
----------------------------
Parent, the Parent, nor the Borrower nor any of its Subsidiaries shall enter
into, or be a party to, any transaction with any Affiliate of the Indirect
Parent, the Parent, the Borrower or such Subsidiary (which Affiliate is not the
Indirect Parent or a Guarantor), except as permitted by law and (i) loans and
advances permitted under Section 5.07(iii), (iv) and/or (v), (ii) transactions
in the ordinary course of business and pursuant to reasonable terms and which
are no less favorable to the Indirect Parent, the Parent, the Borrower or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a Person which is not an Affiliate, and (iii) subject to the limitation in the
last sentence of Section 5.08, transactions resulting in Transaction Losses.
"Transaction Losses" shall mean
42
losses incurred during any month in an amount equal to (x) the sum of the
respective revenues of the Parent, the Borrower or any Subsidiary less than (y)
the sum of the respective variable manufacturing costs of the Parent, the
Borrower or any Subsidiary, all as determined each month on an aggregate
cumulative basis for such Person since the Closing Date.
SECTION 5.23. Ownership of Parent and the Borrower. The Indirect
------------------------------------
Parent shall maintain ownership and control over all of the outstanding Capital
Stock of Parent, and Parent shall maintain ownership and control over all of the
outstanding Capital Stock of the Borrower.
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) either the Indirect Parent or the Borrower shall fail to observe
or perform any covenant contained in Sections 5.02(ii), 5.03 to 5.13,
inclusive, or 5.21 through 5.23, inclusive; or
(c) either the Indirect Parent or 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 either the
Indirect Parent or the Borrower by the Banks or (ii) the Indirect Parent or
the Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
the Indirect Parent or 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 Indirect Parent, the Borrower or any Subsidiary shall fail to
make any payment in respect of Debt
43
(i) due and owing to either Wachovia or First Union in excess of $1,000,000
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), or (ii) in excess of $5,000,000 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 $5,000,000 in the
aggregate outstanding of the Indirect Parent, the Borrower or any
Subsidiary (including, without limitation, any "put" of such Debt to the
Indirect Parent, 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 (including, without limitation, any "put" of such Debt to
the Indirect Parent, the Borrower or any Subsidiary); or
(g) the Indirect Parent, the Borrower or any 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 Indirect Parent, the Borrower or any 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 Indirect Parent, the Borrower or any
Subsidiary under the federal bankruptcy laws as now or hereafter in effect;
or
(i) the Indirect Parent, 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
44
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 Indirect Parent, 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 $5,000,000 (exclusive of insurance coverage
if any insurer shall have acknowledged such coverage in writing) shall be
rendered against the Indirect Parent, the Borrower or any 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 Subsidiary
under Section 6323 of the Code or a lien of the PBGC shall be filed against
the Indirect Parent, the Borrower or any 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 Indirect Parent or the Borrower; or (ii) as of
any date a majority of the Board of Directors of the Indirect Parent or the
Borrower consists of individuals who were not either (A) directors of the
Indirect Parent or 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 Indirect Parent or 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 Indirect
Parent or 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
45
(n) the occurrence of any event, act, occurrence, or condition which
the Required Banks determine either does or has a reasonable probability of
causing a Material Adverse Effect; or
(o) (i) any of the Loan Documents shall cease to be enforceable, (ii)
the Indirect Parent, the Borrower or any Subsidiary Guarantor shall assert
that any Loan Document shall cease to be enforceable, or (iii) any security
interest in the Collateral pursuant to any of the Security Documents shall
not be (or shall cease to be) perfected (unless released pursuant to
Section 2.15 hereof).
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 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,
46
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 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
47
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 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,
48
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.
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
49
(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 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.
SECTION 7.06. HLT Classification. If, after the date hereof, the
------------------
Required Banks determine that, or any Bank has received notice from any
Authority (including, without limitation, the Securities and Exchange
Commission) having jurisdiction over such Bank that the Loans, or any of them,
hereunder are classified as a "highly leveraged transaction" (an "HLT
Classification"), the Required Banks shall promptly give notice of such HLT
Classification to the Borrower and the other Banks and the rate of interest
applicable to the Loans shall automatically convert to the HLT Rate; provided,
--------
that, if any Euro-Dollar Loans are then outstanding, such Loans shall not be
required to be prepaid prior to the end of any applicable Interest Period, but
the Applicable Margins for such Loans shall be immediately increased to that
amount necessary to cause the amount of interest payable on such Loans to the
Banks to equal the HLT Rate.
