Exhibit 10.32
CREDIT AGREEMENT
dated as of
March 20, 2002
among
MOHAWK INDUSTRIES, INC., as Borrower,
WACHOVIA INVESTORS, INC., as Administrative Agent,
THE LENDERS IDENTIFIED HEREIN,
GOLDMAN SACHS CREDIT PARTNERS L.P. and
SUNTRUST BANK, as Co-Syndication Agents
and
FIRST UNION SECURITIES, INC., d/b/a WACHOVIA SECURITIES,
and GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Joint Lead Arrangers and Book Runners
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS .................................................... 1
-----------
Section 1.01 Definitions ................................................. 1
-----------
Section 1.02 Accounting Terms and Determinations ......................... 17
-----------------------------------
Section 1.03 References .................................................. 18
----------
Section 1.04 Use of Defined Terms ........................................ 18
--------------------
Section 1.05 Terminology ................................................. 19
-----------
ARTICLE II THE CREDIT .................................................... 19
----------
Section 2.01 Loans ....................................................... 19
-----
Section 2.02 Continuations and Conversions ............................... 20
-----------------------------
Section 2.03 Notes ....................................................... 21
-----
Section 2.04 Maturity of Loans ........................................... 21
-----------------
Section 2.05 Interest Rates .............................................. 21
--------------
Section 2.06 Fees ........................................................ 23
----
Section 2.07 Pro Rata Treatment and Payments after Event of Default ...... 24
------------------------------------------------------
Section 2.08 Mandatory Reduction and Termination of Commitments .......... 25
--------------------------------------------------
Section 2.09 Optional Prepayments ........................................ 25
--------------------
Section 2.10 Mandatory Prepayments ....................................... 25
---------------------
Section 2.11 General Provisions as to Payments ........................... 26
---------------------------------
Section 2.12 Computation of Interest and Fees ............................ 26
--------------------------------
Section 2.13 Default Rate ................................................ 27
------------
ARTICLE III CONDITIONS TO BORROWINGS ..................................... 27
Section 3.01 Closing Conditions .......................................... 27
------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES ................................ 31
Section 4.01 Corporate Existence and Power ............................... 31
-----------------------------
Section 4.02 Corporate and Governmental Authorization; No Contravention .. 31
----------------------------------------------------------
Section 4.03 Binding Effect .............................................. 31
--------------
Section 4.04 Financial Information ....................................... 32
---------------------
Section 4.05 No Litigation ............................................... 32
-------------
Section 4.06 Compliance with ERISA ....................................... 32
---------------------
Section 4.07 Taxes ....................................................... 33
-----
Section 4.08 Subsidiaries ................................................ 33
------------
Section 4.09 Not an Investment Company ................................... 33
-------------------------
Section 4.10 Ownership of Assets; Liens .................................. 33
--------------------------
Section 4.11 No Default .................................................. 33
----------
Section 4.12 Full Disclosure ............................................. 34
---------------
Section 4.13 Environmental Matters ....................................... 34
---------------------
Section 4.14 Capital Stock ............................................... 35
-------------
Section 4.15 Margin Stock ................................................ 35
------------
Section 4.16 Insolvency .................................................. 35
----------
Section 4.17 Debt ........................................................ 35
----
i
Section 4.18 Intellectual Property ................................................................ 36
---------------------
Section 4.19 No Burdensome Restrictions ........................................................... 36
--------------------------
Section 4.20 Brokers' Fees ........................................................................ 36
-------------
Section 4.21 Labor Matters ........................................................................ 36
-------------
Section 4.22 Material Contracts ................................................................... 36
------------------
ARTICLE V COVENANTS ............................................................................... 37
Section 5.01 Information .......................................................................... 37
------------
Section 5.02 Inspection of Property, Books and Records ............................................ 38
-----------------------------------------
Section 5.03 Notices .............................................................................. 38
--------
Section 5.04 Financial Covenants .................................................................. 40
-------------------
Section 5.05 Restricted Payments .................................................................. 40
-------------------
Section 5.06 Acquisitions, Advances, Investments and Loans ........................................ 40
---------------------------------------------
Section 5.07 Liens/Negative Pledge ................................................................ 41
---------------------
Section 5.08 Maintenance of Existence ............................................................. 43
------------------------
Section 5.09 Dissolution .......................................................................... 43
-----------
Section 5.10 Consolidations, Mergers and Sales of Assets .......................................... 43
-------------------------------------------
Section 5.11 Use of Proceeds ...................................................................... 44
---------------
Section 5.12 Compliance with Laws; Payment of Taxes ............................................... 45
--------------------------------------
Section 5.13 Insurance ............................................................................ 45
---------
Section 5.14 Maintenance of Property .............................................................. 45
-----------------------
Section 5.15 Environmental Matters ................................................................ 45
---------------------
Section 5.16 Environmental Release ................................................................ 46
---------------------
Section 5.17 Debt ................................................................................. 46
----
Section 5.18 Change in Fiscal Year; Changes in Capital Structure Organizational Documents; Material
---------------------------------------------------------------------------------------
Contracts ........................................................................... 47
---------
Section 5.19 Transactions with Affiliates ......................................................... 47
----------------------------
Section 5.20 Limitation on Restricted Actions ..................................................... 47
--------------------------------
Section 5.21 Amendments to Debt, etc .............................................................. 48
------------------------
Section 5.22 Sale Leasebacks ...................................................................... 48
---------------
Section 5.23 No Further Negative Pledges .......................................................... 48
---------------------------
Section 5.24 Security; Additional Credit Parties .................................................. 48
-----------------------------------
Section 5.25 Roadshow ............................................................................. 49
-------
ARTICLE VI DEFAULTS ............................................................................... 49
Section 6.01 Events of Default .................................................................... 49
-----------------
ARTICLE VII CHANGE IN CIRCUMSTANCES, COMPENSATION ................................................. 51
Section 7.01 Basis for Determining Interest Rate Inadequate or Unfair ............................. 51
-------------------------------------------------------
Section 7.02 Illegality ........................................................................... 52
----------
Section 7.03 Increased Cost and Reduced Return .................................................... 52
---------------------------------
Section 7.04 Alternate Base Rate Loans Substituted for Eurodollar Loans ........................... 54
----------------------------------------------------------
Section 7.05 Compensation ......................................................................... 54
------------
Section 7.06 Replacement of Lenders ............................................................... 55
----------------------
ARTICLE VIII MISCELLANEOUS ........................................................................ 55
Section 8.01 Notices .............................................................................. 55
-------
ii
Section 8.02 No Waivers ....................................... 55
----------
Section 8.03 Expenses; Documentary Taxes ...................... 56
---------------------------
Section 8.04 Indemnification .................................. 56
---------------
Section 8.05 Sharing of Setoffs ............................... 57
------------------
Section 8.06 Amendments and Waivers ........................... 57
----------------------
Section 8.07 No Margin Stock Collateral ....................... 58
--------------------------
Section 8.08 Successors and Assigns ........................... 58
----------------------
Section 8.09 Confidentiality .................................. 60
---------------
Section 8.10 Representation by Lenders ........................ 61
-------------------------
Section 8.11 Obligations Several .............................. 61
-------------------
Section 8.12 New York Law ..................................... 61
------------
Section 8.13 Interpretation ................................... 61
--------------
Section 8.14 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION .... 61
---------------------------------------------
Section 8.15 Counterparts ..................................... 62
------------
Section 8.16 Acknowledgments .................................. 62
---------------
Section 8.17 Survival of Representations and Warranties ....... 62
------------------------------------------
Section 8.18 Severability ..................................... 63
------------
Section 8.19 Usury ............................................ 63
-----
iii
Exhibit 2.02 Notice of Continuation/Conversion
Exhibit 2.03 Form of Note
Exhibit 5.01(c) Form of Compliance Certificate
Exhibit 5.24(a) Form of Joinder Agreement
Exhibit 5.24(b) Form of Security Agreement
Exhibit 5.24(c) Form of Pledge Agreement
Exhibit 8.08(c) Form of Assignment and Acceptance
Schedule 1.01(a) Account Designation Letter
Schedule 2.01(a) Lenders and Commitments
Schedule 4.05 Litigation
Schedule 4.08 Subsidiaries
Schedule 4.13 Environmental Matters
Schedule 4.21 Labor Matters
Schedule 4.22 Material Contracts
Schedule 5.06 Investments
Schedule 5.07 Liens
Schedule 5.17 Debt
Schedule 5.20 Encumbrances/Restrictions
Schedule 5.22 Sale Leasebacks
Schedule 5.23 Negative Pledges
Schedule 8.01 Notices
iv
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Credit Agreement") is entered into as of March
20, 2002, among MOHAWK INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions as may from time
to time become parties to this Credit Agreement (collectively, the "Lenders" and
individually, a "Lender"), WACHOVIA INVESTORS, INC., as Administrative Agent for
the Lenders (the "Administrative Agent"), and GOLDMAN SACHS CREDIT PARTNERS L.P.
and SUNTRUST BANK, as Co-Syndication Agents (the "Co-Syndication Agents").
RECITALS
WHEREAS, the Borrower proposes: (a) to acquire the outstanding capital
stock of Dal-Tile International Inc., a Delaware corporation (the "Acquired
Company"); (b) to refinance certain existing funded debt of the Acquired Company
and its Subsidiaries and (c) to obtain a senior bank credit facility in
connection therewith which will also be used to pay fees, costs and expenses
incurred in connection with the foregoing transactions;
WHEREAS, in connection with the foregoing, the Borrower has requested that
the Lenders make loans and other financial accommodations to the Borrower as
more particularly described herein; and
WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01 Definitions.
-----------
The terms as defined in this Section 1.01 shall, for all purposes of this
Credit Agreement and all amendment hereto (except as herein otherwise expressly
provided or unless the context otherwise requires), have the meanings set forth
herein. Defined terms herein shall include in the singular number the plural and
in the plural the singular:
"Account Designation Letter" means the Notice of Account Designation Letter
dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.01(a).
---------------
"Acquired Company" shall have the meaning set forth in the first recital
above.
1
"Acquisition" means any transaction, or any series of related
transactions, by which the Borrower and/or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger or otherwise or (b) acquires (in one transaction or as the most recent
transaction in a series of transactions) control of at least a majority in
ordinary voting power of the securities of a Person which have ordinary voting
power for the election of directors (or other individuals performing similar
functions).
"Acquisition Agreement" shall mean that certain Agreement and Plan of
Merger dated as of November 19, 2001 by and among the Borrower, Maverick Merger
Sub, Inc. and Dal-Tile International Inc.
"Acquisition Documents" shall mean the Acquisition Agreement, and each
other document executed and delivered pursuant to the terms of the Acquisition
Agreement in connection with the consummation of the Dal-Tile Acquisition.
"Additional Credit Party" shall mean each Person that becomes a
Guarantor by execution of a Joinder Agreement in accordance with Section 5.24.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Affected Lender" has the meaning set forth in Section 7.06.
"Affiliate" means (i) any Person (a "Controlling Person") that
directly, or indirectly through one or more intermediaries, controls the
Borrower, (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person, or (iii) any
Person (other than a Subsidiary) of which the Borrower owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agents" collectively means the Administrative Agent, the
Co-Syndication Agents and First Union Securities, Inc., d/b/a Wachovia
Securities.
"Aladdin" means Aladdin Manufacturing Corporation, a Delaware
corporation.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
shall mean, at any time, the rate of interest per annum publicly announced from
time to time by First Union at its principal office in Charlotte, North Carolina
as its prime rate. Each change in the Prime Rate shall be effective as of the
opening of business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by First Union as its Prime
Rate is an index or base rate and shall not necessarily be its lowest or best
rate charged to its customers or other banks. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive in the
2
absence of manifest error) that it is unable to ascertain the Federal Funds
Rate, for any reason, including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the opening of business on the date of such change.
"Alternate Base Rate Loan" means a Loan that bears interest at an
interest rate based on the Alternate Base Rate.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Approved Investment" means an Investment in compliance with the
Investment Guidelines, as in effect on the Closing Date excluding for purposes
hereof, Investments of the type referred to in Section I.(iv), Section I.(ix),
Section I.(xi), Section II.(i) and Section II.(iv) thereof.
"Asset Disposition" means the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of the Borrower or any Subsidiary whether
by sale, lease, transfer or otherwise. The term "Asset Disposition" shall not
include (i) Specified Sales, (ii) the sale, lease or transfer of assets
permitted by Section 5.10(a)(iii), (iv) or (v) hereof, (iii) any Equity Issuance
or (iv) any Recovery Event.
"Assignee" has the meaning set forth in Section 8.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance executed
in accordance with Section 8.08(c) in the form of Exhibit 8.08(c).
---------------
"Attributed Principal Amount" means, on any day, with respect to any
Permitted Receivables Financing entered into by the Borrower or any of its
Subsidiaries, the aggregate amount (with respect to any such transaction, the
"Invested Amount") paid to, or borrowed by, such Person as of such date under
such Permitted Receivables Financing, minus the aggregate amount received by the
-----
applicable Receivables Financier and applied to the reduction of the Invested
Amount under such Permitted Receivables Financing.
"Borrower" means Mohawk Industries, Inc., a Delaware corporation, and
its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower at the same time by the Lenders pursuant to Article II. A Borrowing is
a "Alternate Base Rate Borrowing" if such Loans are Alternate Base Rate Loans or
a "Eurodollar Borrowing" if such Loans are Eurodollar Loans.
3
"Capital Lease" means any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Catoosa Co. IRB" means that issuance of certain bonds by The
Development Authority of Catoosa County, Georgia, pursuant to the terms and
conditions set forth in that certain Indenture of Trust dated as of November 1,
1991.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C.ss. 9601 et. seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities and Exchange Act of 1934, as amended) becomes after
the date hereof the "beneficial owner" (defined as aforesaid), directly or
indirectly, of more than 30% of the Voting Stock of the Borrower, or (b)
Continuing Directors shall cease for any reason to constitute a majority of the
Board of Directors of the Borrower then in office.
"Change of Law" shall have the meaning set forth in Section 7.02.
"Closing Date" means March 20, 2002.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Loans in an amount equal to the amount listed as its
Commitment on Schedule 2.01(a), or in the Assignment and Acceptance by which
----------------
such Lender becomes a party hereto, as such amount may be reduced from time to
time in accordance with the provisions hereof.
"Commitment Percentage" means, for each Lender, the percentage
---------------------
identified as its Commitment Percentage on Schedule 2.01(a), as such percentage
may be modified in connection with any assignment made in accordance with the
provisions of Section 9.6(c).
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
4
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted for
(A) Consolidated Interest Expense, (B) total federal, state, local and foreign
income taxes and other similar taxes, (C) losses (or minus gains) on the sale or
-----
disposition of assets outside the ordinary course of business, (D) depreciation,
amortization expense and other non-cash charges, all as determined in accordance
with GAAP and (E) non-recurring expenses incurred in connection with a Permitted
Acquisition.
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries for such period determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" means at any time Stockholders' Equity.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means, at any time, (x) the total assets of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth on the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, prepared in accordance with GAAP, plus (y) the
accounts receivable balance reported as of the last day of the calendar month
most recently ended by the Borrower or a Subsidiary with respect to Permitted
Receivables Financings.
"Consolidated Total Capital" means, at any time, the sum of the
following as of such time (i) Consolidated Net Worth and (ii) Consolidated Debt.
"Continuing Directors" means the individuals who at the Closing Date
were directors of the Borrower (together with any new director whose election by
the Borrower's board of directors or whose nomination for election by the
Borrower's shareholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the Closing Date or
whose election or nomination for election was previously so approved).
