EXHIBIT 10.1
[EXECUTION COPY]
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MOHAWK INDUSTRIES, INC.
$100,000,000
8.46% SENIOR NOTES DUE SEPTEMBER 2004
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
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Dated as of August 31, 1999
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TABLE OF CONTENTS
(Not Part of Agreement)
Paragraph Page
1. THE NOTES 1
1A. Authorization and Issuance of the Notes 1
1B. Release of Guaranty Agreements 1
1C. Assumption of Obligations 1
2. PURCHASE AND SALE OF NOTES 2
3. CONDITIONS PRECEDENT 2
3A. Related Documents 2
3B. Opinion of Counsel to Industries 2
3C. Representations and Warranties, No Default 2
3D. Transactions Permitted By Applicable Laws 3
3E. Xxxxxxxxxxx 0
0X. Certificates of Good Standing/Qualification to Do Business 3
3G. No Material Adverse Change 3
3H. Private Placement Numbers 4
3I. Other Purchases 4
3J. Expenses 4
3K. Amendment and Restatement of Series Note Agreement and Consolidated Agreement 4
3L. Other Documents 4
4A PREPAYMENTS 4
4A. Required Prepayments 4
4B. Optional Prepayment With Yield-Maintenance Amount 4
4C. Notice of Optional Prepayment 5
4D. Partial Payments Pro Rata 5
4E. Retirement of Notes 5
5A AFFIRMATIVE COVENANTS 6
5A. Reporting Requirements 6
5B. Information Required by Rule 144A 8
5C. Inspection of Property 8
5D. Covenant to Secure Note Equally 8
5E. Guaranteed Obligations 8
5F. Maintenance of Insurance 9
5G. Maintenance of Corporate Existence/Compliance with Law/Preservation of Property 9
5H. Compliance with Environmental Laws 9
5I. No Integration 10
C-i
5J. Financial Reports 10
5K. Payment of Taxes and Claims 10
5L. Year 2000 Issues 11
6A NEGATIVE COVENANTS 11
6A. Certain Financial Limits 11
6B. Dividend Limitation 11
6C. Liens, Debt and Other Restrictions 12
6D. ERISA 15
6E. Fed Regulations, Etc. 16
6F. Environmental Matters 16
7A EVENTS OF DEFAULT 16
7A. Acceleration 16
7B. Rescission of Acceleration 19
7C. Notice of Acceleration or Rescission 20
7D. Other Remedies 20
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 20
8A. Organization 20
8B. Financial Statements 21
8C. Actions Pending 21
8D. Outstanding Debt 21
8E. Title to Xxxxxxxxxx 00
0X. Taxes 22
8G. Conflicting Agreement and Other Matters 22
8H. Offering of Notes 22
8I. Use of Proceeds 22
8J. ERISA 23
8K. Governmental Consent 23
8L. Disclosure 23
8M. Environmental Matters 24
8N. Xxxxxxxx 00
0X. Absence of Foreign or Enemy Status 25
9. REPRESENTATION OF THE PURCHASERS 25
10. DEFINITIONS 25
10A. Yield-Maintenance Terms 25
10B. Other Terms 27
10C. Accounting Principles, Terms and Determinations 37
11. MISCELLANEOUS 38
11A. Note Payments 38
11B. Expenses 38
11C. Consent to Amendments 39
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes 39
11E. Persons Deemed Owners, Participations 40
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11F. Survival of Representations and Warranties; Entire Agreement 40
11G. Successors and Assigns 40
11H. Disclosure to Other Persons 40
11I. Notices 41
11J. Payments Due on Non-Business Days 41
11K. Satisfaction Requirement 41
11L. Independence of Covenants 41
11M. Governing Law 41
11N. Severability 42
11O. Descriptive Headings 42
11P. Counterparts 42
11Q. No Novation 42
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ANNEX I PURCHASERS
PURCHASER SCHEDULE
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COUNSEL TO INDUSTRIES
EXHIBIT C FORM OF SHARING AGREEMENT
SCHEDULE 3F LIST OF GOOD STANDING CERTIFICATES
SCHEDULE 5E LIST OF OUTSTANDING GUARANTEES
SCHEDULE 6C(1) LIST OF LIENS
SCHEDULE 8C LIST OF ACTIONS PENDING
SCHEDULE 8G LIST OF AGREEMENTS RESTRICTING DEBT
SCHEDULE 10B LIST OF PROHIBITED PARTICIPANTS AND TRANSFEREES
C-iv
Mohawk Industries, Inc.
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
As of August 31, 1999
To Each Purchaser Listed
on Annex I Attached Hereto
Ladies and Gentlemen:
Mohawk Industries, Inc., a Delaware corporation (together with its
permitted successors and assigns "Industries"), and Aladdin Manufacturing
Corporation, formerly known as Mohawk Carpet Corporation, a Delaware corporation
(together with its permitted successors and assigns "Aladdin") are a party with
you to that certain Note Purchase Agreement dated as of September 16, 1994 (as
amended, modified or supplemented from time to time, the "1994 Agreement").
Industries desires to assume all of the obligations of Aladdin under the 1994
Agreement and to amend and restate the 1994 Agreement as set forth below.
1. THE NOTES
1A. Authorization and Issuance of the Notes. Industries will assume
each of the senior promissory notes issued by Aladdin originally in the
aggregate principal amount of $100,000,000 (the "1994 Notes") and initially
dated September 16, 1994, maturing September 16, 2004, and bearing interest on
the unpaid balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 8.46% per annum and on overdue
principal premium and interest at the rate specified therein. The term "Notes"
as used in this Agreement shall include each promissory note delivered pursuant
to any provision of this Agreement and each promissory note delivered in
substitution or exchange for any such promissory note pursuant to any such
Provision, and the term "Note" shall refer to any of such Notes.
1B. Release of Guaranty Agreements. You shall terminate the
Guaranty Agreements simultaneously with such termination by (i) the banks a
party to the Bank Agreement; (ii) the holder of the Notes under the Consolidated
Agreement; and (iii) the holder of the notes under the Series Note Agreement.
1C. Assumption of Obligations. Industries hereby assumes all of
Aladdin's obligations under the 1994 Agreement and under the 1994 Notes and any
other Related Documents (as defined in the 1994 Agreement) to which Aladdin was
a
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party, all pursuant to, and subject to the terms and conditions of, this
Agreement, the Notes and the other Related Documents to which it is a party.
2. PURCHASE AND SALE OF NOTES. Aladdin has sold to each of you the
1994 Notes in the original aggregate principal amount set forth on the Purchaser
Schedule hereto. Industries hereby agrees to issue to you and, subject to the
terms and conditions herein set forth, you agree to accept from Industries, in
exchange for each 1994 Note, a Note, in substantially the form of Exhibit A, in
the aggregate principal amount set forth on the Purchaser Schedule hereto, after
taking into account the required prepayment made by Aladdin on September 16,
1998, to evidence the assumption of the 1994 Note by Industries. Each exchange
shall occur at the offices of King & Xxxxxxxx, 0000 Avenue of the Americas, New
York, New York, on the date of closing, which shall be August 31, 1999 or any
other date upon which Industries and you may mutually agree (herein called the
"Closing" or the "Date of Closing").
3. CONDITIONS PRECEDENT. Your obligation to enter into, execute and
deliver this Agreement and exchange the Notes as described in paragraph 2 is
subject to the satisfaction, on or before the Date of Closing, of the following
conditions, as determined in the sole judgment of each Purchaser:
3A. Related Documents. You shall have received each of the
following documents duly executed and delivered by the parties thereto:
(i) a Termination Letter with respect to the Guaranty
Agreements; and
(ii) a Sharing Agreement.
Each of the foregoing agreements shall be in full force and effect on
the Closing Date and each party thereto shall be in full compliance with its
obligations thereunder.
3B. Opinion of Counsel to Industries. You shall have received from
Xxxxxx & Bird LLP, special counsel to Industries, a favorable opinion in form
and content satisfactory to you and in substantially the form of Exhibit B
hereto.
3C. Representations and Warranties, No Default. The representations
and warranties contained in paragraph 8 shall be true on and as of the Date of
Closing, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on the Date of Closing no Event of Default or
Default; and Industries shall have delivered to you an Officer's Certificate,
dated the Date of Closing, regarding the foregoing.
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3D. Transactions Permitted By Applicable Laws. The exchange of the
1994 Notes on the Date of Closing on the terms and conditions herein provided
shall not violate any applicable law or governmental regulation (including,
without limitation, section 5 of the Securities Act or Regulation T, U or X of
the Board of Governors of the Federal Reserve System) and shall not subject you
to any tax (other than any tax on income earned), penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation. The Notes shall on the Date of Closing qualify as a legal investment
for you under applicable insurance law (without regard to any "basket" or
"leeway provisions"), and such acquisition shall not subject you to any penalty
or other onerous condition contained in or pursuant to any such law or
regulation. You shall have received such certificates or other evidence as you
may request to establish compliance with this condition.
3E. Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified or other copies
of such documents as you may reasonably request. In this connection, Industries
shall deliver to you:
(i) copies of the certificate or articles of incorporation
(certified as of a recent date by the Secretary of the State of its
incorporation) and its bylaws (certified by its Secretary) as in effect
on the Date of Closing;
(ii) certified copies (certified by its Secretary) of all
corporate action taken by it to authorize the execution, delivery and
performance of any Related Document to which it is a party; and
(iii) certificates of incumbency and specimen signatures with
respect to each of its officers who are authorized to execute and
deliver any Related Document to which it is a party.
