EXHIBIT 10.2
[EXECUTION COPY]
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MOHAWK INDUSTRIES, INC.
$85,000,000
$60,000,000 7.23% SERIES A SENIOR NOTES DUE SEPTEMBER 1, 2005
$10,000,000 7.17% SERIES B SENIOR NOTES DUE SEPTEMBER 1, 2005
$15,000,000 7.14% SERIES C SENIOR NOTES DUE SEPTEMBER 1, 2005
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AMENDED AND RESTATED
SERIES NOTE AGREEMENT
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Dated as of August 31, 1999
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TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES 1
1A. Authorization and Issuance of the Series A Notes 1
1B. Authorization and Issuance of the Series B Notes 1
1C. Authorization and Issuance of the Series C Notes 2
1D. Release of Guaranty Agreements 2
1E. Assumption of Obligations 2
2. PURCHASE, SALE AND EXCHANGE OF NOTES 2
2A. Purchase, Sale and Exchange of Notes 2
3. CONDITIONS PRECEDENT 3
3A. Conditions of Closing 3
4. PREPAYMENTS 5
4A. Required Prepayments 5
4B. Optional Prepayment With Yield-Maintenance Amount 6
4C. Notice of Optional Prepayment 6
4D. Offer to Prepay upon Change in Control 6
4E. Partial Payments Pro Rata 8
4F. Retirement of Notes 8
5. AFFIRMATIVE COVENANTS 9
5A(1) Financial Statements and Other Information 9
5A(2) Quarterly Officer's Certificate 10
5A(3) Annual Accountant's Letter 10
5A(4) Special Information 11
5B. Information Required by Rule 144A 11
5C. Inspection of Property 11
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5D. Covenant to Secure Note Equally 11
5E. Guaranteed Obligations 11
5F. Maintenance of Insurance 12
5G. Maintenance of Corporate Existence/Compliance with Law/Preservation of
Property 12
5H. Compliance with Environmental Laws 13
5I. No Integration 13
5J. Financial Reports 13
5K. Payment of Taxes and Claims 13
5L. Year 2000 Issues 14
6A NEGATIVE COVENANTS 14
6A. Certain Financial Limits 14
6B. Dividend Limitation 14
6C. Liens, Debt and Other Restrictions 15
6D. ERISA 18
6E. Fed Regulations, Etc. 19
6F. Environmental Matters 19
7A EVENTS OF DEFAULT 19
7A. Acceleration 19
7B. Rescission of Acceleration 22
7C. Notice of Acceleration or Rescission 22
7D. Other Remedies 22
8A REPRESENTATIONS, COVENANTS AND WARRANTIES 23
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8A. Organization 23
8B. Financial Statements 23
8C. Actions Pending 24
8D. Outstanding Debt 24
8E. Title to Properties 24
8F. Taxes 24
8G. Conflicting Agreements and Other Matters 24
8H. Offering of Notes 25
8I. Use of Proceeds 25
8J. ERISA 25
8K. Governmental Consent 26
8L. Disclosure 26
8M. Environmental Matters 26
8N. Solvency 27
8O. Absence of Foreign or Enemy Status 27
9A REPRESENTATIONS OF THE PURCHASER 27
10. DEFINITIONS 28
10A. Yield-Maintenance Terms 28
10B. Other Terms 29
10C. Accounting Principles, Terms and Determinations 43
11. MISCELLANEOUS 43
11A. Note Payments 43
11B. Expenses 44
11C. Consent to Amendments 44
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes 44
11E. Persons Deemed Owners; Participations 45
11F. Survival of Representations and Warranties; Entire Agreement 45
11G. Successors and Assigns 46
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11H. Disclosure to Other Persons 46
11I. Notices 46
11J. Payments Due on Non-Business Days 47
11K. Satisfaction Requirement 47
11L. Independence of Covenants 47
11M. Governing Law 47
11N. Severability 47
11O. Descriptive Headings 47
11P. Counterparts 48
11Q. No Novation 48
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ANNEX I
PURCHASER SCHEDULE
EXHIBIT A-1 -- FORM OF SERIES A NOTE
EXHIBIT A-2 -- FORM OF SERIES B NOTE
EXHIBIT A-3 -- FORM OF SERIES C NOTE
EXHIBIT B -- FORM OF SHARING AGREEMENT
SCHEDULE 3A(6) LIST OF GOOD STANDING CERTIFICATES
SCHEDULE 5E LIST OF OUTSTANDING GUARANTEES
SCHEDULE 6C(1) LIST OF LIENS
SCHEDULE 8C LIST OF ACTIONS PENDING
SCHEDULE 8G LIST OF AGREEMENTS RESTRICTING DEBT
SCHEDULE 10B LIST OF PROHIBITED PARTICIPANTS AND TRANSFEREES
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Mohawk Industries, Inc.
160 South Industrial Boulevard
Calhoun, Georgia 30703-7002
As of August 31, 1999
To Each Purchaser Listed
on Annex I Attached Hereto
Ladies and Gentlemen:
ALADDIN MANUFACTURING CORPORATION, formerly known as Mohawk Carpet
Corporation (together with its successors and assigns, "Aladdin"), a Delaware
corporation, MOHAWK INDUSTRIES, INC. (together with its successors and assigns,
"Industries"), a Delaware corporation, HORIZON INDUSTRIES, INC. (together with
its successors and assigns, "Horizon"), a Georgia corporation, AMERICAN RUG
CRAFTSMEN, INC. (together with its successors and assigns, "American Rug"), a
Tennessee corporation, BURTON CARPETS & RUGS, INC. (together with its successors
and assigns, "Burton"), a Georgia corporation, and THE HARBINGER COMPANY, INC.
(together with its successors and assigns, "Harbinger"), a Georgia corporation,
each a party with you to that certain Note Purchase Agreement dated as of August
15, 1993 (as amended, modified or supplemented from time to time, the "1993
Agreement"). Industries desires to assume all of the obligations of Aladdin
under the 1993 Agreement and to amend and restate the 1993 Agreement as set
forth below.
Industries hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. Authorization and Issuance of the Series A Notes. On August 15,
1993 Aladdin issued its senior promissory notes in the aggregate principal
amount of $60,000,000 dated August 15, 1993 which will mature September 1, 2005
(the "1993 Series A Notes"), each bearing interest on the unpaid balance thereof
from the date thereof until the principal thereof shall become due and payable
at the rate of 7.14% per annum and on overdue payments at the rate specified
therein.
1B. Authorization and Issuance of the Series B Notes. On August 15,
1993, Aladdin issued senior promissory notes in the aggregate principal amount
of $10,000,000 dated August 15, 1993 which will each mature on September 1, 2005
(the "Series B Notes"), each bearing interest on the unpaid balance thereof
from the date thereof until the principal thereof shall become due and payable
at the rate of 7.17% per annum and on overdue payments at the rate specified
therein.
1C. Authorization and Issuance of the Series C Notes. On August 15,
1993 Aladdin issued its senior promissory notes in the aggregate principal
amount of $15,000,000 dated August 15, 1993 which will mature September 1, 2005
(the "1993 Series C Notes"), each bearing interest on the unpaid balance thereof
from the date thereof until the principal thereof shall become due and payable
at the rate of 7.14% per annum and on overdue payments at the rate specified
therein.
1D. Release of Guaranty Agreements. You shall terminate the Guaranty
Agreements simultaneously with such termination by (i) the banks a party to the
Bank Agreement; (ii) the holder of the Notes under the 8.46% Note Agreement; and
(iii) the holders of the Notes under the Consolidated Agreement.
1E. Assumption of Obligations. Industries hereby assumes all of
Aladdin's obligations under the 1993 Agreement and under the 1993 Series A,
Series B and Series C Notes and any other Related Documents.
The term "Notes" as used in this Agreement shall include each
promissory note exchanged pursuant to any provision of this Agreement (including
the Series A Notes and the Series B Notes, as hereinafter defined) and each
promissory note delivered in substitution or exchange for any such promissory
note pursuant to any such provision, and the term "Note" shall refer to any of
such Notes.
2. PURCHASE, SALE AND EXCHANGE OF NOTES.
2A. Purchase, Sale and Exchange of Notes.
(i) On August 15, 1993, Aladdin sold to you the 1993 Series A
Notes, in the aggregate principal amount of $60,000,000, at 100% of such
aggregate principal amount.
Industries hereby agrees to issue to you, and subject to the
terms and conditions herein set forth, you agree to accept from Industries in
exchange for the 1993 Series A Notes, a Note, in substantially the form of
Exhibit A-1 (the "Series A Notes"), in the aggregate principal amount of
$60,000,000, after taking into account the required prepayment of $6,666,666.67
made by Aladdin on September 1, 1998, to evidence the assumption of the of the
1993 Series A Notes by Industries. Each exchange shall occur at the offices of
King & Spalding, 1185 Avenue of the Americas, New York, New York, on the date of
closing, which shall be August 31, 1999 or any other date upon which Industries
and you may mutually agree (herein called the "Closing" or the "Date of
Closing"); and
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(ii) On August 15, 1993, Aladdin sold to issue to you, the 1993
Series B Notes in the aggregate principal amount of $10,000,000, at 100% of such
aggregate principal amount.
Industries hereby agrees to issue to you, and subject to the terms and
conditions herein set forth, you agree to accept from Industries in exchange for
the 1993 Series B Notes, a Note, in substantially the form of Exhibit A-2 (the
"Series B Notes"), in the aggregate principal amount of $10,000,000, after
taking into account the required prepayment of $1,111,111.11 made by Aladdin on
September 1, 1998, to evidence the assumption of the 1993 Series B Notes. Each
exchange shall occur at the offices of King & Spalding, 1185 Avenue of the
Americas, New York, New York, on the Date of Closing.
(iii) On August 15, 1993 Aladdin sold to you the 1993 Series C Notes
in the aggregate principal amount of $15,000,000, at 100% of such aggregate
principal amount.
Industries hereby agrees to issue to you, and subject to the terms and
conditions herein set forth, you agree to accept from Industries in exchange for
the 1993 Series C Notes, a Note, in substantially the form of Exhibit A-3 (the
"Series C Notes"), in the aggregate principal amount of $15,000,000, after
taking into account the required prepayment of $1,666,666.67 made by Aladdin on
September 1, 1998, to evidence the assumption of the 1993 Series C Notes. Each
exchange shall occur at the offices of King & Spalding, 1185 Avenue of the
Americas, on the Date of Closing.
3. CONDITIONS PRECEDENT.
3A. Conditions of Closing. Your obligation to enter into, execute and
deliver this Agreement and exchange the Notes as described in paragraph 2A is
subject to the satisfaction, on or before the Date of Closing, of the following
conditions:
3A(1) Related Documents. You shall have received each of the following
documents duly executed and delivered by the parties thereto:
(i) Termination Letter with respect to the Guaranty Agreements; and
(ii) a Sharing Agreement.
3A(2) Opinion of Counsel to Industries. You shall have received from Alston
& Bird LLP, special counsel to Industries, a favorable opinion satisfactory to
you as to such matters incident to the matters herein contemplated as you may
reasonably request.