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
50
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 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.
51
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 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
rate of interest on any Loan or any fees hereunder, (iii) change 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
52
substitute all or any substantial part of the collateral (if any) held as
security for the Loans, or (viii) release any Guarantee 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.
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 neither the Indirect
Parent nor the Borrower may assign or otherwise transfer any of their 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 Indirect Parent 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) the change
of any date fixed for the
53
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 change 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 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.
(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
both (A) 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, and (B) after such assignment,
the Commitments of the Initial Banks would be equal to or greater than 50% of
the Commitments of all Banks. 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
54
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.
(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
55
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 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. Each of
---------------------------------------------
the Borrower and the Indirect Parent (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) submit 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) waive 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 or the Indirect Parent. Nothing herein contained, however, shall
prevent the Banks from bringing any action or exercising any rights against any
security and against the Borrower or the Indirect Parent personally, and against
any assets of the Borrower or the Indirect Parent, within any other state or
jurisdiction.
56
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]
57
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: /s/ Xxxxxx Xxxxx
--------------------------------------
Title: Treasurer
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chairman & Chief Executive
Officer
Telecopier number: 000-000-0000
Confirmation number: 706-629-7721
MOHAWK CARPET CORPORATION
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Title: Treasurer
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Vice President of Finance
Telecopier number: 000-000-0000
Confirmation number: 706-629-7721
ALADDIN MANUFACTURING CORPORATION (SEAL)
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Title: Treasurer
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chairman & Chief Executive
Officer
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
58
COMMITMENTS: WACHOVIA BANK OF GEORGIA, N.A. (SEAL)
-----------
Tranche A Loans:
$100,000,000
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Tranche B Loans: Title: Vice President
$25,000,000
Existing LC Lending Office
--------------
Commitment:
$3,372,876.71 Wachovia Bank of Georgia, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Commercial Group
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
59
Tranche A Loans: FIRST UNION NATIONAL BANK (SEAL)
$100,000,000 OF GEORGIA
Tranche B Loans:
$25,000,000
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Existing LC Title:
Commitment:
$3,372,876.71 Lending Office
--------------
First Union National Bank of Georgia
0000 Xxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
with a Copy To:
Portfolio Management Dept.
000 Xxxxxxxxx Xxxxxx, X.X.
0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
-----------------
TOTAL COMMITMENTS:
Total Tranche A Loans:
$200,000,000
Total Tranche B Loans:
$50,000,000
Total Existing LC Commitment:
$6,745,753.42
Total Loans:
$250,000,000
60
Exhibit A-1
-----------
TRANCHE A LOAN NOTE
Atlanta, Georgia
As of April 15, 1997
For value received, ALADDIN MANUFACTURING CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of
_____________________________________________________, a national banking
association, (the "Bank"), for the account of its Lending Office, the principal
sum of _________________________________ MILLION DOLLARS ($____________), 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
Third Amended and Restated Credit Agreement of even date herewith among Mohawk
Industries, Inc., the Borrower, First Union National Bank of Georgia, Wachovia
Bank of Georgia, 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").
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
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
61
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.
ALADDIN MANUFACTURING CORPORATION (SEAL)
By: _____________________________
Title:
62
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Base Rate Amount Amount of
or Euro- of Principal Maturity Notation
Date Dollar Loan Loan Repaid Date Made By
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
63
Exhibit A-2
-----------
TRANCHE B LOAN NOTE
Atlanta, Georgia
As of April 15, 1997
For value received, ALADDIN MANUFACTURING CORPORATION, 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
Third Amended and Restated Credit Agreement of even date herewith among Mohawk
Industries, Inc., the Borrower, First Union National Bank of Georgia, Wachovia
Bank of Georgia, 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").
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
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
64
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.
ALADDIN MANUFACTURING CORPORATION (SEAL)
By: ____________________________
Title:
65
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Base Rate Amount Amount of
or Euro- of Principal Maturity Notation
Date Dollar Loan Loan Repaid Date Made By
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
66
Exhibit B
---------
OPINION OF
COUNSEL FOR THE BORROWER AND THE GUARANTORS
-------------------------------------------
[Dated as provided in
Section 3.01 of Credit
Agreement]
[TO BE SUPPLIED BY A&B]
67
Exhibit C
---------
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated __________ __, 19__
Reference is made to the Third Amended and Restated Credit Agreement
dated as of April 15, 1997 (together with all amendments and modifications
thereto, the "Credit Agreement") among Aladdin Manufacturing Corporation, a
Delaware corporation (the "Borrower"), Mohawk Industries, Inc., a Delaware
corporation, First Union National Bank of Georgia, Wachovia Bank of Georgia,
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 respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its
68
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
Indirect Parent 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 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.