3F. Certificates of Good Standing/Qualification to Do Business. You
shall have received a good standing certificate issued by the Secretary of State
of the State of incorporation of Industries and certificates of qualification to
do business as a foreign corporation in jurisdictions specified in Schedule 3F,
each dated as of a recent date.
3G. No Material Adverse Change. You shall have received a
certificate from the chief financial officer or treasurer of Industries dated
the Date of Closing to the effect that no material adverse change in the
financial condition, business, operations or prospects of Industries and its
Subsidiaries taken as a whole has occurred since December 31, 1998.
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3H. Private Placement Numbers. Industries shall have obtained or
caused to be obtained private placement numbers for the Notes from the CUSIP
Service Bureau of Standard & Poor's and you shall have been informed of such
private placement numbers.
3I. Other Purchases. No Purchaser shall have failed to execute and
deliver this Agreement or to accept delivery of the Notes to be exchanged for
its 1994 Notes on the Closing Date.
3J. Expenses. All fees and disbursements of the Purchasers
(including without limitation special counsel to the Purchasers) shall have been
paid in full.
3K. Amendment and Restatement of Series Note Agreement and
Consolidated Agreement. Each Series Note Agreement and the Consolidated
Amendment shall be amended and restated and each of you, to the extent you are a
party thereto, shall have received duly executed copies of such amended and
restated agreements and, otherwise, shall have received true, correct and duly
executed copies thereof including all Schedules and Exhibits thereto and side
letters, if any, affecting the terms thereof or otherwise delivered in
connection therewith together with all amendments and waivers thereto and any
documents, instruments or certificates executed in connection therewith
accompanied by an Officer's Certificate dated the Date of Closing of Industries
to such effect.
3L. Other Documents. You shall have received such other certificates,
legal opinions and documents as you or your special counsel may reasonably
request, all in form and substance reasonably satisfactory to you.
4 PREPAYMENTS. The Notes shall be subject to prepayment with
respect to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in full,
Industries shall apply to the prepayment of the Notes, without premium, the
aggregate principal amount of $14,285,714 on September 16, in
each of the years 1999 to 2003, inclusive, and such principal amounts of the
Notes, together with interest thereon to the prepayment dates, shall become due
on such prepayment dates. The remaining principal amount of the Notes, together
with interest accrued thereon, shall become due on September 16, 2004, the
maturity date of the Notes. Any prepayment made by Industries pursuant to any
other provision of this paragraph 4 shall not reduce or otherwise affect its
obligations to make any prepayment required by this paragraph 4A until the Notes
are paid in full.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes
shall be subject to prepayment, in
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whole or in part on any date on which interest is due and payable (in multiples
of $5,000,000), at the option of Industries at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each Note. Any partial prepayment of the Notes
pursuant to this paragraph 4B shall be applied in satisfaction of required
payments of principal in inverse order of their scheduled due dates.
4C. Notice of Optional Prepayment. Industries shall give the holder
of each Note irrevocable written notice of any prepayment pursuant to paragraph
4B not less than 10 Business Days prior to the prepayment date, specifying (i)
such prepayment date, (ii) the principal amount of the Notes, and of the Notes
held by such holder, to be prepaid on such date, (iii) the accrued but unpaid
interest, to be paid on such date, (iv) a reasonable estimate of the Yield-
Maintenance Amount, if any, to be paid on such date, together, in the case of
clauses (iii) and (iv), with reasonably detailed support for the calculations
determining such interest and Yield-Maintenance Amount, and (v) stating that
such prepayment is to be made pursuant to paragraph 4B. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together
with the Yield-Maintenance Amount, if any, with respect thereto, shall become
due and payable on such prepayment date. Industries shall, on or before the day
on which it gives written notice of any prepayment pursuant to paragraph 4B,
give telephonic notice of the principal amount of the Notes to be prepaid and
the prepayment date to each holder of a Note which shall have designated a
recipient of such notices in the Purchaser Schedule attached hereto or by notice
in writing to Industries.
4D. Partial Payments Pro Rata. Upon any partial prepayment of the
Notes pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by Industries or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A or 4B) in proportion, to the extent
practicable, to the respective outstanding principal amounts thereof, with
adjustments, to the extent practicable, to equalize for any prior prepayments
not in such proportion.
4E. Retirement of Notes. Industries shall not, nor shall Industries
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder.
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5 AFFIRMATIVE COVENANTS.
5A. Reporting Requirements.
5A(1). Financial Statements and Other Information. Industries covenants
that it will deliver to each holder of a Note in triplicate (or such lesser
number as directed by such holder):
(i) as soon as practicable and in any event within 60 days
after the end of each quarterly period (other than the last quarterly
period) in each Fiscal Year,
(1) its Consolidated statements of income and cash flows
for Industries and its Subsidiaries for the period from the
beginning of the current Fiscal Year to the end of such
quarterly period, and
(2) Consolidated balance sheet for Industries and its
Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding Fiscal Year and, for so long as
Industries is a reporting company under the Exchange Act, all in
accordance with the Rules and Regulations of the reporting requirements
of the Securities and Exchange Commission, and, thereafter, in
reasonable detail and satisfactory in form to each of you and, in
either case, certified by an Officer's Certificate delivered on behalf
of Industries, subject to changes resulting from normal year-end
adjustments;
(ii) as soon as practicable and in any event within 90 days
after the end of each Fiscal Year,
(1) Consolidated statements of income and cash flows and
stockholders' equity of Industries and its Subsidiaries for such
year, and
(2) Consolidated balance sheet of Industries and its
Subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding
consolidated figures from the preceding annual audit and, for so long
as Industries is a reporting company under the Exchange Act, all in
accordance with the Rules and Regulations of the reporting requirements
of the Securities and Exchange Commission, and, thereafter, in
reasonable detail and satisfactory in scope to each of you or your
Affiliates, in either case, reported on by independent public
accountants of recognized standing selected by Industries whose report
shall be without limitation as to the scope of the audit and
satisfactory in substance to the Required Holders and certified by an
Officer's Certificate;
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(iii) promptly upon transmission thereof and in no event later
than 15 days thereafter, copies of all such financial statements, proxy
statements, notices and reports as it shall send to its public
stockholders and copies of all registration statements (without
exhibits and excluding registration statements on Form S-8 or its
equivalent) and all reports, including, without limitation, Form 10-Ks,
Form 10-Qs and Form 8-Ks, which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to Industries or any Subsidiary after the Date of
Closing by independent accountants in connection with any annual,
interim or special audit made by them of the books of Industries or any
such Subsidiary;
(v) any other information provided under Sections 5.01(d) and
(e) of the Bank Agreement; and
(vi) with reasonable promptness, such other financial data as
a holder of a Note may reasonably request.
5A(2). Quarterly Officer's Certificate. Together with each delivery of
financial statements required by clauses (i) and (ii) above, Industries will
deliver to each holder of a Note an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by Industries and its Subsidiaries
with the provisions of paragraphs 6A, 6B and 6C(1) through 6C(6) and stating
that there exists no Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence thereof and what
action Industries proposes to take with respect thereto.
5A(3). Annual Accountant's Letter. Together with each delivery of
financial statements required by clause (ii) above, Industries will deliver to
each holder of a Note a certificate of such accountants stating that, in making
the audit necessary for their report on such financial statements, they have
obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature and
period of existence thereof. Such accountant however, shall not be liable to
anyone by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.
5A(4). Special Information. Industries also covenants that forthwith
upon a Responsible Officer obtaining knowledge of (i) an Event of Default or
Default or (ii) at all times during which Industries is not a reporting company
under the Exchange Act, the occurrence of a Material Adverse Effect or any event
which could reasonably be expected to cause a Material Adverse Effect including,
without limitation, the institution or threat of legal proceedings,
Environmental Proceedings and the existence of Environmental Liabilities,
Industries will
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deliver to each holder of a Note an Officer's Certificate specifying the nature
and period of existence thereof and what action Industries has taken, is taking
or proposes to take with respect thereto.
5B. Information Required by Rule 144A. Industries covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as Industries is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. Inspection of Property. Industries covenants that it will permit
any Person designated by any holder of a Note in writing, at such holder's
expense (except upon the occurrence, and during the continuance of a Default or
Event of Default and then, at the expense of Industries), to visit and inspect
any of the Properties of Industries and its Subsidiaries, to examine the
corporate books and financial records of Industries and its Subsidiaries and
make copies thereof or extracts therefrom and to discuss the affairs, finances
and accounts of any of such corporations with the principal officers of
Industries and its independent public accountants, and at such reasonable times
and as often as such holder may reasonably request subject to paragraph 11H.
5D. Covenant to Secure Note Equally. Industries covenants that, if
it or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C(1) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured.
5E. Guaranteed Obligations. Except as set forth on Schedule 5E,
Industries covenants that if, at any time, after the date hereof it or any of
its Subsidiaries incurs or permits to exist any Debt or other obligation (other
than a performance bond or a guarantee of an operating lease or like financial
accommodation issued by Industries or a Subsidiary in the ordinary course of
business) Guaranteed or collateralized in any other manner by any other Person,
it will simultaneously cause such other Person to execute and deliver to each
holder of any Note a guaranty agreement in form and substance reasonably
satisfactory to such holder guaranteeing payment of the principal
9
amount of the Notes and any premium and interest thereon, which bears the same
ratio to the total unpaid principal amount of the Notes as the amount of such
other obligation which is guaranteed bears to the total unpaid principal amount
of such other obligation, or if such other obligation is collateralized, to
collateralize the Notes equally and ratably with such other obligation;
provided, however, the preceding shall not apply to the extent (i) such other
Person is not an Affiliate of Industries or any of its Subsidiaries and (ii)
such other Person has full recourse against Industries and/or such Subsidiary in
connection with such other Person's Guarantee or collateralized obligation.