3A(3) Representations and Warranties; No Default. The representations
and warranties contained in paragraph 8 shall be true on and as of the Date of
Closing, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on the Date of
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Closing no Event of Default or Default; and Industries shall have delivered to
you an Officer's Certificate, dated the Date of Closing, regarding the
foregoing.
3A(4) Transactions Permitted By Applicable Laws. The exchange of the 1993
Series A, Series B and Series C Notes for the Series A, Series B and Series C
Notes on the Date of Closing on the terms and conditions herein provided shall
not violate any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation T, U or X of the Board
of Governors of the Federal Reserve System) and shall not subject you to any tax
(other than any tax on income earned), penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental regulation.
The Notes shall on the Date of Closing qualify as a legal investment for you
under applicable insurance law (without regard to any "basket" or "leeway
provisions"), and such acquisition shall not subject you to any penalty or other
onerous condition contained in or pursuant to any such law or regulation. You
shall have received such certificates or other evidence as you may request to
establish compliance with this condition.
3A(5) Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified or other copies
of such documents as you may reasonably request. In this connection, Industries
shall deliver to you:
(i) copies of the certificate or articles of incorporation
(certified as of a recent date by the Secretary of the State of its
incorporation) and its by-laws (certified by its Secretary) as in effect on the
Date of Closing;
(ii) certified copies (certified by its Secretary) of all corporate
action taken by Industries to authorize the execution, delivery and performance
of this Agreement and the Notes and the issuance of the Notes; and
(iii) certificates of incumbency and specimen signatures with
respect to each of the officers of Industries who are authorized to execute and
deliver this Agreement and the Notes.
3A(6) Certificates of Good Standing/Qualification to Do Business. You
shall have received a good standing certificate issued by the Secretary of State
of the State of incorporation of Industries and certificates of qualification to
do business as a foreign corporation in jurisdictions specified in Schedule
3A(6) in which Industries is required by law to be qualified to do business,
each dated as of a date not more than twenty days prior to Closing.
3A(7) No Material Adverse Change. You shall have received a certificate
from the chief financial officer of Industries dated the Date of Closing to the
effect that no material
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adverse change in the financial condition, business, operations or prospects of
Industries or its Subsidiaries has occurred since December 31, 1998.
3A(8) Amendment and Restatement of Consolidated Agreement and 8.46%
Note Agreement. Each Consolidated Agreement and 8.46% Note Agreement shall be
amended and restated and you shall have received duly executed copies of such
amended and restated agreements including all Schedules and Exhibits thereto and
side letters, if any, affecting the terms thereof or otherwise delivered in
connection therewith, together with all amendments and waivers thereto and any
certificates executed in connection therewith accompanied by an Officer's
Certificate, dated the Date of Closing.
3A(9) Expenses. All fees and disbursements of the Purchaser (including
without limitation special counsel to the Purchaser) shall have been paid in
full.
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. Required Prepayments.
(i) Series A Notes. Until the Series A Notes shall be paid
in full, Industries shall apply to the prepayment of the Series A Notes, without
premium, the sum of $6,666,666.67 on September 1 in each of the years 1999 to
2005, inclusive, and such principal amounts of the Series A Notes, together with
interest thereon to the prepayment dates, shall become due on such prepayment
dates. The remaining principal amount of the Series A Notes, together with
interest accrued thereon, shall become due on the maturity date of the Series A
Notes.
(ii) Series B Notes. Until the Series B Notes shall be paid
in full, Industries shall apply to the prepayment of the Series B Notes, without
premium, the sum of $1,111,111.11 on September 1 in each of the years 1999 to
2005, inclusive, and such principal amounts of the Series B Notes, together with
interest thereon to the prepayment dates, shall become due on such prepayment
dates. The remaining principal amount of the Series B Notes, together with
interest accrued thereon, shall become due on the maturity date of the Series B
Notes.
(iii) Series C Notes. Until the Series C Notes shall be paid
in full, Industries shall apply to the prepayment of the Series A Notes, without
premium, the sum of $1,666,666.67 on September 1 in each of the years 1999 to
2005, inclusive, and such principal amounts of the Series C Notes, together with
interest thereon to the prepayment dates, shall become due on such prepayment
dates. The remaining principal amount of the Series C Notes, together with
interest accrued thereon, shall become due on the maturity date of the Series C
Notes.
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(iv) All Notes. Any prepayment made by Industries pursuant
to any other provision of this paragraph 4 shall not reduce or otherwise affect
its obligations to make any prepayment required by this paragraph 4A until the
Notes are paid in full.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
multiples of $5,000,000), at the option of Industries at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the Yield-
Maintenance Amount, if any, with respect to each Note. Any partial prepayment of
the Notes pursuant to this paragraph 4B shall be applied in satisfaction of
required payments of principal in inverse order of their scheduled due dates.
4C. Notice of Optional Prepayment. Industries shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to paragraph 4B
not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the Yield-
Maintenance Amount, if any, with respect thereto, shall become due and payable
on such prepayment date. Industries shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4B, give telephonic
notice of the principal amount of the Notes to be prepaid and the prepayment
date to each Significant Holder which shall have designated a recipient of such
notices in the Purchaser Schedule attached hereto or by notice in writing to
Industries.
4D. Offer to Prepay upon Change in Control.
(a) Notice and Offer. In the event of either
(1) a Change in Control, or
(2) the obtaining of knowledge of a Control Event by any officer
of Industries or any other Subsidiary (including, without limitation,
by the receipt of notice of a Control Event from any holder of Notes),
Industries will, within three (3) Business Days of the occurrence of either of
such events, give written notice of such Change in Control or Control Event to
each holder of Notes by certified mail (with a copy thereof sent by an overnight
courier of national reputation) and, simultaneously with the sending of such
written notice, give telephonic advice of such Change in Control or Control
Event to an investment officer or other similar representative or agent of each
such
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holder specified on the Purchaser Schedule at the telephone number specified
thereon, or to such other Person at such other telephone number as any holder of
a Note may specify to Industries in writing.
In the event of a Change in Control, such written notice shall contain,
and such written notice shall constitute, an irrevocable offer to prepay all,
but not less than all, the Notes held by such holder on a date specified in such
notice (the "Control Prepayment Date") that is not less than thirty (30) days
and not more than sixty (60) days after the date of such notice. If the Control
Prepayment Date shall not be specified in such notice, the Control Prepayment
Date shall be the thirtieth (30th) day after the date of posting of such notice.
If Industries shall not have received a written response to such notice from
each holder of Notes within ten (10) days after the date of posting of such
notice to such holder of Notes, then Industries shall immediately send a second
written notice by an overnight courier of national reputation to each such
holder of Notes who shall have not previously responded to Industries, which
notice shall also specify the Control Prepayment Date.
(b) Acceptance and Payment. To accept or reject such offered
prepayment, a holder of Notes shall cause a notice of such acceptance or
rejection to be delivered to Industries on or prior to the fifteenth (15th)
day after the date of receipt by such holder of the latest written offer of
such prepayment (the "Offer Determination Date"). If so accepted, such
offered prepayment shall be due and payable on the Control Prepayment Date.
Such offered prepayment shall be made at one hundred percent (100%) of the
principal amount of such Notes, together with any Yield-Maintenance as of
the Control Prepayment Date with respect thereto and interest on the Notes
then being prepaid accrued to the Control Prepayment Date. If a holder of
Notes shall not have responded to such offered prepayment on or prior to
the Offer Determination Date, such holder shall be deemed to have accepted
or rejected such offered prepayment, as such holder shall have elected and
as shall be indicated on the Purchaser Schedule below such holder's name
(or as such holder shall have notified Industries subsequent to the Date of
Closing).
(c) Officer's Certificate. Each offer to prepay the Notes pursuant to
this paragraph 4D shall be accompanied by a certificate, executed by a
Responsible Officer of Industries and dated the date of such offer,
specifying:
(i) the Control Prepayment Date;
(ii) that such offer is made pursuant to paragraph 4D of this
Agreement;
(iii) the principal amount of each Note offered to be prepaid;
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(iv) the interest that would be due on each such Note offered to
be prepaid, accrued to the date fixed for payment;
(v) the calculation of an estimated Yield-Maintenance, if any
(calculated as if the date of such notice was the date of prepayment),
that would be due in connection with such offered prepayment,
accompanied by a copy of any applicable documentation used in
connection with determining the Reinvestment Yield in respect of such
prepayment; and
(vi) in reasonable detail, the nature and date or proposed date
of the Change in Control.
Each such notice shall also contain a legend specifying that such holder
shall be deemed to have accepted or rejected such offered prepayment (as such
holder shall have elected as provided in paragraph 4D(ii) hereof) if such holder
shall not have responded to such offer on or prior to the fifteenth (15th) day
following such holder's receipt of such notice.
(d) Effect of Prepayment. Each prepayment of the Notes pursuant to
this paragraph 4D shall be applied ratably to reduce the corresponding
Required Payments remaining after the date of such prepayment.
(e) Notice Concerning Status of Holders of Notes. Promptly after each
Control Prepayment Date and the making of all prepayments contemplated on
such Control Prepayment Date under this paragraph 4D (and, in any event,
within thirty (30) days thereafter), Industries shall deliver to each
remaining holder of Notes a certificate signed by a Responsible Officer of
Industries containing a list of the then current holders of Notes (together
with their addresses) and setting forth as to each such holder the
outstanding principal amount of Notes of each Series held by each such
holder at such time.
4E. Partial Payments Pro Rata. Upon any partial prepayment of the Notes
pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by Industries or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A or 4B) in proportion to the
respective outstanding principal amounts thereof.
4F. Retirement of Notes. Industries shall not, nor shall Industries
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder unless Industries or such Subsidiary or
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Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the time
outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by Industries or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose
under this Agreement, except as provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS.