69
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:
ALADDIN MANUFACTURING CORPORATION
By:_______________________
Title:
70
Exhibit D
---------
NOTICE OF BORROWING
-------------------
_____________________, 199__
[Wachovia Bank of Georgia, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Commercial Division]
[First Union National Bank of Georgia
000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Re: Third Amended and Restated Credit Agreement (as amended and modified
from time to time, the "Credit Agreement") dated as of April 15, 1997
by and among ALADDIN MANUFACTURING CORPORATION, MOHAWK INDUSTRIES,
INC., FIRST UNION NATIONAL BANK OF GEORGIA, WACHOVIA BANK OF GEORGIA,
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 [30 days] [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):
71
(a) no Default has occurred and is continuing; and
(b) the representations and warranties of the Borrower and the
Indirect Parent 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.
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__.
ALADDIN MANUFACTURING CORPORATION
By:_______________________________
Title:
72
Exhibit E
---------
COMPLIANCE CERTIFICATE
----------------------
Reference is made to the Third Amended and Restated Credit Agreement
dated as of April 15, 1997 (as modified and supplemented and in effect from time
to time, the "Credit Agreement") among Aladdin Manufacturing Corporation, Mohawk
Industries, Inc., First Union National Bank of Georgia, Wachovia Bank of
Georgia, 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 Indirect Parent and 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:
73
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
1. EBIT Ratio (Section 5.03)
The ratio of (a) the sum of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, and (iii) taxes on the Indirect Parent's consolidated
pre-tax income to (b) Consolidated Interest Expense shall not be less than
2.25 to 1.0. Compliance with this Section 5.03 shall be calculated on a
trailing 4 quarter basis as at the end of each Fiscal Quarter.
(a) Consolidated Net Income $____________
(b) taxes on income $____________
(c) Consolidated Interest
Expense $____________
(d) Sum of (a) plus (b) plus (c) $____________
Actual Ratio of (d) to (c)
Required Ratio less than or equal to 2.25 to 1.0
2. Debt to Capitalization Ratio (Section 5.04)
The Debt to Capitalization Ratio shall at all times be less than 0.60 to
1.0.
(a) Consolidated Debt $_____________
(b) Consolidated Tangible
Capital $_____________
Actual Ratio of (a) to (b) ____________
Maximum Ratio more than 0.60 to 1.0
74
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
3. Debt to EBITDA Ratio (Section 5.05)
The ratio of the Indirect Parent's (a) Consolidated Debt to (b) the sum of
(i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
taxes on the Indirect Parent's consolidated pre-tax income, and (iv)
Depreciation and Amortization shall not be greater than 3.5 to 1.0. Clause
(b) in this Section 5.05 shall be calculated on a trailing 4 quarter basis
as at the end of each Fiscal Quarter.
(a) Consolidated Debt $___________
(b) Consolidated Net Income $___________
(c) Consolidated Interest Expense $___________
(d) Taxes on the Indirect Parent's
consolidated pre-tax income $___________
(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 more than 3.5 to 1.0
4. Restricted Payments (Section 5.06)
The Indirect Parent shall not declare or make any Restricted Payment
unless, after giving effect thereto, both (i) no Default shall exist and
(ii) the aggregate of all Restricted Payments declared or made after
February 24, 1994 does not exceed the sum of (v) net proceeds from the sale
of Capital Stock, plus (w) $10,000,000, plus (x) 50.0% of Consolidated Net
Income after February 24, 1994 minus (y) 100.0% of cumulative net losses
after February 24, 1994 minus (z) Restricted Payments made after February
24, 1994.