5F. Maintenance of Insurance. Industries covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its Properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses and
consistent with sound business practices.
5G. Maintenance of Corporate Existence/Compliance with
Law/Preservation of Property. Except as allowed under paragraph 6C(4),
Industries covenants that it and each Subsidiary will do or cause to be done all
things necessary to:
(i) preserve, renew and keep in full force and effect the
corporate existence of Industries and its Subsidiaries (other than any
Subsidiary being dissolved or liquidated as permitted under paragraph
6C(5)(ii)) and any license, certificate, permit, franchise or
governmental authorization necessary to the ownership of its Properties
and assets or to the conduct of its business if the failure to do so
could, individually, or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and
(ii) comply in all respects with all laws and regulations
(including, without limitation, laws and regulations relating to equal
employment opportunity and employee safety) applicable to it and its
Subsidiaries, except where the failure to comply could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, and
(iii) maintain, preserve and protect all material intellectual
property of Industries and its Subsidiaries, and
(iv) preserve all the remainder of its material property used
or useful in the conduct of its business and keep the same in good
repair, working order and condition other than normal wear and tear,
obsolescence and loss caused by a casualty for which Industries or such
Subsidiary is insured and such property so damaged is replaced.
5H. Compliance with Environmental Laws. Industries will, and will
cause each of its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all Environmental Requirements
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including, without limitation, the emission of wastewater effluent, solid and
hazardous waste and air pollution, and establishing general environmental
conditions together with any other applicable requirements for conducting, on a
timely basis, periodic tests and monitoring for contamination of ground water,
surface water, air and land and for biological toxicity of the aforesaid, and
diligently comply with the regulations (except to the extent such regulations
are waived by appropriate governmental authorities) of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, except, individually or in the aggregate, with respect to each of the
foregoing, where the failure to do so could not reasonably be expected to have a
Material Adverse Effect. Industries shall not be deemed to have breached or
violated this paragraph 5H if Industries or any Subsidiary of Industries is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of such Environmental Requirements for which adequate
reserves have been established in accordance with generally accepted accounting
principles.
5I. No Integration. Industries covenants that it has taken and will
continue to take all necessary steps so that the issuance of the Notes has not
and will not require registration under the Securities Act. Industries covenants
that no future offer and sale of debt securities of Industries of any class will
be made if as a result of the doctrine of "integration", there is a reasonable
possibility that such offer and sale would result in the loss of an entitlement
of the Notes to the exemption from the registration requirements of the
Securities Act.
5J. Financial Reports. Industries will keep, and will cause each
Subsidiary to keep, proper books of record and account in which full and correct
entries will be made of all dealings or transactions of or in relation to the
business and affairs of Industries or such Subsidiary in accordance with
generally accepted accounting principles consistently applied (except for
changes disclosed in the financial statements furnished to you pursuant to
paragraph 5A and concurred in by the independent public accountants referred to
in paragraph 5A).
5K. Payment of Taxes and Claims5K. Payment of Taxes and Claims5K.
Payment of Taxes and Claims5K. Payment of Taxes and Claims5K. Payment of Taxes
and Claims. Industries will, and will cause each Subsidiary to, pay before they
become delinquent:
(a) all taxes, assessments and governmental charges or levies
imposed upon it or any of its property; and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if
unpaid, might result in the creation of a Lien upon any of its
property;
provided, that items of the foregoing description need not be paid
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(i) while being actively contested in good faith and by
appropriate proceedings as long as adequate book reserves have
been established and maintained and exist with respect thereto,
and
(ii) so long as the title to, and right to use, such
property, is not materially adversely affected thereby.
5L. Year 2000 Issues. Industries shall take, and cause its
Subsidiaries to take, all actions reasonably necessary to assure that the Year
2000 Issues, as such Year 2000 Issues pertain to the computer programs and
systems of Industries and its Subsidiaries, will not have a Material Adverse
Effect. Industries and its Subsidiaries will use commercially reasonable efforts
to assure that their third-party customers, suppliers and vendors develop and
implement programs to remediate, in all material respects, all Year 2000 Issues
reasonably anticipated by Industries and its Subsidiaries to have a Material
Adverse Effect. Upon written request by the Required Holders, Industries will
provide the holders of the Notes a written description of its program for
assessing Year 2000 Issues, including updates and progress reports. Industries
will advise the holders of the Notes promptly of any reasonably anticipated
Material Adverse Effect as a result of Year 2000 Issues.
6 NEGATIVE COVENANTS. Unless the Required Holders otherwise agree
in writing, Industries shall not, and shall not permit its Subsidiaries to, take
any of the following actions or permit the occurrence or existence of any of the
following events or conditions:
6A. Certain Financial Limits. Industries covenants that it will not
permit:
(i) The Debt to Capitalization Ratio to be equal to or greater
than 0.60 to 1.0 at the end of each Fiscal Quarter; and
(ii) The ratio of (a) Consolidated Debt to (b) the sum of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
taxes on Industries' consolidated pre-tax income, and (iv) Depreciation
and Amortization to be greater than 3.5 to 1.0 at the end of each
Fiscal Quarter. Subclause (b) of this clause (ii) shall be calculated
on a trailing four quarter basis as at the end of each such Fiscal
Quarter.
6B. Dividend Limitation. Industries covenants that, it shall not,
(i) pay or declare any dividend on any class of its stock
(except dividends payable solely in shares of its capital stock) or
make any other distribution on account of any class of its stock; or
12
(ii) make any payment on account of the redemption, purchase
or other acquisition, direct or indirect, of any shares of its stock;
or
(iii) make any optional payments on Subordinated Debt (all of
the foregoing being herein called "Restricted Payments");
unless at the time of declaration, redemption, purchase or payment of such
Restricted Payment and after giving effect thereto, no Default or Event of
Default exists or would exist.
6C. Liens, Debt and Other Restrictions. Industries covenants that it
will not and will not permit any Subsidiary to:
6C(1). Liens. Create, assume or suffer to exist any Lien upon any of
its property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Notes in accordance
with the provisions of paragraph 5D) except:
(i) Liens for taxes (including ad valorem and property taxes)
not yet due or which are being actively contested in good faith by
appropriate proceedings;
(ii) Liens on the property of Industries or any of its
Subsidiaries as of the Date of Closing as set forth on Schedule 6C(1)
attached hereto and any Lien renewing, extending or refunding any Lien
permitted by this clause (ii) so long as the principal amount of Debt
secured by such Lien immediately prior thereto is not increased or the
term reduced and such Lien does not extend to other property;
(iii) other Liens incidental to the conduct of its business or
the ownership of its property and assets (including but not limited to
pledges or deposits in connection with workers' compensation and social
security taxes, assessments and charges and landlords, mechanics and
materialmen Liens and survey exceptions or encumbrances, easements or
reservations, rights-of-way or zoning restrictions), provided that (A)
such liens were not incurred in connection with the borrowing of money
or the obtaining of advances or credit or the payment of the deferred
purchase price of property and (B) the existence of such Lien does not
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(iv) Liens on property or assets of a Subsidiary of Industries
to secure obligations of such Subsidiary to Industries or another
Subsidiary, as the case may be;
(v) Any common law right of setoff or banker's lien arising in
connection with ordinary course of business deposit arrangements
maintained by Industries or its Subsidiaries with its banks or other
financial institutions so long as any such bank or
13
other financial institution (A) shall not at any time make loans or
otherwise extend credit pursuant to any credit facility to Industries or
any of its Subsidiaries, (B) does not maintain accounts (for the deposit of
cash or otherwise) for the benefit of Industries or any Subsidiary other
than those which have in the aggregate monthly balances less than $100,000,
(C) shall have delivered to each holder of a Note a Sharing Agreement
substantially in the form of Exhibit C attached hereto ("Sharing
Agreement"); or (D) shall have waived in writing such common law right of
setoff or banker's lien;
(vi) Liens arising from judicial attachments and judgments; provided
that (A) the execution or other enforcement of such Liens is not being
pursued and the execution or other enforcement of such Liens has been
effectively stayed within 30 days of such Liens' imposition, (B) the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings, (C) adequate book reserves shall have been
established and maintained and shall exist with respect thereto and (D) no
Event of Default shall have occurred with respect to such Liens under
clause (xii) of paragraph 7A;
(vii) Other Liens on property of Industries or a Subsidiary not
otherwise permitted pursuant to this paragraph 6C(1);
(viii) Liens in connection with an Asset Securitization permitted
under paragraph 6C(5);
(ix) Liens against the assets of Aladdin (formerly owned by Galaxy)
under the Catoosa Co. IRB solely to the extent existing as of the date
hereof; and
(x) Liens against the assets of Aladdin (formerly owned by Image
Industries, Inc.) under the Summerville City IRB solely to the extent
existing as of January 1, 1999;
provided that Liens permitted by the foregoing subparagraphs (ii) through
(v) and (vii) shall at no time secure Debt in an aggregate amount exceeding
the greater of (1) $90,000,000 or (2) fifteen percent (15%) of Consolidated
Net Worth at such time and prior to, and after giving effect to the
incurrence, assumption or creation of any such Lien, and to any concurrent
application of the proceeds of any Debt or other obligation secured
thereby, no Default or Event of Default would exist;
6C(2). Subsidiary Indebtedness. Permit any Subsidiary to incur any Debt
except for (i) Debt owed by a Subsidiary to Industries or another Subsidiary,
(ii) Debt deemed incurred in connection with an Asset Securitization permitted
under paragraph 6C(5); (iii) (A) Debt of Subsidiaries arising in connection with
the Summerville City IRB and the Catoosa Co. IRB and incurrence of reimbursement
obligations with respect to the Letters of Credit (as defined in the Bank
Agreement) with respect to the Summerville City IRB and the Catoosa Co. IRB and
(B) other Debt of Subsidiaries arising in connection with the issuance of bonds
by governmental
14
authorities so long as such debt is supported by a letter of credit issued by a
financial institution for the benefit of Industries is obligated to such
financial institution under a reimbursement agreement for the reimbursement of
amounts drawn under such Letter of Credit; and (iv) in addition to Debt incurred
under clauses (i) through (iii) of this paragraph 6C(2), other Debt of
Subsidiaries not exceeding in the aggregate amount outstanding at any time 15%
of Consolidated Net Worth;
6C(3). Loans, Advances and Investments. Make or maintain any