5(1) Financial Statements and Other Information. Industries covenants
that it will deliver to each Significant Holder in quadruplicate:
(i) as soon as practicable and in any event within 60 days after the
end of each quarterly period (other than the last quarterly period) in each
Fiscal Year,
(1) its Consolidated statements of income and cash flows for
Industries and its Subsidiaries for the period from the beginning of the current
Fiscal Year to the end of such quarterly period, and
(2) Consolidated balance sheet for Industries and its
Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the corresponding
period in the preceding Fiscal Year, for so long as Industries is a reporting
company under the Exchange Act, all in accordance with the Rules and Regulations
of the reporting requirements of the Securities and Exchange Commission, and,
thereafter, all in reasonable detail and satisfactory in form to you or your
Affiliates, and, in either case, certified by an Officer's Certificate delivered
on behalf of Industries, subject to changes resulting from normal year-end
adjustments;
(ii) as soon as practicable and in any event within 90 days after the
end of each Fiscal Year,
(1) Consolidated statements of income and cash flows and
Stockholders' Equity of Industries and its Subsidiaries for such year,
(2) Consolidated balance sheet of Industries and its
Subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding consolidated
figures from the preceding annual audit, for so long as Industries is a
reporting company under the Exchange Act, all in accordance with the Rules and
Regulations of the reporting requirements of the Securities
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and Exchange Commission, and, thereafter, all in reasonable detail and
satisfactory in scope to you or your Affiliates, in either case, reported on by
independent public accountants of recognized standing selected by Industries
whose report shall be without limitation as to the scope of the audit and
satisfactory in substance to you or your Affiliates and certified by an
Officer's Certificate delivered on behalf of Industries;
(iii) promptly upon transmission thereof and in no event later
than 15 days thereafter, copies of all such financial statements, proxy
statements, notices and reports as it shall send to its public stockholders and
copies of all registration statements (without exhibits excluding registration
statements on Form S-8 or its equivalent) and all reports including, without
limitation, Form 10-K's, Form 10-Q's and Form 8-K's which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other report
submitted to Industries or any Subsidiary after the Date of Closing by
independent accountants in connection with any annual, interim or special audit
made by them of the books of Industries or any such Subsidiary;
(v) any other information provided under Sections 5.01(d) and (e) of
the Bank Agreement; and
(vi) with reasonable promptness, such other financial data as
such Significant Holder may reasonably request.
5(2) Quarterly Officer's Certificate. Together with each delivery of
financial statements required by clauses (i) and (ii) above, Industries will
deliver to each holder of a Note an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by Industries and its Subsidiaries
with the provisions of paragraphs 6A, 6B and 6C(1) through 6C(6) and stating
that there exists no Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence thereof and what
action Industries proposes to take with respect thereto.
5(3) Annual Accountant's Letter. Together with each delivery of
financial statements required by clause (ii) above, Industries will deliver to
each holder of a Note a certificate of such accountants stating that, in making
the audit necessary for their report on such financial statements, they have
obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature and
period of existence thereof. Such accountant however, shall not be liable to
anyone by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.
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5(4) Special Information. Industries also covenants that forthwith
upon a Responsible Officer obtaining knowledge of (i) an Event of Default or
Default or (ii) at all times during which Industries is not a reporting company
under the Exchange Act, the occurrence of a Material Adverse Effect or any event
which could reasonably be expected to cause a Material Adverse Effect including,
without limitation, the institution or threat of legal proceedings,
Environmental Proceedings and the existence of Environmental Liabilities,
Industries will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action Industries
has taken, is taking or proposes to take with respect thereto.
5B. Information Required by Rule 144A. Industries covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as such Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. Inspection of Property. Industries covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense (except upon the occurrence, and during the continuance of a
Default or Event of Default and then, at the expense of Industries), to visit
and inspect any of the Properties of Industries and its Subsidiaries, to examine
the corporate books and financial records of Industries and its Subsidiaries and
make copies thereof or extracts therefrom and to discuss the affairs, finances
and accounts of any of such corporations with the principal officers of
Industries and its independent public accountants, all at such reasonable times
and as often as such Significant Holder may reasonably request subject to
paragraph 11H.
5D. Covenant to Secure Note Equally. Industries covenants that, if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C(1) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured.
5E. Guaranteed Obligations. Except as set forth on Schedule 5E,
Industries covenants that if, at any time, after the date hereof, it or any of
its Subsidiaries incurs or permits to exist any Debt or other obligation (other
than a performance bond or a guarantee of an Operating Lease or like financial
accommodation issued by Industries
12
or a Subsidiary in the ordinary course of business) Guaranteed or collateralized
in any other manner by any other Person, it will simultaneously cause such other
Person to execute and deliver to each holder of any Note a guaranty agreement in
form and substance reasonably satisfactory to such holder guaranteeing payment
of the principal amount of the Notes and any premium and interest thereon, which
bears the same ratio to the total unpaid principal amount of the Notes as the
amount of such other obligation which is guaranteed bears to the total unpaid
principal amount of such other obligation, or if such other obligation is
collateralized, to collateralize the Notes equally and ratably with such other
obligation; provided, however, the preceding shall not apply to the extent (i)
such other Person is not an Affiliate of Industries or any of its Subsidiaries
and (ii) such other Person has full recourse against Industries and/or such
Subsidiary in connection with such other Person's Guarantee or collateralized
obligation.
5F. Maintenance of Insurance. Industries covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5G. Maintenance of Corporate Existence/Compliance with Law/Preservation
of Property. Except as allowed under paragraph 6C(4), Industries covenants
that it and each Subsidiary will do or cause to be done all things necessary to
(i) preserve, renew and keep in full force and effect the corporate
existence of Industries and its Subsidiaries (other than any Subsidiary being
dissolved or liquidated as permitted under paragraph 6C(5)(ii) and any license,
certificate, permit, franchise or governmental authorization necessary to the
ownership of its Properties and assets or to the conduct of its business if the
failure to do so could, individually, or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and
(ii) comply in all respects with all laws and regulations
(including, without limitation, laws and regulations relating to equal
employment opportunity and employee safety) applicable to it and its
Subsidiaries, except where the failure to comply could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and
(iii) maintain, preserve and protect all material intellectual
property of Industries and its Subsidiaries, and
(iv) preserve all the remainder of its material property used
or useful in the conduct of its business and keep the same in good repair,
working order and condition other than normal wear and tear, obsolescence and
loss caused by a casualty for which Industries or such Subsidiary is insured and
such property so damaged is replaced.
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5H. Compliance with Environmental Laws. Industries will, and will cause
each of its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all Environmental Requirements
including, without limitation, the emission of wastewater effluent, solid and
hazardous waste and air pollution, and establishing general environmental
conditions together with any other applicable requirements for conducting, on a
timely basis, periodic tests and monitoring for contamination of ground water,
surface water, air and land and for biological toxicity of the aforesaid, and
diligently comply with the regulations (except to the extent such regulations
are waived by appropriate governmental authorities) of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, except, with respect to each of the foregoing, where the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
Industries shall not be deemed to have breached or violated this paragraph 5H if
Industries or any Subsidiary of Industries is challenging in good faith by
appropriate proceedings diligently pursued the application or enforcement of
such Environmental Requirements for which adequate reserves have been
established in accordance with generally accepted accounting principles.
5I. No Integration. Industries covenants that it has taken and will
continue to take all necessary steps so that the issuance of the Notes has not
and will not require registration under the Securities Act. Industries covenants
that no future offer and sale of debt securities of Industries of any class will
be made if, as a result of the doctrine of "integration", there is a reasonable
possibility that such offer and sale would result in the loss of an entitlement
of the Notes to the exemption from the registration requirements of the
Securities Act.
5J. Financial Reports. Industries will keep, and will cause each
Subsidiary to keep, proper books of record and account in which full and correct
entries will be made of all dealings or transactions of or in relation to the
business and affairs of Industries or such Subsidiary in accordance with
generally accepted accounting principles consistently applied (except for
changes disclosed in the financial statements furnished to you pursuant to
paragraph 5A and concurred in by the independent public accountants referred to
in paragraph 5A).
5K. Payment of Taxes and Claims. Industries will, and will cause each
Subsidiary to, pay before they become delinquent:
(a) all taxes, assessments and governmental charges or levies imposed
upon it or any of its property; and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if unpaid, might
result in the creation of a Lien upon any of its property;
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provided, that items of the foregoing description need not be paid
(i) while being actively contested in good faith and by
appropriate proceedings as long as adequate book reserves have been established
and maintained and exist with respect thereto, and
(ii) so long as the title to, and right to use, such property, is
not materially adversely affected thereby.
5L. Year 2000 Issues. Industries shall take, and cause its Subsidiaries to
take, all actions reasonably necessary to assure that the Year 2000 Issues, as
such Year 2000 Issues pertain to the computer programs and systems of Industries
and its Subsidiaries, will not have a Material Adverse Effect. Industries and
its Subsidiaries will use commercially reasonable efforts to assure that their
third-party customers, suppliers and vendors develop and implement programs to
remediate, in all material respects, all Year 2000 Issues reasonably anticipated
by Industries and its Subsidiaries to have a Material Adverse Effect. Upon
written request by the Required Holders, Industries will provide the holders of
the Notes a written description of its program for assessing Year 2000 Issues,
including updates and progress reports. Industries will advise the holders of
the Notes promptly of any reasonably anticipated Material Adverse Effect as a
result of Year 2000 Issues.
6. NEGATIVE COVENANTS. Unless the Required Holders otherwise agree in
writing, Industries shall not, and shall not permit its Subsidiaries to, take
any of the following actions or permit the occurrence or existence of any of the
following events or conditions:
6A. Certain Financial Limits. Industries covenants that it will not
permit:
(i) The Debt to Capitalization Ratio to be equal to or greater than 0.60
to 1.0 at the end of each Fiscal Quarter; and
(ii) The ratio of (f) Consolidated Debt to (g) the sum of (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on Industries'
Consolidated pre-tax income, (iv) Depreciation and Amortization to be greater
than 3.5 to 1.0 at the end of each Fiscal Quarter. Subclause (b) of this clause
(ii) shall be calculated on a trailing four quarter basis as at the end of each
such Fiscal Quarter.
6B. Dividend Limitation. Industries covenants that, it shall not,
15
(i) pay or declare any dividend on any class of its stock or make any
other distribution on account of any class of its stock; or
(ii) redeem, purchase or otherwise acquire, directly or indirectly, any
shares of its stock; or
(iii) make any optional payments on Subordinated Debt (all of the
foregoing being herein called "Restricted Payments");
unless at the time of declaration, redemption, purchase or payment of such
Restricted Payment, and after giving effect thereto, no Default or Event of
Default exists or would exist.