75
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
(a) Dividends-paid or declared
in Fiscal Year 19____ $__________
(b) Purchase of treasury stock
in Fiscal Year 19____ $__________
(c) Stock option or warrants
in Fiscal Year 19____ $__________
Total Restricted Payments $__________
(d) 50% of Consolidated Net Income
after February 24, 1994 $__________
(e) 100% of cumulative net losses
after February 24, 1994 $__________
(f) Restricted Payments made
after February 24, 1994 $__________
Limitation: sum of $10,000,000
plus (d) less (e) less (f) $__________
6. Loans and Advances (Section 5.07)
Neither the Indirect Parent nor the Borrower nor any of their Subsidiaries
shall make loans or advances to any Person (except as permitted by Section
5.08) except: (i) deposits required by government or regulatory agencies,
insurers, or public utilities, (ii) advances for suppliers in the ordinary
course of business which advances have been obtained from customers of the
Borrower, (iii) so long as no Default shall be in existence or be caused
thereby, advances or loans between the Indirect Parent, the Borrower or any
Subsidiary Guarantor, (iv) loans and advances to an officer or employee of
the Borrower, the Indirect Parent or of any Subsidiary provided that the
aggregate amount of all such loan and advances (taken as a whole)
outstanding at any time shall not exceed $10,000,000, or (v) loans and
advances to Subsidiaries in existence as of the Closing Date, but which are
not Guarantors, not exceeding the outstanding sum of (x) $15,000,000, minus
(y) Investments made under Section 5.08(vii).
76
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
--------------------------
_____________, 199__
Utility and Governmental Deposits $__________
Limitation None
Aggregate loans and advances $__________
Limitation $10,000,000
7. Investments (Section 5.08)
Neither the Indirect Parent nor the Borrower nor any of their Subsidiaries
shall make Investments in any Person (except as permitted by Section 5.07)
except Investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit issued by
a commercial bank whose credit is satisfactory to the Required Banks, (iii)
commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Corporation or P1 or the equivalent thereof by Xxxxx'x Investors Service,
Inc. and in either case maturing within 6 months after the date of
acquisition, (iv) Horizon & Xxxxx Properties Partnership in an amount not
exceeding the amount of such Investment in existence as of the Closing
Date, (v) tender bonds the payment of the principal of and interest on
which is fully supported by a letter of credit issued by a United States
bank whose long-term certificates of deposit are rated at least AA or the
equivalent thereof by Standard & Poor's Corporation and Aa or the
equivalent thereof by Xxxxx'x Investors Service, Inc., (vi) Persons whose
business primarily consists of the manufacturing, marketing or distribution
of commercial or home furnishings and the amount of such Investments at any
time plus the amount of Transaction Losses does not exceed an amount equal
to 20.0% of Consolidated Tangible Net Worth (where such Investments are not
Permitted Acquisitions), (vii) Subsidiaries in existence as of the Closing
Date, but which are not Guarantors, not exceeding the aggregate sum of (x)
$15,000,000, minus (y) loans and advances made under Section 5.07(v),
(viii) the Parent, the Borrower and the other Guarantors, and/or (ix) so
long as no Default shall be in existence or be caused thereby, Permitted
Acquisitions.
77
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
-----------------------------
___________, 199__
List of Investments: Permitted by the following
provision of Section 5.13
(a) __________________________ _________________________
(b) __________________________ _________________________
(c) __________________________ _________________________
(d) __________________________ _________________________
(e) __________________________ _________________________
(f) __________________________ _________________________
(g) __________________________ _________________________
(h) __________________________ _________________________
Section 5.08(vi) test calculated under paragraph 9 below.
8. Negative Pledge (Section 5.09)
Liens permitted under paragraphs (a)
through (j) $__________
Limitation -- 10% of Consolidated
Tangible Net Worth $__________
9. Transactions with Affiliates (Section 5.22)
Neither the Indirect Parent, the Parent, nor the Borrower nor any of its
Subsidiaries shall enter into, or be a party to, any transaction with any
Affiliate of the Indirect Parent, the Parent, the Borrower or such
Subsidiary (which Affiliate is not the Indirect Parent or a Wholly Owned
Subsidiary), except as permitted by law and (i) loans and advances
permitted under Section 5.07(iv), (ii) transactions in the ordinary course
of business and pursuant to reasonable terms and which are no less
favorable to the Indirect Parent, the Parent, the Borrower or such
Subsidiary than would be obtained in a comparable arm's length transaction
with a Person which is not an Affiliate, and (iii) transactions during any
month for which the amount equal to (A)(x) the sum of the respective
revenues of the Parent, the Borrower or any Subsidiary which is less than
(y) the sum of the respective variable manufacturing costs
78
COMPLIANCE CHECK LIST
(Mohawk Industries, Inc.)
-----------------------------
___________, 199__
of the Parent, the Borrower or any Subsidiary, all as determined each month
on an aggregate cumulative basis for such Person since the Closing Date
(such cumulative sum, the "Transaction Losses"), plus (B) the amount of all
Investments permitted under Section 5.08(vi), does not exceed an amount
equal to 20.0% of Consolidated Tangible Net Worth.