Investments except (a) Investments in Industries or any Subsidiary, including
without limitation, advances or loans between or among Industries or any
Subsidiary and loans and advances to officers and employees of Industries or any
Subsidiary in the ordinary course of business; (b) Investments in Persons
engaged in a Permitted Line of Business (whether or not any such Person is, or
after giving effect to any such Investment becomes, a Subsidiary); (c)
Investments in Persons in connection with Permitted Acquisitions; and (d)
Investments in Approved Investments; provided, however, during the existence of
an Event of Default, neither Industries nor any of its Subsidiaries may make any
new Investments without the prior written consent of the Required Holders;
6C(4). Merger or Consolidation. Merge with or into or consolidate or
exchange shares with any other Person or permit any other Person to merge or
consolidate with or into it, provided that (a) Industries may merge with another
Person if (i) such Person is organized under the laws of the United States of
America or one of its States, (ii) Industries is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing and (b) Subsidiaries of Industries may
merge with and into Industries, any other Subsidiary, or any other Person if
after giving effect thereto such other Person would be a Subsidiary;
6C(5). Sale of Assets. Dispose of any property or assets, except:
(i) assets may be transferred from a Subsidiary to Industries or
another Subsidiary;
(ii) any Wholly-Owned Subsidiary 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;
(iii) Industries and its Subsidiaries may factor receivables;
(iv) Industries and its Subsidiaries may effect Asset
Securitizations; and
15
(v) the foregoing limitation on the sale, lease or other transfer
of assets shall not prohibit, during any Fiscal Quarter, a transfer of
assets by Industries or any Subsidiary (in a single transaction or in a
series of related transactions) unless (x) the proceeds thereof are not
reinvested within 180 days thereafter in a Permitted Line of Business owned
by Industries or such Subsidiary or (y) the aggregate assets to be so
transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all
other assets utilized in all other business lines or segments discontinued,
during such Fiscal Quarter and the immediately preceding three Fiscal
Quarters, constituted more than 20% of Consolidated Total Assets at the end
of the fourth Fiscal Quarter immediately preceding such Fiscal Quarter;
6C(6). Sale and Lease-Back. Enter into or permit to remain in effect
any arrangement (a "Sale and Lease-Back") with any Person or to which such
Person is a party providing for the leasing by Industries or any of its
Subsidiaries of real or personal property which has been or is to be sold or
transferred by Industries or any of its Subsidiaries to any Person to whom funds
have been or are to be advanced on the security of such property or rental
obligations of Industries or any of its Subsidiaries, unless such arrangement
relates solely to such real or personal property and is entered into within 180
days following the acquisition or construction (permitted pursuant to the
proviso set forth in paragraph 6C(5)(v)) by Industries or such Subsidiary of the
real or personal property;
6C(7). Maintenance of Existence. Other than as permitted by paragraphs
6C(4), 6C(5) and 6C(8), Industries shall, and shall cause each Subsidiary to,
maintain its corporate existence and carry on its business in a Permitted Line
of Business; or
6C(8). Dissolution. Neither Industries nor any of its Subsidiaries
shall suffer or permit dissolution or liquidation either in whole or in part or
redeem or retire any shares of its own stock or that of any Subsidiary, except
through corporate reorganization to the extent permitted by paragraph 6C(4) or
6C(5) or in connection with a Restricted Payment which is permitted pursuant to
paragraph 6C.
6D. ERISA. Industries covenants that it will not, nor permit any
Subsidiary to:
(i) terminate or withdraw from any Plan so as to result in any
material liability to the Pension Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan
(other than a Multiemployer Plan) which would subject Industries or any
Subsidiary to any material tax, penalty or other liability,
16
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, involving any Plan (other than a
Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition, which
presents a material risk of incurring a material liability to the Pension
Benefit Guaranty Corporation.
6E. Fed Regulations, Etc. Industries covenants that it will not, and
will not permit any Subsidiary or any agent acting on behalf of Industries or
any Subsidiary to, take any action which might cause this Agreement or the Notes
to violate or cause you to fail to comply with Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act, in each case as in effect now or as the same may hereafter be
in effect.
6F. Environmental Matters. Industries covenants that it will not, and
will not permit, any Third Party to, except in compliance with all applicable
Environmental Requirements (unless the failure to so comply could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect), (i) use, produce, manufacture, process, generate, store, dispose of at,
manage at, or ship or transport to (collectively "Handle") or transport from the
Properties any Hazardous Materials (other than as provided for below) or (ii)
Handle any Hazardous Materials except for Hazardous Materials used, produced,
released or managed in the ordinary course of business; provided, that
Industries may, and may permit Third Parties to release Hazardous Materials in
amounts which do not require remediation pursuant to applicable law or
regulation, and which do not present any potentially substantial danger to
health, safety or the environment.
7 EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
(i) Industries defaults in the payment of any principal of or
Yield-Maintenance Amount or any other amount payable with respect to any
Note (other than interest) when the same shall become due, either by the
terms thereof or otherwise as herein provided; or
(ii) Industries defaults in the payment of any interest on any
Note for more than five Business Days after the date due; or
(iii) Industries or any of its Significant Subsidiaries defaults
(whether as primary obligor or as guarantor or other surety) in any payment
of principal of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any
17
obligation under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property
whether or not secured by a purchase money mortgage or any obligation under
notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto; or Industries or any
such Significant Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder or under any
such agreement shall occur and be continuing) and the effect of such
failure or other event is to cause, or to permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due (or to be repurchased by Industries or
any such Significant Subsidiary) prior to any stated maturity, provided
that the aggregate amount of all obligations as to which such a default
shall occur and be continuing or such a failure or other event permitting
acceleration (or resale to Industries or any such Significant Subsidiary)
shall occur and be continuing exceeds $25,000,000; or
(iv) any representation or warranty made by Industries herein or by
Industries or any of its officers in any writing furnished in connection
with or pursuant to this Agreement shall be false in any material respect
on the date as of which made; or
(v) Industries or any Subsidiary fails to perform or observe any
agreement contained in paragraph 6; or
(vi) Industries or any Subsidiary fails to perform or observe any
other agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after a Responsible Officer obtains actual
knowledge thereof; or
(vii) Industries or any Significant Subsidiary makes an assignment
for the benefit of creditors; or
(viii) any decree or order for relief in respect of Industries or any
Significant Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein
called the "Bankruptcy Law"), of any jurisdiction; or
(ix) Industries or any Significant Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of Industries or any Significant Subsidiary, or of any substantial
part of the assets of Industries or any Significant Subsidiary, or
commences a voluntary case under the Bankruptcy Law of the United States or
any proceedings (other than proceedings for the voluntary liquidation and
dissolution of a Significant Subsidiary) relating to Industries or any
Significant Subsidiary under the Bankruptcy Law of any other jurisdiction;
or
18
(x) any such petition or application is filed, or any such
proceedings are commenced, against Industries or any Significant Subsidiary
and Industries or such Significant Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition in any
such proceedings, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
(xi) any order, judgment or decree is entered in any proceedings
against Industries or any Significant Subsidiary decreeing the dissolution
of Industries or Significant Subsidiary and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(xii) a final judgment or final judgments, in the aggregate, in
excess of $25,000,000 (exclusive of any insurance coverage for which the
insurance company issuing such coverage shall have acknowledged (in
writing) coverage with respect thereto) shall be rendered against
Industries or any Significant Subsidiary and, within 60 days after entry
thereof, such judgment is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such stay,
such judgment is not discharged; or
(xiii) Industries or any ERISA Affiliate, in its capacity as an
employer under a Multiemployer Plan, makes a complete or partial withdrawal
from such Multiemployer Plan resulting in the occurrence by such
withdrawing employer of a withdrawal liability in an amount exceeding
$25,000,000 and, within 30 days after such occurrence, such withdrawal
liability is not discharged; or
(xiv) so long as any Related Document shall be in effect pursuant to
the terms hereof Industries shall fail to comply with the terms of any
Related Document to which it is a party beyond applicable grace periods, if
any, specified in such Related Document; or
(xv) a Material Adverse Effect shall occur as a result of any
Environmental Liability, whether or not disclosed to you (solely for the
purposes hereof such Environmental Liability, individually or in the
aggregate, to be in excess of $25,000,000) and, to the extent such
Environmental Liability is contingent, Industries and/or its Significant
Subsidiaries fail to diligently pursue any action required to be taken by
any governmental or regulatory authority, or diligently, in compliance with
applicable laws, avoid taking any such action or fail to diligently pursue
the avoidance of, or reduction of, the final, non-appealable assessment,
judgment or other charge related thereto on Industries and/or its
Significant Subsidiaries, and, to the extent such Environmental Liability
is not contingent and is a final, non-appealable assessment, judgment or
other
19
charge, within 30 days after the final assessment, adjudication or
charge related thereto, such Environmental Liability is not discharged,
remedied or otherwise cured; or
(xvi) any exercise of rights under paragraph 4D of a Series Note
Agreement;
then:
(a) if such event is an Event of Default specified in clause (i) or
(ii) of this paragraph 7A, the holder of any Note (other than Industries or
any Subsidiary or Affiliate) may at its option, by notice in writing to
Industries, declare such Note to be, and such Note shall thereupon be and
become, immediately due and payable at par together with interest accrued
thereon and together with the Yield-Maintenance Amount, if any, with
respect to each Note, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by Industries,
(b) if such event is an Event of Default specified in any of
clauses (viii), (ix) or (x) of this paragraph 7A, all of the Notes at the
time outstanding shall automatically become immediately due and payable at
par together with interest accrued thereon and together with the Yield-
Maintenance Amount, if any, with respect to each Note, without presentment,
demand, protest or notice of any kind, all of which are hereby waived by
Industries, and
(c) if such event is not an Event of Default specified in
clause (viii), (ix) or (x) of this paragraph 7A, the holder or holders of
at least 15% of the aggregate principal amount of the Notes from time to
time outstanding may at its or their option, by notice in writing to
Industries, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by Industries.