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
5
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Credit Documents" means this Credit Agreement, the Notes, any Joinder
Agreement, and any other document evidencing, relating to or securing the Loans,
and any other document or instrument delivered in connection with this Credit
Agreement, the Notes or the Loans.
"Credit Party" means any of the Borrower or the Guarantors, if any.
"Dal-Tile Acquisition" means the acquisition of the Acquired Company by
the Borrower and/or one of its Wholly-Owned Subsidiaries pursuant to the terms
of the Acquisition Documents.
"Debt" of any Person means at any date without duplication, all of the
following as of such date (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under Capital Leases, (v) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, (x) the total accounts receivable reported
as sold as of the last day of the calendar month most recently ended by the
Borrower or a Subsidiary with respect to a Permitted Receivables Financing, (xi)
all obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (xii) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements, (xiii) all
obligations of such Person under Hedging Agreements, (xiv) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product and (xv)
the Debt of any partnership or unincorporated joint venture in which such Person
is a general partner or a joint venturer. 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 Issuance" means the issuance of any Debt for borrowed money by
the Borrower or any of its Subsidiaries. The term "Debt Issuance" shall not
include (i) Debt owing among the
6
Borrower and its Subsidiaries; (ii) Debt deemed incurred in connection with a
Permitted Receivables Financing; or (iii) renewals, refinancings and extensions
of Debt of the Borrower or any Subsidiary outstanding on the Closing Date in the
same or lesser principal amount of the Debt then outstanding relating thereto so
long as such renewed, refinanced or extended Debt is on terms and conditions no
less favorable to the Borrower or such Subsidiary, as the case may be, than the
Debt originally issued.
"Debt to Capitalization Ratio" means the ratio of Consolidated Debt to
Consolidated Total Capital.
"Debt Rating" means the debt rating for the Borrower's senior,
unsecured, non-credit enhanced long term indebtedness for money borrowed as
determined by Moody's or S&P.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum of
2% plus the then highest interest rate (including the Applicable Margin) which
may be applicable to any Loans hereunder, including, without limitation, under
Section 7.06, (irrespective of whether any such class of Loans are actually
outstanding hereunder).
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or the State of
New York are authorized by law to close.
"Domestic Subsidiary" means any Subsidiary that is organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether pending or,
to the knowledge of the Borrower or any Subsidiary threatened, arising from and
in any way associated with any Environmental Requirements and which would have
or create a reasonable possibility of causing a Material Adverse Effect.
7
"Environmental Notices" means notice from any Environmental Authority or by
any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity, for correction of any, violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under any
applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to any of the Borrower, any
Subsidiary, or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"Equity Issuance" means any issuance by the Borrower or any Subsidiary to
any Person other than the Borrower or any Subsidiary of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants or (c) any shares of its Capital Stock pursuant to the
conversion of any debt securities to equity. The term "Equity Issuance" shall
not include (i) any equity issued in connection with the Dal-Tile Acquisition,
(ii) any Asset Disposition, (iii) any Debt Issuance, or (iv) the issuance of
common stock by the Borrower or any of its Subsidiaries to officers, directors
or employees of the Borrower or any Subsidiary in connection with stock offering
plans and other benefit plans of the Borrower or its Subsidiaries in the
ordinary course of business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Eurodollar Business Day" means any Domestic Business Day on which dealings
in Dollar deposits are carried out in the London interbank market.
"Eurodollar Loan" means a Loan the rate of interest applicable to which is
based on the London Interbank Offered Rate.
"Eurodollar Reserve Percentage" has the meaning set forth in Section
2.05(c).
"Event of Default" has the meaning set forth in Section 6.0l.
"Excluded Subsidiary" means any Subsidiary of the Borrower that is subject
to provisions in its charter documents that require it to be a "bankruptcy
remote" entity or a "single
8
purpose" entity and therefore prohibit it from, among other things, guaranteeing
or becoming jointly and severally liable for the Debt of others.
"Existing Credit Agreement" means that certain Fifth Amended and Restated
Credit Agreement dated as of November 23, 1999 among Mohawk Industries, Inc.,
First Union National Bank, SunTrust Bank, Atlanta, Wachovia Bank, N.A., and the
other banks from time to time party thereto.
"Federal Funds Rate" means, for any day the rate per annum (rounded upward,
if necessary, to the next higher 1/100/th/ of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to First
Union on such day on such transactions, as determined by First Union.
"Fee Letter" means that certain Fee Letter dated November 19, 2001 among
the Borrower and the Agents.
"First Union" means Wachovia Investors, Inc., and its successors and, as
the context requires, its permitted assigns.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"Funding Indemnity Letter" has the meaning set forth in Section 2.01(b).
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Credit Agreement.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
9
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
--------
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantee Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Debt of any other Person in any
manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Debt or any
property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Debt or to maintain
working capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Debt of such other Person, (iii) to lease or purchase property,
securities or services primarily for the purpose of assuring the holder of such
Debt, or (iv) to otherwise assure or hold harmless the holder of such Debt
against loss in respect thereof. The amount of any Guarantee Obligation
hereunder shall (subject to any limitations set forth therein) be deemed to be
an amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Debt in respect of which such Guarantee Obligation is
made.
"Guarantor" means any of the Additional Credit Parties that executes a
Joinder Agreement, together with their successors and permitted assigns.
"Hazardous Materials" means (a) solid or hazardous waste, as defined in the
Resource Conservation and Recovery Act of 1980, 42 U.S.C. ss. 6901 et seq. and
its implementing regulations and amendments, or in any applicable state or local
law or regulation, (b) "hazardous substance", "pollutant", or "contaminant" as
defined in CERCLA, or in any applicable state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product, including, crude oil or
any fraction thereof (d) toxic substances, as defined in the Toxic Substances
Control Act of 1976, or in any applicable state or local law or regulation or
(e) insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or any applicable state or
local law or regulation, as each such Act, statute or regulation may be amended
from time to time.
"Hedging Agreement" means, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.
10
"Highest Lawful Rate" means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to any Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Interest Coverage Ratio" means, with respect to the Borrower and its
Consolidated Subsidiaries on a consolidated basis for the twelve month period
ending on the last day of any fiscal quarter of the Borrower, the ratio of (a)
Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Interest Period" means: (1) with respect to each Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the first, second or third month thereafter, as the
Borrower may elect; provided that:
--------
(a) any Interest Period (other than an Interest Period determined
pursuant to paragraph (c) below) which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall,
subject to paragraph (c) below, end on the last Eurodollar Business Day of
the appropriate subsequent calendar month; and
(c) any Interest Period which begins before the Termination Date and
would otherwise end after the Termination Date shall end on the Termination
Date;
(2) with respect to each Alternate Base Rate Borrowing, the period commencing on
the date of such Borrowing and ending 30 days thereafter; provided that:
--------
(a) any Interest Period (other than an Interest Period determined
pursuant to paragraph (b) below) which would otherwise end on a day which
is not a Domestic Business Day shall be extended to the next succeeding
Domestic Business Day; and
(b) any Interest Period which begins before the Termination Date and
would otherwise end after the Termination Date shall end on the Termination
Date.
"Investment" in any Person means (a) the acquisition (whether for cash,
property, services, assumption of Debt, securities or otherwise) of Capital
Stock, bonds, notes, debentures, partnership, joint ventures or other ownership
interests or other securities of such Person, (b) any advance, loan or other
extension of credit to such Person (other than deposits made in connection with
the purchase of equipment or other assets in the ordinary course of business) or
(c) any other capital contribution to or investment in such Person, but
excluding any Restricted Payment to such Person.
11
"Investment Guidelines" means the guidelines for investment of funds of
the Borrower and the Subsidiaries as in effect on the Closing Date as approved
by the Board of Directors of the Borrower at a meeting held on December 17,
1998.
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Exhibit 5.24(a), executed and delivered by an Additional Credit Party in
---------------
accordance with the provisions of Section 5.24.
"Lender" has the meaning set forth in the first paragraph of this
Credit Agreement.
"Lending Office" means, as to each Lender, its office located at its
address set forth on Schedule 8.01 or such other office as such Lender may
-------------
hereafter designate as its Lending Office by notice to the Borrower and the
Administrative Agent.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement, which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law. For the
purposes of this Credit Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"Loan" means an Alternate Base Rate Loan or a Eurodollar Loan and
"Loans" means Alternate Base Rate Loans or Eurodollar Loans, or either or each
of them, as the context shall require.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Margin Stock" means "margin stock" as defined in Regulations T, U or
X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
business, properties, prospects, operations or condition (financial or
otherwise) of the Borrower and its Consolidated Subsidiaries (for the avoidance
of doubt, to be deemed to include at all times the Acquired Company and its
Subsidiaries) taken as a whole, (b) the material rights and remedies of the
Lenders under the Credit Documents, or the ability of the Borrower to perform
its material obligations under the Credit Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any Credit
Document.
"Material Contract" means any contract or other arrangement, whether
written or oral, to which the Borrower, the Acquired Company or any of their
respective Subsidiaries is a party as
12
to which contract the breach, nonperformance or cancellation of such contract by
any party thereto could reasonably be expected to have a Material Adverse
Effect.
"Material Subsidiary" means, as of the date of any determination
thereof, any Subsidiary that either: (a) owns assets having a book value equal
to or greater than 5.0% of Consolidated Total Assets, or (b) had Net Income for
any prior period of four consecutive Fiscal Quarters equal to or greater than
5.0% of Consolidated Net Income for the same four Fiscal Quarter period.
"Multiemployer Plan" has the meaning set forth in Section 4001(a)(3) of
ERISA.
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Borrower or any Subsidiary in respect of any Asset Disposition, Equity Issuance
or Debt Issuance, net of (a) direct costs (including, without limitation,
reasonable legal, accounting and investment banking fees, and sales
commissions), (b) taxes paid or payable as a result thereof, and (c) in the case
of any Asset Disposition, any repayments by the Borrower or such Subsidiary of
Debt (other than Debt under any of the Credit Documents) to the extent that such
Debt is secured by a Lien on the property that is the subject of such Asset
Disposition; it being understood that "Net Cash Proceeds" shall include, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received by the Borrower or any Subsidiary in any Asset
Disposition, Equity Issuance or Debt Issuance.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Notes" means the promissory notes of the Borrower, substantially in
the form of Exhibit 2.03, evidencing the obligation of the Borrower to repay the
------------
Loans.
"Obligations" means, without duplication, all of the obligations of the
Borrower and Guarantors, if any, to the Lenders and the Administrative Agent,
whenever arising, under this Credit Agreement, the Notes or any of the other
Credit Documents (including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code
with respect to the Borrower, regardless of whether such interest is an allowed
claim under the Bankruptcy Code).
"Participant" has the meaning set forth in Section 8.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means an Acquisition by the Borrower or any
Subsidiary of the Borrower; provided that (a) in the case of an Acquisition of
--------
the capital stock of another Person, the board of directors (or other comparable
governing body) of such other Person shall have duly approved such Acquisition,
(b) the Borrower shall have delivered to the Administrative Agent, prior to the
closing of such Acquisition, a certificate of its chief financial officer,
controller or treasurer demonstrating that, upon giving effect to such
Acquisition on a pro forma basis, the
13
Borrower would be in compliance with all of the covenants set forth in Section
5.04, (c) the representations and warranties made by the Borrower in any Credit
Document shall be true and correct in all material respects at and as if made as
of the date of such Acquisition (after giving effect thereto) except to the
extent such representations and warranties expressly relate to an earlier date,
(d) at the time of such Acquisition and after giving effect thereto, no Default
or Event of Default shall exist or be continuing and (e) the aggregate
consideration (including cash and non-cash consideration and any assumption of
Debt) paid by the Borrower or any of its Subsidiaries for all such Acquisitions
occurring after the Closing Date shall not exceed in the aggregate, during the
term of this Credit Agreement, $50,000,000.
"Permitted Investment" has the meaning set forth in Section 5.06.
"Permitted Line of Business" means the manufacturing, marketing and or
distribution of commercial or home furnishings and floor coverings and other
reasonably related products and any "vertical integration" with respect thereto.
"Permitted Receivables Financing" means (i) the sale of Transferred
Assets by the Borrower or any of its Subsidiaries to a Receivables Financier,
(ii) a loan to the Borrower or any of its Subsidiaries secured by a pledge to a
Receivables Financier of Transferred Assets or (iii) any other financing
arrangement with the Borrower or any of its Subsidiaries whereby a Receivables
Financier receives an interest in Transferred Assets from the Borrower or any of
its Subsidiaries, provided that (A) the aggregate Attributed Principal Amount
--------
for all such receivables financings shall not at any time exceed $350,000,000,
(B) the terms of any such receivables financing shall, at the time such
receivables financing is established, be consistent with those prevailing in the
market for similar transactions involving a receivables originator/servicer of
similar credit quality and an asset pool of similar characteristics and (C) the
documentation for such transaction shall not be amended or modified in any
material manner without the prior written approval of the Agents; provided that,
--------
notwithstanding the above, any receivables financing of the Borrower in effect
as of the Closing Date shall be deemed to be a Permitted Receivables Financing.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, joint venture, limited liability company, a trust or
any other entity, or organization, including, but not limited to, a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Borrower or any Subsidiary (which shall at all times be deemed
to include the Acquired Company and its Subsidiaries), wherever located.
14
"Receivables Financier" means any Person, other than a Subsidiary or
Affiliate of the Borrower, who, in connection with a Permitted Receivables
Financing, (i) purchases any accounts receivable, notes receivable, rights to
future lease payments or residuals (collectively, together with any property
relating thereto and the right to collections thereon, the "Transferred Assets")
from the Borrower or any of its Subsidiaries, (ii) lends to the Borrower or any
of its Subsidiaries and, in connection therewith, receives a pledge of such
Transferred Assets and/or (iii) otherwise enters into any financing arrangement
with the Borrower or any of its Subsidiaries whereby it receives an interest in
such Transferred Assets from the Borrower or any of its Subsidiaries.
"Recovery Event" means the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their respective property or assets.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Related Fund" means, with respect to any Lender, a special purpose
entity that purchases or participates in such Lender's loans and for which such
Lender is agent, advisor or manager for such special purpose entity.
"Replacement Lender" has the meaning set forth in Section 7.06.
"Required Lenders" means at any time Lenders having at least 50% of the
aggregate amount of the Commitments, or if the Commitments are no longer in
effect, holding at least 50% of the aggregate outstanding principal amount of
the Notes; provided, that if there are only two Lenders at any time, Required
--------
Lenders shall mean both Lenders, and if there are three Lenders at any time,
Required Lenders shall mean at least two of such Lenders collectively holding
more than 50% of the Commitments.
15
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries, now or hereafter outstanding (other
than any dividend or distribution payable in Capital Stock), (b) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of the
Borrower or any of its Subsidiaries, now or hereafter outstanding, (c) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of Capital Stock of the
Borrower or any of its Subsidiaries, now or hereafter outstanding, or (d) any
payment or prepayment of principal of, premium, if any, or interest on,
redemption, purchase, retirement, defeasance, sinking fund or similar payment
with respect to, any Subordinated Debt; provided that the term Restricted
--------
Payment shall not include (A) payments in respect of Permitted Receivables
Financings to the extent permitted hereunder or (B) the payment of royalties in
the ordinary course of business from one Subsidiary to another Subsidiary.
"Specified Sales" means (a) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business and
(b) the sale, transfer or other disposition for fair market value on arm's
length commercial terms of Permitted Investments described in clauses (b), (c),
(d), (e) or (j) of Section 5.06.