(a) Cumulative Transaction
Losses $_____________
(b) Investments under Section
5.08(vi) $--------------
(c) Sum of (a) plus (b) $______________
(d) Limitation 20% of Consolidated Tangible Net
Worth
79
EXHIBIT F
---------
[FORM OF PARENT GUARANTY]
GUARANTY
--------
THIS GUARANTY (this "Guaranty") is made as of the 15th day of April,
1997, by MOHAWK CARPET CORPORATION (f/k/a Mohawk Limited), a Delaware
corporation (the "Parent Guarantor") in favor of Wachovia Bank of Georgia, N.A.,
a national banking association, and First Union National Bank of Georgia
(collectively, together with their successors and assigns, the "Banks");
W I T N E S S E T H
WHEREAS, Aladdin Manufacturing Corporation (f/k/a Mohawk Manufacturing
Corporation), a Delaware corporation (the "Company"), Mohawk Industries, Inc.
and the Banks have entered into that certain Third Amended and Restated Credit
Agreement dated as of even date herewith whereby the parties thereto have
amended and restated that certain Second Amended and Restated Credit Agreement
dated as of January 13, 1995, as amended (the "Original Credit Agreement"; as
such Third Amended and Restated Credit Agreement may be amended or modified
further from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by the Banks
to the Company;
WHEREAS, it is required by Section 3.01(a) of the Credit Agreement,
that the Parent Guarantor, the holder of 100% of the issued and outstanding
capital stock of the Company, execute and deliver this Guaranty whereby the
Parent Guarantor shall guarantee the payment when due of all principal, interest
and other amounts that shall be at any time payable by the Company under the
Credit Agreement, the Notes and the other Loan Documents; and
WHEREAS, as the holder of 100% of the issued and outstanding capital
stock of the Company, and in consideration of the financial and other support
that the Company has provided, and such financial and other support as the
Company may in the future provide, to Parent Guarantor, whether directly or
indirectly, and in order to induce the Banks to enter into the Credit Agreement,
the Parent Guarantor is willing to guarantee the obligations of the Company
under the Credit Agreement, the Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and
80
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and
-----------
not otherwise defined herein have, as used herein, the respective meanings
provided for therein.
SECTION 2. The Guaranty. The Parent Guarantor hereby absolutely and
------------
unconditionally, guarantees the due and punctual payment and performance of: (i)
the principal of, and accrued 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 Company
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 Company 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
Company to pay any such amount in accordance with the terms of the Credit
Agreement, the Parent 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 Parent Guarantor of
the Guaranteed Obligations.
SECTION 3. Guaranty Unconditional. The obligations of the Parent
----------------------
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under the Credit
Agreement, any Note, or any other Loan Document, by operation of law or
otherwise or any obligation of any other guarantor of any of the Guaranteed
Obligations;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note, or any other Loan Document;
(iii) any release, nonperfection or invalidity of any direct or
indirect security for any obligation of the Company under the Credit
Agreement, any Note, any Loan Document, or any obligations of any other
guarantor of any of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership
of the Company or any other guarantor of any of the Guaranteed Obligations,
or any
81
insolvency, bankruptcy, reorganization or other similar proceeding affecting
the Company, or any other guarantor of the Guaranteed Obligations, or its
assets or any resulting release or discharge of any obligation of the
Company, or any other guarantor of any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the
Parent Guarantor may have at any time against the Company, any other
guarantor of any of the Guaranteed 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
the Company, or any other guarantor of any of the Guaranteed Obligations,
for any reason related to the Credit Agreement, any other Loan Document, or
any other Guaranty, or any provision of applicable law or regulation
purporting to prohibit the payment by the Company, or any other guarantor of
the Guaranteed Obligations, of the principal of or interest on any Note or
any other amount payable by the Company under the Credit Agreement, the
Notes, or any other Loan Document;
(vii) any other act or omission to act or delay of any kind by
the Company, any other guarantor of the Guaranteed 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 Parent Guarantor'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 Credit Agreement or any other Loan Documents.
SECTION 4. Discharge Only Upon Payment In Full; Reinstatement In
-----------------------------------------------------
Certain Circumstances. The Parent Guarantor's obligations hereunder shall
---------------------
remain in full force and effect until all Guaranteed Obligations shall have been
paid in full and the Commitments under the Credit Agreement shall have
terminated or expired. If at any time any payment of the principal of or
interest on any Note or any other amount payable by the Company under the Credit
Agreement or any other Loan Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, the Parent Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.