6C. Liens, Debt and Other Restrictions. Industries covenants that it
will not and will not permit any Subsidiary to:
6C(1). Liens. Create, assume or suffer to exist any Lien upon any of
its property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Notes in accordance
with the provisions of paragraph 5D) except:
(i) Liens for taxes (including ad valorem and property taxes) not yet
due or which are being actively contested in good faith by appropriate
proceedings;
(ii) Liens on the property of Industries and its Subsidiaries as of the
Date of Closing as set forth on Schedule 6C(1) attached hereto and any Lien
renewing, extending or refunding any Lien permitted by this clause (ii) so long
as the principal amount of Debt secured by such Lien immediately prior thereto
is not increased or the term reduced and such Lien does not extend to other
property;
(iii) other Liens incidental to the conduct of its business or the
ownership of its property and assets (including but not limited to pledges or
deposits in connection with workers' compensation and social security taxes,
assessments and charges and landlords, mechanics and materialmen Liens and
survey exceptions or encumbrances, easements or reservations, rights-of-way or
zoning restrictions), provided that (A) such liens were not incurred in
connection with the borrowing of money or the obtaining of advances or credit or
the payment of the deferred purchase price of property and (B) the existence of
such Lien does not materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;
(iv) Liens on property or assets of a Subsidiary of Industries to
secure obligations of such Subsidiary to Industries or another Subsidiary, as
the case may be;
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(v) Any common law right of setoff or banker's lien arising in
connection with ordinary course of business deposit arrangements maintained by
Industries or its Subsidiaries with its banks or other financial institutions so
long as any such bank or other financial institution (A) shall not at any time
make loans or otherwise extend credit pursuant to any credit facility to
Industries or any of its Subsidiaries, (B) does not maintain accounts (for the
deposit of cash or otherwise) for the benefit of any Industries or its
Subsidiaries other than those which have in the aggregate monthly balances less
than $100,000, (C) shall have delivered to each holder of a Note a Sharing
Agreement substantially in the form of Exhibit B; or (D) shall have waived in
writing such common law right of setoff or banker's lien;
(vi) Liens arising from judicial attachments and judgments; provided
that (A) the execution or other enforcement of such Liens is not being pursued
and the execution or other enforcement of such Liens has been effectively stayed
within 30 days of such Liens' imposition, (B) the claims secured thereby are
being actively contested in good faith and by appropriate proceedings, (C)
adequate book reserves shall have been established and maintained and shall
exist with respect thereto and (D) no Event of Default shall have occurred with
respect to such Liens under clause (xii) of paragraph 7A;
(vii) Other Liens on property of Industries or a Subsidiary not
otherwise permitted pursuant to this paragraph 6C(l),
(viii) Liens in connection with an Asset Securitization permitted under
paragraph 6C(5);
(ix) Liens against the assets of Aladdin (formerly owned by Galaxy) under
the Catoosa Co. IRB solely to the extent existing as of the date hereof;
and
(x) Liens against the assets of Aladdin (formerly owned by Image
Industries, Inc.) under the Summerville City IRB solely to the extent
existing as of January 1, 1999;
provided that Liens permitted by the foregoing subparagraphs (ii) through
(v) and (vii) shall at no time secure Debt in an aggregate amount exceeding
the greater of (1) $90,000,000 or (2) fifteen percent (15%) of Consolidated
Net Worth at such time and prior to, and after giving effect to the
incurrence, assumption or creation of any such Lien, and to any concurrent
application of the proceeds of any Debt or other obligation secured
thereby, no Default or Event of Default would exist;
6C(2). Subsidiary Debt. Permit any Subsidiary to incur any Debt except
for (i) Debt owed by a Subsidiary to Industries or another Subsidiary, (ii) Debt
deemed incurred in connection with an Asset Securitization permitted under
paragraph 6C(5); (iii) (A) Debt of Subsidiaries arising in connection with the
Summerville City IRB and the Catoosa Co. IRB and incurrence of reimbursement
obligations with respect to the Letters of Credit (as defined in the
17
Bank Agreement) with respect to the Summerville City IRB and the Catoosa Co. IRB
and (B) other Debt of Subsidiaries arising in connection with the issuance of
bonds by governmental authorities so long as such Debt is supported by a letter
of credit issued by a financial institution for the benefit of Industries and
Industries is obligated to such financial institution under a reimbursement
agreement for the reimbursement of amounts drawn under such letter of credit;
and (iv) in addition to Debt incurred under clauses (i) through (iii) of this
paragraph 6C(2), other Debt of Subsidiaries not exceeding in the aggregate
amount outstanding at any time 15% of Consolidated Net Worth;
6C(3). Loans, Advances and Investments. Make or maintain any Investments
except (a) Investments in Industries or any Subsidiary, including without
limitation, advances or loans between or among Industries or any Subsidiary and
loans and advances to officers and employees of Industries or any Subsidiary in
the ordinary course of business; (b) Investments in Persons engaged in a
Permitted Line of Business (whether or not any such Person is, or after giving
effect to any such Investment becomes, a Subsidiary); (c) Investments in Persons
in connection with Permitted Acquisitions; and (d) Investments in Approved
Investments; provided, however, during the existence of an Event of Default,
neither Industries nor any of its Subsidiaries may make any new Investments
without the prior written consent of the Required Holders;
6C(4). Merger or Consolidation. Merge with or into or consolidate or
exchange shares with any other Person or permit any other Person to merge or
consolidate with or into it, provided that (a) Industries may merge with another
Person if (i) such Person is organized under the laws of the United States of
America or one of its States, (ii) Industries is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing and (b) Subsidiaries of Industries may
merge with and into Industries, any other Subsidiaries, or any other Person if
after giving effect thereto such Person would be a Subsidiary.
6C(5). Sale of Assets. Dispose of any property or assets, except:
(i) assets may be transferred from a Subsidiary to Industries or
another Subsidiary;
(ii) any Wholly-Owned Subsidiary may dissolve or liquidate so
long as the assets of such Subsidiary at the time of such dissolution or
liquidation are transferred to such Subsidiary's shareholder and such
shareholder assumes all of the liabilities of such Subsidiary at the time of
such dissolution or liquidation;
(iii) Industries and its Subsidiaries may factor receivables;
(iv) Industries and its Subsidiaries may effect Asset
Securitizations; and
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(v) the foregoing limitation on the sale, lease or other transfer
of assets shall not prohibit, during any Fiscal Quarter, a transfer of assets by
Industries or any Subsidiary (in a single transaction or in a series of related
transactions) unless (x) the proceeds thereof are not reinvested within 180 days
thereafter in a Permitted Line of Business owned by Industries or such
Subsidiary or (y) the aggregate assets to be so transferred or utilized in a
business line or segment to be so discontinued, when combined with all other
assets transferred, and all other assets utilized in all other business lines or
segments discontinued, during such Fiscal Quarter and the immediately preceding
three Fiscal Quarters, constituted more than 20% of Consolidated Total Assets at
the end of the fourth Fiscal Quarter immediately preceding such Fiscal Quarter;
6C(6). Sale and Lease-Back. Enter into or permit to remain in effect
any arrangement (a "Sale and Lease-Back") with any Person or to which such
Person is a party providing for the leasing by Industries or any of its
Subsidiaries of real or personal property which has been or is to be sold or
transferred by Industries or any of its Subsidiaries to any Person to whom funds
have been or are to be advanced on the security of such property or rental
obligations of Industries or any of its Subsidiaries, unless such arrangement
relates solely to such real or personal property and is entered into within 180
days following the acquisition or construction (permitted pursuant to the
proviso set forth in paragraph 6C(5)(v)) by Industries or such Subsidiary of the
real or personal property;
6C(7). Maintenance of Existence. Other than as permitted by paragraphs
6C(4), 6C(5) and 6C(8), Industries shall, and shall cause each Subsidiary to,
maintain its corporate existence and carry on its business in a Permitted Line
of Business; or
6C(8). Dissolution. Neither Industries nor any of its Subsidiaries
shall suffer or permit dissolution or liquidation either in whole or in part or
redeem or retire any shares of its own stock or that of any Subsidiary, except
through corporate reorganization to the extent permitted by paragraph 6C(4) or
6C(5) or in connection with a Restricted Payment which is permitted pursuant to
paragraph 6C.
6D. ERISA. Industries covenants that it will not, nor permit any
Subsidiary to:
(i) terminate or withdraw from any Plan so as to result in any material
liability to the Pension Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any -prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan (other
than a Multiemployer Plan) which would subject Industries or any Subsidiary to
any material tax, penalty or other liability;
19
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, involving any Plan (other than a Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition, which presents a
material risk of incurring a material liability to the Pension Benefit Guaranty
Corporation.
6E. Fed Regulations, Etc. Industries covenants that it will not, and
will not permit any Subsidiary or any agent acting on behalf of Industries or
any Subsidiary to, take any action which might cause this Agreement or the Notes
to violate or cause you to fail to comply with Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act, in each case as in effect now or as the same may hereafter be
in effect.
6F. Environmental Matters. Industries covenants that it will not, and
will not permit, any Third Party to, except in compliance with all applicable
Environmental Requirements (unless the failure to so comply could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect), (i) use, produce, manufacture, process, generate, store, dispose of at,
manage at, or ship or transport to (collectively "Handle") or transport from the
Properties any Hazardous Materials (other than as provided for below) or (ii)
Handle any Hazardous Materials except for Hazardous Materials used, produced,
released or managed in the ordinary course of business; provided, that
Industries may, and may permit Third Parties to release Hazardous Materials in
amounts which do not require remediation pursuant to applicable law or
regulation, and which do not present any potentially substantial danger to
health, safety or the environment.
7 EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) Industries defaults in the payment of any principal of or
Yield-Maintenance Amount or any other amount payable with respect to any Note
(other than interest) when the same shall become due, either by the terms
thereof or otherwise as herein provided; or
(ii) Industries defaults in the payment of any interest on any Note
for more than five Business Days after the date due; or
(iii) Industries or any of its Significant Subsidiaries defaults
(whether as primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any
20
other obligation for money borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for property whether or
not secured by a purchase money mortgage or any obligation under notes payable
or drafts accepted representing extensions of credit) beyond any period of grace
provided with respect thereto, Industries or any such Significant Subsidiary
fails to perform or observe any other agreement, term or condition contained in
any agreement under which any such obligation is created (or if any other event
thereunder or under any such agreement shall occur and be continuing) and the
effect of such failure or other event is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due (or to be repurchased by Industries or any
such Significant Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing or permitting
acceleration (or resale to Industries or any such Significant Subsidiary) shall
occur and be continuing exceeds $25,000,000; or
(iv) any representation or warranty made by Industries herein
or by Industries or any of its officers in any writing furnished in connection
with or pursuant to this Agreement shall be false in any material respect on the
date as of which made; or
(v) Industries fails to perform or observe any agreement contained
in paragraph 6; or
(vi) Industries fails to perform or observe any other agreement,
term or condition contained herein and such failure shall not be remedied within
30 days after the Responsible Officer obtains actual knowledge thereof; or
(vii) Industries or any Significant Subsidiary makes an assignment
for the benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of Industries or any
Significant Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein called
the "Bankruptcy Law"), of any jurisdiction; or
(ix) Industries or any Significant Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of Industries
or any Significant Subsidiary, or of any substantial part of the assets of
Industries or any Significant Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Significant
Subsidiary) relating to Industries or any Significant Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
21
(x) any such petition or application is filed, or any such
proceedings are commenced, against Industries or any Significant Subsidiary and
Industries or such Significant Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment or
decree is entered appointing any such trustee, receiver, custodian, liquidator
or similar official, or approving the petition in any such proceedings, and such
order, judgment or decree remains unstayed and in effect for more than 60 days;
or
(xi) any order, judgment or decree is entered in any proceedings
against Industries or any Significant Subsidiary decreeing the dissolution of
Industries or any Significant Subsidiary and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(xii) a final judgment or final judgments, in the aggregate, in
excess of $25,000,000 (exclusive of any insurance coverage for which the
insurance company issuing such coverage shall have acknowledged (in writing)
coverage with respect thereto) shall be rendered against Industries or any
Significant Subsidiary and, within 60 days after entry thereof, such judgment is
not discharged or execution thereof stayed pending appeal, or within 60 days
after the expiration of any such stay, such judgment is not discharged; or
(xiii) Industries or any ERISA Affiliate, in its capacity as an
employer under Multiemployer Plan, makes a complete or partial withdrawal from
such Multiemployer Plan resulting in the occurrence by such withdrawing employer
of a withdrawal liability in an amount exceeding $25,000,000 and, within 30 days
after such occurrence such withdrawal liability is discharged; or
(xiv) so long as any Related Document shall be in effect pursuant to
the terms hereof Industries shall fail to comply with the terms of any Related
Document to which it is a party beyond applicable grace periods, if any,
specified in such Related Document; or
(xv) a Material Adverse Effect shall occur as a result of any
Environmental Liability, whether or not disclosed to you (solely for the
purposes hereof such Environmental Liability, individually or in the aggregate,
to be in excess of $25,000,000) and, to the extent such Environmental Liability
is contingent, Industries and/or its Significant Subsidiaries fail to diligently
pursue any action required to be taken by any governmental or regulatory
authority, or diligently, in compliance with applicable laws, avoid taking any
such action or fail to diligently pursue the avoidance of, or reduction of, the
final, non-appealable assessment, judgment or other charge related thereto on
Industries and/or its Significant Subsidiaries, and, to the extent such
Environmental Liability is not contingent and is a final, non-appealable
assessment, judgment or other charge, within 30 days after the final assessment,
adjudication or charge related thereto, such Environmental Liability is not
discharged, remedied or otherwise cured; or
(xvi) any exercise of rights under paragraph 4D of this Series
Note Agreement;
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then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than Industries or any
Subsidiary or Affiliate) may at its option, by notice in writing to Industries,
declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable at par together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Industries, (b) if such event is an Event of Default
specified in any of clauses (viii), (ix) or (x) of this paragraph 7A with
respect to Industries, all of the Notes at the time outstanding shall
automatically become immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by Industries, and (c) if such event is not an Event
of Default specified in clause (viii), (ix) or (x) of this paragraph 7A with
respect to Industries, the Required Holder(s) may at its or their option, by
notice in writing to Industries, declare all of the Notes to be, and all of the
Notes shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by Industries.