"Stockholders' Equity" means, at any time, the stockholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
--- ---------
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Stockholders' 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. Notwithstanding the foregoing, the
Lenders hereby agree that the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 121 ("FAS 121") relating to, among other
things, the accounting for the impairment of long-lived assets, and its effect
upon the consolidated financial statements of the Borrower as of and for the
Fiscal Year ended December 31, 1996, shall be disregarded for the purposes of
determining Stockholders' Equity, provided that any charge against income for
the Fiscal Year ended December 31, 1996, resulting from the impairment of
long-lived assets shall not exceed $2,000,000. In addition, the Lenders agree
that the effect of that certain non-recurring $4,000,000 charge, incurred by
Borrower during the fourth Fiscal Quarter of 1995 as a result of income tax
reimbursement made to certain executives of Borrower relating to their exercise
of certain stock options, shall be disregarded when determining Stockholders'
Equity.
"Subject Transactions" has the meaning set forth in Section 1.02.
"Subordinated Debt" means any other Debt incurred by the Borrower and
its Subsidiaries which by its terms is specifically subordinated in right of
payment to the prior payment in full of the Obligations.
16
"Subsidiary" means, with respect to a Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other individuals
performing similar functions are at the time directly or indirectly owned by
such Person.
"Summerville City IRB" means that issuance of certain bonds by The
Development Authority of the City of Summerville, Georgia, pursuant to the terms
and conditions set forth in that certain Trust Indenture dated as of September
l, 1997.
"Term Loan Amount" means an amount up to SEVEN HUNDRED MILLION DOLLARS
($700,000,000), as requested by the Borrower.
"Termination Date" means March 19, 2003.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Transferred Assets" has the meaning set forth in the definition of
Receivables Financier.
"Transferee" has the meaning set forth in Section 8.08(d).
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or individuals
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower
or any Subsidiary.
Section 1.02 Accounting Terms and Determinations.
-----------------------------------
(a) Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP, applied on a basis
consistent (except for changes concurred in by the Borrower's independent public
accountants or otherwise required by a change in GAAP) with the most recent
audited consolidated financial statements of the Borrower delivered to the
Lenders unless with respect to any such change concurred in by the Borrower's
independent public accountants or required by GAAP, in determining compliance
with any of the provisions of any of the Credit Documents: (i) the Borrower
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements, or (ii) the Required Lenders shall so
object in writing within 30 days after the delivery of such financial
statements, in either of which events the Lenders and the Borrower shall
negotiate in good faith to resolve any existing disagreements regarding such
calculations, provided, that if such disagreements are not resolved within 30
days
17
after receipt or a notice of objection, such calculations shall be made on a
basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements delivered under
Section 5.01, shall mean the financial statements referred to in Section 4.04).
(b) With respect to any period during which an Acquisition or an Asset
Disposition has occurred (each, a "Subject Transaction"), for purposes of
determining compliance with the financial covenants set forth in Section 5.04,
Consolidated EBITDA and Consolidated Interest Expense shall be calculated with
respect to such period on a pro forma basis (including pro forma adjustments
arising out of events which are directly attributable to a specific transaction,
are factually supportable and are expected to have a continuing impact, in each
case determined on a basis consistent with Article 11 of Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
Securities and Exchange Commission, which would include cost savings resulting
from head count reduction, closure of facilities and similar restructuring
charges, which pro forma adjustments shall be certified by the chief financial
officer, controller or treasurer of the Borrower and agreed to by the Agents)
using the historical audited financial statements of any business so acquired or
to be acquired or sold or to be sold and the consolidated financial statements
of the Borrower and its Subsidiaries which shall be reformulated as if such
Subject Transaction, and any Debt incurred or repaid in connection therewith,
had been consummated or incurred or repaid at the beginning of such period (and
assuming that such Debt bears interest during any portion of the applicable
measurement period prior to the relevant acquisition at the weighted average of
the interest rates applicable to outstanding Loans incurred during such period).
Section 1.03 References.
----------
Unless otherwise indicated, references in this Credit Agreement to
"Articles", "Exhibits", "Schedules", "Sections" and other Subdivisions are
references to Articles, exhibits, schedules, sections and other subdivisions
hereof. references in this Agreement to any document, instrument or agreement
(a) shall include all exhibits, schedules and other attachments thereto, (b)
shall include all documents, instruments or agreements issued or executed in
replacement thereof, to the extent permitted hereby and (c) shall mean such
document, instrument or agreement, or replacement or predecessor thereto, as
amended, supplemented, restated or otherwise modified from time to time to the
extent permitted hereby and in effect at any given time. Unless explicitly set
forth to the contrary, a reference to "Subsidiary" means a Subsidiary of the
Borrower.
Section 1.04 Use of Defined Terms.
--------------------
All terms defined in this Credit Agreement shall have the same defined
meanings when used in any of the other Credit Documents, unless otherwise
defined therein or unless the context shall require otherwise.
18
Section 1.05 Terminology.
-----------
All personal pronouns used in this Credit Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
Titles of Articles and Sections in this Credit Agreement are for convenience
only, and neither limit nor amplify the provisions of this Credit Agreement.
ARTICLE II
THE CREDIT
----------
Section 2.01 Loans.
-----
(a) Loans. Subject to the terms and conditions set forth
-----
herein, each Lender severally agrees, on the Closing Date to make a term
loan (each a "Loan" and, collectively, the "Loans") to the Borrower, in
Dollars, in an amount equal to such Lender's Commitment Percentage of the
Term Loan Amount; provided that (i) the aggregate amount of Loans made
--------
shall not exceed the Term Loan Amount and (ii) the Loans shall only be made
in a single funding. Once repaid, the Loans may not be reborrowed.
(b) Funding of the Loans. If the Borrower desires for
--------------------
Eurodollar Loans to be extended on the Closing Date, at least three (3)
Eurodollar Business Days prior to the Closing Date, the Borrower shall
deliver to the Administrative Agent a funding indemnity letter (the
"Funding Indemnity Letter"), in form and substance satisfactory to the
Agents, whereby the Borrower shall (i) request that the Term Loan Amount be
extended to the Borrower in the form of Eurodollar Loans on the Closing
Date and (ii) agree to indemnify the Lenders against any loss or expense
incurred by the Lenders resulting from the failure of the Borrower to
borrow the Eurodollar Loans on the Closing Date, whether as a result of the
Credit Agreement not closing on the Closing Date or otherwise. If the
Administrative Agent receives the Funding Indemnity Letter in accordance
with the terms set forth above, the Term Loan Amount shall be extended to
the Borrower as Eurodollar Loans on the Closing Date (subject to the
satisfaction of the requirements set forth in Section 3.01). If the
Administrative Agent does not receive the Funding Indemnity Letter in
accordance with the terms set forth above, the Term Loan Amount shall be
extended to the Borrower as Alternate Base Rate Loans on the Closing Date
(subject to the satisfaction of the requirements set forth in Section
3.01). On the Closing Date, each applicable Lender will make its Commitment
Percentage of the Term Loan Amount available to the Administrative Agent by
deposit, in Dollars and in immediately available funds, at the
Administrative Agent's Lending Office or at such other address as the
Administrative Agent may designate in writing. The amount of the Loans will
then be made available to the Borrower by the Administrative Agent as
directed by the Borrower or, if no such direction is provided, by crediting
the account of the Borrower on the books of such office of the
Administrative Agent, to the extent the amount of such Loans are made
available to the Administrative Agent.
19
No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make a Loan hereunder; provided, however,
that the failure of any Lender to fulfill its obligations hereunder shall
not relieve any other Lender of its obligations hereunder. If the
Administrative Agent shall have received an executed signature page to this
Credit Agreement (whether an original or via telecopy) from a Lender, the
Administrative Agent and the Borrower may assume that such Lender has or
will make the amount of its Loans available to the Administrative Agent on
the Closing Date, and the Administrative Agent in reliance upon such
assumption, may (in its sole discretion but without any obligation to do
so) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative
Agent, the Administrative Agent shall be able to recover such corresponding
amount from such Lender. If such Lender does not pay such corresponding
amount forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from the
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent at a per
annum rate equal to (i) from the Borrower at the rate otherwise payable by
the Borrower in respect of the Loans made available by the other Lenders
and (ii) from a Lender at the Federal Funds Rate if paid within two (2)
Domestic Business Days of the date of drawing and thereafter at a rate
equal to the Alternate Base Rate.
Section 2.02 Continuations and Conversions.
-----------------------------
(a) Generally. The Borrower shall have the option, on any
---------
Eurodollar Business Day, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Alternate Base Rate Loans into
Eurodollar Loans, or to convert Eurodollar Loans into Alternate Base Rate
Loans; provided, however, that (i) each such continuation or conversion
must be requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.02, in compliance with
------------
the terms set forth below, (ii) Eurodollar Loans may only be continued or
converted on the last day of the Interest Period applicable thereto, (iii)
Eurodollar Loans may not be continued nor may Alternate Base Rate Loans be
converted into Eurodollar Loans during the existence and continuation of a
Default or Event of Default and (iv) any request to continue a Eurodollar
Loan that fails to comply with the terms hereof or any failure to request a
continuation of a Eurodollar Loan at the end of an Interest Period shall
result in a conversion of such Eurodollar Loan to a Alternate Base Rate
Loan on the last day of the applicable Interest Period (it being understood
that no such failure shall constitute a Default or Event of Default). Each
continuation or conversion must be requested by the Borrower no later than
11:00 a.m. (A) on the day of a requested conversion of a Eurodollar Loan to
a Alternate Base Rate Loan or (B) three (3) Eurodollar Business Days prior
to the date for a requested continuation of a Eurodollar Loan or conversion
of an Alternate Base Rate Loan to a Eurodollar Loan, in each case pursuant
to a written Notice of Continuation/Conversion submitted to the
Administrative Agent (which shall promptly notify each of the Lenders)
20
which shall set forth (x) whether the Borrower wishes to continue or
convert such Loans and (y) if the request is to continue a Eurodollar Loan
or convert an Alternate Base Rate Loan to a Eurodollar Loan, the Interest
Period applicable thereto.
(b) Minimum Amounts. Each request for a conversion or
---------------
continuation shall be subject to the requirements that (i) each Eurodollar
Loan shall be in a minimum amount of $25,000,000 and in integral multiples
of $5,000,000 in excess thereof, (ii) each Alternate Base Rate Loan shall
be in a minimum amount of $10,000,000 (and integral multiples of $1,000,000
in excess thereof) and (iii) no more than four Eurodollar Loans shall be
outstanding at any one time. For the purposes of this Section 2.02(b), all
Eurodollar Loans with the same Interest Periods beginning on the same date
shall be considered as one Eurodollar Loan, but Eurodollar Loans with
different Interest Periods, even if they begin or end on the same date,
shall be considered as separate Eurodollar Loans.
Section 2.03 Notes.
-----
The Loans of each Lender shall be evidenced by a single Note made by the
Borrower payable to the order of such Lender for the account of its Lending
Office in an amount equal to the original principal amount of such Lender's
Commitment.
Section 2.04 Maturity of Loans.
-----------------
All Loans shall mature and be due and payable in full on the Termination
Date.
Section 2.05 Interest Rates.
--------------
(a) "Applicable Margin" means, for any day, the rate per annum
set forth below opposite the applicable Level then in effect based on the
Borrower's then current Debt Rating, it being understood that the
Applicable Margin for (i) Loans which are Alternate Base Rate Loans shall
be the percentage set forth under the column "Alternate Base Rate Margin"
and (ii) Loans which are Eurodollar Loans shall be the percentage set forth
under the column "Eurodollar Rate Margin":
----------------------------------------------------------------
Alternate Eurodollar Rate
Base Rate Margin
Level Rating Margin
----------------------------------------------------------------
I BBB-/Baa3 or 0.000% 1.375%
higher
----------------------------------------------------------------
II BB+/Ba1 0.250% 1.750%
----------------------------------------------------------------
III BB/Ba2 or lower 0.500% 2.000%
----------------------------------------------------------------
; provided, however, that the Applicable Margin for Eurodollar Loans and
for Alternate Base Rate Loans shall increase by an additional 0.250% as of
the end of each 90 day
21
period after the Closing Date that Loans remain outstanding (i.e. assuming
no downgrading of the Borrower's Debt Rating throughout such period, if the
Borrower's Debt Rating is BBB-/Baa3, then beginning as of the end of the
first 90 day period the Applicable Margin for Eurodollar Loans would be
1.625% and for Alternate Base Rate Loans would be 0.25% and beginning as of
the end of the second 90 day period the Applicable Margin for Eurodollar
Loans would be 1.875% and for Alternate Base Rate Loans would be 0.50%. If
the Borrower's Debt Rating is downgraded during such period, the increase
of 0.25% shall be added to the then prevailing rate at the end of such
period).
Any change in the Applicable Margin due to a change in the Debt
Rating shall be effective on the effective date of such change in the Debt
Rating. Notwithstanding the foregoing, the Borrower shall be obligated to
provide notice to the Administrative Agent and the Lenders of any change in
the Debt Rating in accordance with Section 5.03(e).
If (a) only one of S&P and Moody's at any time of determination
shall have in effect a Debt Rating, the Applicable Margin shall be
determined by reference to the available rating, (b) neither S&P nor
Moody's at any time of determination shall have in effect a Debt Rating,
the Applicable Margin will be set in accordance with Level III, (c) the
ratings established by S&P and Moody's shall fall within different levels,
the Applicable Margin shall be based upon the lower rating, (d) any rating
established by S&P or Moody's shall be changed, such change shall be
effective as of the date on which such change is first announced publicly
by the rating agency making such change, and (e) S&P or Moody's shall
change the basis on which ratings are established, each reference to the
Debt Rating announced by S&P or Moody's, as the case may be, shall refer to
the then equivalent rating by S&P or Moody's, as the case may be.
(b) Each Alternate Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan
is made until it becomes due, at a rate per annum equal to the Alternate
Base Rate for such day plus the Applicable Margin. Such interest shall be
payable for each Interest Period on the last day thereof, but no less
frequently than quarterly. Any overdue principal of and, to the extent
permitted by applicable law, overdue interest on any Alternate Base Rate
Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
(c) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period;
provided that if any Eurodollar Loan shall, as a result of paragraph (l)(c)
--------
of the definition of Interest Period, have an Interest Period of less than
one month, such Eurodollar Loan shall bear interest during such Interest
Period at the rate applicable to Alternate Base Rate Loans during such
period. Such interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent permitted by law,
overdue interest on any Eurodollar Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default
Rate.
22
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100/th/ of 1%) by
dividing (i) the applicable London Interbank Offered Rate for such Interest
Period by (ii) 1.00 minus the Eurodollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Eurodollar Loan
means for the Interest Period of such Eurodollar Loan, the rate per annum
determined on the basis of the offered rate for deposits in Dollars of
amounts equal or comparable to the principal amount of such Eurodollar Loan
offered for a term comparable to such Interest Period, which rates appear
on Telerate Page 3750 effective as of 11:00 A.M., London time, two (2)
Eurodollar Business Days prior to the first day of such Interest Period,
provided that (i) if more than one such offered rate appears on Telerate
--------
Page 3750, the "London Interbank Offered Rate" will be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100/th/ of 1%)
of such offered rates; (ii) if no such offered rates appear on such page,
the "London Interbank Offered Rate" for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher
1/100/th/ of 1%) of rates quoted by not less than two major banks in New
York City, selected by the Administrative Agent, at approximately 10:00
A.M., Eastern time, two (2) Eurodollar Business Days prior to the first day
of such Interest Period, for deposits in Dollars offered to leading
European banks for a period comparable to such Interest Period in an amount
comparable to the principal amount of such Eurodollar Loan.
"Eurodollar Reserve Percentage" means, with respect to a given Lender,
for any day that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the actual reserve requirement
for such Lender in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by reference to
which the interest rate on Eurodollar Loans is determined or any category
of extensions of credit or other assets which includes loans by a
non-United States office of any Lender to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurodollar Reserve
Percentage.