7B. Rescission of Acceleration7B. At any time after any or all of the Notes
shall have been declared immediately due and payable pursuant to paragraph 7A,
the holder or holders of at least 76% of the aggregate principal amount of the
Notes from time to time outstanding may, by notice in writing to Industries,
rescind and annul such declaration and its consequences if:
(i) all overdue interest on the Notes, the principal of and Yield-
Maintenance Amount, if any, payable with respect to any Notes which have
become due otherwise than by reason of such declaration, and interest on
such overdue interest and overdue principal and Yield-Maintenance Amount at
the rate specified in the Notes shall have been paid,
20
(ii) any amounts which have become due solely by reason of such
declaration shall not have been paid,
(iii) all Events of Default and Defaults, other than nonpayment of
amounts which have become due solely by reason of such declaration, shall
have been cured or waived pursuant to paragraph 11C, and
(iv) no judgment or decree shall have been entered for the payment of
any amounts due pursuant to the Notes or this Agreement.
No such rescission or annulment shall extend to or affect any subsequent Event
of Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, Industries
shall forthwith give written notice thereof to the holder of each Note at the
time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. Industries represents,
covenants and warrants as follows:
8A. Organization. Industries is a corporation duly organized and existing
in good standing under the laws of the jurisdiction in which it is incorporated
or formed and each of its Subsidiaries is duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated or
formed. Industries has and each of its Subsidiaries has the corporate power to
own its respective property and to carry on its respective business as now being
conducted and each is duly qualified and authorized to do business in each
jurisdiction in which the character of its Properties or the nature of its
business requires such
21
qualification or authorization except where the failure to be so qualified or
authorized could not reasonably be expected to have a Material Adverse Effect.
8B. Financial Statements. Industries has furnished you with the following
financial statements, identified by a principal financial officer of Industries:
(A) a Consolidated balance sheet of Industries and its Subsidiaries as at
December 31 in each of the years 1996 to 1998, inclusive, and Consolidated
statements of income, stockholders' equity and cash flows of Industries and its
Subsidiaries for each such year, all reported on by KPMG LLP, and (B) a
Consolidated balance sheet of Industries and its Subsidiaries as at March 31,
1999 and Consolidated statements of income, stockholders' equity and cash flows
for the three-month period ended on each such date, prepared by Industries. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and normal year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of Industries and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of Industries and
its Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of the operations
of Industries and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, condition
(financial or otherwise) or operations of Industries and its Subsidiaries taken
as a whole since December 31, 1998.
8C. Actions Pending. Except as set forth in Schedule 8C there is no
action, suit, investigation or proceeding pending or to the knowledge of
Industries, threatened against Industries or any of its Subsidiaries, or any
Properties or rights of Industries or any of its Subsidiaries, by or before any
court, arbitrator or administrative or governmental body which might,
individually or in the aggregate, result in a Material Adverse Effect.
8D. Outstanding Debt. None of Industries or its Subsidiaries has
outstanding any Debt except as permitted by paragraph 6C(2). There exists no
default under the provisions of any instrument evidencing Debt in an aggregate
principal amount in excess of $5,000,000 or of any agreement relating thereto.
8E. Title to Properties. Industries has and each of its Subsidiaries has
good and indefeasible title to its material real Properties (other than
Properties which it leases) and good title to all of its other material
Properties and assets, including the material Properties and assets reflected in
the balance sheet as at December 31, 1998 referred to in paragraph 8B (other
than Properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by paragraph 6C(1). All
leases necessary in any material respect for the conduct of the respective
businesses of Industries and its Subsidiaries are valid and subsisting and are
in full force and effect.
22
8F. Taxes. Industries has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of Industries are required to be filed giving due regard to any
extensions granted, and each has paid all taxes as shown on such returns and on
all assessments received by it to the extent that such taxes have become due
giving due regard to any extensions granted, except such taxes as are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles.
8G. Conflicting Agreement and Other Matters. Neither Industries nor any of
its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition. Neither the execution
nor delivery of this Agreement or any other Related Document to which it is a
party, nor the exchange of the Notes, nor fulfillment of nor compliance with the
terms and provisions hereof and of the Notes will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
or result in any violation of, or result in the creation of any Lien upon any of
the Properties or assets of Industries or any of its Subsidiaries pursuant to,
the charter or by-laws of Industries or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
Industries or any of its Subsidiaries is subject. Neither Industries nor any of
its Subsidiaries is a party to, or otherwise subject to any provision contained
in, any instrument evidencing Debt of Industries or such Subsidiary, any
agreement relating thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of Industries of the type to be evidenced by the Notes except
as set forth in the agreements listed in Schedule 8G attached hereto.
8H. Offering of Notes. Neither Industries nor any agent acting on the
behalf of Industries has, directly or indirectly, offered the Notes or any
similar security for sale to, or solicited any offers to buy the Notes or any
similar security from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither
Industries nor any agent acting on the behalf of Industries has taken or will
take any action which would subject the issuance or sale of the Notes to the
provisions of section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. Use of Proceeds. Neither Industries nor any Subsidiary owns or has any
present intention of acquiring any "margin stock" as defined in Regulation U (12
CFR Part 207) of the Board of Governors of the Federal Reserve System (herein
called "margin stock"). The proceeds of sale of the Notes were used to repay
certain Debt identified on Schedule 8I to the 1994 Agreement. None of such
proceeds were used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any Debt which was originally
23
incurred to purchase or carry any stock that was, at the time, a margin stock or
for any other purpose which would have constituted the transaction contemplated
by the 1994 Agreement a "purpose credit" within the meaning of such Regulation
U. Neither Industries nor any agent acting on its behalf has taken or will take
any action which might cause this Agreement or the Notes to violate Regulation T
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by Industries or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan and other than routine payment of premiums that are timely
paid) by Industries, any Subsidiary or any ERISA Affiliate which is or would be
materially adverse to the business, condition (financial or otherwise) or
operations of Industries and its Subsidiaries taken as a whole. Neither
Industries nor any Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of Industries and its
Subsidiaries taken as a whole. The execution and delivery of this Agreement and
any other Related Document will be, and the initial issuance and sale of the
Notes to the purchasers was, exempt from, or will not (or did not) involve any
transaction which is subject to, the prohibitions of section 406 of ERISA and
will not (or did not) involve any transaction in connection with which a penalty
could be imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code.
8K. Governmental Consent. Assuming the accuracy of the representations in
paragraph 9 below, neither the nature of Industries or of any Subsidiary, nor
any of their respective businesses or Properties, nor any relationship between
Industries or any Subsidiary and any other Person, nor any circumstance in
connection with the exchange of the Notes is such as to require any
authorization, consent, approval, exemption or other action by or notice to or
filing with any court or administrative or governmental body (other than such of
the foregoing as shall have been obtained or filed at the Date of Closing and
routine filings after the Date of Closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with the execution
and delivery of this Agreement, the exchange of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. Disclosure. Neither this Agreement nor any other Related Document nor
any other document, certificate or statement furnished to you by or on behalf of
Industries in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to
Industries or any Subsidiary which materially adversely affects or in the future
may (so far as Industries can now reasonably foresee) materially adversely
24
affect the business, property or assets, or financial condition of Industries or
any Subsidiaries and which has not been set forth in this Agreement or in any
other Related Document or in the other documents, certificates and statements
furnished to you by or on behalf of Industries prior to the date hereof in
connection with the transactions contemplated hereby. The financial projections
given to you are reasonable based on the assumptions stated therein and the best
information available to the officers of Industries.
8M. Environmental Matters. (i Subject to the discussion regarding
underground storage tanks in those certain Reports identified in clauses (xii),
(xiv), (xv), (xviii), (xix), (xx), (xxi) and (xxii) in the definition of the
term "Environmental Reports", neither Industries nor any Subsidiary is subject
to any Environmental Liability or Environmental Requirement which could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(ii) Neither Industries nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state statute similar to
CERCLA. None of the Properties has been identified on any current or proposed
National Priorities List under 40 C.F.R. (S) 300 or any list arising from a
state statute similar to CERCLA. None of the Properties has been identified on
any CERCLIS list.
(iii) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, released, managed 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 knowledge of Industries, at or
from any adjacent site or facility, except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of, released and
managed in the ordinary course of business in compliance with all applicable
Environmental Requirements where the failure to so comply could reasonably be
expected to have a Material Adverse Effect and except for Hazardous Materials
present in amounts which have not required and do not require remediation,
pursuant to applicable law or regulation, and which have not presented and do
not present a potentially substantial danger to health, safety or the
environment.