7B. Rescission of Acceleration. At any time after any or all of the Notes
shall have been declared immediately due and payable pursuant to paragraph 7A,
the Required Holder(s) may, by notice in writing to Industries, rescind and
annul such declaration and its consequences if (i) all overdue interest on the
Notes, the principal of and Yield-Maintenance Amount, if any, payable with
respect to any Notes which have become due otherwise than by reason of such
declaration, and interest on such overdue interest and overdue principal and
Yield-Maintenance Amount at the rate specified in the Notes shall have been
paid, (ii) any amounts which have become due solely by reason of such
declaration shall not have been paid, (iii) all Events of Default and Defaults,
other than non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C, and (iv)
no judgment or decree shall have been entered for the payment of any amounts due
pursuant to the Notes or this Agreement. No such rescission or annulment shall
extend to or affect any subsequent Event of Default or Default or impair any
right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, Industries
shall forthwith give written notice thereof to the holder of each Note at the
time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both,
23
whether for specific performance of any covenant or other agreement contained in
this Agreement or in aid of the exercise of any power granted in this Agreement.
No remedy conferred in this Agreement upon the holder of any Note is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
8 REPRESENTATIONS, COVENANTS AND WARRANTIES. Industries represents,
covenants and warrants as follows:
8A. Organization. Industries is a corporation duly organized and existing
in good standing under the laws of the jurisdiction in which it is incorporated
or formed and each of its Subsidiaries is duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated or
formed. Industries has and each of its Subsidiaries has the corporate power to
own its respective property to carry on its respective business as now being
conducted and each is duly qualified and authorized to do business in each
jurisdiction which the character of its Properties or the nature of its business
requires such qualification or authorization except for the failure to be so
qualified or authorized would not have a Material Adverse Effect on Industries
and its Subsidiaries, taken as a whole.
8B. Financial Statements. Industries has furnished you with the following
financial statements, identified by a principal financial officer of Industries:
(A) a Consolidated balance sheet of Industries and its Subsidiaries as at
December 31 in each of the years 1996 to 1998, inclusive, and Consolidated
statements of income, Stockholders' Equity and cash flows of Industries and its
Subsidiaries for each such year, all reported on by KPMG LLP, and (B) a
Consolidated balance sheet of Industries and its Subsidiaries as at March 31,
1999 and Consolidated statements of income, Stockholders' Equity and cash flows
for the three-month period ended on each such date, prepared by Industries. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and normal year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of Industries and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of Industries and
its Subsidiaries as at the dates thereof, and the statements of income,
Stockholders' Equity and cash flows fairly present the results of the operations
of Industries and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, condition
(financial or otherwise) or operations of Industries and its Subsidiaries taken
as a whole since December 31, 1998.
24
8C. Actions Pending. Except as set forth in Schedule 8C there is no action,
suit, investigation or proceeding pending or, to the knowledge of Industries,
threatened against Industries or any of its Subsidiaries, or any Properties or
rights of Industries or any of its Subsidiaries, by or before any court,
arbitrator or administrative or governmental body which might, individually or
in the aggregate, result in a Material Adverse Effect.
8D. Outstanding Debt. Neither Industries nor any of its Subsidiaries has
outstanding any Debt except as permitted by paragraph 6C(2). There exists no
default under the provisions of any instrument evidencing Debt in an aggregate
principal amount in excess of $5,000,000 or of any agreement relating thereto.
8E. Title to Properties. Industries has and each of its Subsidiaries has
good and indefeasible title to its respective real Properties (other than
Properties which it leases) and good title to all of its other respective
Properties and assets, including the Properties and assets reflected in the
balance sheet as at December 31, 1998 referred to in paragraph 8B (other than
Properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6C(1). All leases
necessary in any material respect for the conduct of the respective businesses
of Industries and its Subsidiaries are valid and subsisting and are in full
force and effect.
8F. Taxes. Industries has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of Industries are required to be filed giving due regard to any
extensions granted, and each has paid all taxes as shown on such returns and on
all assessments received by it to the extent that such taxes have become due
giving due regard to any extensions granted, except such taxes as are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles.
8G. Conflicting Agreements and Other Matters. Neither Industries nor any of
its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition. Neither the execution
nor delivery of this Agreement or any other Related Document to which it is a
party, nor the exchange of the Notes, nor fulfillment of nor compliance with the
terms and provisions hereof and of the Notes will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
or result in any violation of, or result in the creation of any Lien upon any of
the Properties or assets of Industries or any of its Subsidiaries pursuant to,
the charter or by-laws of Industries or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
Industries or any of its Subsidiaries is subject. Neither Industries nor any of
its Subsidiaries is a party to, or otherwise subject to any provision contained
in, any instrument evidencing Debt of Industries or such Subsidiary, any
agreement relating thereto or any other
25
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of Industries of the
type to be evidenced by the Notes except as set forth in the agreements listed
in Schedule 8G attached hereto.
8H. Offering of Notes. Neither Industries nor any agent acting on the
behalf of Industries has, directly or indirectly, offered the Notes or any
similar security for sale to, or solicited any offers to buy the Notes or any
similar security from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither
Industries nor any agent acting on the behalf of Industries has taken or will
take any action which would subject the issuance or sale of the Notes to the
provisions of section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. Use of Proceeds. Neither Industries nor any Subsidiary owns or has any
present intention of acquiring any "margin stock" as defined in Regulation U (12
C.F.R Part 207) of the Board of Governors of the Federal Reserve System (herein
called "margin stock"). The proceeds of the sale of the Notes were applied in
the manner specified in Part 2.18(a) of Annex 3 to the 1993 Agreement. None of
such proceeds were used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any margin stock or
for the purpose of maintaining, reducing or retiring any Debt which was
originally incurred to purchase or carry any stock that was, at the time, a
margin stock or for any other purpose which would have constituted the
transaction contemplated by the 1993 Agreement, a "purpose credit" within the
meaning of such Regulation U. Neither Industries nor any agent acting on the
behalf of Industries has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation T or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange Act,
in each case as in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan (other than a Multiemployer Plan). No liability to the Pension
Benefit Guaranty Corporation has been or is expected by Industries or any ERISA
Affiliate to be incurred with respect to any Plan (other than a Multiemployer
Plan) by Industries, any Subsidiary or any ERISA Affiliate which is or would be
materially adverse to the business, condition (financial or otherwise) or
operations of Industries and its Subsidiaries taken as a whole. Neither
Industries, nor any Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of Industries and its
Subsidiaries taken as a whole. The execution and delivery of this Agreement and
any other Related Document will be, and the initial issuance and sale of the
Notes to the purchasers was, exempt from, or will not (or did not) involve any
transaction which is subject to, the prohibitions of section 406 of ERISA and
will not (or did not) involve any transaction in
26
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code.
8K. Governmental Consent. Neither the nature of Industries or of any
Subsidiary, nor any of their respective businesses or Properties, nor any
relationship between Industries or any Subsidiary and any other Person, nor any
circumstance in connection with the exchange of the Notes is such as to require
any authorization, consent, approval, exemption or other action by or notice to
or filing with any court or administrative or governmental body (other than such
of the foregoing as shall have been obtained or filed at the Date of Closing and
routine filings after the Date of Closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with the execution
and delivery of this Agreement, the exchange of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L. Disclosure. Neither this Agreement nor any other Related Document nor
any other document, certificate or statement furnished to you by or on behalf of
Industries in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to
Industries or any Subsidiary which materially adversely affects or in the future
may (so far as Industries can now reasonably foresee) materially adversely
affect the business, property or assets, or financial condition of Industries or
any Subsidiaries and which has not been set forth in this Agreement or in any
other Related Document or in the other documents, certificates and statements
furnished to you by or on behalf of Industries prior to the date hereof in
connection with the transactions contemplated hereby. The financial projections
given to you are reasonable based on the assumptions stated therein and the best
information available to the officers of Industries.
8M. Environmental Matters. (i) Subject to the discussion regarding
underground storage tanks in those certain Reports identified in clauses (xiii),
(xiv), (xv), (xviii), (xix), (xx), (xxi) and (xxii) in the definition of the
term "Environmental Reports," neither Industries nor any Subsidiary is subject
to any Environmental Liability or Environmental Requirement which could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(ii) Neither Industries nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state statute similar to
CERCLA. None of the Properties has been identified on any current or proposed
National Priorities List under 40 C.F.R. ss. 300 or any list arising from a
state statute similar to CERCLA. None of the Properties has been identified on
any CERCLIS list.
(iii) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, released, managed at or
shipped or transported to or
27
from the Properties or are otherwise present at, on, in or under the Properties
or, to the best knowledge of Industries, at or from any adjacent site or
facility, except for Hazardous Materials used, produced, manufactured,
processed, generated, stored, disposed of, released and managed in the ordinary
course of business in compliance with all applicable Environmental Requirements
where the failure to do so could reasonably be expected to have a Material
Adverse Effect and except for Hazardous Materials present in amounts which have
not required and do not require remediation, pursuant to applicable law or
regulation, or which have not presented and do not present a potentially
substantial danger to health, safety or the environment.