(d) The Administrative Agent shall determine the interest rates
applicable to the Loans hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the other Lenders (by telephone or
facsimile transmission) of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
Section 2.06 Fees.
----
The Borrower shall pay to each Lender the fees payable to such Lender as
mutually agreed in writing as of the Closing Date.
23
Section 2.07 Pro Rata Treatment and Payments after Event of Default.
------------------------------------------------------
(a) Generally. Each payment under this Credit Agreement or any
---------
Note shall be applied, first, to any fees then due and owing by the
-----
Borrower pursuant to Section 2.06, second, to interest then due and owing
------
in respect of the Loans and, third, to principal of the Loans then due and
-----
owing. Each payment on account of any fees pursuant to Section 2.06 shall
be made pro rata in accordance with the respective amounts due and owing.
--- ----
Each payment (other than prepayments) by the Borrower on account of
principal of and interest on the Loans, shall be made pro rata according to
--- ----
the respective amounts due and owing. Each mandatory prepayment on account
of principal of the Loans shall be applied in accordance with Section 2.10;
provided, that prepayments made pursuant to Section 7.02 shall be applied
--------
in accordance with such section. All payments (including prepayments) to be
made by the Borrower on account of principal, interest and fees shall be
made without defense, set-off or counterclaim.
(b) Allocation of Payments After Event of Default.
---------------------------------------------
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event of
Default, all amounts collected or received by the Administrative Agent or
any Lender on account of the Obligations or any other amounts outstanding
under any of the Credit Documents shall be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees actually
incurred) of the Administrative Agent in connection with enforcing the
rights of the Lenders under the Credit Documents;
SECOND, to payment of any fees owed to the Administrative Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees actually
incurred) of each of the Lenders in connection with enforcing its rights
under the Credit Documents or otherwise enforcing its rights with respect
to the Obligations owing to such Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued
fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations;
SIXTH, to all other Obligations which shall have become due and
payable under the Credit Documents or otherwise and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
24
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above.
Section 2.08 Mandatory Reduction and Termination of Commitments.
--------------------------------------------------
The Commitments shall terminate on the Termination Date and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable by
the Borrower on such date.
Section 2.09 Optional Prepayments.
--------------------
(a) The Borrower may prepay any Alternate Base Rate Borrowing in
whole at any time, or from time to time in part in amounts aggregating at
least $10,000,000 or any larger amount, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of
prepayment.
(b) Subject to Section 7.05, the Borrower may, upon at least
three (3) Eurodollar Business Days' notice to the Administrative Agent,
prepay any Eurodollar Loan in whole at any time, or from time to time in
part, prior to the maturity thereof, in amounts aggregating at least
$25,000,000 or any larger amount, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of the
prepayment
(c) Upon the Administrative Agent's receipt of a notice of
prepayment pursuant to this Section, such notice shall not thereafter be
revocable by the Borrower.
Section 2.10 Mandatory Prepayments.
---------------------
(a) Asset Dispositions. Promptly following any Asset Disposition,
------------------
the Borrower shall prepay the Loans in an aggregate amount equal to the Net
Cash Proceeds derived from such Asset Disposition (such prepayment to be
applied as set forth in clause (d) below); provided, however, the
provisions of this clause (a) shall not apply to (i) any Asset Disposition
to the extent the Net Cash Proceeds thereof are used to purchase or
otherwise acquire replacement assets within 90 days prior to or 180 days
after the receipt of such Net Cash Proceeds or (ii) any Asset Disposition
or Asset Dispositions where the amount of Net Cash Proceeds does not exceed
$10,000,000 in the aggregate in any fiscal year.
(b) Issuances. Immediately upon receipt by the Borrower or any of
---------
its Subsidiaries of proceeds from (i) any Debt Issuance, the Borrower shall
prepay the Loans in an aggregate amount equal to one hundred percent (100%)
of the Net Cash Proceeds of such Debt Issuance to the Lenders (such
prepayment to be applied as set forth in clause (d) below) or (ii) any
Equity Issuance, the Borrower shall prepay the Loans in an
25
aggregate amount equal to one hundred percent (100%) of the Net Cash
Proceeds of such Equity Issuance to the Lenders (such prepayment to be
applied as set forth in clause (d) below); provided, however, (A) the
-------- -------
provisions of the preceding clause (i) shall not apply to any Debt
permitted to be incurred pursuant to Section 5.17 and (B) the provisions of
the preceding clause (ii) shall not apply to any Equity Issuance issued in
exchange for any other Capital Stock of the Borrower to the extent no Net
Cash Proceeds shall be generated from any such transaction.
(c) Recovery Event. To the extent the Borrower or any of its
--------------
Subsidiaries receives cash proceeds in connection with a Recovery Event
which are not applied toward the repair, replacement or relocation of
damaged properties within 270 days after the receipt by such Person of such
cash proceeds, the Borrower shall prepay the Loans in an aggregate amount
equal to 100% of such cash proceeds to the Lenders (such prepayment to be
applied as set forth in clause (d) below).
(d) Application of Mandatory Prepayments. All amounts required
------------------------------------
to be paid pursuant to Section 2.10(a) through (c) shall be applied to the
Lenders on a pro rata basis, first to Alternate Base Rate Loans and then to
Eurodollar Rate Loans pro rata to the remaining Interest Period maturities.
All prepayments under this Section 2.10 shall be subject to Section 7.05
and be accompanied by interest on the principal amount prepaid through the
date of prepayment.
Section 2.11 General Provisions as to Payments.
---------------------------------
(a) The Borrower shall make each payment of principal of, and
interest on, each Lender's Loans and of each Lender's fees hereunder, not
later than 11:00 A.M. (Eastern time) on the date when due, in federal or
other funds immediately available at the place where payment is due, to the
Administrative Agent at its address set forth on Schedule 8.01 or at such
-------------
other address as the Administrative Agent shall notify the Borrower in
writing from time to time.
(b) Whenever any payment of principal of, or interest on, the
Alternate Base Rate Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of
principal of or interest on, the Eurodollar Loans shall be due on a day
which is not a Eurodollar Business Day, the date for payment thereof shall
be extended to the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Eurodollar Business
Day.
Section 2.12 Computation of Interest and Fees.
--------------------------------
Interest on Alternate Base Rate Loans shall be computed on the basis of the
actual number of days elapsed in a 365/366 day year (including the first day but
excluding the last day). Interest on Eurodollar Loans shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the
26
first day thereof to but excluding the last day thereof. Any fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
Section 2.13 Default Rate.
------------
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at the Default Rate.
ARTICLE III
CONDITIONS TO BORROWINGS
Section 3.01 Closing Conditions.
------------------
The obligations of each Lender under this Credit Agreement are subject
to the receipt by the Administrative Agent of the following (in sufficient
number of counterparts (except as to the Notes) for delivery of a counterpart to
each Lender; it being acknowledged and agreed that each Lender shall receive a
copy of the executed signature pages to the Credit Agreement and a copy of such
Lender's respective Note prior to funding):
(a) Execution of Credit Documents. (i) Counterparts of this
-----------------------------
Credit Agreement, executed by a duly authorized officer of each party
hereto and (ii) a Note for the account of each Lender, each in form and
substance reasonably acceptable to the Administrative Agent, in each
case executed by a duly authorized officer of each party thereto.
(b) Authority Documents. A secretary's certificate addressed
-------------------
to the Administrative Agent, on behalf of the Lenders, with respect to
the following:
(i) Charter Documents. A copy of the certificate of
-----------------
incorporation of the Borrower certified to be true and complete
as of a recent date by the appropriate Governmental Authority
of the state of its incorporation.
(ii) Resolutions. Copies of the resolutions of the board
-----------
of directors of the Borrower and the Acquired Company,
approving the Borrower's entering into of the Credit Agreement
and the Borrower's and the Acquired Company's entering into of
the Acquisition Agreement, and the consummations of the
transactions contemplated therein, and authorizing execution
and delivery thereof, certified by an officer of such Person,
as of the Closing Date to be true and correct and in force and
effect as of such date.
(iii) Bylaws. Copies of the bylaws of the Borrower
------
certified by an officer of the Borrower as of the Closing Date
to be true and correct and in force and effect as of such
date.
27
(iv) Good Standing. Copies of certificates of good
-------------
standing, existence or its equivalent with respect to the
Borrower certified as of a recent date by the appropriate
Governmental Authorities of the state of incorporation or
organization and each other state in which the failure to so
qualify and be in good standing could reasonably be expected
to have a Material Adverse Effect.
(v) Incumbency. An incumbency certificate of the
----------
Borrower certified by a secretary or assistant secretary to be
true and correct as of the Closing Date.
(c) Legal Opinion of Counsel. An opinion or opinions of
------------------------
legal counsel (including local counsel) for the Borrower, dated as of
the Closing Date and addressed to the Administrative Agent and the
Lenders, in form and substance reasonably acceptable to the
Administrative Agent.
(d) Litigation. There shall not exist any pending or
----------
threatened litigation, proceeding, bankruptcy or insolvency,
injunction, order or claim affecting or relating to the Borrower, the
Acquired Company or any of their respective Subsidiaries, this Credit
Agreement and the other Credit Documents or the Dal-Tile Acquisition
that in the judgment of any Agent could reasonably be expected to have
a Material Adverse Effect, that has not been settled, dismissed,
vacated, discharged or terminated prior to the Closing Date.
(e) Fees and Expenses. Evidence that all fees, if any,
-----------------
owing pursuant to the Fee Letter and Section 2.06 have been paid.
(f) Reliance. A copy of each material opinion, report and
--------
agreement required to be delivered pursuant to the Acquisition
Documents in connection with the Dal-Tile Acquisition and related
transactions, and to the extent available, a letter from each Person
delivering any such opinion authorizing reliance thereon by the Agents
and the Lenders, all in form and substance reasonably satisfactory to
the Agents.
(g) Account Designation Letter. A copy of an executed
--------------------------
Account Designation Letter in the form of Schedule 1.01(a) hereto.
----------------
(h) Dal-Tile Acquisition. The corporate and capital
--------------------
structure of the Borrower and its subsidiaries after giving effect to
the Dal-Tile Acquisition and the other related transactions shall be as
set forth on Schedule 4.08. All legal, tax, accounting business and
-------------
other matters relating to the Dal-Tile Acquisition or to the Borrower
and its subsidiaries after giving effect thereto, shall be satisfactory
in all material respects to each Agent. All documentation related to
the Dal-Tile Acquisition (including without limitation the purchase
agreements and all schedules thereto, employment agreements, and any
other material agreements including merger agreements) shall be
satisfactory to each Agent in all material respects. The
representations and warranties in the Acquisition Agreement shall be
accurate in all material respects as of the Closing Date and the
conditions contained therein shall have been satisfied as of such date
and the Administrative
28
Agent, on behalf of the Lenders, shall have received a final copy of
the Acquisition Agreement and any other material documents executed in
connection therewith requested by the Agents, and all amendments or
supplements thereto, certified by a officer of the Borrower to be true
and correct and in full force and effect.
(i) Consents. All governmental, shareholder and material third
--------
party consents and approvals (including, without limitation, consents
and approvals of the Board of Directors of the Acquired Company)
necessary in connection with the transactions contemplated by the
Acquisition Documents and the financings and other transactions
contemplated hereby shall have been obtained and all applicable waiting
periods shall have expired without any action being taken by any
authority that could restrain, prevent or impose any material adverse
conditions on such transactions or that could seek or threaten any of
the foregoing.
(j) Compliance with Laws. The financings and other
--------------------
transactions contemplated hereby shall be in compliance with all
applicable laws and regulations (including Environmental Requirements
and all applicable securities and banking laws, rules and regulations).
(k) Lien Searches. The Agents shall have received the results
-------------
of lien searches with respect to the Borrower, the Acquired Company and
their respective Subsidiaries, in such jurisdictions as selected by the
Agents, and the Agents shall be satisfied with the results thereof.
(l) Financial Statements. The Agents and the Lenders shall
--------------------
have received final audited financial statements for the Borrower and
the Acquired Company for the fiscal years ended 1999, 2000 and 2001.
(m) Sources and Uses of Funds. The Agents shall have received
-------------------------
a memorandum detailing the sources and uses of the funds to be used to
consummate the Dal-Tile Acquisition, the other transactions
contemplated by this Credit Agreement and the other Credit Documents
and related expenses, in form and substance reasonably satisfactory to
the Agents.
(n) Pro Forma Opening Balance Sheet and Updated Projections:
-------------------------------------------------------
The Agents and the Lenders shall have received (i) an unaudited pro
forma condensed, combined, consolidated balance sheet of the Borrower
and its Subsidiaries as of December 31, 2001 giving pro forma effect to
the Dal-Tile Acquisition (the "Pro Forma Balance Sheet") and (ii)
five-year projections ("Five-Year Projections") together with such
information as the Agents and the Lenders may reasonably request to
confirm the tax, legal, and business assumptions made in such Pro Forma
Balance Sheet and Five-Year Projections. The Pro Forma Balance Sheet
and Five-Year Projections must demonstrate, in the reasonable judgment
of each Agent, together with all other information then available to
the Agents and the Lenders, the ability of the Borrower and its
Subsidiaries, taken as a whole, to repay their debts and satisfy their
respective other obligations as and when due.
29
(o) Financial Requirement Certificate. The Borrower shall have
---------------------------------
demonstrated to the Administrative Agent, by delivery of an officer's
certificate providing detailed calculations thereof, the following: (i)
pro forma adjusted Consolidated EBITDA (as approved by the Agents) of
the Borrower, the Acquired Company and their respective Subsidiaries
for the twelve consecutive calendar month period ending as of the end
of the calendar month immediately preceding the Closing Date shall be
greater than or equal to $500,000,000 and (ii) the aggregate amount of
Debt of the Borrower, the Acquired Company and their respective
Subsidiaries shall be less than or equal to $1,500,000,000.
(p) Material Adverse Change. Since the date of the last set of
-----------------------
audited financial statements of the Borrower delivered to the Agents
prior to the Closing Date, in the reasonable determination of the
Agents, there shall not have been any occurrence or happening resulting
in a Material Adverse Effect or an event, condition or state of facts
that could reasonably be expected to have a Material Adverse Effect.
(q) Officer's Certificates. The Administrative Agent, on
----------------------
behalf of the Lenders, shall have received a certificate or
certificates executed by the chief financial officer or treasurer of
the Borrower certifying that (A) the Borrower and its Consolidated
Subsidiaries are, and to the best of his knowledge having made due
inquiry, the Acquired Company and its Subsidiaries are, in compliance
with all existing material financial obligations, (B) all governmental,
shareholder and third party consents and approvals, if any, with
respect to the Credit Documents, the Acquisition Documents and the
transactions contemplated thereby have been obtained, (C) no action,
suit, investigation or proceeding is pending or threatened in any court
or before any arbitrator or governmental instrumentality that purports
to affect the Borrower, the Acquired Company or any of their respective
Subsidiaries or any transaction contemplated by the Credit Documents,
which action, suit, investigation or proceeding could reasonably be
expected to have a Material Adverse Effect, and (D) immediately after
giving effect to this Credit Agreement, the other Credit Documents, the
Acquisition Documents and all the transactions contemplated therein to
occur on such date, (1) the Borrower is solvent, (2) no Default or
Event of Default exists, (3) all representations and warranties
contained herein, in the other Credit Documents and, to the best
knowledge of the Borrower, in the Acquisition Documents are true and
correct in all material respects and (4) the Borrower is in compliance
with each of the financial covenants set forth in Section 5.04 on a pro
forma basis after giving effect to the Dal-Tile Acquisition and the
Borrowing of Loans hereunder, together with detailed covenant
compliance calculations providing evidence thereof.