(iv) Industries and each of its Subsidiaries have procured all permits
necessary under Environmental Requirements for the conduct of its respective
businesses except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
8N. Solvency. As of the Date of Closing and after giving effect to the
transactions contemplated hereunder (a) the amount of the "present fair salable
value" of the assets of Industries will, as of such date, exceed the amount of
all "liabilities of Industries, contingent or otherwise," as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the solvency of debtors, (b) the present fair
salable value of the assets of Industries will, as of the Date of Closing, be
greater than the amount that will be required to pay the liability of Industries
on its debts as such debts
25
become absolute and matured, (c) Industries will not have, as of the Date of
Closing, an unreasonably small amount of capital with which to conduct its
business, and (d) Industries will be able to pay its debts as they mature. For
purposes of this paragraph 8N "debt" means "liability or a claim", and "claim"
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
8O. Absence of Foreign or Enemy Status. Neither Industries nor any of
its Subsidiaries is an "enemy" or an "ally of the enemy" within the meaning of
section 2 of the Trading with the Enemy Act (50 U.S.C. App. xx.xx. 1 et seq.),
as amended. Neither Industries nor any of its Subsidiaries is in violation of,
and neither the issuance and exchange of the Notes by Industries nor the use of
the proceeds thereof as contemplated by this Agreement will violate, the Trading
with the Enemy Act. as amended, or any executive orders, proclamations or
regulations issued pursuant thereto, including, without limitation, regulations
administered by the Office of Foreign Asset Control of the Department of the
Treasury (31 C.F.R., Subtitle B, Chapter V).
9. REPRESENTATION OF THE PURCHASERS. You represent that you are not
acquiring the Notes with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of your property at all times has been and shall be and remain
within your control. You are an "Accredited Investor" as that term is defined in
Rule 501 of Regulation D of the Securities Act.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined in the
introductory sentence and in paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal of
such Note that is to be repaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied
26
on the same periodic basis as that on which interest on the Note is payable)
equal to the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the Y-M Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate (or such other display as may
replace page 678 on the Telerate) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Y-M Business Day next
preceding the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (a) converting
U.S. Treasury xxxx quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between yields
reported for various maturities.
"Remaining Average Life" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of years (calculated
to the nearest one-twelfth year) which will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be repaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Telerate" shall mean Telerate Services, Inc. or if no longer available
such other comparable service as the Required Holders may select as a substitute
therefor.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called principal of
such Note over the sum of (i) such Called principal plus (ii) interest accrued
thereon as of (including, without duplication,
27
interest due on) the Settlement Date with respect to such Called principal. The
Yield-Maintenance Amount shall in no event be less than zero.
"Y-M Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or authorized
to close.
10B. Other Terms.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly controls another Person; (ii) which beneficially owns 5%
or more of the voting stock of another Person, (iii) of which 5% or more of the
voting stock is owned by such Person; or (iv) that is an officer or director of
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Aladdin" shall have the meaning set forth in the introductory paragraph
hereof.
"American Rug" shall mean American Rug Craftsmen, Inc., a Tennessee
corporation.
"Amortization" shall mean for any period the sum of all amortization
expenses of Industries and its Consolidated Subsidiaries for such period, as
determined in accordance with generally accepted accounting principles.
"Approved Investment" shall mean an Investment in compliance with the
Investment Guidelines.
"Asset Securitization" shall mean the sale of accounts receivable and
related assets of a Person in connection with a bona fide asset securitization
program.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Bank Agreement" shall mean that certain Fourth Amended and Restated
Credit Agreement dated as of January 28, 1999 among Industries and the Banks, as
it may be amended, restated, modified or supplemented from time to time.
"Banks" shall mean each of First Union National Bank and Wachovia Bank,
N.A. or other financial institutions a party to the Bank Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in Xxx Xxxx Xxxx xxx Xxxxxxx, Xxxxxxx are required
or authorized to be closed.
28
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, would be required to be
capitalized on the books of Industries or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"Capital Stock" shall mean any nonredeemable capital stock of
Industries or any Consolidated Subsidiary (to the extent issued to a Person
other than Industries), whether common or preferred.
"Catoosa Co. IRB" shall mean 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" shall mean the Comprehensive Environmental Response Compensation
and Liability Act.
"CERCLIS" shall mean the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Closing" shall have the meaning set forth in paragraph 2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall have the meaning set forth in paragraph
11H.
"Consolidated" shall mean the consolidated financial information of
Industries and each of its Subsidiaries under generally accepted accounting
principles.
"Consolidated Agreement" shall mean that certain Second Consolidated,
Amended and Restated Note Agreement dated as of August 31, 1999 among Industries
and Prudential, as it may be amended, restated, modified or supplemented from
time to time in accordance with its terms.
"Consolidated Debt" shall mean at any date the Debt of Industries and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Interest Expense" for any period shall mean interest,
whether expensed or capitalized, in respect of Debt of Industries or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" shall mean, for any period, the Net Income of
Industries and its Consolidated Subsidiaries for such period determined on a
consolidated basis, but excluding
29
(i) extraordinary items and (ii) any equity interests of Industries or any
Subsidiary in the unremitted earnings of any Person that is not a Subsidiary.
"Consolidated Net Worth" shall mean at any time Stockholder's Equity.
Each Purchaser hereby agrees that:
(i) 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 Industries as of and for the
Fiscal Year ended December 31, 1996, shall be disregarded for the purposes
of determining Stockholders' Equity, provided that any charge against
income for the Fiscal Year ended December 31, 1996, resulting from the
impairment of long-lived assets does not exceed $2,000,000; and
(ii) the effect of that certain non-recurring $4,000,000 charge,
incurred by Industries during the fourth Fiscal Quarter of 1995 as a result
of income tax reimbursements made to certain executives of Industries
relating to their exercise of certain stock options, shall be disregarded
when determining Stockholders' Equity.
"Consolidated Note Holder" shall mean Prudential Insurance Company of
America, the holder of the Series A and Series B Notes under the Consolidated
Agreement.
"Consolidated Operating Profits" shall mean, for any period, the
Operating Profits of Industries and its Consolidated Subsidiaries during such
period.
"Consolidated Subsidiary" shall mean at any date any Subsidiary or
other entity the accounts of which, in accordance with generally accepted
accounting principles, would be consolidated with those of Industries in its
consolidated financial statements as of such date.
"Consolidated Total Assets" shall mean, at any time, (x) the total
assets of Industries and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of Industries and its Consolidated Subsidiaries, prepared in
accordance with generally accepted accounting principles, plus (y) the accounts
receivable balance reported as of the last day of the calendar month most
recently ended by Industries or a Subsidiary with respect to an Asset
Securitization.
"Consolidated Total Capital" shall mean, at any time, the sum of the
following as of such time (i) Consolidated Net Worth, and (ii) Consolidated
Debt.
"Date of Closing" shall have the meaning set forth in paragraph 2 hereof.
30
"Debt" of any Person shall mean at any date, without duplication, all
of the following as of such date (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, and (x) the total accounts receivable
reported as sold as of the last day of the calendar month most recently ended by
Industries or a Subsidiary with respect to an Asset Securitization. For all
purposes of this Agreement, the amount of a Person's Debt under a loan or lease
agreement between such Person and a governmental agency that has issued
industrial development bonds or similar instruments, the repayment of which is
secured by the payment obligations of such Person under such loan or lease
agreement, shall be equal to the aggregate principal amount of such bonds or
instruments outstanding at the time of determination less the amount of proceeds
of such bonds or instruments which at such time are on deposit with a trustee or
other fiduciary in a "construction" fund, or other similar fund which would be
available to such trustee or other fiduciary to repay the bonds or other
instruments if then due and payable.
"Debt to Capitalization Ratio" shall mean the ratio of Consolidated
Debt to Consolidated Total Capital.
"Depreciation" shall mean for any period the sum of all depreciation
expenses of Industries and its Consolidated Subsidiaries for such period, as
determined in accordance with generally accepted accounting principles.
"Environmental Liabilities" shall mean any liabilities, whether accrued
or contingent, arising from or relating in any way to any Environmental
Requirements.