(iv) Industries and each of its Subsidiaries have procured all permits
necessary under Environmental Requirements for the conduct of its respective
businesses except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
8N. Solvency. As of the Date of Closing and after giving the effect to
the transactions contemplated hereunder and to all other Debt being incurred on
such date in connection therewith (a) the amount of the "present fair salable
value" of the assets of Industries will, as of such date, exceed the amount of
all "liabilities of Industries, contingent or otherwise," as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the solvency of debtors, (b) the present fair
salable value of the assets of Industries will, as of the Date of Closing, be
greater than the amount that will be required to pay the liability of Industries
on its debts as such debts become absolute and matured, (c) Industries will not
have, as of the Date of Closing, an unreasonably small amount of capital with
which to conduct its business, and (d) Industries will be able to pay its debts
as they mature. For purposes of this paragraph 8N "debt" means "liability or a
claim", and "claim" means any (x) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
8O. Absence of Foreign or Enemy Status. Neither Industries nor any of its
Subsidiaries is an "enemy" or an "ally of the enemy" within the meaning of
section 2 of the Trading with the Enemy Act (50 U.S.C. App. (S)(S) 1 et seq.),
as amended. Neither Industries nor any of its Subsidiaries is in violation of,
and neither the issuance and exchange of the Notes by Industries nor the use of
the proceeds thereof as contemplated by this Agreement will violate, the Trading
with the Enemy Act. as amended, or any executive orders, proclamations or
regulations issued pursuant thereto, including, without limitation, regulations
administered by the Office of Foreign Asset Control of the Department of the
Treasury (31 C.F.R., Subtitle B, Chapter V).
9 REPRESENTATIONS OF THE PURCHASER. You represent that you did not
acquire the 1993 Series A Note, the 1993
28
Series B Note or the 1993 Series C Note purchased by you under the 1993
Agreement, with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of your property at all times has been and shall be and remain within your
control. You are not acquiring the Notes to be purchased by you hereunder with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act, provided that the disposition of your property
shall at all times be and remain within your control. You are an "Accredited
Investor" as that term is defined in Rule 501 of Regulation D of the Securities
Act.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined in
the introductory sentence and in paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate (or such other display as may replace Page 678 on
the Telerate) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, (ii) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
29
"Remaining-Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Telerate" shall mean Telerate Services, Inc. or if no longer
available such other comparable service as you may select as a substitute
therefor.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
"Y-M Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or authorized
to work.
10B. Other Terms.
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly controls another Person; (ii) which beneficially owns 5%
or more of the voting stock of another Person; (iii) of which 5% or more of the
voting stock is owned by such Person; or (iv) that is an officer or director of
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Affiliate Transaction Amount" shall mean for any period, with
respect to any transaction described in Paragraph 6C(8) (without regard to the
limitations contained therein), an amount equal to the greater of (a) Zero
Dollars ($0) and (b) the difference between (x) the
30
aggregate value (whether in respect of the payment of a purchase price or the
payment of rents or other amounts, the rendering of services or otherwise) that
would have been obtained by Industries or its Subsidiaries during such period in
such transaction assuming such transaction had been entered into upon fair and
reasonable terms with a Person other than an Affiliate or Subsidiary minus (y)
the aggregate actual value obtained by Industries or its Subsidiaries in
connection with such transaction during such period, all as determined in
accordance with sound financial practices.
"Aladdin" shall have the meaning set forth in the introductory
paragraph hereof.
"Approved Investment" shall mean an Investment in compliance with the
Investment Guidelines.
"Asset Securitization" shall mean the sale of accounts receivable and
related assets of a Person in connection with a bona fide asset securitization
program.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Bank Agreement" shall mean that certain Fourth Amended and Restated
Credit Agreement as of January 28, 1999 among Industries and the Banks, as it
may be amended, modified or supplemented from time to time.
"Banks" shall mean each of First Union National Bank and Wachovia
Bank, N.A. or other financial institutions a party to the Bank Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which commercial banks in New York City and Atlanta, Georgia are
required or authorized to be closed.
"Capital Stock" shall mean any nonredeemable capital stock of
Industries or any Consolidated Subsidiary (to the extent issued to a Person
other than Industries), whether common or preferred.
"Capitalized Lease Obligation" shall mean any rental obligation
which, under generally accepted accounting principles, would be required to be
capitalized on the books of Industries or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"Catoosa Co. IRB" shall mean that issuance of certain bonds by the
Development Authority of Catoosa County, Georgia, pursuant to the terms and
conditions set forth in that certain Indenture of Trust dated as of November 1,
1991.
31
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act.
"CERCLIS" shall mean the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change in Control" shall mean any Acquisition (as defined below)
subsequent to the Date of Closing by any Person, or related Persons constituting
a "group" (as such term is defined in section 13(d) of the Securities Exchange
Act of 1934), of
(a) the power to elect, appoint or cause the election or appointment
of at least a majority of the members of the Board of Directors of
Industries (other than the normal acquisition of proxies by the then
current Board of Directors of Industries), through beneficial ownership of
the capital stock of Industries or otherwise, or
(b) all or substantially all of the Properties and assets of
Industries,
provided, however, that a Change in Control shall not be deemed to have occurred
if
(x) the Acquisition of such power or properties and assets is
pursuant to a transaction in compliance with the provisions of Section
6C(4) hereof and
(y) no Person, or related Persons constituting a "group" for
purposes of section 13(d) of the Securities Exchange Act of 1934, shall
have the power to elect, appoint or cause the election or appointment of at
least a majority of the members of the board of directors of such successor
or transferee.
For purposes of this definition,
"Acquisition" of the power or properties and assets stated
in the preceding sentence means the earlier of
(i) the actual possession thereof and
(ii) the consummation of any transaction or series of
related transactions which, with the passage of time, will give
such Person or Persons the actual possession thereof.
"Closing" shall have the meaning specified in paragraph 2A.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
32
"Confidential Information" shall have the meaning set forth in
paragraph 11H.
"Consolidated" shall mean the consolidated financial information of
Industries and each of its Subsidiaries under generally accepted accounting
principles.
"Consolidated Agreement" shall mean that certain Second Consolidated,
Amended and Restated Note Agreement dated August 31, 1999 among Industries and
Prudential, as it may be amended, restated, modified or supplemented from time
to time in accordance with its terms.
"Consolidated Debt" shall mean at any date the Debt of Industries and
its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Interest Expense" for any period shall mean interest,
whether expensed or capitalized, in respect of Debt of Industries or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" shall mean, for any period, the Net Income
of Industries and its Consolidated Subsidiaries for such period determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of Industries or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" shall mean at any time Stockholder's Equity.
Each Purchaser hereby agrees that:
(i) the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 121 ("FAS 121") relating to, among other
things, the accounting for the impairment of long-lived assets, and its effect
upon the consolidated financial statements of Industries as of and for the
Fiscal Year ended December 31, 1996, shall be disregarded for the purposes of
determining Stockholders' Equity, provided that any charge against income for
the Fiscal Year ended December 31, 1996, resulting from the impairment of long-
lived assets does not exceed $2,000,000; and
(ii) the effect of that certain non-recurring $4,000,000 charge,
incurred by Aladdin during the fourth Fiscal Quarter of 1995 as a result of
income tax reimbursements made to certain executives of Aladdin relating to
their exercise of certain stock options, shall be disregarded when determining
Stockholders' Equity.
"Consolidated Note Holder" shall mean Prudential Insurance Company of
America, the holder of the Series A and Series B Notes under the Consolidated
Agreement.
33
"Consolidated Total Assets" shall mean, at any time, (x) the total
assets of Industries and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of Industries and its Consolidated Subsidiaries, prepared in
accordance with generally accepted accounting principles, plus (y) the accounts
receivable balance reported as of the last day of the calendar month most
recently ended by Industries or a Subsidiary with respect to an Asset
Securitization.
"Consolidated Total Capital" shall mean, at any time, the sum of the
following as of such time (i) Consolidated Net Worth and (ii) Consolidated Debt.
"Consolidated Subsidiary" shall mean at any date any Subsidiary or
other entity the accounts of which, in accordance with generally accepted
accounting principles, would be consolidated with those of Industries in its
consolidated financial statements as of such date.
"Control Event" shall mean
(a) the execution by Industries, any Subsidiary or any Affiliate
of any letter of intent or similar agreement with respect to any
proposed transaction or event or series of transactions or events
that, individually or in the aggregate, could reasonably be expected
to result in a Change in Control; or
(b) the execution of any written agreement that, when fully
performed by the parties thereto, would result in a Change in
Control.
"Control Prepayment Date" shall have the meaning specified in
paragraph 4D.
"Date of Closing" shall have the meaning specified in paragraph 2A.
"Debt" of any Person shall mean at any date, without duplication, all
of the following as of such date (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, and (x) the total accounts receivable
reported as sold as of the last day of the calendar month most recently ended by
Industries or a Subsidiary with respect to an Asset Securitization. For all
purposes of this Agreement, the amount of a Person's Debt under a loan or lease
agreement between such Person and a governmental agency that has issued
34
industrial development bonds or similar instruments, the repayment of which is
secured by the payment obligations of such Person under such loan or lease
agreement, shall be equal to the aggregate principal amount of such bonds or
instruments outstanding at the time of determination less the amount of proceeds
of such bonds or instruments which at such time are on deposit with a trustee or
other fiduciary in a "construction" fund, or other similar fund which would be
available to such trustee or other fiduciary to repay the bonds or other
instruments if then due and payable.
"Debt to Capitalization Ratio" shall mean the ratio of Consolidated
Debt to Consolidated Total Capital.
"Defeased" shall mean fully paid and satisfied or irrevocably
provided for, in either case, without possibility of any future unwinding,
"claw-back", or other failure to remain fully paid, satisfied or irrevocably
provided for.
"Depreciation" shall mean for any period the sum of all depreciation
expenses of Industries and its Consolidated Subsidiaries for such period, as
determined in accordance with generally accepted accounting principles.
"8.46% Note Agreement" shall mean the Amended and Restated Note
Purchase Agreement dated as of August 31, 1999 among Industries and the 8.46%
Note Holders, as it may be amended, restated, modified or supplemented from time
to time in accordance with its terms.
"8.46% Note Holder" shall mean a holder of a promissory note issued
under the 8.46% Note Agreement.
"Environmental Liabilities" shall mean any liabilities, whether
accrued or contingent, arising from or relating in any way to any Environmental
Requirements.
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Reports" means, collectively, each of the following
reports prepared by various consultants for the Borrower: (i) Final Report Phase
II UST Assessment Beck Dye Plant, Calhoun, Georgia, dated October 15, 1992,
Dames & Moore, (ii) Final Report, Phase I Environmental Survey Tifton Spinning
Mill, Tifton, Georgia, dated October 15, 1992, Dames & Moore, (iii) Final Report
Phase I Environmental Survey Horizon Industries, Inc., The Harbinger Company,
Inc., Calhoun, Georgia, dated October 15, 1992, Dames & Moore, (iv) Final Report
Phase I Environmental Survey Horizon Industries, Inc. Central Distribution
Center, Calhoun, Georgia, dated October 15, 1992, Dames & Moore, (v) Final
Report Phase I Environmental Survey Horizon Industries, Inc. Main Facility South
Industrial Boulevard, Calhoun, Georgia, dated October 15, 1992, Dames & Moore,
(vi) Final Report Phase I Environmental Survey Horizon Industries, Inc. Beck Dye
Plant, Calhoun, Georgia, dated
35
October 15, 1992, Dames & Moore, (vii) Final Report Phase I Environmental
Survey LIBCO Mill, Liberty, South Carolina, dated September 29, 1992, Dames &
Moore, (viii) Final Report Phase I Environmental Survey Oak River Mill,
Bennettsville, South Carolina, dated September 29, 1992, Dames & Moore, (ix)
Final Report Phase I Environmental Survey Dixiana Mill, dated September 29,
1992, Dames & Moore, (x) Final Report Phase I Environmental Survey Laurens Park
Mill, East Dublin, Georgia, dated September 29, 1992, Dames & Moore, (xi) Phase
I Environmental Audit Report, Brumlow Mills, Gordon County, Georgia, dated March
2, 1993, Environmental Science & Engineering, Inc., (xii) Report of Results from
Environmental Audit of American Rug Craftsmen Facilities, dated April, 1993,
Jordan, Jones & Goulding, (xiii) Phase I and Phase II Environmental Assessment
of Delaware Valley Wool Scouring Company, Philadelphia, Pennsylvania, dated July
23, 1993, Jordan, Jones & Goulding, (xiv) Phase I and Phase II Environmental
Assessment of Karastan Eden Rug Mill, Eden, North Carolina, dated July 23, 1993,
Jordan, Jones & Goulding, (xv) Phase I and Phase II Environmental Assessment of
Karastan Eden Service Center, Eden, North Carolina, dated July 23, 1993, Jordan,
Jones & Goulding, (xvi) Phase I Environmental Assessment of Karastan Worsted
Mill, Greenville, North Carolina, dated July 20, 1993, Atlanta Environmental
Management, Inc., (xvii) Phase I and Phase II Environmental Assessment Karastan
Spinning Mill, Greenville, North Carolina, dated July 20, 1993, Atlanta
Environmental Management, Inc., (xviii) Phase I and Phase II Environmental
Assessment Karastan Laurel Hill Yarn Mill, Laurel Hill, North Carolina, dated
July 23, 1993, Atlanta Environmental Management, Inc., (xix) Phase I and Phase
II Environmental Assessment Karastan Rocky River Yarn Mill, Calhoun Falls, South
Carolina, dated July 23, 1993, Atlanta Environmental Management, Inc., (xx)
Phase I and Phase II Environmental Assessment Karastan Lyerly Carpet Mill,
Lyerly, Georgia, dated July 23, 1993, Atlanta Environmental Management, Inc.,
(xxi) Phase I and Phase II Environmental Assessment Karastan Summerville Mill,
Summerville, Georgia, dated July 23, 1993, Atlanta Environmental Management,
Inc., (xxii) Phase I and Phase II Environmental Karastan Belton Yarn Mill,
Belton, South Carolina, July 20, 1993, Atlanta Environmental Management, Inc.,
and (xxiii) Phase I and Phase II Environmental Assessment Karastan Landrum Woven
Mill, Landrum, South Carolina, dated July 23, 1993, Atlanta Environmental
Management, Inc.
"Environmental Requirements" shall mean any applicable local, state
or federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as a Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
such Company within the meaning of section 414(c) of the Code.
36
"Event of Default" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "Default" shall mean
any of such events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fiscal Quarter" shall mean any Fiscal Quarter of Industries.
"Fiscal Year" shall mean any Fiscal Year of Industries.
"Funded Debt" shall mean, with respect to any Person, the sum of (i)
all Debt (other than a guarantee by Industries of an Operating Lease of its
Subsidiary) of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or unpaid,
more than one year from, or is directly or indirectly renewable or extendible at
the option of the debtor to a date more than one year (including an option of
the debtor under a revolving credit or similar agreement obligating the lender
or -lenders to extend credit over a period of more than one year) from, the date
of the creation thereof and (ii) all indebtedness attributable to any
Receivables Financing.
"Galaxy" shall mean Galaxy Carpet Mills, Inc., a Delaware
corporation.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"Guaranty Agreement" shall mean any one of the Guaranty Agreements.
37
"Guaranty Agreements" shall mean (a) the Amended and Restated
Guaranty Agreement dated as of September 3, 1993, executed and delivered by
Industries, (b) the Guaranty Agreement dated as of February 25, 1994, executed
and delivered by Aladdin, (c) the Guaranty Agreement dated as of November 3,
1993, executed and delivered by Marketing, (d) the Guaranty Agreement dated as
of January 13, 1995, executed and delivered by Galaxy, (e) the Guaranty
Agreement dated as of May 1, 1995, executed and delivered by Mills, (f) Guaranty
Agreement dated as of July 19, 1995, executed and delivered by Limited, (g)
Guaranty Agreement, dated as of November 12, 1998, executed and delivered by
World Carpets, Inc., (h) Guaranty Agreement, dated as of November 12, 1998,
executed and delivered by World Commercial Carpets, Inc., (i) Guaranty
Agreement, dated as of January 22, 1999, executed and delivered by Mohawk
Servicing, Inc., (j) Guaranty Agreement, dated as of January 22, 1999, executed
and delivered by Mohawk Factoring, Inc., (k) Guaranty Agreement, dated as of
January 22, 1999, executed and delivered by Mohawk Commercial, Inc., (l)
Guaranty Agreement, dated as of January 22, 1999, executed and delivered by
American Weavers LLC, (m) Guaranty Agreement, dated as of January 22, 1999,
executed and delivered by Newmark & James, Inc., (n) Guaranty Agreement, dated
as of March 11, 1999, executed and delivered by Durkan Patterned Carpets, Inc.
and (o) each other Guaranty Agreement executed and delivered by any current or
former direct or indirect Subsidiary of Industries pursuant to the 1993
Agreement.
"Hazardous Materials" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable federal, state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product or constituent, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in any
applicable federal, state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable federal, state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Horizon" shall mean Horizon Industries, Inc., a Georgia corporation,
and its permitted successors and assigns.
"Industries" shall have the meaning set forth in the introductory
paragraph hereof.
"Interest Expense" shall mean interest expense, as defined according
to generally accepted accounting principles.
38
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition or beneficial ownership by such Person of, or of a beneficial
interest in, Capital Stock, partnership interests, bonds, notes, debentures or
other securities issued by any other Person.
"Investment Guidelines" shall mean the guidelines for investment of
funds of Industries and the Subsidiaries as approved by the Board of Directors
of Industries or an authorized executive committee thereof and in effect on the
Date of Closing, as modified or supplemented from time to time with the approval
of the Board of Directors of Industries or an authorized executive committee.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise), any common law right of set off or
banker's lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction) or any other
type of preferential arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation.
"Limited" shall mean Mohawk Limited, a Delaware corporation.
"Material Adverse Effect" shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of Industries
and its Consolidated Subsidiaries taken as a whole, (b) the rights and remedies
of the Purchasers under the Related Documents, or the ability of Industries to
perform its obligations under the Related Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any Related
Document.
"Maturity Factoring Arrangement" shall mean any arrangement with a
Person whereby either Industries or its Subsidiaries contracts out to a Person a
portion of its receivables credit functions and in connection therewith
transfers all or a portion of its accounts receivable in the ordinary course of
business as conducted on the Date of Closing and on terms substantially similar
to those under which such account receivable is created and (i) neither of
Industries retains any liability with respect to the collectibility of such
accounts receivable or any obligation
39
whatsoever with respect thereto or to such Person except for the payment of a
fee and the settlement of any bona fide dispute of the account debtor with
respect to the transaction giving rise to such accounts receivable and (ii) any
funds, amount or other consideration paid by such Person for the transfer of
such accounts receivable shall be payable subsequent to such transfer on a date
certain determined with reference to, and approximately coincident with, the
date such Person anticipates such accounts receivable shall be collected.
"Mills" shall mean Mohawk Mills, Inc., a Delaware corporation.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"1993 Agreement" shall the meaning specified in the introductory
paragraph hereof.
"1993 Series A Note(s)" shall have the meaning specified in paragraph
1A.
"1993 Series B Note(s)" shall have the meaning specified in paragraph
1B.
"1993 Series C Note(s)" shall have the meaning specified in paragraph
1C.
"Offer Determination Date" shall have the meaning specified in
paragraph 4D.
"Officer's Certificate" shall mean a certificate signed in the name of
a Company by its President, one of its Vice Presidents, its Treasurer or its
Corporate Controller.
"Operating Lease" shall mean any lease or rental agreement of
Industries or any of its Subsidiaries, which is not a Capitalized Lease, other
than any such lease or rental agreement having a term of less than twelve months
from the date of inception of such lease or rental agreement.
"Permitted Line of Business" shall mean the manufacturing, marketing
and/or distribution of commercial or home furnishings and floor coverings and
other reasonably related products and any "vertical integration" with respect
thereto.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
40
"Properties" shall mean all real property owned, leased or otherwise
used or occupied by any of Industries or any Subsidiary, wherever located.
"Plan" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by Industries or any ERISA
Affiliate.
"Prior Documents" shall have the meaning specified in paragraph 11Q.
"Prudential Personnel" shall mean, at the time of any Purchase
Request, those individuals (not more than three (3)) then most-recently
designated by you to Industries in writing (with mail and delivery addresses and
facsimile transmission telephone numbers) as the Prudential Personnel. The
Prudential Personnel shall initially be those individuals identified in writing
contemporaneously with the execution and delivery of this Agreement, and shall
be subject to such changes and such designees as you may at any time and from
time to time make by notice to Industries in writing, provided that Industries
shall not be bound by such changes until such notice is received by Industries.
"Receivables Financing" shall mean a transaction pursuant to which
funds are advanced to Industries and/or any of its Subsidiaries in exchange for
which Industries and/or any of its Subsidiaries shall pledge or sell any or all
of its receivables to secure, in whole or in part, the repayment of such funds.
"Related Documents" shall mean this Agreement (and each modification
thereof), any Note and the Sharing Letter and any document or instrument
executed in connection with any of the foregoing.
"Rental Charges" for any period shall mean all payment obligations of
Industries and its Subsidiaries under all Operating Leases and rental
agreements, determined on a Consolidated basis as of the date of determination.
"Required Holder(s)" shall mean the holder or holders of at least
66-2/3% of the aggregate principal amount of the Notes from time to time
outstanding.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of
Industries or any other officer of Industries involved principally in its
financial administration or its controllership function.
"Restricted Payments" shall have the meaning specified in paragraph
6B(iii).
"Sale and Leaseback" shall have the meaning specified in paragraph
6C(6) hereof.
41
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Secured Debt" shall mean any Debt or obligation of any Person which
is secured by, or otherwise benefiting from, a Lien on any property, tangible or
intangible, of Industries or any Subsidiary, whether or not Industries or such
Subsidiary has assumed or become liable for the payment of such Debt.
"Senior Funded Debt" shall mean all Funded Debt other than
Subordinated Debt.
"Series A Note" shall have the meaning specified in paragraph 2A(i)
hereof.
"Series B Note" shall have the meaning specified in paragraph 2A(ii)
hereof.
"Series C Note" shall have the meaning specified in paragraph
2A(iii) hereof.
"Series Note Agreement" shall mean this Amended and Restated Series
Note Agreement dated as of August 31, 1999 among Industries and the Series Note
Holders.
"Series Note Holder" shall mean a holder of a promissory note issued
under an Series Note Agreement.
"Sharing Agreement" shall mean that certain Sharing Agreement dated as
of the date hereof, between Industries, the Banks, each 8.46% Note Holder, the
Consolidated Note Holder and you.
"Significant Holder" shall mean (i) you, so long as you shall hold (or
be committed under this Agreement to purchase) any Note, or (ii) any other
holder of at least 5% of the aggregate principal amount of the Notes from time
to time outstanding.
"Significant Subsidiary" shall mean, as determined with reference to
the most recent financial statements delivered pursuant to paragraph 5A(1), a
Subsidiary or Subsidiaries that either (a) individually or in the aggregate,
shall have net sales equaling or exceeding 3% of the net sales of Industries and
its Subsidiaries on a Consolidated basis or (b) individually or in the
aggregate, shall have total assets equaling or exceeding 31% of the total assets
of Industries and its Subsidiaries on a Consolidated basis.
"Stockholders' Equity" shall mean, at any time, the stockholders'
equity of Industries and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of Industries and its
Consolidated Subsidiaries prepared in accordance with generally accepted
accounting principles, but excluding any Redeemable Preferred Stock of
Industries or any of its Consolidated Subsidiaries. Shareholders' equity
generally would include, but not be limited to, (i) the par or stated value of
all outstanding
42
Capital Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various
deductions such as (A) purchases of treasury stock, (B) valuation allowances,
(C) receivables due from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) foreign currency translation
adjustments.
"Subordinated Debt" shall mean the Funded Debt of the Industries and
any Subsidiaries which (i) is validly and expressly subordinated in right of
payment to the Notes; and (ii) has, when issued, a Weighted Average Life to
Maturity greater than the remaining Weighted Average Life to Maturity of the
Notes.
"Subsidiary" shall mean any corporation of which at least a majority
of the outstanding voting securities are owned or controlled, directly or
indirectly, by Industries.
"Summerville City IRB" shall mean that issuance of certain bonds by
The Development Authority of the City of Summerville, Georgia, pursuant to the
terms and conditions set forth in that Trust Indenture dated as of September 1,
1997.
"S&P" shall mean Standard & Poor's Corporation.
"Termination Letter" shall that certain Termination Letter, dated as
of the date hereof, between Industries, the Banks, each 8.46% Note Holder, the
Consolidated Note Holder and you.
"Third Party" shall mean all lessees, sublessees, licensees and other
users of the Properties.
"Transferee" shall mean any direct or indirect transferee of all or
any part of any Note purchased by you under this Agreement provided, however; in
no event shall any such transferee be a Person identified on Schedule 10B.
"Unsecured" with respect to Debt means that such Debt that is not
Secured Debt.
"Voting Stock" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
"Weighted Average Life to Maturity" shall mean as applied to any
indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment, including
payment at final maturity, in respect thereof, by (y) the number of years
(calculated to
43
the nearest one-twelfth year) which will elapse between such date and the date
as of which such payment is to be made.
"Wholly-Owned Subsidiary" shall mean any Subsidiary, all of the Voting
Stock of which shall, at the time of determination, be owned by Industries or
another Wholly-Owned Subsidiary.
"Year 2000 Issues" shall mean the actual and reasonably anticipated
costs, claims, losses, and liabilities associated with the inability of certain
computer applications to handle effectively data that includes dates on and
after January 1, 2000, as such inability in respect of Industries or any
Subsidiary and in respect of their respective material customers, suppliers and
vendors affects the business, operations, and financial condition of Industries
or any Subsidiary.
10C. Accounting Principles, Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
most recent audited consolidated financial statements of Industries and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A of, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. Industries agrees that, so long as you shall hold
any Note, it will make payments of principal of, interest on and any Yield-
Maintenance Amount payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to your
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as you may designate in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing of any Note,
you will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. Industries agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as you
have made in this paragraph 11A.
44
11B. Expenses. Industries agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all out-of-pocket
expenses (including without limitation legal fees) arising in connection with
such transactions, including (i) all expenses incurred by you and any Transferee
in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement or any other Related Document, including
without limitation, paragraph 5K and all stamp, intangibles, recording and other
taxes, if any, payable by you and/or any Transferee with respect to this
Agreement or any other Related Document and any subsequent proposed modification
or waiver of, or proposed consent under, this Agreement, whether or not such
proposed modification or waiver shall be effected or proposed consent granted,
and (ii) the costs and expenses, including attorneys' fees, actually incurred by
you or such Transferee in connection with the restructuring, refinancing or
"work out" of this Agreement or any other Related Document or the transactions
contemplated hereby or thereby or in enforcing (or determining whether or how to
enforce) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated hereby or by
reason of your or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The obligations
of Industries under this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by you or any Transferee and the payment of
any Note. The obligations of Industries under paragraph 11B of the 1993
Agreement shall survive the execution and delivery of this Agreement and the
Related Documents.
11C. Consent to Amendments. This Agreement may be amended, and
Industries may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if Industries shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
except that, without the written consent of the holder or holders of all Notes
at the time outstanding, no amendment to this Agreement shall change the
maturity of any Note, or change the principal of, or the rate or time of payment
of interest on or any Yield-Maintenance Amount payable to any Note, or affect
the time, amount or allocation of any prepayments, or change the proportion of
the principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between Industries and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as
45
registered notes without coupons in denominations of at least $1,000,000, except
as may be necessary to reflect any principal amount not evenly divisible by
$1,000,000. Industries shall keep at its principal office a register in which it
shall provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
Industries, it shall, at its expense, execute and deliver one or more new Notes
of like tenor and of a like aggregate principal amount, registered in the name
of such Transferee or Transferees. At the option of the holder of any Note, such
Note may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of Industries. Whenever any Notes are so
surrendered for exchange, Industries shall, at its expense, execute and deliver
the Notes which the holder making the exchange is entitled to receive. Every
Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, Industries will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, Industries may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and Industries, shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person
(other than any Person identified on Schedule 10B) on such terms and conditions
as may be determined by such holder in its sole and absolute discretion,
provided that any such participation shall be in a principal amount of at least
$1,000,000.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of Industries in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of you or any Transferee. Subject to the preceding sentence,
this Agreement and the other Related Documents embody the entire agreement and
understanding between you and Industries and supersede all prior agreements and
understandings relating to the subject matter hereof.
46
11G. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of either of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
11H. Disclosure to Other Persons. Industries acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of Industries or any Subsidiary in connection
with or pursuant to this Agreement to (i) such holder's directors, officers,
employees, agents and professional consultants, (ii) any other holder of any
Note, (iii) any Person to which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, (v) any Person from which such
holder offers to purchase any security of Industries, (vi) any federal or state
regulatory authority having jurisdiction over such holder, (vii) the National
Association of Insurance Commissioners or any similar organization or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (a) in compliance with any law, rule, regulation or order applicable
to such holder, (b) in response to any subpoena or other legal process or
informal investigative demand or (c) in connection with any litigation to which
such holder is a party. Except as provided above, each holder of a Note agrees
to exercise its best efforts to hold in confidence and not to disclose
Confidential Information (as defined below). The term "Confidential Information"
shall mean any information delivered or made available by Industries to a holder
which is either financial or clearly indicated to be Confidential Information
and does not include information which (x) was publicly known, or otherwise
known to such holder, at the time of disclosure, (y) subsequently becomes
publicly known other than through the act of or omission by such holder, or (z)
otherwise becomes known to such holder, other than through disclosure by
Industries.
11I. Notices. All written communications provided for hereunder shall
be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to you, addressed to you at the address specified
for such communications in the Purchaser Schedule attached hereto, or at such
other address as you shall have specified to Industries in writing, (ii) if to
any other holder of any Note, addressed to such other holder at such address as
such other holder shall have specified to Industries in writing or, if any such
other holder shall not have so specified an address to Industries, then
addressed to such other holder in care of the last holder of such Note which
shall have so specified an address to Industries, and (iii) if to Industries,
addressed to it at 160 South Industrial Boulevard, Calhoun, Georgia 30703-7002,
Attention: Vice President-Finance, or at such other address as Industries shall
have specified to the holder of each Note in writing; provided, however, that
any such communication to Industries may also, at the option of the holder of
any Note, be delivered by any other means either to Industries at its address
specified above or to any officer of Industries.
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11J. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in your judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. Independence of Covenants. All covenants of Industries hereunder
shall be of independent effect so that if a particular action or condition is
not permitted by any one of such covenants, the fact that it would be permitted
by an exception to, or otherwise be within the other limitations of, another
covenant, shall not avoid the occurrence of an Event of Default or Default if
such action is taken or condition exists.
11M. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York. INDUSTRIES HEREBY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE
REQUIRED HOLDERS, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE
NOTES OR ANY OTHER RELATED DOCUMENT SHALL BE LITIGATED IN SUCH COURTS, AND
INDUSTRIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURTS.
11N. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11O. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
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11P. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
11Q. No Novation. The parties hereto have entered into this Agreement
and the other Related Documents solely to amend and restate and restructure the
terms of, and obligations owing under and in connection with, the 1993 Agreement
and any document executed in connection with either Agreement (the "Prior
Documents"). The parties do not intend this Agreement, the other Related
Documents or the transactions contemplated hereby to be, and this Agreement, the
other Related Documents or the transactions contemplated hereby shall not be
construed to be, a novation of any of the obligations owing by Aladdin under or
in connection with any of the Prior Documents.
[Signatures Commence On Next Page.]
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If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
Industries, whereupon this letter shall become a binding agreement among
Industries and you.
Very truly yours,
MOHAWK INDUSTRIES, INC.
By: ______________________
Title:
[Acceptance On Next Page.]
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Accepted:
Separately Executed by each of the
Following Purchasers]
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: _____________________________
Name:
Title:
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JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: _____________________________
Name:
Title:
[Signatures continued on next page.]
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INVESTORS PARTNER LIFE INSURANCE
COMPANY
By: _____________________________
Name:
Title:
[Signatures continued on next page.]
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PRINCIPAL LIFE INSURANCE COMPANY
By: PRINCIPAL CAPITAL MANAGEMENT,
LLC, a Delaware limited liability
company, its authority signatory
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
[Signatures continued on next page.]
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THE FRANKLIN LIFE INSURANCE COMPANY
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
[Signatures continued on next page.]
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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: _____________________________
Name: Robert R. Derrick
Title: Vice President