82
SECTION 5. Waiver of Notice by the Parent Guarantor. The Parent
----------------------------------------
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein,
as well as any requirement that at any time any action be taken by any Person
against the Company, any other guarantor of the Guaranteed Obligations, or any
other Person.
SECTION 6. Stay of Acceleration. If acceleration of the time for
--------------------
payment of any amount payable by the Company under the Credit Agreement, any
Note or any other Loan Document or the Company Guaranty is stayed upon the
insolvency, bankruptcy or reorganization of the Company, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement, any
Note or any other Loan Document shall nonetheless be payable by the Parent
Guarantor hereunder forthwith on demand by the Banks.
SECTION 7. Notices. All notices, requests and other communications to
-------
any party hereunder shall be given or made by telecopier or other writing and
telecopied or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Banks in accordance with the provisions of Section 8.01 of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, in each case given or addressed as aforesaid.
SECTION 8. No Waivers. No failure or delay by any Bank in exercising
----------
any right, power or privilege hereunder 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 provided in this Guaranty, the Credit Agreement, the Notes,
and the other Loan Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 9. Successors and Assigns. This Guaranty is for the benefit
----------------------
of the Banks and their respective successors and assigns and in the event of an
assignment of any amounts payable under the Credit Agreement, the Notes, or the
other Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty may not be assigned by the Parent Guarantor without the prior written
consent of the Banks, and shall be binding upon the Parent Guarantor and its
successors and permitted assigns.
83
SECTION 10. Changes in Writing. Neither this Guaranty nor any
------------------
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Parent Guarantor and the Banks.
SECTION 11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
-----
LAW OF THE STATE OF GEORGIA. EACH OF THE PARENT GUARANTOR AND EACH OF THE BANKS
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT
SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
THE PARENT GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARENT GUARANTOR AND EACH OF THE BANKS HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12. Taxes, etc. All payments required to be made by the
-----------
Parent Guarantor hereunder shall be made without setoff or counterclaim and free
and clear of and without deduction or withholding whatsoever, or, in the event
that the Parent Guarantor is required by law to make any such deduction or
withholding, the Parent 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 13. Subrogation. The Parent Guarantor hereby agrees that it
------------
will not exercise any rights which it may acquire by way of subrogation under
this Guaranty, by any payment made hereunder or otherwise, unless and until all
of the Guaranteed Obligations shall have been paid in full. If any amount shall
be paid to the Parent Guarantor on account of such subrogation rights at any
time when all of the Guaranteed Obligations shall not have been paid in full,
such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Banks to be credited and applied upon the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement.
84
IN WITNESS WHEREOF, the Parent Guarantor has caused this Guaranty to be
duly executed, under seal, by its authorized officer as of the date first above
written.
MOHAWK CARPET CORPORATION,
a Delaware corporation (SEAL)
By:__________________________________________
Title:
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chairman & Chief
Executive Officer
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
85
EXHIBIT G
---------
[FORM OF INDIRECT PARENT GUARANTY]
GUARANTY
--------
THIS GUARANTY (this "Guaranty") is made as of the 15th day of April,
1997, by MOHAWK INDUSTRIES, INC., a Delaware corporation (the "Indirect Parent
Guarantor") in favor of Wachovia Bank of Georgia, N.A., a national banking
association, and First Union National Bank of Georgia (collectively, together
with their successors and assigns, the "Banks");
W I T N E S S E T H
WHEREAS, Aladdin Manufacturing Corporation (f/k/a Mohawk Manufacturing
Corporation), a Delaware corporation (the "Company"), Mohawk Industries, Inc.
and the Banks have entered into that certain Third Amended and Restated Credit
Agreement dated as of even date herewith whereby the parties thereto have
amended and restated that certain Second Amended and Restated Credit Agreement
dated as of January 13, 1995, as amended (the "Original Credit Agreement"; as
such Third Amended and Restated Credit Agreement may be amended or modified
further from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by the Banks
to the Company;
WHEREAS, it is required by Section 3.01(a) of the Credit Agreement,
that the Indirect Parent Guarantor, the holder of 100% of the issued and
outstanding capital stock of Mohawk Carpet Corporation, the holder of 100% of
the issued and outstanding capital stock of the Company, execute and deliver
this Guaranty whereby the Indirect Parent Guarantor shall guarantee the payment
when due of all principal, interest and other amounts that shall be at any time
payable by the Company under the Credit Agreement, the Notes and the other Loan
Documents; and
WHEREAS, as the holder of 100% of the issued and outstanding capital
stock of Mohawk Carpet Corporation, the holder of 100% of the issued and
outstanding capital stock of the Company, and in consideration of the financial
and other support that the Company has provided, and such financial and other
support as the Company may in the future provide, to Indirect Parent Guarantor,
whether directly or indirectly, and in order to induce the Banks to enter into
the Credit Agreement, the Indirect Parent Guarantor is willing to guarantee the
obligations of the Company under the Credit Agreement, the Notes, and the other
Loan Documents;
86
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and
-----------
not otherwise defined herein have, as used herein, the respective meanings
provided for therein.