(r) Debt Rating. The Borrower shall have obtained with a
-----------
stable outlook as of the Closing Date, after giving effect to the
Dal-Tile Acquisition, a senior unsecured long-term, non-credit enhanced
debt rating of at least BBB- from Standard & Poor's Ratings Group and
at least Baa3 from Moody's Investor Service, Inc.
(s) Additional Matters. Each of the Agents and the Lenders
------------------
shall have received such other documents, agreements and opinions in
connection with the Credit
30
Documents, all satisfactory in form and substance, as any Agent or any
Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 4.01 Corporate Existence and Power.
-----------------------------
The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, is duly
qualified to transact business in every jurisdiction where, by the nature of its
business, such qualification is necessary and where failure to be so qualified
could have or create a reasonable possibility of causing a Material Adverse
Effect, and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
Section 4.02 Corporate and Governmental Authorization; No Contravention.
----------------------------------------------------------
The execution, delivery, and performance by the Borrower of this Credit
Agreement, the Notes and the other Credit Documents to which it is a party (i)
are within its corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official (other than routine filings with the
Securities and Exchange Commission), (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of the Borrower, the Acquired Company or
any of their respective Subsidiaries or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower, the Acquired
Company or any of their respective Subsidiaries, and (v) do not result in the
creation or imposition of any Lien on any asset of the Borrower, the Acquired
Company or any of their respective Subsidiaries other than the Liens arising
under or contemplated in connection with the Credit Documents.
Section 4.03 Binding Effect.
--------------
This Credit Agreement constitutes a valid and binding agreement of the
Borrower enforceable in accordance with its terms, and the Notes and the other
Credit Documents, when executed and delivered in accordance with this Credit
Agreement, will constitute valid and binding obligations of the Borrower
(provided that the Borrower is a party to any such Credit Document) enforceable
in accordance with their respective terms, provided that the enforceability
--------
hereof and thereof is subject in each case to general principles of equity and
to bankruptcy, insolvency and similar laws affecting the enforcement of
creditors' rights generally.
31
Section 4.04 Financial Information.
---------------------
(a) The consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries for the Fiscal Years ended 1999, 2000 and 2001,
and the related consolidated statements of income, shareholders' equity and
cash flows for such Fiscal Years, reported on by KPMG LLP, copies of which
have been delivered to each of the Lenders fairly present in all material
respects, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
(b) The consolidated balance sheets of the Acquired Company and
its subsidiaries for the Fiscal Years ended 1999, 2000 and 2001, and the
related consolidated statements of income, shareholders' equity and cash
flows for such Fiscal Years, reported on by Ernst & Young LLP, copies of
which have been delivered to each of the Lenders, fairly present in all
material respects, in conformity with GAAP, the consolidated financial
position of the Acquired Company and its subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods
stated.
(c) Since December 31, 2001, there has been no event, act,
condition or occurrence having, or which could reasonably be expected to
have, a Material Adverse Effect.
Section 4.05 No Litigation.
-------------
Except as set forth on Schedule 4.05, as of the date hereof, there is no
-------------
action, suit or proceeding pending, or to the knowledge of the Borrower
threatened in writing, against or affecting the Borrower, the Acquired Company
or any of their respective Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to have
a Material Adverse Effect.
Section 4.06 Compliance with ERISA.
---------------------
(a) The Borrower and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and are in compliance with the
presently applicable provisions of ERISA and the Code (except where such
noncompliance could not reasonably be expected to have a Material Adverse
Effect), and have not incurred any liability to the PBGC under Title IV of
ERISA (other than premiums payable to the PBGC in the normal course).
(b) Neither the Borrower nor any member of the Controlled Group is
obligated to contribute to any Multiemployer Plan.
32
Section 4.07 Taxes.
-----
There have been filed on behalf of the Borrower, the Acquired Company and
each their respective Subsidiaries all Federal, state and local income, excise,
property, and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to all assessments (including
interest and penalties) received by or on behalf of the Borrower, the Acquired
Company or any of their respective Subsidiaries have been paid or valid and
effective extensions therefor have been obtained. The charges, accruals and
reserves on the books of the Borrower, the Acquired Company and each their
respective Subsidiaries in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate. United States income tax returns of
the Borrower, the Acquired Company and each their respective Subsidiaries have
been examined and closed through the Fiscal Year ended 1996 and the United
States income tax returns of the Acquired Company and its Subsidiaries have been
examined and closed through the Fiscal Year ended 1990. Neither the Borrower,
the Acquired Company, nor any of their respective Subsidiaries is aware as of
the Closing Date of any proposed tax assessments against them or any of their
Subsidiaries or the Acquired Company or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
Section 4.08 Subsidiaries.
------------
Each of the Borrower's Subsidiaries is duly organized or formed, validly
existing and in good standing under the laws of the jurisdiction of its creation
and organization, and has all powers (by virtue of its creation and
organization) and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted. As of the date
hereof, the Borrower has no Subsidiaries except for those Subsidiaries listed on
Schedule 4.08, which accurately sets forth each such Subsidiary's complete name
- -------------
and jurisdiction of creation and organization.
Section 4.09 Not an Investment Company.
-------------------------
None of the Borrower, the Acquired Company or any of their respective
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10 Ownership of Assets; Liens.
--------------------------
Each of the Borrower and its Consolidated Subsidiaries is the owner (or
lessee) of, and in the case of owned assets has good and marketable title to,
all of its respective assets, and none of its respective assets is subject to
any Lien except as permitted in Section 5.07.
Section 4.11 No Default.
----------
Neither the Borrower, nor any of its Consolidated Subsidiaries (including
the Acquired Company and its Consolidated Subsidiaries) is in default under or
with respect to any agreement, instrument or undertaking to which it is a party
or by which it or any of its property is bound
33
which could reasonably be expected to have or cause a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
Section 4.12 Full Disclosure.
---------------
All information, other than the Projections (as defined below), which has
been or is hereafter made available by or on behalf of the Borrower or any of
its Subsidiaries to the Administrative Agent or any Lender for purposes of or in
connection with this Credit Agreement, any other Credit Document, any
Acquisition Document, or any transaction contemplated hereby or thereby, is and
will be complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading; provided,
however, with respect to any such information relating to the Acquired Company
or any of its Subsidiaries that was made available to the Administrative Agent
or any Lender prior to the Closing Date, the foregoing representation is made
only to the Borrower's knowledge. All financial projections concerning the
Borrower, the Acquired Company and their respective Subsidiaries that have been
or are hereafter made available by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender for purposes of or in
connection with this Credit Agreement, any other Credit Document, any
Acquisition Document, or any transaction contemplated hereby or thereby (the
"Projections") have been or will be prepared in good faith based upon reasonable
assumptions. There is no fact now known to the Borrower which has, or could
reasonably be expected to have, a Material Adverse Effect which fact has not
been set forth herein, in the financial statements of the Borrower and its
Consolidated Subsidiaries furnished to the Administrative Agent and/or the
Lenders, or in any certificate, opinion or other written statement made or
furnished by the Borrower to the Administrative Agent and/or the Lenders.
Section 4.13 Environmental Matters.
---------------------
(a) Except as disclosed on Schedule 4.13, to the best knowledge of
-------------
the Borrower, after due inquiry (which does not necessarily mean the
performance of a phase I environmental audit), (a) neither the Borrower nor
any Subsidiary is subject to any Environmental Liability and (b) neither
the Borrower nor any Subsidiary has been designated as a potentially
responsible party under CERCLA or under any state statute similar to
CERCLA. To the best knowledge of the Borrower, after due inquiry (which
does not necessarily mean the performance of a phase I environmental
audit), none of the Properties has been identified on any current or
proposed (i) National Priorities List under 40 C.F.R. Section 300, (ii)
CERCLIS list or (iii) any list arising from a state statute similar to
CERCLA.
(b) Except as disclosed on Schedule 4.13, to the best knowledge of
-------------
the Borrower, after due inquiry (which does not necessarily mean the
performance of a phase I environmental audit), no Hazardous Materials have
been or are being used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed or otherwise handled at,
or shipped or transported to or from the Properties or are otherwise
present at, on, in or under the Properties, or, to the best of the
knowledge of the
34
Borrower, at or from any adjacent site or facility, except for (i)
Hazardous Materials, such as cleaning solvents, combustion enhancers,
pesticides and other materials used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed, or otherwise
handled in the ordinary course of business in compliance with all
applicable Environmental Requirements, and (ii) Hazardous Materials with
respect to which the presence thereof, any required remediation with
respect thereto, or the expenses, fines, penalties and other costs relating
thereto could not reasonably be expected to have a Material Adverse Effect.
(c) Except (i) as disclosed on Schedule 4.13 and (ii) for
-------------
non-compliance which could not reasonably be expected to have a Material
Adverse Effect, the Borrower and each of its Subsidiaries is in compliance
with all Environmental Requirements in connection with the operation of the
Properties and each of the Borrower's and each Subsidiary's respective
businesses.
Section 4.14 Capital Stock.
-------------
All Capital Stock, debentures, bonds, notes and all other securities of the
Borrower and its Subsidiaries presently issued and outstanding are validly and
properly issued in accordance with all applicable laws, including but not
limited to, the "Blue Sky" laws or all applicable states and the federal
securities laws.
Section 4.15 Margin Stock.
------------
Neither the Borrower nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of any Loan will be used, except
as permitted by Section 5.11 (a) to purchase or carry any Margin Stock or (b) to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.
Section 4.16 Insolvency.
----------
After giving effect to the execution and delivery of the Credit Documents
and the making of the Loans under this Credit Agreement, the Borrower will not
be "insolvent," within the meaning of such term as used in O.C.G.A. (S) 18-2-22
or as defined in (S) 101 of Title 11 of the United States Code, as amended from
time to time, or be unable to pay its debts generally as such debts become due,
or have an unreasonably small capital to engage in any business or transaction,
whether current or contemplated.
Section 4.17 Debt.
----
Set forth on Schedule 5.17 is as of the Closing Date a listing of all
-------------
outstanding Debt of the Borrower and its Subsidiaries.
35
Section 4.18 Intellectual Property.
---------------------
Each of the Borrower and its respective Subsidiaries owns, or has the legal
right to use, all patents, trademarks, tradenames, copyrights, technology,
know-how and processes necessary for each of them to conduct its business as
currently conducted. No claim has been asserted and is pending by any Person
challenging or questioning the use of any such intellectual property or the
validity or effectiveness of any such intellectual property, nor does the
Borrower or any of its Subsidiaries know of any such claim, and, to the
knowledge of the Borrower or any of its Subsidiaries, the use of such
intellectual property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
Section 4.19 No Burdensome Restrictions.
--------------------------
None of the Borrower or any of its Subsidiaries is a party to any agreement
or instrument or subject to any other obligation or any charter or corporate
restriction or any provision of any applicable law, rule or regulation which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 4.20 Brokers' Fees.
-------------
None of the Borrower or any of its Subsidiaries has any obligation to any
Person in respect of any finder's, broker's, investment banking or other similar
fee in connection with any of the transactions evidenced by the Credit Documents
other than the closing and other fees payable pursuant to the Credit Documents,
including without limitation, the Fee Letter.
Section 4.21 Labor Matters.
-------------
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any of its Subsidiaries as of the
Closing Date, other than as set forth in Schedule 4.21 hereto, and none of the
-------------
Borrower or any of its Subsidiaries (i) has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years, other
than as set forth in Schedule 4.21 hereto or (ii) has knowledge of any potential
-------------
or pending strike, walkout or work stoppage which could reasonably be expected
to have a Material Adverse Effect.
Section 4.22 Material Contracts.
------------------
Schedule 4.22 sets forth a true, correct and complete list of all Material
-------------
Contracts in effect as of the Closing Date. All of the Material Contracts are in
full force and effect, and no material defaults currently exist thereunder.
36
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Commitment shall remain in effect
or any amount payable hereunder or under any Note remains unpaid:
Section 5.01 Information.
-----------
The Borrower will deliver to the Agents (who shall promptly make available
to each of the Lenders):
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries of the end of such Fiscal Year and the related
consolidated statements of earnings, stockholders' equity and cash flows
for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, including the related unqualified
audit opinion issued by KPMG LLP or other independent public accountants of
nationally recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Agents;
(b) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter (other than the fourth Fiscal Quarter), a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, the related consolidated
statements of earnings and statements of cash flows and a list of
additional Material Contracts entered into for such quarter and for the
portion of the Fiscal Year ended at the end of such quarter, setting forth
in each case in comparative form the figures for the corresponding quarter
and the corresponding portion of the previous Fiscal Year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
GAAP (except for the failure to provide footnotes thereto) and consistency
by the chief financial officer or the corporate controller of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit 5.01(c) (a "Compliance Certificate"),
---------------
of the chief financial officer, treasurer or the corporate controller of
the Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.04 and Section 5.07, on the date of such
financial statements and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(d) simultaneously with the delivery, of each set of annual financial
statements referred to in paragraph (a) above, operations and cash flow
projections (indicating projected earnings and significant cash sources and
uses) prepared by the Borrower for the Fiscal Year following the Fiscal
Year reported on in such statements
37
referred to in paragraph (a), in such form and substance as is acceptable
to the Agents, in their sole discretion;
(e) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Borrower shall have filed with the Securities and Exchange
Commission;
(g) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability, under Title IV of ERISA, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy
of such notice; and
(h) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as any
Lender may reasonably request, including, without limitation, consolidating
balance sheets and statements of earning of the Borrower and the Borrower's
Subsidiaries, in existence at such time, as at the end of any fiscal
period.
Section 5.02 Inspection of Property, Books and Records.
-----------------------------------------
The Borrower will (i) keep, and cause each Subsidiary to keep, proper books
of record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of any Lender at such Lender's expense prior to the occurrence
of a Default and at the Borrower's expense after the occurrence of a Default to
visit and inspect any of their respective properties, to examine, and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to cooperate
and assist in such visits and inspections, in each case upon reasonable notice,
at such reasonable times and as often as may reasonably be desired.
Section 5.03 Notices.
-------
The Borrower will give notice in writing to the Administrative Agent (which
shall promptly transmit such notice to each Lender) of:
38
(a) the occurrence of any Default or Event of Default promptly, but in
any event within two (2) Domestic Business Days, after the Borrower obtains
knowledge thereof;
(b) promptly, any default or event of default under any Contractual
Obligation or any Material Contract of the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect;
(c) promptly, any litigation, or any investigation or proceeding
(including, without limitation, any governmental or environmental
proceeding) known to the Borrower, affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect or which in any manner questions the validity of this Credit
Agreement, the Notes or any of the other transactions contemplated hereby
or thereby, and give notice setting forth the nature of such pending or
threatened action, suit or proceeding and such additional information as
the Administrative Agent, at the request of any Lender, may reasonably
request;
(d) as soon as possible and in any event within thirty (30) days after
the Borrower knows or has reason to know of: (i) a failure to make any
required contribution to a Plan, or the termination, reorganization or
insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any member of the Controlled Group or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, reorganization or
insolvency of, any Plan;
(e) promptly, but in no event later than two (2) Domestic Business
Days, after any change in the Debt Rating, notice of the new Debt Rating;
(f) prompt written notice of all Environmental Liabilities, pending,
threatened or anticipated Environmental Proceedings, Environmental Notices,
Environmental Judgments and Orders, and Environmental Releases at, on, in,
under or in any way affecting the Properties or any adjacent property,
which would have a Material Adverse Effect; and
(g) promptly, any other development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of
an officer of the Borrower setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto. In the case of any notice of a Default or Event of Default, the
Borrower shall specify that such notice is a Default or Event of Default notice
on the face thereof.
39
Section 5.04 Financial Covenants.
-------------------
Commencing on the day immediately following the Closing Date, the Borrower
shall comply with the following financial covenants:
(a) Debt to Capitalization Ratio. The Debt to Capitalization Ratio
----------------------------
shall be less than or equal to 0.55 to 1.0 as of the last day of each
Fiscal Quarter.
(b) Interest Coverage Ratio. The Interest Coverage Ratio shall be
-----------------------
greater than or equal to 3.50 to 1.0 as of the last day of each Fiscal
Quarter.
(c) Consolidated Net Worth. Consolidated Net Worth at all times shall
----------------------
be greater than or equal to $1,450,000,000.
Section 5.05 Restricted Payments.
-------------------
The Borrower will not, nor will it permit any Subsidiary to, directly or
indirectly declare or make any Restricted Payment during the term of this Credit
Agreement except that any Subsidiary may make Restricted Payments to the
Borrower or any other Subsidiary that is its parent.
Section 5.06 Acquisitions, Advances, Investments and Loans.
---------------------------------------------
The Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly, make any Acquisition or Investment, or enter into any agreement to
make any Acquisition or Investment, except for (each of the following, a
"Permitted Investment"):
(a) any Permitted Acquisition;
(b) Investments in direct obligations of, or obligations guaranteed as
to principal and interest by, the United States government or any agency or
instrumentality thereof maturing in one year or less from the date of
acquisition thereof;
(c) Investments in deposits in (including money market funds of), or
certificates of deposits or bankers' acceptances of, (i) any bank or trust
company organized under the laws of the United States or any state thereof
having capital and surplus in excess of $100,000,000, (ii) any
international bank organized under the laws of any country which is a
member of the OECD or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000, or (iii)
leading banks in a country where the Borrower or the Subsidiary making such
Investment does business; provided, that all such Investments mature within
--------
270 days of the date of such Investment; and provided, further, that all
-------- -------
Investments pursuant to clause (iii) above are (A) solely of funds
generated in the ordinary course of business by operations of the relevant
investor in the country where such Investment is made, and (B) denominated
in the currency of the country in which such Investment is made or in
Dollars;
40
(d) Investments in commercial paper maturing within 270 days and
having one of the two highest ratings of either S&P, Moody's or Fitch
Investors' Service, Inc.;
(e) Investments in money market funds (other than those referred to in
paragraph (c) above) that have assets in excess of $2,000,000,000, are
managed by recognized and responsible institutions and invest solely in
obligations of the types referred to in subsections (b), (c)(i) and (ii)
and (d) above;
(f) Investments in the Borrower by any Subsidiary (determined
immediately after such Investment);
(g) Guarantee Obligations incurred in the ordinary course of business
so long as the aggregate outstanding amount of all Guarantee Obligations
under this clause (g) does not exceed at any time $5,000,000;
(h) Investments (i) in the Borrower or any Domestic Subsidiary
(excluding Excluded Subsidiaries except in connection with a Permitted
Receivables Financing), including without limitation, advances or loans
between or among the Borrower or any Domestic Subsidiary and (ii) in
Foreign Subsidiaries in an aggregate amount, in the case of this clause
(ii), not to exceed $10,000,000 at any time outstanding;
(i) loans and advances to officers and employees of the Borrower or
any Subsidiary in the ordinary course of business in an aggregate amount
not to exceed $5,000,000;
(j) Investments in Approved Investments;
(k) accounts receivable created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms;
(l) investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(m) Investments made prior to the Closing Date and set forth on
Schedule 5.06; and
(n) Investments of a nature not contemplated in the foregoing
subsections in an amount not to exceed $10,000,000 in the aggregate at any
time outstanding.
Section 5.07 Liens/Negative Pledge.
---------------------
Neither the Borrower nor any of its Subsidiaries will create, assume or
suffer to exist any Lien with respect to any of its property or assets of any
kind (whether real or personal, tangible or intangible), whether now owned or
hereafter acquired by it, except:
41
(a) Liens existing on the date of this Credit Agreement and set forth
on Schedule 5.07 securing Debt outstanding on the date of this Credit
-------------
Agreement in an aggregate principal amount not exceeding $3,198,899.00;
(b) any Lien existing on any asset of any Person at the time such
Person becomes a Consolidated Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
--------
concurrently with or within 120 days after the acquisition or completion of
construction thereof;
(d) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the Borrower;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section, provided that (i) such Debt is not secured by
--------
any additional assets, and (ii) the amount of such Debt secured by any such
Lien is not increased;
(h) Liens incidental to the conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the
use thereof in the operation of its business;
(i) Liens in connection with Permitted Receivables Financings
permitted under Section 5.10;
(j) Liens involuntarily imposed and being contested in good faith,
subject to the Borrower or such Subsidiary having established reasonable
reserves therefor to the extent required under GAAP;
(k) Liens against the assets of Aladdin under the Catoosa Co. IRB
solely to the extent existing as of the date hereof;
(l) Liens against the assets of Aladdin under the Summerville City
IRB solely to the extent existing as of the date hereof;
42
(m) Liens in favor of the Administrative Agent (or other Person
acting as a collateral agent, trustee or in a similar capacity) for the
benefit of the Lenders and securing any of the Obligations; and
(n) Liens securing other Debt of the Borrower or any of its
Subsidiaries required to be granted under the terms of the documents,
instruments or agreements evidencing such Debt so that such Debt is equally
and ratably secured with the Obligations to the extent the Obligations
become secured by Liens permitted under the immediately preceding
subsection (m).
provided that Liens permitted by the foregoing paragraphs (b) through (g) shall
- --------
at no time secure Debt in an aggregate amount exceeding $25,000,000.
Section 5.08 Maintenance of Existence.
------------------------
Other than as permitted by Section 5.09 or 5.10, the Borrower shall, and
shall cause each Subsidiary to, maintain its corporate existence and carry on
its business in a Permitted Line of Business.
Section 5.09 Dissolution.
-----------
Neither the Borrower nor any of its Subsidiaries shall suffer or permit
dissolution or liquidation either in whole or in part or redeem or retire any
shares of its own stock or that of any Subsidiary, except through corporate
reorganization to the extent permitted by Section 5.10 or in connection with a
Restricted Payment which is permitted pursuant to Section 5.05.
Section 5.10 Consolidations, Mergers and Sales of Assets.
-------------------------------------------
The Borrower will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer,
lease or otherwise dispose of its property or assets or agree to do so at a
future time except the following, without duplication, shall be expressly
permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition of
property or assets (A) to an unrelated party not in the ordinary
course of business (other than Specified Sales), where and to the
extent that they are the result of a Recovery Event or (B) the
sale, lease, transfer or other disposition of machinery, parts and
equipment no longer used or useful in the conduct of the business
of the Borrower or any of its Subsidiaries, as appropriate, in its
reasonable discretion, so long as the net proceeds therefrom are
used to repair or replace damaged property or to purchase or
otherwise acquire new assets or property, provided that such
--------
purchase
43
or acquisition is committed to within 180 days of receipt of the net
proceeds and such purchase or acquisition is consummated within 180
days thereafter;
(iii) the sale, lease or transfer of property or assets (A)
among the Borrower and its Domestic Subsidiaries, (B) among Foreign
Subsidiaries to other Foreign Subsidiaries, (C) from Foreign
Subsidiaries to the Borrower or any of its Domestic Subsidiaries and
(D) to Foreign Subsidiaries in an aggregate amount not to exceed
$25,000,000 (net of the value of assets transferred by Foreign
Subsidiaries to the Borrower and its Domestic Subsidiaries);
(iv) the sale, conveyance, contribution or other transfer of
assets (including without limitation, the granting of any Lien) of the
Borrower and its Subsidiaries to Receivables Financiers in connection
with Permitted Receivables Financings;
(v) any Subsidiary may dissolve or otherwise liquidate
provided that the aggregate book value of assets not transferred to
the Borrower or any of its other Subsidiaries shall not exceed the
limitation imposed under the immediately following clause (vi); and
(vi) the sale, lease or transfer of property or assets not to
exceed $50,000,000 in the aggregate in any fiscal year.
(b) Notwithstanding the provisions in Section 5.10(a), merge with
or into any other Person, except that the following shall be permitted:
(i) any Subsidiary of the Borrower may merge with or into
the Borrower or any Domestic Subsidiary of the Borrower (determined
immediately thereafter) if, in connection with any such merger (A)
either the Borrower or such Domestic Subsidiary is the surviving
corporation and (B) no Default or Event of Default shall have occurred
and be continuing immediately after giving effect to such merger or as
a result thereof; and
(ii) any Subsidiary of the Borrower may merge with another
Person in connection with an Acquisition permitted by Section 5.06 if
(A) such Subsidiary is the surviving corporation and (B) following
such Acquisition, the Borrower shall retain, directly or indirectly, a
proportionate equity interest in such Subsidiary equal to or greater
than the Borrower's equity interest immediately prior to such
Acquisition.
Section 5.11 Use of Proceeds.
---------------
The proceeds of the Loans shall be used by the Borrower on the Closing Date
to finance the Acquisition, to finance the fees and expenses incurred in
connection with the Acquisition and to refinance certain existing Debt of the
Acquired Company. In no event shall any portion of the
44
proceeds of the Loans be used by the Borrower for any purpose in violation of
any applicable law or regulation.
Section 5.12 Compliance with Laws; Payment of Taxes.
--------------------------------------
The Borrower will, and will cause each of its Subsidiaries to, comply in
all material respects with applicable laws (including but not limited to ERISA),
regulations and similar requirements of Governmental Authorities (including but
not limited to PBGC), except where the necessity of such compliance is being
contested in good faith through appropriate proceedings or where noncompliance
would not have or create a reasonable possibility of causing a Material Adverse
Effect. The Borrower will, and will cause each of its Subsidiaries to, pay
promptly when due, giving regard for any extensions obtained, all taxes,
assessments, governmental charges, claims for labor, supplies, rent and other
obligations which, if unpaid, might become a lien against the property of either
the Borrower or any Subsidiary, except liabilities being contested in good faith
and against which, if requested by the Lenders, either the Borrower or such
Subsidiary will set up reserves in accordance with GAAP.
Section 5.13 Insurance.
---------
The Borrower will maintain, and will cause each of its Subsidiaries to
maintain (either in the name of the Borrower or in such Subsidiary's own name),
with financially sound and reputable insurance companies insurance on all its
material property in at least such amounts and against at least such risks as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Administrative Agent, upon
written request, such information as to the insurance carried as the
Administrative Agent may reasonably request.
Section 5.14 Maintenance of Property.
-----------------------
Subject to the rights of the Borrower or any Subsidiary to discontinue
certain operations under Section 5.09 or 5.10, the Borrower shall, and shall
cause each Subsidiary to, maintain all of its properties and assets in good
working order, ordinary wear and tear and obsolescence excepted (excluding
losses due to fully insured, subject to commercially reasonable deductibles,
casualties).
Section 5.15 Environmental Matters.
---------------------
The Borrower will not, nor will it permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle, or ship or transport to or from the Properties any Hazardous
Materials except for Hazardous Materials such as cleaning solvents, combustion
enhancers, pesticides and other similar materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed, or otherwise
handled in the ordinary course of business in compliance with all applicable
Environmental Requirements.
45
Section 5.16 Environmental Release.
---------------------
The Borrower agrees that upon the occurrence of an Environmental Release
which could reasonably be expected to have a Material Adverse Effect and which
violates any Environmental Requirement it will promptly investigate the extent
of, and take appropriate action to remediate such Environmental Release, whether
or not ordered or otherwise directed to do so by any Environmental Authority.
Section 5.17 Debt.
----
(a) The Borrower shall not create, incur, assume or suffer to
exist any Debt (i) that is secured by any Lien that is not permitted by
Section 5.07, (ii) that does not arise or exist under the Existing Credit
Agreement, (iii) that does not arise or exist under this Credit Agreement
or (iv) that is not in existence as of the Closing Date and set forth on
Schedule 5.17 hereto; provided, however, that the Borrower may (A) renew,
------------- -------- -------
refinance or extend any Debt originally permitted to be created, incurred
or assumed or permitted to exist pursuant to this subsection (a) so long as
such renewed, refinanced or extended Debt (y) is on terms and conditions no
less favorable to the Borrower than the Debt originally issued (including,
without limitation, any shortening of the final maturity or average life to
maturity or requiring any payment to be made sooner than originally
scheduled or any increase in the interest rate applicable thereto or any
change to any subordination provision thereof) and (z) matures no earlier
than six months after the Termination Date, (B) enter into Hedging
Agreements, (C) incur Debt in respect of trade letters of credit in the
ordinary course of business, (D) incur intercompany Debt to the extent not
otherwise prohibited by this Credit Agreement, provided that such
intercompany Debt shall be fully subordinated to the Obligations, on terms
and conditions reasonably satisfactory to the Agents and (E) incur
additional Debt after the date hereof in respect of uncommitted, unsecured
lines of credit in an aggregate amount not to exceed $25,000,000 at any
time outstanding and (F) Guarantee Obligations in respect of Debt of
Subsidiaries permitted to be incurred by such Subsidiaries under the
immediately following subsections (b)(i), (b)(iii) and (b)(iv) (provided
that with respect to Debt incurred pursuant to subsection (b)(iv) below,
such Guarantee Obligations may exist only to the extent the Borrower
provided a Guarantee of such Debt as of the Closing Date).
(b) Except for Debt existing as of the Closing Date and set forth
on Schedule 5.17, the Borrower shall not permit any Subsidiary to create,
-------------
incur, assume or suffer to exist any Debt except for (i) Debt owed by a
Domestic Subsidiary to the Borrower or another Domestic Subsidiary of the
Borrower, (ii) Debt deemed incurred in connection with a Permitted
Receivables Financing permitted under Section 5.10; (iii) Debt of
Subsidiaries arising in connection with the Summerville City IRB and the
Catoosa Co. IRB; and (iv) renewals, refinancings and extentions of Debt
outstanding on the Closing Date in the same or lesser principal amount of
the Debt then outstanding relating thereto so long as such renewed,
refinanced or extended Debt is on terms and conditions no less favorable to
such Subsidiary than the Debt originally issued (including, without
limitation, any shortening of the final maturity or average life to
maturity or requiring any payment to be made sooner than originally
scheduled or any increase in the interest rate applicable
46
thereto or any change to any subordination provision thereof). It is
understood and agreed that in the event that any Subsidiary or Subsidiaries
of the Borrower provides a Guarantee or Guarantees to any Person or Persons
other than the Lenders, such Subsidiary or Subsidiaries shall immediately
provide equal and ratable Guarantees to the Lenders hereunder.
Section 5.18 Change in Fiscal Year; Changes in Capital Structure
---------------------------------------------------
Organizational Documents; Material Contracts.
---------------------------------------------
The Borrower shall give the Lenders at least 30 day's prior written notice
of any change in the determination of its Fiscal Year. Except as expressly
permitted by this Credit Agreement, the Borrower will not, and will not permit
any Subsidiary to, make any changes in its equity capital structure (including
in the terms of its outstanding stock) that would reduce or impair the
consolidated equity capital of the Borrower and its Subsidiaries immediately
thereafter and the Borrower will not, nor will it permit any Subsidiary to,
amend, modify or change its articles of incorporation or limited liability
company operating agreement, as applicable (or corporate charter or other
similar organizational document) or bylaws (or other similar document), except
in the event that such changes, modifications or amendments could not reasonably
be expected to have a Material Adverse Effect. The Borrower will not, nor will
it permit any of its Subsidiaries to, without the prior written consent of the
Administrative Agent (acting in concert with the other Agents), amend, modify,
cancel or terminate or extend or permit the amendment, modification,
cancellation or termination of any of the Material Contracts, except in the
event that such amendments, modifications, cancellations or terminations could
not reasonably be expected to have a Material Adverse Effect.