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Reports" shall mean, collectively, each of the following
reports prepared by various consultants for Industries: (i) Final Report Phase
II UST Assessment Xxxx Dye Plant, Calhoun, Georgia, dated October 15, 1992,
Dames & Xxxxx, (ii) Final Report, Phase I Environmental Survey Tifton Spinning
Mill, Tifton, Georgia, dated October 15, 1992, Dames & Xxxxx, (iii) Final Report
Phase I Environmental Survey Horizon Industries, Inc., The Harbinger Company,
Inc., Calhoun, Georgia, dated October 15, 1992, Dames & Xxxxx, (iv) Final Report
Phase I Environmental Survey Horizon Industries, Inc. Central Distribution
Center, Calhoun, Georgia, dated October 15, 1992, Dames & Xxxxx, (v) Final
Report Phase I Environmental Survey Horizon Industries, Inc. Main Facility Xxxxx
Xxxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx, dated October 15, 1992, Dames & Xxxxx,
(vi) Final Report Phase I
31
Environmental Survey Horizon Industries, Inc., Xxxx Dye Plant, Calhoun, Georgia,
dated October 15, 1992, Dames & Xxxxx, (vii) Final Report Phase I Environmental
Survey LIBCO Mill Liberty, South Carolina, dated September 29, 1992, Dames &
Xxxxx, (viii) Final Report Phase I Environmental Survey Oak River NM
Bennettsville, South Carolina, dated September 29, 1992, Dames & Xxxxx, (ix)
Final Report Phase I Environmental Survey Dixiana Mill, dated September 29,
1992, Dames & Xxxxx, (x) Final Report Phase I Environmental Survey Laurens Park
Mill, East Dublin, Georgia, dated September 29, 1992, Dames & Xxxxx, (xi) Phase
I Environmental Audit Report, Xxxxxxx Xxxxx, Xxxxxx County, Georgia, dated March
2, 1993, Environmental Science & Engineering, Inc., (xii) Report of Results from
Environmental Audit of American Rug Craftsmen Facilities, dated April, 1993,
Jordan, Xxxxx & Xxxxxxxx, (xiii) Phase I and Phase II Environmental Assessment
of Delaware Valley Wool Scouring Company, Philadelphia, Pennsylvania, dated July
23, 1993, Jordan, Xxxxx & Xxxxxxxx, (xiv) Phase I and Phase II Environmental
Assessment of Karastan Eden Rug Mill, Eden, North Carolina, dated July 23, 1993,
Jordan, Xxxxx & Xxxxxxxx, (xv) Phase I and Phase II Environmental Assessment of
Karastan Eden Service Center, Eden, North Carolina, dated July 23, 1993, Jordan,
Xxxxx & Xxxxxxxx, (xvi) Phase I Environmental Assessment of Karastan Worsted
Mill, Greenville, North Carolina, dated July 20, 1993, Atlanta Environmental
Management, Inc., (xvii) Phase I and Phase II Environmental Assessment Karastan
Spinning Mill, Greenville, North Carolina, dated July 20, 1993, Atlanta
Environmental Management Inc., (xviii) Phase I and Phase II Environmental
Assessment Karastan Xxxxxx Xxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxx, dated
July 23, 1993, Atlanta Environmental Management, Inc., (xix) Phase I and Phase
11 Environmental Assessment Karastan Rocky Xxxxx Xxxx Xxxx, Xxxxxxx Xxxxx, Xxxxx
Xxxxxxxx, dated July 23, 1993, Atlanta Environmental Management, Inc., (xx)
Phase I and Phase II Environmental Assessment Karastan Lyerly Carpet Mill,
Lyerly, Georgia, dated July 23, 1993, Atlanta Environmental Management, Inc.,
(xxi) Phase I and Phase II Environmental Assessment Karastan Summerville Mill,
Summerville, Georgia, dated July 23, 1993, Atlanta Environmental Management,
Inc., (xxii) Phase I and Phase II Environmental Karastan Belton Yarn Mill,
Belton, South Carolina, July 20, 1993, Atlanta Environmental Management, Inc.,
and (xxiii) Phase I and Phase II Environmental Assessment Karastan Landrum Woven
Mill, Landrum, South Carolina, dated July 23, 1993, Atlanta Environmental
Management, Inc.
"Environmental Requirements" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as Industries within the meaning of
section 414(b) of the Code, or any
32
trade or business which is under common control with Industries within the
meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fiscal Quarter" shall mean any Fiscal Quarter of Industries.
"Fiscal Year" shall mean any Fiscal Year of Industries.
"Galaxy" shall mean Galaxy Carpet Xxxxx, Inc., a Delaware corporation.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"Guaranty Agreements" shall mean (a) the Amended and Restated Guaranty
Agreement dated as of September 16, 1994, executed and delivered by Industries,
(b) the Guaranty Agreement dated as of September 16, 1994, executed and
delivered by Aladdin, (c) the Guaranty Agreement dated as of September 16, 1994,
executed and delivered by Marketing, (d) the Guaranty Agreement dated as of
January 13, 1995, executed and delivered by Galaxy, (e) the Guaranty Agreement
dated as of May 1, 1995, executed and delivered by Xxxxx, (f) the Guaranty
Agreement dated as of July 19, 1995, executed and delivered by Limited, (g)
Guaranty
33
Agreement, dated as of November 12, 1998, executed and delivered by World
Carpets, Inc., (h) Guaranty Agreement, dated as of November 12, 1998, executed
and delivered by World Commercial Carpets, Inc., (i) Guaranty Agreement, dated
as of January 22, 1999, executed and delivered by Mohawk Servicing, Inc., (j)
Guaranty Agreement, dated as of January 22, 1999, executed and delivered by
Mohawk Factoring, Inc. (k) Guaranty Agreement, dated as of January 22, 1999,
executed and delivered by Mohawk Commercial, Inc., (l) Guaranty Agreement, dated
as of January 22, 1999, executed and delivered by American Weavers LLC, (m)
Guaranty Agreement, dated as of January 22, 1999, executed and delivered by
Newmark & Xxxxx, Inc., (n) Guaranty Agreement, dated as of March 11, 1999,
executed and delivered by Durkan Patterned Carpets, Inc. and (o) each other
Guaranty Agreement executed and delivered by any current or former direct or
indirect Subsidiary of Industries pursuant to the 1994 Agreement.
"Hazardous Materials" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable federal, state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product or constituent, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in any
applicable federal, state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable federal, state or local law or
regulation, as each such Act statute or regulation may be amended from time to
time.
"Industries" shall have the meaning set forth in the introductory paragraph
hereof.
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition or beneficial ownership by such Person of, or of a beneficial
interest in capital stock, partnership interests, bonds, notes, debentures or
other securities issued by any other Person.
"Investment Guidelines" shall mean the guidelines for investment of
funds of Industries and the Subsidiaries as approved by the Board of Directors
of Industries or an authorized executive committee thereof and in effect on the
Date of Closing, as modified or supplemented from time to time with the approval
of the Board of Directors of Industries or an authorized executive committee.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise), any common law right of set off or banker's lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing
34
statement under the Uniform Commercial Code of any jurisdiction) or any other
type of preferential arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation, including without limitation any Lien granted by a Person in
connection with an Asset Securitization.
"Limited" shall mean Mohawk Limited, a Delaware corporation.
"Marketing" shall mean Mohawk Marketing, Inc., a Georgia corporation.
"Material Adverse Effect" shall mean, 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 Industries
and its Consolidated Subsidiaries taken as a whole, (b) the rights and remedies
of the Purchasers under the Related Documents, or the ability of Industries to
perform its obligations under the Related Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any Related
Document.
"Xxxxx" shall mean Mohawk Xxxxx, Inc., a Delaware corporation.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" shall mean any Plan which is a "Multiemployer
Plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Net Income" shall mean, 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 generally accepted accounting principles.
"Officer's Certificate" shall mean a certificate signed in the name of
Industries by its President, one of its Vice Presidents, its Treasurer or its
Corporate Controller.
"Operating Profits" shall mean, as applied to any Person for any
period, the operating income of such Person for such period, as determined in
accordance with generally accepted accounting principles.
"Permitted Acquisitions" means a non-hostile acquisition, however
structured, of all or substantially all of the assets of, or a majority of all
the issued and outstanding capital stock of, a Person in a Permitted Line of
Business.
35
"Permitted Line of Business" shall mean the manufacturing, marketing
and/or distribution of commercial or home furnishings and floor coverings and
other reasonably related products and any "vertical integration" with respect
thereto.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by Industries or any ERISA
Affiliate.
"Properties" shall mean all real property owned, leased or otherwise
used or occupied by Industries or any Subsidiary, wherever located.
"Prudential" shall mean The Prudential Insurance Company of America or
any of its affiliates and any successors and assigns.
"Purchasers" shall mean, collectively, each Person specified on Annex I.
"Redeemable Preferred Stock" of any Person shall mean any preferred
stock issued by such Person which is at any time prior to September 16, 2004
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Related Documents" shall mean this Agreement (and each modification
thereof), any Note, each Sharing Agreement and any document or instrument
executed in connection with any of the foregoing.
"Required Holder(s)" shall mean the holder or holders of at least
66-2/3% of the aggregate principal amount of the Notes from time to time
outstanding.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of
Industries.
"S&P" shall mean Standard & Poor's Corporation.
"Sale and Leaseback" shall have the meaning specified in paragraph 6C(6)
hereof
"Securities Act" shall mean the Securities Act of 1933, as amended.
36
"Series Note Agreement" shall mean the Amended and Restated Series
Agreement dated as of August 31, 1999 among Industries and the Series Note
Holders, as any may be amended, restated, modified or supplemented from time to
time.
"Series Note Holder" shall mean a holder of a promissory note issued
under the Series Note Agreement.
"Sharing Agreement" shall mean that certain Sharing Agreement dated as
of the date hereof, between Industries, the Banks, each Series Note Holder, the
Consolidated Note Holder and you.
"Significant Subsidiary" shall mean, as determined with reference to
the most recent financial statements delivered pursuant to paragraph 5A(1), a
Subsidiary or Subsidiaries that either (a) individually or in the aggregate,
shall have net sales equaling or exceeding 3% of the net sales of Industries and
its Subsidiaries on a Consolidated basis or (b) individually or in the
aggregate, shall have total assets equaling or exceeding 31% of the total assets
of Industries and its Subsidiaries on a Consolidated basis.
"Stockholders' Equity" shall mean, at any time, the stockholders'
equity of Industries and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of Industries and its
Consolidated Subsidiaries prepared in accordance with generally accepted
accounting principles, but excluding any Redeemable Preferred Stock of
Industries 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.
"Subordinated Debt" shall mean the Debt of Industries and the
Subsidiaries which (i) is validly and expressly subordinated in right of payment
to the Notes; and (ii) has, when issued, a Weighted Average Life to Maturity
greater than the remaining Weighted Average Life to Maturity of the Notes.