SECTION 2. The Guaranty. The Indirect Parent Guarantor hereby
------------
absolutely and unconditionally, guarantees the due and punctual payment and
performance of: (i) the principal of, and accrued 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 Company 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 Company 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 Company to pay any such amount in accordance with the terms
of the Credit Agreement, the Indirect Parent 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 Indirect Parent Guarantor of the Guaranteed Obligations.
SECTION 3. Guaranty Unconditional. The obligations of the Indirect
----------------------
Parent Guarantor hereunder shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under the Credit
Agreement, any Note, or any other Loan Document, by operation of law or
otherwise or any obligation of any other guarantor of any of the Guaranteed
Obligations;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note, or any other Loan Document;
(iii) any release, nonperfection or invalidity of any direct or
indirect security for any
87
obligation of the Company under the Credit Agreement, any Note, any Loan
Document, or any obligations of any other guarantor of any of the Guaranteed
Obligations;
(iv) any change in the corporate existence, structure or
ownership of the Company or any other guarantor of any of the Guaranteed
Obligations, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company, or any other guarantor of the Guaranteed
Obligations, or its assets or any resulting release or discharge of any
obligation of the Company, or any other guarantor of any of the Guaranteed
Obligations;
(v) the existence of any claim, setoff or other rights which the
Indirect Parent Guarantor may have at any time against the Company, any
other guarantor of any of the Guaranteed 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
the Company, or any other guarantor of any of the Guaranteed Obligations,
for any reason related to the Credit Agreement, any other Loan Document, or
any other Guaranty, or any provision of applicable law or regulation
purporting to prohibit the payment by the Company, or any other guarantor of
the Guaranteed Obligations, of the principal of or interest on any Note or
any other amount payable by the Company under the Credit Agreement, the
Notes, or any other Loan Document;
(vii) any other act or omission to act or delay of any kind by
the Company, any other guarantor of the Guaranteed 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 Indirect Parent Guarantor'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 Credit Agreement or any other Loan Documents.
SECTION 4. Discharge Only Upon Payment In Full; Reinstatement In
-----------------------------------------------------
Certain Circumstances. The Indirect Parent Guarantor's obligations hereunder
---------------------
shall remain in full force and effect until all Guaranteed Obligations shall
have been paid in full and the Commitments under the Credit Agreement shall have
terminated or expired. If at any time any payment of the principal of or
interest on any Note or any other amount payable
88
by the Company under the Credit Agreement or any other Loan Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, the Indirect Parent
Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
SECTION 5. Waiver of Notice by the Indirect Parent Guarantor. The
-------------------------------------------------
Indirect Parent Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and, to the fullest extent permitted by law, any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Company, any other guarantor of the Guaranteed
Obligations, or any other Person.
SECTION 6. Stay of Acceleration. If acceleration of the time for
--------------------
payment of any amount payable by the Company under the Credit Agreement, any
Note or any other Loan Document or the Company Guaranty is stayed upon the
insolvency, bankruptcy or reorganization of the Company, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement, any
Note or any other Loan Document shall nonetheless be payable by the Indirect
Parent Guarantor hereunder forthwith on demand by the Banks.
SECTION 7. Notices. All notices, requests and other communications to
-------
any party hereunder shall be given or made by telecopier or other writing and
telecopied or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Banks in accordance with the provisions of Section 8.01 of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, in each case given or addressed as aforesaid.
SECTION 8. No Waivers. No failure or delay by any Bank in exercising
----------
any right, power or privilege hereunder 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 provided in this Guaranty, the Credit Agreement, the Notes,
and the other Loan Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 9. Successors and Assigns. This Guaranty is for the benefit
----------------------
of the Banks and their respective successors and assigns and in the event of an
assignment of any amounts payable under the Credit Agreement, the Notes, or the
other Loan
89
Documents, the rights hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness. This Guaranty may not be
assigned by the Indirect Parent Guarantor without the prior written consent of
the Banks, and shall be binding upon the Indirect Parent Guarantor and its
successors and permitted assigns.
SECTION 10. Changes in Writing. Neither this Guaranty nor any
------------------
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Indirect Parent Guarantor and the Banks.
SECTION 11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
-----
LAW OF THE STATE OF GEORGIA. EACH OF THE INDIRECT PARENT GUARANTOR AND EACH OF
THE BANKS HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE
COURT SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE INDIRECT PARENT GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE INDIRECT PARENT GUARANTOR AND EACH OF THE BANKS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 12. Taxes, etc. All payments required to be made by the
-----------
Indirect Parent Guarantor hereunder shall be made without setoff or counterclaim
and free and clear of and without deduction or withholding whatsoever, or, in
the event that the Indirect Parent Guarantor is required by law to make any such
deduction or withholding, the Indirect Parent 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 13. Subrogation. The Indirect Parent Guarantor hereby agrees
------------
that it will not exercise any rights which it may acquire by way of subrogation
under this Guaranty, by any payment made hereunder or otherwise, unless and
until all of the Guaranteed Obligations shall have been paid in full. If any
amount shall be paid to Indirect Parent Guarantor on account of such subrogation
rights at any time when all of the Guaranteed Obligations shall not have been
paid in full, such amount shall be held in trust for the benefit of the Banks
and shall forthwith be paid to the Banks to be credited and applied upon the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Credit Agreement.
90
IN WITNESS WHEREOF, the Indirect Parent Guarantor has caused this
Guaranty to be duly executed, under seal, by its authorized officer as of the
date first above written.
MOHAWK INDUSTRIES, INC.,
a Delaware corporation (SEAL)
By:______________________________________
Title:
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chairman & Chief
Executive Officer
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
91
EXHIBIT H
---------
[FORM OF SUBSIDIARY GUARANTY]
[AMENDED AND RESTATED] GUARANTY AGREEMENT
-----------------------------------------
THIS [AMENDED AND RESTATED] GUARANTY AGREEMENT (this "Agreement") is dated
as of _______________, 1997 by _________________________, a _______________
corporation (the "Subsidiary Guarantor") in favor of Wachovia Bank of Georgia,
N.A., a national banking association, and First Union National Bank of Georgia
(collectively, together with their successors and assigns, the "Banks");
WHEREAS, pursuant to that certain Third 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., Mohawk Carpet Corporation, Aladdin Manufacturing Corporation
(the "Borrower"), and the Banks, 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 interest on, the Notes (as such term is defined in
the Credit
92
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.
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
93
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 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.
94
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.
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
95
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.
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.
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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:
Accepted and Agreed:
WACHOVIA BANK OF GEORGIA, N.A.
By:___________________________
Title:
FIRST UNION NATIONAL BANK OF GEORGIA
By:___________________________
Title:
97
Schedule 4.08
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Subsidiaries
------------
I. Indirect Parent (Mohawk Industries, Inc.)
---------------
Name Jurisdiction of Incorporation
---- -----------------------------
A. Mohawk Carpet Corporation Delaware
II. Parent (Mohawk Carpet Corporation)
------
Name Jurisdiction of Incorporation
---- -----------------------------
A. Aladdin Manufacturing Delaware
Corporation
B. Mohawk International FSC, Inc. Barbados
III. Borrower (Aladdin Manufacturing Corporation)
------------------------------
Name Jurisdiction of Incorporation
---- -----------------------------
A. Rainbow International, Inc. U.S. Virgin Islands
(soon to be dissolved)
B. Mohawk Xxxxx, Inc. Xxxxxxx
X. Horizon Europe, Inc. Xxxxxxx
X. Delaware Valley Wool
Scouring, Inc. Pennsylvania
E. Mohawk Marketing, Inc. Georgia
98
Schedule 4.17
Debt Outstanding
As of April 15, 1997
Lender Amount Outstanding
First Union $81,325,000
Wachovia 81,325,000
Prudential 106,286,000
Principal Mutual 54,400,000
Xxxx Xxxxxxx 50,000,000
Massachusetts Mutual 12,750,000
American General 6,150,000
Jefferson Pilot Life 3,450,000
Catoosa County IRB 6,500,000
Chatooga County IRB 729,707
Various Capital Leases 228,198
------------
Total Debt $403,143,905