Section 5.19 Transactions with Affiliates.
----------------------------
The Borrower will not, nor will it permit any Subsidiary to, enter into any
transaction or series of transactions, whether or not in the ordinary course of
business, with any officer, director, shareholder or Affiliate other than on
terms and conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder or Affiliate.
Section 5.20 Limitation on Restricted Actions.
--------------------------------
Except as set forth on Schedule 5.20, the Borrower will not, nor will it
-------------
permit any Subsidiary, excluding Excluded Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to the Borrower or any Subsidiary on
its Capital Stock (b) pay any Debt or other obligation owed to the Borrower or
any Subsidiary, (c) make loans or advances to the Borrower or any Subsidiary,
(d) sell, lease or transfer any of its properties or assets to the Borrower or
any Subsidiary, or (e) act as a guarantor and pledge its assets pursuant to the
Credit Documents or any renewals, refinancings, exchanges, refundings or
extension thereof, except (in respect of any of the matters referred to in
clauses (a)-(e) above) for such encumbrances or restrictions existing under or
by reason of (i) this Credit Agreement and the other Credit Documents, (ii) the
Existing Credit Agreement as in effect on the Closing Date,
47
(iii) applicable law or (iv) any Lien permitted under Section 5.07 or any
document or instrument governing any such Lien, provided that any such
--------
restriction contained therein relates only to the asset or assets subject to
such Lien.
Section 5.21 Amendments to Debt, etc.
------------------------
The Borrower will not, nor will it permit any Subsidiary to, after the
issuance thereof, amend or modify (or permit the amendment or modification of)
any of the terms of any Debt if such amendment or modification would (i) shorten
the final maturity or average life to maturity, (ii) require any payment to be
made sooner than originally scheduled, (iii) increase the interest rate or fees
applicable to such Debt or (iv) change any subordination provision thereof.
Section 5.22 Sale Leasebacks.
---------------
Except as set forth on Schedule 5.22, the Borrower will not, nor will it
-------------
permit any Subsidiary to, directly or indirectly, become or remain liable as
lessee or as guarantor or other surety with respect to any lease, whether an
operating lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired in excess of $5,000,000 in the
aggregate on an annual basis, (a) which the Borrower or any Subsidiary has sold
or transferred or is to sell or transfer to a Person which is not the Borrower
or any Subsidiary or (b) which the Borrower or any Subsidiary intends to use for
substantially the same purpose as any other property which has been sold or is
to be sold or transferred by the Borrower or any Subsidiary to another Person
which is not the Borrower or any Subsidiary in connection with such lease.
Section 5.23 No Further Negative Pledges.
---------------------------
Except as set forth on Schedule 5.23, the Borrower will not, nor will it
-------------
permit any Subsidiary to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, except (a) pursuant to this Credit Agreement and the other
Credit Documents, (b) pursuant to the Existing Credit Agreement and (c) in
connection with any Lien permitted by Section 5.07 or any document or instrument
governing any such Lien, provided that any such restriction contained therein
--------
relates only to the asset or assets subject to such Lien.
Section 5.24 Security; Additional Credit Parties.
-----------------------------------
The Borrower shall if the Debt Rating shall be (i) BB+ or lower, as
determined by S&P and/or (ii) Ba1 or lower, as determined by Moody's, and if
requested by the Agents, negotiate with the Agents in good faith to (A) cause
one or more Domestic Subsidiaries of the Borrower that are also Material
Subsidiaries, excluding Excluded Material Subsidiaries, as requested by the
Agents, to promptly become a Guarantor hereunder by way of execution of a
Joinder Agreement and (B) enter into and cause each of the Additional Credit
Parties to enter into a Security Agreement, in substantially the form attached
hereto as Exhibit 5.24(b) (or such other form as
---------------
48
may be acceptable to the Agents), a Pledge Agreement, in substantially the form
attached hereto as Exhibit 5.24(c) (or such other form as may be acceptable to
---------------
the Agents), and such other security documents with the Administrative Agent, on
behalf of the Lenders, as the Agents shall deem necessary to grant liens in
substantially all of the Credit Parties' assets to the Lenders to secure the
Obligations.
Section 5.25 Roadshow.
--------
The Borrower shall undertake a roadshow in connection with an offering of
securities by the Borrower or other financing, as agreed upon by each Agent,
upon ten (10) Domestic Business Days' notice from the Administrative Agent. The
Borrower shall accept a transaction with a yield that each Agent reasonably deem
to be consistent with prevailing market rates and is otherwise on customary
terms and conditions including appropriate covenants, as applicable.
ARTICLE VI
DEFAULTS
Section 6.01 Events of Default.
-----------------
If one or more of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay any principal on any Note when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Note or any fee or other amount payable
hereunder when due in accordance with the terms thereof or hereof and such
failure shall continue unremedied for three (3) Domestic Business Days; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.03(a), 5.04 through 5.11, inclusive, or 5.17
through 5.25, inclusive; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Credit Agreement
(other than those covered by paragraph (a) or (b) above) and such failure
shall not have been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to the Borrower by the Lenders or
(ii) the Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
the Borrower in this Credit Agreement or in any certificate, financial
statement or other document delivered pursuant to this Credit Agreement or
any of the other Credit Documents shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
49
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Debt in excess of $25,000,000 in the aggregate outstanding
(other than the Notes or pursuant to any of the other Credit Documents)
when due or within any applicable grace period; or
(f) any event or condition shall occur which (i) results in the
acceleration of the maturity of Debt in excess of $25,000,000 in the
aggregate outstanding of the Borrower or any Subsidiary (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary) or
(ii) enables or, with the giving of notice or lapse of time or both, would
enable, the holders of Debt in excess of $25,000,000 in the aggregate
outstanding of the Borrower or any Subsidiary or any Person acting on such
holders' behalf to accelerate the maturity thereof (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary); or
(g) the Borrower or any Material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Material Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment or a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary, case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Material Subsidiary under the federal bankruptcy laws
as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay
to the PBGC or to a Plan under Title IV of ERISA; or a notice of intent to
terminate a Plan or Plans (other than pursuant to a standard termination)
shall be filed under Title IV of ERISA by the Borrower, any member of the
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute a proceeding under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary, of any
such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter: or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans should be
terminated; or
50
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $25,000,000 (exclusive of insurance coverage
if any insurer shall have acknowledged such coverage in writing) shall be
rendered against the Borrower or any Material Subsidiary, and such judgment
or order shall continue unsatisfied and unstayed for a period of 30 days;
or
(k) one or more federal tax liens securing an aggregate amount in
excess of $5,000,000 shall be filed against the Borrower or any Material
Subsidiary under Section 6321 of the Code or a lien of the PBGC shall be
filed against the Borrower or any Material Subsidiary under Section 4068 of
ERISA and in either case such lien shall remain undischarged for a period
of 25 days after the date of filing: or
(l) there shall occur a Change of Control; or
(m) an "Event of Default" shall occur under any of the other Credit
Documents; or
(n) (i) any of the Credit Documents shall cease to be enforceable, or
(ii) the Borrower shall assert that any Credit Document shall cease to be
enforceable.
then, and in every such event, the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall (i) by notice to
the Borrower terminate the Commitments or and they shall thereupon terminate,
and (ii) by notice to the Borrower declare the Notes (together with accrued
interest thereon) to be, and the Notes shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower together with interest at the
Default Rate accruing on the principal amount thereof from and after the date of
such Event of Default; provided that if any Event of Default specified in
--------
paragraph (g) or (h) above occurs with respect to the Borrower, without any
notice to the Borrower or any other act by the Lenders, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower together with
interest thereon at the Default Rate accruing on the principal amount thereof
from and after the date of such Event of Default. Notwithstanding the foregoing,
each of the Lenders shall have available to it all other remedies at law or
equity.
ARTICLE VII
CHANGE IN CIRCUMSTANCES, COMPENSATION
Section 7.01 Basis for Determining Interest Rate Inadequate or Unfair.
--------------------------------------------------------
If on or prior to the first day of any Interest Period:
(a) any Lender determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest
Period, or
51
(b) any Lender determines that the London Interbank Offered Rate, as
the case may be, as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Lender of funding the
relevant Eurodollar Loan for such Interest Period,
such Lender shall forthwith give notice thereof to the Borrower, whereupon until
such Lender notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of such Lender to make any
Eurodollar Loan specified in such notice shall be suspended.
Section 7.02 Illegality.
----------
If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (any such event being referred to as a
"Change of Law"), or compliance by any Lender (or its Lending Office) with any
request or directive (whether or not having the force of law) of any
Governmental Authority shall make it unlawful or impossible for any Lender (or
its Lending Office) to make, maintain or fund its Eurodollar Loans, such Lender
shall forthwith give notice thereof to the Borrower, whereupon until such Lender
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligation of such Lender to make Eurodollar Loans, shall be
suspended. Before giving any notice to the Borrower pursuant to this Section,
such Lender shall designate a different Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Lender, be otherwise materially disadvantageous to such Lender. If such Lender
shall determine that it may not lawfully continue to maintain and fund any of
its outstanding Eurodollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each Eurodollar Loan of such Lender, together with accrued
interest thereon. Concurrently with prepaying each such Eurodollar Loan, the
Borrower shall borrow a Alternate Base Rate Loan in an equal principal amount
from such Lender (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other Lenders), and
such Lender shall make such a Alternate Base Rate Loan.
Section 7.03 Increased Cost and Reduced Return.
---------------------------------
(a) If after the date hereof, a Change of Law or compliance by any
Lender (or its Lending Office) with any request or directive (whether or
not having the force of law) of any Governmental Authority:
(i) shall subject any Lender (or its Lending Office) to any
tax, duty or other charge with respect to its Eurodollar Loans, its
Note or its obligation to make Eurodollar Loans, or shall change the
basis of taxation of payments to any Lender (or its Lending Office) of
the principal of or interest on its Eurodollar Loans or any other
amounts due under this Credit Agreement in respect of its Eurodollar
Loans or its obligation to make Eurodollar Loans (except for changes
52
in the rate of tax on the overall net income of such Lender or its
Lending Office imposed by the jurisdiction in which such Lender's
principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Eurodollar Loan any
such requirement included in an applicable Eurodollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its Lending Office); or
(iii) shall impose on any Lender (or its Lending Office) or on the
United States market for certificates of deposit or the London
interbank market any other condition affecting its Eurodollar Loans,
its Note or its obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Lending Office) of making or maintaining any Eurodollar Rate
Loan, or to reduce the amount of any sum received or receivable by such
Lender (or its Lending Office) under this Credit Agreement or under its
Note with respect thereto, by an amount deemed by such Lender to be
material, then, within 15 days after demand by such Lender, the Borrower
shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
(b) If any Lender shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office)
with any request or directive regarding capital adequacy (whether or not
having the force of law) of any Governmental Authority, has or would have
the effect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time
to time, within 15 days after demand by such Lender, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) Each Lender will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Lender to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise materially disadvantageous to such Lender. A
certificate of any Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution
methods.
53
(d) The provisions of this Section 7.03 shall be applicable with
respect to any Participant, Assignee or other Transferee (unless the date
of any such assignment or transfer, a condition listed under Section 7.02
or 7.03 existed with respect to any such Participant, Assignee or other
Transferee), and any calculations required by such provisions shall be made
based upon the circumstances of such Participant, Assignee or other
Transferee.
Section 7.04 Alternate Base Rate Loans Substituted for Eurodollar Loans.
----------------------------------------------------------
If (i) the obligation of any Lender to make or maintain Eurodollar Loans
has been suspended pursuant to Section 702 or (ii) any Lender has demanded
compensation under Section 7.03, and the Borrower shall, by at least five (5)
Eurodollar Business Days' prior notice to such Lender have elected that the
provisions of this Section shall apply to such Lender, then, unless and until
such Lender notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Lender as
Eurodollar Loans, as the case may be, shall be made instead as Alternate
Base Rate Loans; provided, that interest and principal on such Loans shall
be payable contemporaneously with the related Eurodollar Loans of the other
Lenders, and
(b) after each of its Eurodollar Loan, has been repaid, all payments
of principal which would otherwise be applied to repay such Eurodollar
Loans shall be applied to repay its Alternate Base Rate Loans instead.
Section 7.05 Compensation.
------------
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall compensate such Lender for any loss, cost or expense
actually incurred by such Lender and not compensated pursuant to Section 7.03 as
a result of:
(a) any payment or prepayment (pursuant to Section 2.09(b), Section
7.02 or otherwise) of a Eurodollar Loan on a date other than the last day
of an Interest Period for such Eurodollar Loan; or
(b) any failure by the Borrower to prepay a Eurodollar Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Eurodollar Loan on the
specified date for the Eurodollar Borrowing;
such compensation to include, without limitation, an amount equal to the excess,
if any of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Eurodollar Loan (or, in the case
54
of a failure to prepay or borrow, the Interest Period for such Eurodollar Loan
which would have commenced on the date of such failure to prepay or borrow) at
the applicable rate of interest for such Eurodollar Loan provided for hereto
over (y) the amount of interest (as reasonably determined by such Lender) such
Lender would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
Section 7.06 Replacement of Lenders.
----------------------
If any Lender (an "Affected Lender") makes demand for amounts owed
under Section 7.03 (other than due to any change in the Eurodollar Reserve
Percentage) or gives notice under Section 7.0l or 7.02 that it can no longer
participate in Eurodollar Loans, then in each case the Borrower shall have the
right, if no Default or Event of Default exists, and subject to the terms and
conditions set forth in Section 8.08(c), to designate an Assignee (a
"Replacement Lender") to purchase the Affected Lender's share of outstanding
Loans and all other obligations hereunder and to assume the Affected Lender's
obligations to the Borrower under this Credit Agreement; provided, that, any
-------- ----
Replacement Lender must be reasonably acceptable to the Required Lenders (and,
in any event, may not be an Affiliate of the Borrower). Subject to the
foregoing, the Affected Lender agrees to assign without recourse to the
Replacement Lender its share of outstanding Loans and its Commitment, and to
delegate to the Replacement Lender its obligations to the Borrower under this
Credit Agreement. Upon such sale and delegation by the Affected Lender and the
purchase and assumption by the Replacement Lender, and compliance with the
provisions of Section 8.08(c), the Affected Lender shall cease to be a "Lender"
hereunder and the Replacement Lender shall become a "Lender" under this Credit
Agreement; provide, however, that any Affected Lender shall continue to be
------- -------
entitled to the indemnification provisions contained elsewhere herein.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices.
-------
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telecopier or similar writing) and
shall be deemed to have been duly given or made (i) if given by telecopier, when
such telecopy is transmitted to the telecopier number specified in this Section
and the appropriate confirmation is received, or (ii) if given by mail or by
overnight courier, or if delivered by hand, when received, in each case,
addressed or given to each such party at the address set forth on Schedule 8.01,
-------------
or to such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Notes.
Section 8.02 No Waivers.
----------
No failure or delay by any Lender in exercising any right, power or
privilege hereunder or under its Note shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
55
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 8.03 Expenses; Documentary Taxes.
---------------------------
The Borrower agrees (a) to pay or reimburse the Agents for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation, negotiation, printing and execution of, and any
amendment, supplement or modification to, this Credit Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, reasonable field examination expenses
and charges), together with the reasonable and actual fees and disbursements of
counsel to each of the Agents, (b) to pay or reimburse the Agents for all their
reasonable out-of-pocket expenses actually incurred in connection with the
arrangement and syndication of the facilities established by this Credit
Agreement, (c) to pay or reimburse each Lender and the Administrative Agent for
all its reasonable costs and expenses actually incurred in connection with the
enforcement or preservation of any rights under, or defense against any actions
arising out of, this Credit Agreement, the Notes and any such other documents,
including, without limitation, the reasonable and actual fees and disbursements
of counsel to the Administrative Agent and to the Lenders and (d) on demand, to
pay, indemnify, and hold each Lender and the Administrative Agent harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other similar
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, the Credit Documents and
any such other documents. The agreements in this Section 8.03 shall survive
repayment of the Loans, Notes and all other amounts payable hereunder.
Section 8.04 Indemnification.
---------------
The Borrower shall pay, indemnify, and hold each Agent, each Lender and
their Affiliates harmless from and against, any and all other liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever including,
without limitation, reasonable fees and disbursements of counsel to each of the
Agents and the Lenders (including reasonable allocated costs of in-house legal
counsel) and settlement costs, with respect to the enforcement of the Credit
Documents and the use, or proposed use, of proceeds of the Loans (all of the
foregoing, collectively, the "indemnified liabilities"); provided, however, that
-------- -------
the Borrower shall not have any obligation hereunder to the Agents or any Lender
with respect to indemnified liabilities arising from the gross negligence or
willful misconduct of the Agents or any such Lender, as determined by a court of
competent jurisdiction. The agreements in this Section 8.04 shall survive
repayment of the Loans, Notes and all other amounts payable hereunder.
56
Section 8.05 Sharing of Setoffs.
------------------
Each Lender agrees that if it shall, by exercising any right of setoff
or counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest owing with respect to the Note held by it which
is greater than the proportion received by any other Lender in respect of the
aggregate amount of all principal and interest owing with respect to the Note
held by such other Lender, the Lender receiving such proportionately greater
payment shall purchase such participations in the Notes held by the other
Lenders owing to such other Lenders, and such other adjustments shall be made,
as may be required so that all such payments of principal and interest with
respect to the Note held by the Lender owing to such other Lenders shall be
shared by the Lenders pro rata; provided that (i) nothing in this Section shall
--------
impair the right of any Lender to exercise any right of setoff or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes, and
(ii) if all or any portion of such payment received by the purchasing Lender is
thereafter recovered from such purchasing Lender, such purchase from such other
Lenders shall be rescinded and such other Lender shall repay to the purchasing
Lender the purchase price of such participation to the extent of such recovery
together with an amount equal to such other Lenders' ratable share (according to
the proportion of (x) the amount of such other Lenders' required repayment to
(y) the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of setoff or counterclaim and other rights with respect to such
participation as fully as if such holder or a participation were a direct
creditor of the Borrower in the amount of such participation.
Section 8.06 Amendments and Waivers
----------------------
(a) Any provision of this Credit Agreement, the Notes or
any other Credit Documents may be amended, modified or waived if, but
only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Lenders; provided that, no such amendment or
waiver shall, unless signed by all Lenders, (i) increase the Commitment
of any Lender or subject any Lender to any additional obligation, (ii)
decrease the principal of or decrease the rate of interest on any Loan
or decrease any fees hereunder, (iii) extend the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder,
(iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action
under this Section or any other provision of this Credit Agreement, (v)
release or substitute all or any substantial part of the collateral (if
any) held as security for the Loans, (vi) release any Guarantee (if
any) given to support payment of the Loans, (vii) amend, modify,
terminate or waive any provision of Section 5.07(n), the last sentence
of Section 5.17(b), this Section 8.06(a) or the definition of "Required
Lenders" or (viii) waive a Default or an Event of Default under this
Credit Agreement if an Event of Default (as defined therein) under the
Existing Credit Agreement shall then be in existence; provided,
however, this clause (viii) shall not apply to any Default or Event of
Default (x) occurring under Section 6.01(e) or (f) of
57
this Credit Agreement solely as a result of the occurrence of an Event
of Default (as defined therein) under the Existing Credit Agreement or
(y) resulting from any event, condition or circumstance that does not
also result in the occurrence of an Event of Default (as defined
therein) under the Existing Credit Agreement (excluding any such Event
of Default occurring under Section 6.01(e) or (f) of the Existing
Credit Agreement solely as a result of the occurrence of a Default or
Event of Default under this Credit Agreement).
(b) The Borrower will not solicit, request or negotiate for
or with respect to any proposed waiver or amendment of any of the
provisions of this Credit Agreement unless each Lender shall be
informed thereof by the Borrower and shall be afforded an opportunity,
of considering the same and shall be supplied by the Borrower with
sufficient information to enable it to make an informed decision with
respect thereto. Executed, true and correct copies of any waiver or
consent effected pursuant to the provisions of this Credit Agreement
shall be delivered by the Borrower to each Lender forthwith following
the date on which the same shall have been executed and delivered by
the requisite percentage of Lenders. The Borrower will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Lender
(in its capacity, as such) as consideration for or as an inducement to
the entering into by such Lender of any waiver or amendment of any of
the terms and provisions of this Credit Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to each
of the Lenders.
Section 8.07 No Margin Stock Collateral.
--------------------------
Each of the Lenders represents to the other Lenders that it in good
faith is not, directly or indirectly (by negative pledge or otherwise), relying
upon any Margin Stock as collateral in the extension or maintenance of the
credit provided for in this Credit Agreement.
Section 8.08 Successors and Assigns
----------------------
(a) The provisions of this Credit Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that the Borrower may not
assign or otherwise transfer any of its rights under this Credit
Agreement without the prior written consent of all of the Lenders.
(b) Any Lender may at any time sell to one or more Persons
(each a "Participant") participating interests in any Loan owing to
such Lender, its Note, its Commitment hereunder or any other interest
of such Lender hereunder. In the event of any such sale by a Lender of
a participating interest to a Participant, such Lender's obligations
under this Credit Agreement shall remain unchanged. Such Lender shall
remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this
Credit Agreement, and the Borrower shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Credit Agreement. In no event shall a Lender
that sells a participation be obligated to the Participant to take or
refrain from taking any
58
action hereunder except that such Lender may agree that it will not
(except as provided below), without the consent of the Participant,
agree to (i) extend any date fixed for the payment of principal of or
interest on the related loan or loans, (ii) the change of the amount of
any principal, interest or fees due on any date fixed for the payment
thereof with respect to the related loan or loans, (iii) the change of
the principal of the related loan or loans, (iv) any decrease in the
rate at which interest is payable thereon from the rate at which the
Participant is entitled to receive interest in respect of such
participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security, for the
Loans, or (vi) the release of any Guarantee (if any) given to support
payment of the Loans. Unless such Participant is a Related Fund with
respect to such Lender, each Lender selling a participating interest in
any Loan, Note, Commitment or other interest under this Credit
Agreement shall, within ten (10) Domestic Business Days of such sale,
provide the Borrower and the other Lenders with written notification
stating that such sale has occurred and identifying the Participant and
the interest purchased by such Participant. The Borrower agrees that
each Participant shall be entitled to the benefits of Article VII with
respect to its participation in Loans outstanding from time to time to
the same extent as if it were a Lender.
(c) Any Lender may at any time assign to one or more banks,
funds or financial institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under this
Credit Agreement and the Notes, and such Assignee shall assume all such
rights and obligations, pursuant to an Assignment and Acceptance in the
form attached hereto as Exhibit 8.08(c), executed by such Assignee and
---------------
such transferor Lender; provided that (i) no interest may be sold by a
Lender pursuant to this paragraph (c) unless the Assignee shall agree
to assume ratably equivalent portions of the transferor Lender's
Commitment, (ii) the amount of the Commitment of the assigning Lender
subject to such assignment (determined as of the effective date of the
assignment) shall be equal to $5,000,000 (or any larger multiple of
$1,000,000), and (iii) no interest may be sold by a Lender pursuant to
this paragraph (c) to any Assignee that is not then a Lender without
the consent of the Administrative Agent and, so long as no Default or
Event of Default has occurred and is continuing, the Borrower, which
consents shall not be unreasonably withheld or delayed. Each Lender
agrees to notify the other Lenders of any assignment hereunder. Upon
(A) execution of the Assignment and Acceptance by such transferor
Lender, such Assignee, and the Borrower, (B) delivery of an executed
copy of the Assignment and Acceptance to the Borrower, and (C) payment
by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee,
such Assignee shall for all purposes be a Lender party, to this Credit
Agreement and shall have all the rights and obligations of a Lender
under this Credit Agreement to the same extent as if it were an
original party, hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Lender shall be released
from its obligations hereunder to a corresponding extent, and no
further consent or action by the Borrower or the Lenders shall be
required. Upon the consummation of any transfer to an Assignee pursuant
to this paragraph (c), the transferor Lender and the Borrower shall
make appropriate arrangements so that, if required, a new Note is
issued to such Assignee.
59
(d) Subject to the provisions of Section 8.09, the Borrower
authorizes each Lender to disclose to any Participant, Assignee or
other transferee (each a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession
concerning the Borrower which has been delivered to such Lender by the
Borrower pursuant to this Credit Agreement or which has been delivered
to such Lender by the Borrower in connection with such Lender's credit
evaluation prior to entering into this Credit Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 7.03 than the transferor Lender would have been
entitled to receive with respect to the rights transferred, unless such
transfer is made with the Borrower's prior written consent or by reason
of the provisions of Section 7.02 or 7.03 requiring such Lender to
designate a different Lending Office under certain circumstances or at
a time when the circumstances giving rise to such greater payment did
not exist.
(f) Upon its receipt of a duly executed Assignment and
Acceptance, together with payment to the Administrative Agent by the
transferor Lender or the Assignee, as agreed between them, of a
registration and processing fee of (i) $3,500, if neither the
transferor Lender nor the Assignee is an Agent, or (ii) $500, if either
the transferor Lender or the Assignee (or both) is an Agent, the
Administrative Agent shall (x) accept such Assignment and Acceptance,
(y) record the information contained therein in a register for the
recordation of the names and addresses of the Lenders and the
Commitment of an principal amount of the Loans owing to, each Lender
from time to time and (z) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(g) In addition to any other assignment permitted pursuant to
this Section 8.08, (i) any Lender may assign and/or pledge all or any
portion of its Loans, the other Obligations owed by or to such Lender,
and its Notes, if any, to secure obligations of such Lender including,
without limitation, any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal
Reserve Bank; provided, no Lender, as between Borrower and such Lender,
--------
shall be relieved of any of its obligations hereunder as a result of
any such assignment and pledge, and provided further, in no event shall
-------- -------
the applicable Federal Reserve Bank or trustee be considered to be a
"Lender" or be entitled to require the assigning Lender to take or omit
to take any action hereunder.
Section 8.09 Confidentiality.
---------------
Each Lender agrees to exercise its best efforts to keep any information
delivered or made available by the Borrower to it which is clearly indicated to
be confidential information, confidential from any one other than persons
employed or retained by such Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans; provided, however
-------- -------
that nothing herein shall prevent any Lender from disclosing such information
(i) to any other Lender, (ii) upon the order of any court or administrative
agency, (iii) upon the request or demand of any regulatory agency or authority
having jurisdiction over
60
such Lender, (iv) which has been publicly disclosed, (v) to the extent
reasonably required in connection with any litigation to which any Lender or its
respective Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vii) to such Lender's
legal counsel and independent auditors and (viii) to any actual or proposed
Participant, Assignee or other Transferee of all or part of its rights hereunder
which has agreed in writing to be bound by the provisions of this Section 8.09.
Section 8.10 Representation by Lenders.
-------------------------
Each Lender hereby represents that it is a commercial lender, fund or
financial institution which makes Loans in the ordinary course of its business
and that it will make its Loans hereunder for its own account in the ordinary
course of such business; provided, however that, subject to Section 8.08, the
disposition of the Note or Notes held by that Lender shall at all times be
within its exclusive control.
Section 8.11 Obligations Several.
-------------------
The obligations of each Lender hereunder are several, and no Lender
shall be responsible for the obligations or commitment of any other Lender
hereunder. Nothing contained in this Credit Agreement and no action taken by
Lenders pursuant hereto shall be deemed to constitute the Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Credit Agreement or any other Credit Document,
subject to any restrictions requiring actions to be taken upon the consent of
the Required Lenders, and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
Section 8.12 New York Law.
------------
This Credit Agreement and each Note shall be construed in accordance
with and governed by the law of the State of New York without regard to
conflicts of laws principles thereof.
Section 8.13 Interpretation.
--------------
No provision of this Credit Agreement or any of the other Credit
Documents shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
Section 8.14 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
---------------------------------------------
TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER (A) AND EACH OF
THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT
DOCUMENTS, OR ANY OF THE
61
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF NEW YORK, THE COURTS THEREOF AND THE
UNITED STATES DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS
CREDIT AGREEMENT, THE NOTES AND THE OTHER CREDIT DOCUMENTS, (C) WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS
(INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE
WITHIN THE STATE OF NEW YORK FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS
CREDIT AGREEMENT, THE NOTES OR THE OTHER CREDIT DOCUMENTS, AND (D) AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN THE MANNER PRESCRIBED IN SECTION 8.01
FOR THE GIVING OF NOTICE TO THE BORROWER. NOTHING HEREIN CONTAINED, HOWEVER,
SHALL PREVENT THE LENDERS, FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS
AGAINST ANY SECURITY AND AGAINST THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS
OF THE BORROWER WITHIN ANY OTHER STATE OR JURISDICTION.
Section 8.15 Counterparts.
------------
This Credit Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Section 8.16 Acknowledgments.
---------------
The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of each Credit Document;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Credit Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower, on the
other hand, in connection herewith is solely that of debtor and
creditor; and
(c) no joint venture exists among the Lenders or among the
Borrower and the Lenders.
Section 8.17 Survival of Representations and Warranties.
------------------------------------------
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Credit Agreement and the Notes
and the making of the Loans, provided that all such representations and
--------
warranties shall terminate on the date upon which the Commitments
62
have been terminated and all amounts owing hereunder and under any Notes have
been paid in full.
Section 8.18 Severability.
------------
Any provision of this Credit 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.
Section 8.19 Usury.
-----
Notwithstanding any other provision herein, the aggregate interest rate
charged with respect to any of the Obligations, including all charges or fees in
connection therewith deemed in the nature of interest under applicable law shall
not exceed the Highest Lawful Rate. If the rate of interest (determined without
regard to the preceding sentence) under this Credit Agreement at any time
exceeds the Highest Lawful Rate, the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total amount
of interest due hereunder equals the amount of interest which would have been
due hereunder if the stated rates of interest set forth in this Credit Agreement
had at all times been in effect. In addition, if when the Loans made hereunder
are repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Credit Agreement had at all times been in effect, then to the extent permitted
by law, Borrower shall pay to Administrative Agent an amount equal to the
difference between the amount of interest paid and the amount of interest which
would have been paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of Lenders and Borrower to
conform strictly to any applicable usury laws. Accordingly, if any Lender
contracts for, charges, or receives any consideration which constitutes interest
in excess of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender's option be applied
to the outstanding amount of the Loans made hereunder or be refunded to
Borrower.
63
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed under seal, by their respective authorized
officers as of the day and year first above written.
BORROWER: MOHAWK INDUSTRIES, INC.
- --------
By: /s/ Sidney J. Frost
-----------------------------------
Name: Sidney J. Frost
Title: Vice President and Treasurer
LENDERS: WACHOVIA INVESTORS, INC.,
- ------- as Administrative Agent and as a Lender
By: /s/ Steven J. Taylor
--------------------------
Name: Steven J. Taylor
Title: Director
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Co-Syndication Agent and as a Lender
By: /s/ Kevin Ulrich
--------------------------------
Name: Kevin Ulrich
Title: Authorized Signatory
SUNTRUST BANK,
as Co-Syndication Agent and as a Lender
By: /s/ Stephen A. McKenna
--------------------------
Name: Stephen A. McKenna
Title: Managing Director,
Senior Risk Officer