"Subsidiary" shall mean any corporation or other legal entity of which at
least a majority of the outstanding voting securities are owned or controlled,
directly or indirectly, by Industries.
"Summerville City IRB" shall mean that issuance of certain bonds by The
Development Authority of the City of Summerville, Georgia, pursuant to the terms
and conditions set forth in that certain Trust Indenture dated as of September
1, 1997.
37
"Termination Letter" shall mean that certain Termination Letter, dated as
of the date hereof, between Industries, the Banks, each Series Note Holder, the
Consolidated Note Holder and you.
"Third Party" shall mean all lessees, sublessees, licensees and other users
of the Properties.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by you under this Agreement; provided, however, in no
event shall any such transferee be a Person identified on Schedule 10B.
"Voting Stock" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
"Weighted Average Life to Maturity" shall mean as applied to any
indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment sinking fund, serial maturity or other required payment, including
payment at final maturity, in respect thereof by (y) the number of years
(calculated to the nearest one-twelfth year) which will elapse between such date
and the date as of which such payment is to be made.
"Wholly-Owned Subsidiary" shall mean 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 Industries or
a Consolidated Subsidiary.
"Year 2000 Issues" shall mean the actual and reasonably anticipated
costs, claims, losses, and liabilities associated with the inability of certain
computer applications to handle effectively data that includes dates on and
after January 1, 2000, as such inability in respect of Industries or any
Subsidiary and in respect of their respective material customers, suppliers and
vendors affects the business, operations, and financial condition of Industries
or any Subsidiary.
10C. Accounting Principles, Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis
38
consistent with the most recent audited consolidated financial statements of the
Industries and its Subsidiaries delivered pursuant to clause (ii) of paragraph
5A or, if no such statements have been so delivered, the most recent audited
financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. Industries agrees that so long as you shall hold any
Note, it will make payments of principal of, interest on and any Yield-
Maintenance Amount payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to your
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as you may designate in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing of any Note,
you will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. Industries agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as you
have made in this paragraph 11A.
11B. Expenses. Industries agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all out-of-pocket
expenses (including without limitation legal fees) arising in connection with
such transactions, including (i) all expenses incurred by you and any Transferee
in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement or any other Related Document, including
without limitation all stamp, intangibles, recording and other taxes, if any,
payable by you and/or any Transferee with respect to this Agreement or any other
Related Document and any subsequent proposed modification or waiver of, or
proposed consent under, this Agreement, whether or not such proposed
modification or waiver shall be effected or proposed consent granted, and (ii)
the costs and expenses, including without limitation attorneys' fees and
financial advisor fees, actually incurred by you or such Transferee in
connection with the restructuring, refinancing or "work out" of this Agreement
or any other Related Document or the transactions contemplated hereby or thereby
or in enforcing (or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or the
transactions contemplated hereby or by reason of your or any Transferee's having
acquired any Note, including without limitation costs and expenses incurred in
any bankruptcy case. The obligations of Industries under this paragraph 11B
shall survive the transfer of any Note or portion thereof or interest therein by
you or any Transferee and the payment of any Note.
39
11C. Consent to Amendments. This Agreement may be amended, and Industries
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if Industries shall obtain the written consent
to such amendment action or omission to act of the Required Holder(s) except
that, without the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the maturity of
any Note, or change the principal of, or the rate or time of payment of interest
on or any Yield-Maintenance Amount payable with respect to any Note, or affect
the time, amount or allocation of any repayments, or change the proportion of
the principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between Industries and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended, restated, modified or
supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. The
Notes are issuable as registered notes without coupons in denominations of at
least $1,000,000, except as may be necessary to reflect any principal amount not
evenly divisible by $1,000,000. Industries shall keep at its principal office a
register in which it shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of Industries, it shall at its expense, execute and deliver
one or more new Notes of like tenor and of a like aggregate principal amount,
registered in the name of such Transferee or Transferees. At the option of the
holder of any Note, such Note may be exchanged for other Notes of like tenor and
of any authorized denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of Industries.
Whenever any Notes are so surrendered for exchange, Industries shall, at its
expense, execute and deliver the Notes which the holder making the exchange is
entitled to receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any such
loss, theft or destruction, upon receipt of such holder's unsecured indemnity
agreement, or in the case of any such mutilation upon surrender and cancellation
of such Note, Industries will make and deliver a new Note, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Note.
40
11E. Persons Deemed Owners, Participations. Prior to due presentment for
registration of transfer, Industries may treat the Person in whose name any Note
is registered as the owner and holder of such Note for the purpose of receiving
payment of principal of, interest on and any Yield-Maintenance Amount payable
with respect to such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and Industries, shall not be affected by notice to
the contrary. Subject to the preceding sentence, the holder of any Note may from
time to time grant participations in such Note to any Person (other than any
Person identified on Schedule 10B) on such terms and conditions as may be
determined by such holder in its sole and absolute discretion, provided that any
such participation shall be in a principal amount of at least $1,000,000.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of Industries in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of you or any Transferee. Subject to the preceding sentence,
this Agreement and the other Related Documents embody the entire agreement and
understanding between you and Industries and supersede all prior agreements and
understandings relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. Disclosure to Other Persons. Industries acknowledges that the holder
of any Note may deliver copies of any financial statements and other documents
delivered to such holder, and disclose any other information disclosed to such
holder, by or on behalf of Industries or any Subsidiary in connection with or
pursuant to this Agreement to (i) such holder's directors, officers, employees,
agents and professional consultants, (ii) any other holder of any Note, (iii)
any Person to which such holder offers to sell such Note or any part thereof,
(iv) any Person to which such holder sells or offers to sell a participation in
all or any part of such Note, (v) any Person from which such holder offers to
purchase any security of Industries, (vi) any federal or state regulatory
authority having jurisdiction over such holder, (vii) the National Association
of Insurance Commissioners or any similar organization or (viii) any other
Person to which such delivery or disclosure may be necessary or appropriate (a)
in compliance with any law, rule, regulation or order applicable to such holder,
(b) in response to any subpoena or other legal process or informal investigative
demand or (c) in connection with any litigation to which such holder is a party.
Except as provided above, each holder of a Note agrees to exercise its best
efforts to hold in confidence and not to disclose Confidential Information (as
defined below). The term "Confidential
41
Information" shall mean any information delivered or made available by
Industries to a holder which is either financial or clearly indicated to be
Confidential Information and does not include information which (x) was publicly
known, or otherwise known to such holder, at the time of disclosure, (y)
subsequently becomes publicly known other than through the act of or omission by
such holder, or (z) otherwise becomes known to such holder, other than through
disclosure by Industries.
11I. Notices. All written communications provided for hereunder shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at such other
address as you shall have specified to Industries in writing, (ii) if to any
other holder of any Note, addressed to such other holder at such address as such
other holder shall have specified to Industries in writing or, if any such
other holder shall not have so specified an address to Industries, then
addressed to such other holder in care of the last holder of such Note which
shall have so specified an address to Industries, and (iii) if to Industries,
addressed to it at 000 Xxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx 00000-0000,
Attention: Treasurer, or at such other address as Industries shall have
specified to the holder of each Note in writing; provided however, that any such
communication to Industries may also, at the option of the holder of any Note,
be delivered by any other means either to Industries at its address specified
above or to any officer of Industries.
11J. Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day. If the date for any payment is extended to the
next succeeding Business Day by reason of the preceding sentence, the period of
such extension shall be included in the computation of the interest payable on
such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in the judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. Independence of Covenants. All covenants of Industries hereunder shall
be of independent effect so that if a particular action or condition is not
permitted by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be within the other limitations of, another
covenant, shall not avoid the occurrence of an Event of Default or Default if
such action is taken or condition exists.
11M. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the
42
State of New York. INDUSTRIES HEREBY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE
REQUIRED HOLDERS, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE
NOTES OR ANY OTHER RELATED DOCUMENT SHALL BE LITIGATED IN SUCH COURTS, AND
INDUSTRIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURTS.
11N. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11O. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11P. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
11Q. No Novation. The parties hereto have entered into this Agreement and
the other Related Documents solely to amend and restate and restructure the
terms of, and obligations owing under and in connection with, the 1994 Agreement
and any document executed in connection with such Agreement (the "Prior
Documents"). The parties do not intend this Agreement, the other Related
Documents or the transaction contemplated hereby to be, and this Agreement, the
other Related Documents or the transactions contemplated hereby shall not be
construed to be, a novation of any of the obligations owing by Aladdin under or
in connection with any of the Prior Documents.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
Industries, whereupon this letter shall become a binding agreement among
Industries and you.
[Signatures commence on next page.]
S-1
Very truly yours,
MOHAWK INDUSTRIES, INC.
By: ______________________
Title:
[Signatures continued on next page.]
S-2
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: ____________________________
Vice President
[Signatures continued on next page.]
S-3
PRINCIPAL LIFE INSURANCE COMPANY
By: PRINCIPAL CAPITAL MANAGEMENT, LLC
a Delaware limited liability company, its
authorized signatory
By: ____________________________
Title:
By: ____________________________
Title:
[Signatures continued on next page.]
S-4
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By: ____________________________
Title:
[Signatures continued on next page.]
S-5
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: ____________________________
Title:
[Signatures continued on next page.]
S-6
XXXXXXXXX XXXXXXXX LIFE
INSURANCE COMPANY OF AMERICA
By: ____________________________
Title:
S-7
THE FRANKLIN LIFE INSURANCE
COMPANY
By: ____________________________
Title:
By: ____________________________
Title:
