SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
|_|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File
Number 1-6853
Shaw Industries, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-1032521
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
616 East Walnut Avenue,
Dalton, Georgia 30720
Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 706/278-3812
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class On Which Registered
Common Stock, No Par Value The New York Stock Exchange
$1.11 Stated Value The Pacific Stock Exchange
Rights to Purchase Series A
Participating Preferred Stock The New York Stock Exchange
$.50 Stated Value The Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF ACT: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filled by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports and (2) has been subject to such filing
requirements for the past 90 days. Yes x No_____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the closing sales price on The New York
Stock Exchange on March 17, 1995 was: $1,546,095,033
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Title of Each Class Outstanding at March 17, 1995
Common Stock, No Par Value 137,017,402 Shares
DOCUMENTS INCORPORATED BY REFERENCE
1994 Annual Report to Shareholders --- Part II.
Definitive Proxy Statement for the 1995 Annual Meeting of Shareholders on April
27, 1995 --- Part III.
<PAGE>
PART I
Item I. Business
Shaw Industries, Inc. ("Shaw" or the "Company") is the world's largest
carpet manufacturer based on both revenue and volume of production. Shaw designs
and manufactures approximately 2,500 styles of tufted and woven carpet for
residential and commercial use under the PHILADELPHIA, TRUSTMARK, CABIN CRAFTS,
SHAW COMMERCIAL CARPETS, STRATTON, NETWORX, SHAWMARK, EVANS BLACK, SALEM,
SUTTON, KOSSET, CROSSLEY, ABINGDON, REDBOOK, MINSTER, INVICTA and TERZA trade
names and under certain private labels. The Company's manufacturing operations
are fully integrated from the processing of yarns through the finishing of
carpet. The Company's carpet is sold in a broad range of prices, patterns,
colors and textures with the majority of its sales in the medium to high retail
price range. Shaw sells its products to retailers, distributors and commercial
users throughout the United States, Canada, Mexico, Australia and the United
Kingdom and, to a lesser degree, exports to additional overseas markets.
On May 31, 1994, the Company entered into an agreement to form a joint
venture with Grupo Industrial Alfa, S.A. de C.V. of Monterrey, Mexico
("Alfa"), for the manufacture, distribution and marketing of carpets, rugs and
related products in Mexico and South America. The Company acquired a
fifty-one percent interest in Terza, S.A. de C.V., and accordingly, the
subsidiary is included in consolidation at December 31, 1994 and the
results of operations of Terza are included in the Company's consolidated
financial statements since May 31, 1994.
On January 9, 1995, the Company announced that it had acquired through
its wholly owned subsidiary, Carpets International (U.K.) Plc,
substantially all of the operating assets of the Carpet Division of Coats
Viyella Plc for approximately $29.4 million.
On March 1, 1995, the Company announced that a joint venture earlier formed
with Versax, S.A. de C.V., a subsidiary and successor in-interest to Alfa,
had acquired some of the carpet manufacturing assets of Tapetes Luxor, S.A.
de C.V. and Corporacion Santa Rosa, S.A. de C.V.
The Company, based upon its international acquisitions, is now
positioned to supply the Australian, Pacific Rim and European markets with high
quality products. For 1994 and 1993, international operations accounted for 10.4
percent and 3.9 percent of the Company's net sales, respectively. As a result of
its foreign expansion, the Company has limited exposure to fluctuations in
foreign currency exchange rates on its intercompany payables and on certain
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other U.S. dollar denominated net liabilities of its foreign subsidiaries. The
Company may employ foreign exchange contracts when, in the normal course of
business, they are determined to effectively manage and reduce such exposure.
Geographical information about the Company's sales, operating profit and
identifiable assets is incorporated by reference to page 18 of Exhibit 13 to
this report. The results of the acquired operations in fiscal 1994 did not have
a material effect on the Company's net income.
Products and Marketing
Substantially all carpet manufactured by the Company is tufted carpet
made from nylon and polypropylene yarn. In the tufting process, yarn is inserted
by multiple needles into a synthetic backing, forming loops which may be cut or
left uncut, depending on the desired texture or construction. According to
industry estimates, tufted carpet accounted for over 91% of unit volume
shipments of carpet manufactured in the United States during 1994. Substantially
all carpet manufactured in the United States is made from synthetic fibers, with
nylon accounting for 65.2% of the total, polypropylene 24.9%, polyester 9.4% and
wool 0.5%. During 1994, the Company processed approximately 95% of its
requirements for carpet yarn in its own yarn processing facilities.
The Company believes that its significant investment in modern,
state-of-the-art equipment has been an important factor in achieving and
maintaining its leadership position in the marketplace. During the past five
fiscal years, the Company has invested approximately $718 million in property
additions (including acquisitions). The Company continually seeks
opportunities for increasing its sales volume and market share. For example, the
Company continues to expand its product lines of carpet manufactured from
polypropylene fiber, including fibers produced by the Company's own extrusion
equipment. The Company also has a manufacturing facility for the production of
carpet tiles for the commercial market.
The overall level of sales in the carpet industry is influenced by a
number of factors, including consumer confidence and spending for durable goods,
interest rates, turnover in housing, the condition of the residential
construction industry and the overall strength of the economy.
The marketing of carpet is influenced significantly by current trends in
style and fashion, principally color trends. The Company believes it has been a
leader in the development of color technology in the carpet industry and that
its dyeing facilities are among the most modern and versatile in the industry.
The Company maintains an in-house product development department to identify
developing color and style trends which are expected to affect its customers'
buying decisions. In 1994, this department was further strengthened by the
completion of the Shaw Industries Research and Development Center. This
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state-of-the-art complex includes a 75,000 square foot pilot plant featuring
sample extrusion, yarn processing, tufting, dyeing, coating and shearing
equipment, and three fiber and dye development laboratories.
Sales and Distribution
The Company's products are marketed domestically by approximately 950
salaried sales personnel in its various marketing divisions directly to
retailers and distributors and to large national accounts through the Company's
National Accounts Division. The Company's ten (10) regional warehouse facilities
and seven (7) redistribution centers, along with its centralized management
information system, enable it to provide prompt delivery of its products to both
its retail customers and wholesale distributors. The Company's substantial
investment in management information systems permits efficient production
scheduling and control of inventory levels.
The Company sells to approximately 42,000 retailers, distributors and
national accounts located throughout the United States and Canada. Retailers and
national accounts, on a combined basis, accounted for approximately 86% of the
Company's carpet sales for 1994. Shaw also sells to approximately 100 wholesale
distributors. Approximately 4% of the Company's carpet sales in 1994 were to
distributors. Sales of Shaw products in foreign markets, including the sales of
foreign subsidiaries, accounted for approximately 10% of total sales in 1994. No
single customer accounted for more than 2% of the Company's sales during 1994.
Competition
The carpet industry is highly competitive with more than 200 companies
engaged in the manufacture and sale of carpet in the United States. Carpet
manufacturers also face competition from the hard surface floorcovering
industry. The principal methods of competition within the carpet industry are
quality, style, price and service. The Company believes its strategically
located regional warehouse facilities and redistribution centers provide a
competitive advantage by enabling it to supply carpet on a timely basis to
customers. The Company's long-standing practice in investing in modern,
state-of-the-art equipment contributes significantly to its ability to compete
effectively on the basis of quality, style and price.
Raw Materials
The principal raw materials used by the Company are nylon fiber and
filament, and synthetic backing; additional raw materials include polyester,
polypropylene and wool fibers and filaments, jute, latex and dye.
During 1994, the Company experienced no significant shortages of raw materials.
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Employees
At December 31, 1994, the Company had approximately 24,600 full-time
employees. In the opinion of management, employee relations are good. Employees
are involved in the Quality Improvement Process which began in 1985. This
program was designed to improve the Company's products and services through
education and training. None of the Company's employees in the United States are
represented by unions. Employees of foreign subsidiaries are represented by
unions.
Environmental Matters
Management believes the Company is currently in compliance in all
material respects with applicable federal, state and local statutes and
ordinances regulating the discharge of materials into the environment and
otherwise relating to the protection of the environment. Management does not
believe the Company will be required to expend any material amounts in order to
remain in compliance with these laws and regulations or that compliance will
materially affect its capital expenditures, earnings or competitive position.
During 1994, the Company continued its commitment to the environment.
The Company's Research and Design Center was opened successfully in 1994 and was
the first commercial application of concrete produced using carpet by-products.
In this recycling process, a portion of the conventional concrete substrate is
replaced with shredded carpet remnants. Laboratory tests indicate that this
product is equal to, and in some ways superior to, conventional concrete.
Because of its commitment to finding new ways of using mill waste, the
Company is aggressively pursuing a situation where all its waste products
can be used in an environmentally friendly way. Future possibilities for use of
the fiber reinforced concrete include road and bridge construction, military
applications, building foundations, tile, brick and concrete blocks.
Patents, Trademarks, etc.
Patent protection has not been significant to the Company's business,
although the Company does hold several patents covering machinery used in a
specific carpet coloring process and has several patent applications pending.
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Item 2. Properties
Shaw's executive offices are located in Dalton, Georgia. The principal
facilities operated by Shaw and described below are owned except as otherwise
noted:
Approximate Principal Products
Location Sq. Ft. or Functions
Dalton, Georgia 46,700 Executive headquarters
Dalton, Georgia 145,000 Administrative offices
Dalton, Georgia 114,600 Administrative offices
Dalton, Georgia 229,500 Administrative offices
and distribution
Dalton, Georgia 309,800 Administrative offices
and distribution
Dalton, Georgia 291,000 Administrative offices
and distribution
Dalton, Georgia 235,500 Administrative offices
and distribution
Dalton, Georgia 372,700 Administrative offices
and distribution
Cartersville, Georgia 138,900 Administrative offices
and warehousing
Dalton, Georgia 601,000 Distribution
Dalton, Georgia 400,000 Distribution
Dalton, Georgia 303,200 Distribution
Dalton, Georgia 371,600 Distribution
Ringgold, Georgia 649,100 Distribution
Ringgold, Georgia 224,200 Distribution
Andalusia, Alabama 1,119,000 Yarn extrusion
Thomson, Georgia 258,300 Yarn extrusion
Valley Head, Alabama(1) 160,000 Yarn processing
Bainbridge, Georgia 450,000 Yarn processing
Blue Ridge, Georgia(2) 75,100 Yarn processing
Calhoun, Georgia 262,100 Yarn processing
Chatsworth, Georgia(2) 36,800 Yarn processing
Chatsworth, Georgia 117,200 Yarn processing
Lafayette, Georgia 131,900 Yarn processing
Milledgeville, Georgia 78,600 Yarn processing
Rome, Georgia 40,600 Yarn processing
Decatur, Tennessee(1) 151,000 Yarn processing
Eton, Georgia 423,000 Yarn processing and
tufting
Stevenson, Alabama 441,000 Yarn spinning
Chatsworth, Georgia 188,300 Yarn spinning
Dallas, Georgia 138,500 Yarn spinning
Dalton, Georgia 241,600 Yarn spinning
Ellijay, Georgia 157,100 Yarn spinning
Fitzgerald, Georgia 250,000 Yarn spinning
Newnan, Georgia 289,000 Yarn spinning
5
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Approximate Principal Products
Location Sq. Ft. or Functions
Tifton, Georgia 142,500 Yarn spinning
Toccoa, Georgia 139,000 Yarn spinning
Trenton, Georgia 192,300 Yarn spinning
Trenton, SC 169,500 Yarn spinning
South Pittsburg, TN 187,900 Yarn spinning
Cartersville, Georgia 317,600 Tufting, dyeing &
coating
Cartersville, Georgia 171,800 Tufting, dyeing &
coating
Dalton, Georgia 650,240 Tufting, dyeing &
coating
Dalton, Georgia 461,000 Tufting, dyeing &
coating
Dalton, Georgia 326,000 Tufting, dyeing &
coating
Dalton, Georgia 354,900 Tufting, dyeing &
coating
Dalton, Georgia 579,600 Tufting, dyeing &
coating
Dalton, Georgia 376,200 Tufting & printing
Ringgold, Georgia 201,000 Tufting
Dalton, Georgia 150,000 Dyeing
Dalton, Georgia 267,000 Dyeing and coating
Dalton, Georgia 231,300 Printing, foaming &
warehousing
Cartersville, Georgia(2) 192,000 Carpet tile
manufacturing
Cartersville, Georgia 255,200 Contract carpet
manufacturing
Charlotte, N.C. 112,400 Backing manufacturing
Ringgold, Georgia(2) 248,000 Finishing and rug
manufacturing
Winchester, Tennessee 320,600 Carpet manufacturing
Chickamauga, Georgia(2) 219,500 Sample manufacturing
and warehousing
Dalton, Georgia 197,680 Sample manufacturing
and warehousing
Dalton, Georgia(2) 103,100 Sample manufacturing
and warehousing
Dalton, Georgia 147,200 Sample manufacturing and
warehousing
Dalton, Georgia (2) 154,800 Sample manufacturing and
warehousing
Dalton, Georgia (2) 45,200 Carpet store
Dalton, Georgia 55,000 Design Center
Dalton, Georgia 85,000 Research and Development
Center
6
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Approximate Principal Products
Location Sq. Ft. or Functions
Bradford, England 746,000 Tufting, weaving, coating,
distribution and
administrative offices.
Gwent, Wales 265,000 Yarn extrusion, yarn
processing, tufting,
dyeing and coating
Victoria, Australia 1,425,000 Yarn extrusion, yarn
processing, tufting,
dyeing, coating,
distribution and
administrative offices
Monterrey, Mexico 288,000 Yarn processing,
tufting, dyeing,
coating, distribution
and adminstrative
offices.
(1) Leased from Industrial Development Boards.
(2) Leased property.
Shaw maintains leased warehouses and customer service facilities in or
near Dallas; Los Angeles (2); Seattle; San Francisco; Denver; Chicago;
Minneapolis; Boston; and, Cranbury, New Jersey. Each leased warehouse facility
includes a sales showroom. The Company also maintains redistribution centers in
Orlando, Florida; Columbus, Ohio; Mobile, Alabama; Kernersville, North Carolina;
Mechanicsburg, Pennsylvania; St. Louis, Missouri; and, Fredericksburg, Virginia.
Management of the Company believes all of its properties are generally well
maintained, suitable and adequate for its current and anticipated future
operations, and are substantially utilized.
7
<PAGE>
Item 3. Legal Proceedings
From time to time the Company is subject to claims and suits arising in
the course of its business. In April 1993, the Company became a defendant in
certain litigation alleging personal injury resulting from personal exposure to
volatile organic compounds found in carpet produced by the Company. The
complaints seek injunctive relief and unspecified money damage on all claims.
The Company has denied any liability. The Company believes that it has
meritorious defenses and that the litigation will not have a material adverse
effect on the Company's financial condition or results of operations. In June
1994, the Company and several other carpet manufacturers received grand jury
subpoenas from the Antitrust Division of the United States Department of Justice
relating to an investigation of the industry. The Company believes that once
this investigation is completed it will not have a material adverse effect on
the Company's financial condition or results of operations.
At the end of fiscal year 1994, there were no other pending legal
proceedings to which the Company was a party or to which any of its property was
subject which, in the opinion of management, were likely to have a material
adverse effect on the Company's business, financial condition or results of
operations.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
8
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Item 4(A). Executive Officers of the Registrant
Officer
Name Age Since Position
---- --- ------- --------
J. C. Shaw 65 1967 Chairman of the Board
of Directors
Robert E. Shaw 63 1967 President and Chief
Executive Officer
and Director
William C. Lusk, Jr. 59 1971 Senior Vice President
and Treasurer and
Director
W. Norris Little 63 1978 Senior Vice President,
Operations and
Director
Vance D. Bell 43 1983 Vice President,
Marketing
Bennie M. Laughter 43 1986 Vice President,
Secretary and General
Counsel
Carl P. Rollins 51 1991 Vice President
Douglas H. Hoskins 60 1978 Controller
Messrs. J. C. Shaw and Robert E. Shaw are brothers. There are no other
family relationships among any of the executive officers of the Company.
Officers of the Company are elected annually by the Board of Directors.
All of the executive officers of the Company except for Mr. Rollins have
served as executive officers for the Company for more than the past five years.
Mr. Rollins joined the Company in June, 1991, as a Vice President. Prior to
June, 1991, Mr. Rollins had been engaged in the private practice of law with the
firm of McCamy, Phillips, Tuggle, Rollins & Fordham, in Dalton, Georgia.
9
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PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters
The high and low sales prices for the Company's common stock as reported
by the New York Stock Exchange and the amount of dividends paid by quarter for
the last two fiscal years are set forth on page 1 of Exhibit 13.
Reference is made to Note 2 of Notes to Consolidated Financial Statements
on page 12 of Exhibit 13 for information concerning restrictions on the payment
of cash dividends.
At March 1, 1995, there were 4,449 holders of record of the Company's
common stock.
Item 6. Selected Financial Data
This information is set forth on pages 4 - 5 of the Exhibit 13 under the
caption "Ten-Year Financial Review."
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This information is set forth on pages 2 - 3 of Exhibit 13 to this
report.
Item 8. Financial Statements and Supplementary Data
This information is set forth on pages 6 - 20 of Exhibit 13.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
10
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors is incorporated by reference to
"Election of Class of Directors" on pages 3 - 6 of the Proxy Statement for the
1995 Annual Meeting of Shareholders. Reference is also made to Item 4(A) of Part
I of this report, "Executive Officers of the Registrant," which information is
incorporated herein.
Item 11. Executive Compensation
This information is incorporated by reference to "Executive Compensation"
on pages 7 - 14 of the Proxy Statement for the 1995 Annual Meeting of
Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is incorporated by reference to "Voting Rights and
Principal Shareholders" and "Election of Directors" on pages 1 -2 and 3 - 6
respectively, of the Proxy Statement for the 1995 Annual Meeting of
Shareholders.
11
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PART IV
Item 13.Certain Relationships and Related Transactions
This information is incorporated by reference to "Certain Relationships"
on page 5 of the Proxy Statement for the 1995 Annual Meeting of Shareholders.
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Exhibit 13, a copy of which is filed with this Form 10-K, contains
the balance sheets as of December 31, 1994, and January 1, 1994, the
related statements of income, shareholders' investment and cash flows for
each of the three years in the period ended December 31, 1994, and the
related report of Arthur Andersen LLP. These financial statements and the
report of Arthur Andersen LLP are incorporated herein by reference. The
financial statements, incorporated by reference, include the following:
- Balance Sheets -- December 31, 1994, and January 1,
1994.
- Statements of Income and Statements of Shareholders' Investment
for the years ended December 31, 1994, January 1, 1994, and December 26, 1992.
- Statements of Cash Flows for the years ended December 31, 1994, January
1, 1994, and December 26, 1992.
- Notes to Financial Statements -- December 31, 1994, January 1, 1994, and
December 26, 1992.
2. Financial Statement Schedule
- Report of Independent Public Accountants as to Schedule:
Schedule
Number
II Valuation and Qualifying Accounts for the Years Ended December
31, 1994, January 1, 1994 and December 26, 1992.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Shaw Industries, Inc.:
We have audited, in accordance with generally accepted auditing standards,
the financial statements of Shaw Industries, Inc. included in the annual report
to shareholders incorporated by reference in this Form 10-K and have issued our
report thereon dated February 8, 1995. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. Schedule II is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 8, 1995
<PAGE>
SCHEDULE II
SHAW INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, JANUARY 1, 1994 AND DECEMBER 26, 1992
<TABLE>
<CAPTION>
Additions
Balance at Charged to
Beginning Costs and Balance at
of Year Expenses Deductions End of Year
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1992:
Allowance for doubtful accounts and
discounts $ 8,289 $ 84,675 $ 78,143 $ 14,821
YEAR ENDED JANUARY 1, 1994:
Allowance for doubtful accounts and
discounts $ 14,821 $ 98,230 $ 100,000 $ 13,051
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts and
discounts $ 13,051 $ 112,978 $ 108,104 $ 17,925
</TABLE>
<PAGE>
Number Description
3. Exhibits incorporated by reference or filed with this report.
3(a) Amended and Restated Articles of Incorporation. [Incorporated herein
by reference to Exhibit 3(a) to Registrant's Registration Statement filed with
the commission on December 28, 1993 (File No. 33-51719).]
3(b) Bylaws. [Incorporated herein by reference to Exhibit 3(b) to
Registrant's Registration Statement filed with the commission on December 28,
1993 (File No. 33-51714).]
4(a) Specimen form of Common Stock Certificate. [Incorporated herein by
reference to Exhibit 2 to Registrant's Report on Form 8-A filed with the
Securities and Exchange Commission on May 12, 1989 (File No. 1-6853).]
4(b) Articles II, V and VI of the Restated Articles of
Incorporation, as amended, contained in Exhibit 3(a), and Articles Two and Seven
and Section 8.1 of the Bylaws of Registrant, contained in Exhibit 3(b), and
Statement of Designation, Preferences and Rights of Series A Participating
Preferred Stock, filed as Exhibit 3(c), are incorporated herein by reference.
4(c) Rights Agreement dated as of April 10, 1989, between
Registrant and Citizens and Southern Trust Company (Georgia), N.A., as Rights
Agent. [Incorporated herein by reference to Exhibit 1 to Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission on May 5,
1989 (File No.
1-6853).]
10(a) Reserved
10(b)* Deferred Compensation Plan and form of Deferred
Compensation Agreement of Registrant as adopted in April, 1980. [Incorporated
herein by reference to the Registrant's July 2, 1994 Form 10-K filed with the
Securities and Exchange Commission].
10(c) Reserved
<PAGE>
10(d) Reserved
10(e) Reserved
10(f) Reserved
10(g) Credit Agreement dated November 30, 1994, between Registrant and
Nationsbank of Georgia, National Association, regarding a $600,000,000 revolving
credit facility.
10(h)* 1987 Incentive Stock Option Plan of the Registrant. [Incorporated
herein by reference to Exhibit A to Registrant's 1987 Proxy Statement, dated
September 22, 1987 (File No. 1-6853).]
10(i) Reserved
10(j)* 1989 Discounted Stock Option Plan of the Registrant. [Incorporated
herein by reference to Exhibit A to Registrant's 1989 Proxy Statement, dated
September 21, 1989 (File No. 1-6853).]
10(k)* 1992 Incentive Stock Option Plan of the
Registrant. [Incorporated herein by reference to
Exhibit A to Registrant's 1992 Proxy
Statement, dated September 18, 1992 (File No.1-6853).]
11 Computation of Earnings per Share for the fiscal years ended
December 31, 1994, January 1, 1994 and December 26, 1992.
13 Items Incorporated by Reference from the 1994 Annual Report to
Shareholders.
21 List of Subsidiaries.
23 Consent of independent public accountants.
27 Financial Data Schedule.
*Compensatory plan or management contract required to be
filed as an exhibit to Item 14 (c) of Form 10-K.
(b) No reports on Form 8-K were filed during the last quarter of fiscal
1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SHAW INDUSTRIES, INC.
Date: March 30, 1995 By: /S/ROBERT E. SHAW
-- -----------------
Robert E. Shaw
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 30, 1995 /S/ ROBERT E. SHAW
-- ------------------
Robert E. Shaw
President, Chief
Executive Officer and
Director
Date: March 30, 1995 /S/ J. C. SHAW
-- --------------
J. C. Shaw
Chairman of the Board of
Directors
Date: March 30, 1995 /S/ WILLIAM C. LUSK, JR.
-- ------------------------
William C. Lusk, Jr.
Sr. VP, Treasurer and
Director (Principal
Financial and Accounting
Officer)
Date: March 30, 1995 /S/ W. NORRIS LITTLE
-- --------------------
W. Norris Little
Senior VP, Operations and
Director
Date: March 30, 1995 /S/ ROBERT R. HARLIN
-- --------------------
Robert R. Harlin
Director
Date: March 30, 1995 /S/ THOMAS G. COUSINS
-- ---------------------
Thomas G. Cousins
Director
<PAGE>
Date: March 30, 1995 /S/ S. TUCKER GRIGG
-- -------------------
S.Tucker Grigg
Director
Date: March 30, 1995 /S/ CLIFFORD M. KIRTLAND, Jr.
-- -----------------------------
Clifford M. Kirtland, Jr.
Director
Date: March 30, 1995 /S/ J. HICKS LANIER
-- -------------------
J. Hicks Lanier
Director
Date: March 30, 1995 /S/ R. JULIAN McCAMY
-- --------------------
R. Julian McCamy
Director
<PAGE>
Exhibit Page
Number Description Number
3 (a) Amended and Restated Articles of Incorporation,
[Incorporated herein by reference to Exhibit
3(a) to Registrant's Registration Statement
filed with the commission on December 28,
1993 (File No. 33-51719).]
3 (b) Bylaws. [Incorporated herein by reference to
Exhibit 3 (b) to Registrant's Registration Statement
(File No. 33-51719).]
4 (a) Specimen form of Common Stock Certificate.
[Incorporated herein by reference to Exhibit 2 to
Registrant's Report on Form 8-A filed with the
Securities nd Exchange Commission on May 12, 1989
(File No. 1-6853).]
4 (b) Articles II, V and VI of the Restated Articles
of Incorporation, as amended, contained in Exhibit
3(a), and Articles Two and Seven and Section 8.1 of
the Bylaws of Registrant, contained in Exhibit 3(b),
and Statement of Designation, Preferences and Rights
of Series A Participating Preferred Stock, filed as
Exhibit 3(c), are incorporated.
4 (c) Rights Agreement dated as of April 10, 1989
between Registrant and Citizens and Southern Trust
Company (Georgia), N.A., as Rights Agent.
[Incorporated herein by reference to Exhibit 1
to Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission on
May 5, 1989 (File No. 1-6853.]
<PAGE>
Exhibit Page
Number Description Number
10 (a) Reserved
10 (b)* Deferred Compensation Plan and form of Deferred
Compensation Agreement of Registrant as adopted
in April, 1980. [ Incorporated herein by reference th the
Registrant's July 2, 1994 Form 10 K filed with the Securities
and Exchange Commission ].
10(c) Reserved
10(d) Reserved
10(e) Reserved
10(f) Reserved
10(g) Credit Agreement dated November 30, 1994, between
Registrant and Nationsbank of Georgia, National
Association, regarding a $600,000,000 revolving
credit facility.
10(h)* 1987 Incentive Stock Option Plan of the Registrant.
[Incorporated herein by reference to Exhibit A
to Registrant's 1987 Proxy Statement, dated
September 22, 1987 (File No. 1-6853).]
10(i) Reserved
10(j)* 1989 Discounted Stock Option Plan of the Registrant.
[Incorporated herein by reference to Exhibit A to
Registrant's 1989 Proxy Statement, dated September 21,
1989 (File No. 1-6853).]
10(k)* 1992 Incentive Stock Option Plan of the Registrant.
[Incorporated herein by reference to Exhibit A to
Registrant's 1992 Proxy
<PAGE>
Exhibit Page
Number Description Number
Statement, dated September 18, 1992
(File No. 1-6853).]
11 Computation of Earnings per share for the fiscal
years ended December 31, 1994, January 1, 1994 and
December 26, 1992.
13 Items Incorporated by Reference from the 1994
Annual Report to Shareholders.
21 List of Subsidiaries.
23 Consent of independent public accountants.
27 Financial Data Schedule.
*Compensatory plan or management contract required to be
filed as an exhibit to Item 14(c) of Form 10-K.
(b) No reports on Form 8-K were filed during the
last quarter of fiscal 1994.
<PAGE>
EXHIBIT 10 (g)
THIS CREDIT AGREEMENT dated as of November 30, 1994 by and among SHAW
INDUSTRIES, INC., a corporation organized under the laws of the State of Georgia
(the "Borrower"), the Lenders named herein and NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, as Agent.
WHEREAS, the parties hereto desire to make available to the Borrower
certain financial accommodations on the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In addition to terms defined elsewhere herein,
the following terms shall have the following meanings for the purposes of this
Agreement:
"Adjusted LIBO Rate" means, with respect to each Interest Period for
any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest Period
by (b) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
"Affiliate" means any Person (other than the Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control with,
the Borrower; (b) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in the Borrower; or (c) five percent (5%) or more of
whose voting stock or other equity interest is directly or indirectly owned or
held by the Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with") means the possession directly or indirectly of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agent" means NationsBank of Georgia, National Association, as agent
for the Lenders under the terms of this Agreement, and any successor agent.
"Agreement" means this Credit Agreement.
"Agreement Date" means the date as of which this Agreement is dated.
<PAGE>
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Applicable Margin" means the percentage rate set forth below for a
given Type of Loan corresponding to the Consolidated Funded Debt/EBITDA Ratio of
the Borrower in effect at such time:
Consolidated Funded Applicable Margin Applicable Margin
Debt/EBITDA Ratio for Base Rate Loans for LIBOR Loans
Greater than 3.25 to 1.00 0% 0.625%
Less than or equal to 3.25 to 1.00 but greater
than 2.75 to 1.00 0% 0.450%
Less than or equal to 2.75 to 1.00 but greater
than 2.25 to 1.00 0% 0.225%
Less than or equal to 2.25 to 1.00 0% 0.150%
The Applicable Margin shall be determined by the Agent on a quarterly basis
commencing with the fiscal quarter ending on December 31, 1994. The Consolidated
Funded Debt/EBITDA Ratio shall be determined by the Agent promptly after receipt
of the financial statements required to be delivered by the Borrower to the
Agent and the Lenders pursuant to Section 7.01 or 7.02, as applicable. Any
adjustment to the Applicable Margin shall be effective as of the first day of
the fiscal quarter immediately following the fiscal quarter in which the
quarterly (or annual) financial statements are required to be delivered to the
Agent and the Lenders. Notwithstanding the foregoing, for the period from the
Effective Date through and including April 1, 1995, the Applicable Margin for
Base Rate Loans shall equal 0% and the Applicable Margin for LIBOR Loans shall
equal 0.150%. Thereafter, the Applicable Margin shall be adjusted from time to
time as set forth above.
"Assignment Agreement" has the meaning given that term in Section 11.06(c).
"Available Revolving Commitment" means, on any date of determination
thereof: (a) the Revolving Commitment in effect on such date minus (b) the sum
of: (i) the aggregate outstanding principal amount of Loans on such date, (ii)
the aggregate Stated Amount of all Letters of Credit outstanding on such date
and (iii) the aggregate amount of Reimbursement Obligations unpaid on such date
(other than any such Reimbursement Obligations to be paid on such date).
"Base Rate" means, at any time, the higher of: (a) the rate which
NationsBank announces from time to time in Atlanta, Georgia as its prime lending
rate and (b) the Federal Funds Rate, as in effect from time to time, plus
one-half of one percent (0.5%) per annum. The prime lending rate of NationsBank
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. NationsBank may make commercial loans or other
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<PAGE>
loans at rates of interest at, above, or below such prime lending rate. Any
change in the Base Rate hereunder shall be effective for purposes of this
Agreement as of the date of such change in the rates described in subparagraphs
(a) and (b) above.
"Base Rate Loans" means Loans bearing interest at a rate based on the
Base Rate.
"Beneficiary" means any third Person designated by the Borrower to whom
the Agent is to make payment or on whose order payment is to be made under a
Letter of Credit.
"Borrower" has the meaning set forth in the introductory paragraph
hereof and shall include the Borrower's successors and assigns.
"Borrowing" means a borrowing by the Borrower of Loans pursuant to Section
2.02.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks in Atlanta, Georgia or New York, New York are authorized or
required to close.
"Business Unit" means the assets constituting the business or a
division or operating unit thereof of any Person.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" means: (i) securities issued, guaranteed or insured
by the United States or any of its agencies with maturities of not more than one
year from the date acquired; (ii) certificates of deposit with maturities of not
more than one year from the date acquired issued by a U.S. federal or state
chartered commercial bank of recognized standing, which has capital and
unimpaired surplus in excess of $500,000,000.00 and which bank or its holding
company has a short-term commercial paper rating of at least A-2 or the
equivalent by Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.
or at least P-2 or the equivalent by Moody's Investors Services, Inc.; (iii)
reverse repurchase agreements with terms of not more than seven days from the
date acquired, for securities of the type described in (i) above and entered
into only with commercial banks having the qualifications described in (ii)
above; (iv) commercial paper or finance company paper issued by any Person
incorporated under the laws of the United States or any state thereof and rated
at least A-2 or the equivalent thereof by Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc. or at least P-2 or the equivalent thereof by
Moody's Investors Services, Inc., in each case with maturities of not more than
one year from the date acquired; and (v) investments in money market funds
registered under the Investment Company Act of 1940, which have net assets of at
least $500,000,000.00 and at least eighty-five percent (85%) of whose assets
consist of securities and other obligations of the type described in clauses (i)
through (iv) above.
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<PAGE>
"Collateral" means any collateral security hereafter pledged by any
Loan Party to secure the Obligations or any portion thereof.
"Collateral Account" means a special non-interest bearing deposit
account maintained at the Principal Office of the Agent and under the sole
dominion and control of the Agent.
"Commitment" means, as to each Lender, such Lender's obligation to make
Loans hereunder in an amount up to, but not exceeding, the amount set forth for
such Lender on Annex I as such Lender's "Initial Commitment Amount", as the same
may be reduced from time to time pursuant to Section 2.13.
"Consolidated EBIT" means, with respect to the Borrower and its
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income (Loss) of the Borrower and its
Subsidiaries for such period plus (ii) Consolidated Interest Expense of the
Borrower and its Subsidiaries for such period plus (iii) taxes on income accrued
during such period.
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any period of computation thereof, the sum of (i) Consolidated
EBIT for such period plus (ii) amortization expense for such period plus (iii)
without duplication, depreciation expense for such period.
"Consolidated EBIT/Interest Ratio" means, with respect to the Borrower
and its Subsidiaries for each rolling Four-Quarter Period ending on the date of
the computation thereof, the ratio of (i) Consolidated EBIT for such
Four-Quarter Period to (ii) Consolidated Interest Expense for such Four-Quarter
Period.
"Consolidated Funded Debt" means, on the date of any computation
thereof, with respect to the Borrower and its Subsidiaries (determined on a
consolidated basis but without duplication in accordance with GAAP): (a) all
Indebtedness for money borrowed of the Borrower and its Subsidiaries regardless
of maturity including all revolving and term Indebtedness and all other lines of
credit; (b) all Indebtedness (other than trade debt of the Borrower and its
Subsidiaries incurred in the ordinary course of business), whether or not in any
such case the same was for money borrowed and regardless of maturity: (i)
represented by notes payable, and drafts accepted, that represent extensions of
credit; (ii) constituting obligations evidenced by bonds, debentures, notes or
similar instruments; or (iii) constituting purchase money indebtedness,
conditional sales contracts, title retention debt instruments or other similar
instruments upon which interest charges are customarily paid or that are issued
or assumed as full or partial payment for property; (c) all Indebtedness that
constitutes a Capitalized Lease Obligation under which the Borrower and/or its
Subsidiaries are obligated; (d) all reimbursement obligations under any standby,
trade or other letters of credit or acceptances (whether or not drawings
thereunder have been then presented for payment) issued for the account of the
Borrower or its Subsidiaries or under which the Borrower and its Subsidiaries
are otherwise obligated; and (e) all Indebtedness of the Borrower and its
Subsidiaries that is such by virtue of clause (b) of the definition of
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<PAGE>
Indebtedness, but only to the extent that the obligations Guaranteed are
obligations that would constitute Consolidated Funded Debt under subparagraphs
(a) through (d) above.
"Consolidated Funded Debt/EBITDA Ratio" means, with respect to the
Borrower and its Subsidiaries at the time of the computation thereof, the ratio
of (i) the Consolidated Funded Debt of the Borrower and its Subsidiaries
outstanding at such time to (ii) Consolidated EBITDA for the Four-Quarter Period
ending on the date of the computation thereof.
"Consolidated Interest Expense" means, with respect to the Borrower and
its Subsidiaries for any period of computation thereof, the total interest
expense (including, without limitation, interest expense attributable to
Capitalized Lease Obligations in accordance with GAAP) of the Borrower and its
Subsidiaries on a consolidated basis and in any event including (i) the
amortization of debt discounts and (ii) amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense.
"Consolidated Net Income (Loss)" means, with respect to the Borrower
and its Subsidiaries for any period of computation thereof, the net income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period (taken as a single accounting period) determined in conformity with GAAP;
provided, however, that the following shall be excluded when determining
Consolidated Net Income (Loss): (i) the income (or loss) for such fiscal period
of any Person prior to the date such Person becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries,
or such Person's assets are acquired by the Borrower or any of its Subsidiaries;
(ii) any item of gain or loss resulting from sale, conversion or other
disposition of assets other than in the ordinary course of business; (iii) net
gains or losses on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Borrower and its Subsidiaries; (iv)
net gains or losses on the collection of proceeds of life insurance policies;
(v) any write-up of any asset; and (vi) any other net gains or losses of an
extraordinary nature as determined in accordance with GAAP.
"Consolidated Net Worth" means, with respect to any Person, such
Person's total shareholder's equity (including capital stock, additional paid-in
capital and retained earnings, after deducting treasury stock) which would
appear as such on a balance sheet of such Person prepared in accordance with
GAAP (determined on a consolidated basis and excluding intercompany items and
excluding any upward adjustments after the Agreement Date due to revaluation of
assets).
"Consolidated Tangible Capitalization" means, as at the date of any
computation thereof, the sum of: (a) the Consolidated Funded Debt of the
Borrower and its Subsidiaries outstanding as of such date plus (b) the
Consolidated Tangible Net Worth of the Borrower and its Subsidiaries as of such
date.
"Consolidated Tangible Net Worth" means, as at the date of any
computation thereof, (a) the Consolidated Net Worth of the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) minus (b) all intangible items reflected therein,
including all goodwill, all intangible plant expansion costs, all unamortized
debt discount and expense, unamortized research and development expense,
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<PAGE>
unamortized deferred charges, patents, trademarks, service marks, trade names,
copyrights, unamortized excess cost of investment in Subsidiaries over equity at
dates of acquisition, and all similar items which should properly be treated as
intangibles in accordance with GAAP.
"Continue", "Continuation" and "Continued" each refers to the
continuation of a LIBOR Loan from one Interest Period to the next Interest
Period pursuant to Section 2.11.
"Convert", "Conversion" and "Converted" each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.11.
"Credit Event" means any of the following: (a) the making (or deemed
making) of any Loan; (b) the Conversion or Continuation of a Loan; and (c) the
issuance of a Letter of Credit.
"Credit Percentage" means, as to each Lender, the ratio, expressed as a
percentage, of (a) the amount of such Lender's Commitment to (b) the aggregate
amount of the Commitments of all Lenders hereunder; provided, however, that if
at the time of determination the Commitments have terminated or been reduced to
zero, the "Credit Percentage" of each Lender shall be the Credit Percentage of
such Lender in effect immediately prior to such termination or reduction.
"Date of Issuance" means the date of issuance by the Agent of a Letter
of Credit under this Agreement.
"Default" means any of the events specified in Section 9.01, whether or
not there has been satisfied any requirement for the giving of notice, the lapse
of time, a determination of materiality or the happening of any other condition.
"Defaulting Lender" has the meaning set forth in Section 2.03(c).
"Dollars" or "$" means the lawful currency of the United States of America.
"Drawing" means a drawing by a Beneficiary under any Letter of Credit.
"Effective Date" means the later of: (a) the Agreement Date; and (b)
the date on which all of the conditions precedent set forth in Section 4.01
shall have been fulfilled or waived in writing by the Requisite Lenders.
"Environmental Laws" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
ss. 7401 et seq; Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et
seq.; Solid Waste Disposal Act, 42 U.S.C. ss. 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq.; National Environmental Policy Act, 42 U.S.C. ss. 4321 et seq.; regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time, or any successor law.
"ERISA Affiliate" means any entity required at any relevant time to be
aggregated with the Borrower or any Subsidiary under Sections 414(b) or (c) of
the Internal Revenue Code. In addition, for purposes of any provision of this
Agreement that relates to Section 412(n) of the Internal Revenue Code, the term
ERISA Affiliate shall mean any entity aggregated with the Borrower or any
Subsidiary under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 9.01,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"Existing Consolidated Funded Debt" means the Consolidated Funded Debt
of the Borrower and its Subsidiaries outstanding as of the Agreement Date and
set forth on Schedule 1.01(a) attached hereto.
"Existing Letters of Credit" means the letters of credit issued by
NationsBank for the account of the Borrower or its Subsidiaries prior to the
Agreement Date, all as more particularly described on Schedule 1.01(b).
"Existing Liens" means Liens on the property and assets of the Borrower
and its Subsidiaries in existence as of the Agreement Date and described on
Schedule 1.01(c) hereof.
"Expiration Date" means, as to any Letter of Credit, the date set forth
in such Letter of Credit as the date by which the Beneficiary must have
presented such Letter of Credit, drafts, and any required documents for payment,
acceptance or negotiation in accordance with the terms of such Letter of Credit.
"Extension Request" has the meaning set forth in Section 2.16.
"Federal Funds Rate" means, at any time, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged by Federal
Funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal Funds brokers of recognized standing selected by the
Agent.
"Fee Letter" has the meaning set forth in Section 3.09.
"Fees" means the fees and commissions provided for or referred to in
Sections 3.07, 3.08 and 3.09 and any other fees payable by the Borrower
hereunder or under any other Loan Document.
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"Foreign Lender" means any Lender organized under the laws of a
jurisdiction other than the United States of America or any state thereof.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower, taken together as one accounting period and, unless
set forth herein to the contrary, shall mean the previous four fiscal quarters
of the Borrower and ending on the day of any computation of any ratio contained
herein.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances. Unless otherwise agreed, references to GAAP herein shall
be to GAAP as in effect on the Agreement Date.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any Indebtedness
means and includes:
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of any Indebtedness; or
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such Indebtedness whether by:
(i) the purchase of securities or obligations;
(ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose
of enabling the obligor with respect to such Indebtedness to make any
payment or performance (or payment of damages in the event of
nonperformance) of or on account of any part or all of such
Indebtedness, or to assure the owner of such Indebtedness against loss;
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(iii) the supplying of funds to or in any other manner investing in the
obligor with respect to such Indebtedness;
(iv) repayment of amounts drawn down by beneficiaries of letters of credit
(including Letters of Credit); or
(v) the supplying of funds to or investing in a Person on
account of all or any part of such Person's Indebtedness under a
Guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such Indebtedness.
As the context requires, "Guaranty" shall also mean each guaranty executed and
delivered by each Material Subsidiary pursuant to Section 6.09.
"Hazardous Materials" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances", "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TLCP" toxicity, "EP" toxicity; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
"Hedging Obligations" means obligations of the Borrower and its
Subsidiaries under any interest rate swap, hedging arrangement or similar
arrangement with respect to the Obligations.
"Indebtedness" as applied to a Person means, without duplication, (a)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined including, without
limitation, all Capitalized Lease Obligations of such Person and all
reimbursement obligations of such Person under letters of credit and acceptances
issued for its account, and (b) any Guaranty of any obligation described in
subparagraph (a) above executed by such Person or under which such Person is
obligated.
"Interest Period" means, for any LIBOR Loan, the period commencing on
the date of the Borrowing, Conversion or Continuation of such LIBOR Loan and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each Interest Period shall be one, two, three
or six months, in each case as the Borrower may, in an appropriate Notice of
Borrowing, Notice of Continuation or Notice of Conversion, select. In no event
shall an Interest Period extend beyond the Termination Date. Whenever the last
day of any Interest Period would otherwise occur on a day other than a LIBOR
Business Day, the last day of such Interest Period shall be extended to occur on
the next succeeding LIBOR Business Day; provided, however, that if such
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<PAGE>
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding LIBOR Business Day.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended or any successor federal tax code.
"Investment" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person:
(a) the purchase or other acquisition of any share of capital stock,
evidence of Indebtedness or other security issued by any other Person;
(b) the purchase or acquisition of the assets of another Person;
(c) any loan, advance or extension of credit to, or contribution (in the
form of money or goods) to the capital of, any other Person;
(d) any Guaranty of the Indebtedness of any other Person;
(e) any other investment in any other Person (including the entering of any
joint venture or partnership (whether as a general or limited partner)); and
(f) any commitment or option to make an Investment in any other Person.
"Issuing Bank Fees" has the meaning set forth in Section 3.08.
"L/C Commitment Amount" equals $25,000,000.
"Lender" means each of the financial institutions from time to time
identified as Lenders on, for each Lender and for each Type of Loan, the then
current Annex I attached hereto, together with its respective successors and
assigns.
"Lending Office" means, for each Lender and for each Type of Loan, the
office of each Lender specified for such Lender on Annex I attached hereto.
"Letter of Credit" means a standby letter of credit issued, or deemed
issued, by the Agent pursuant to Section 2.06 and shall include each Renewed
Letter of Credit.
"Letter of Credit Facility" means the facility described in Sections
2.06 through 2.09 pursuant to which the Letters of Credit are to be issued.
"Letter of Credit Request" has the meaning set forth in Section 2.07(a).
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"LIBOR" means, with respect to any Interest Period for LIBOR Loans, the
offered rate per annum in the London interbank market for deposits in Dollars of
amounts equal or comparable to the principal amount of such LIBOR Loan offered
for a term comparable to such Interest Period, as currently shown on the Reuters
Screen LIBOR page as of 11:00 a.m., Greenwich Mean Time, two LIBOR Business Days
prior to the first day of such Interest Period; provided, however, that (a) if
more than one offered rate as described above appears on the Reuters Screen
LIBOR page, the rate used to determine LIBOR will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of such offered
rates, or (b) if no such offered rates appear, the rate used for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of rates quoted by the Agent at approximately 10:00 a.m., New
York time, two LIBOR Business Days prior to the first day of such Interest
Period for deposits in Dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the principal
amount of such LIBOR Loans. If the Agent ceases to use the Reuters Screen LIBOR
page for determining interest rates based on eurodollar deposit rates, a
comparable internationally recognized interest rate reporting service shall be
used to determine such offered rates.
"LIBOR Business Day" means any day on which banks are scheduled to be
open for business and quoting interest rates for Dollar deposits on the London
interbank market and which is also a Business Day.
"LIBOR Loans" means Loans bearing interest at a rate based on LIBOR.
"Lien" as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge or lease constituting a Capitalized Lease Obligation, conditional
sale or other title retention agreement, or other security title or encumbrance
of any kind in respect of any property of such Person, or upon the income or
profits therefrom; (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person; and (c) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial Code or its equivalent in any
jurisdiction.
"Loan" means a loan made by a Lender to the Borrower pursuant to Section
2.01.
"Loan Document" means this Agreement, each of the Notes, each of the
Guaranties and each other document or instrument now or hereafter executed and
delivered by a Loan Party in connection with or pursuant to this Agreement, the
Revolving Credit Facility or the Letter of Credit Facility.
"Loan Party" means each of the Borrower, each other Person who
guarantees all or a portion of the Obligations and/or who pledges any collateral
security to secure all or a portion of the Obligations. As of the Agreement
Date, the Borrower shall constitute the only Loan Party.
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"Material Adverse Change" means, with respect to any Person, a material
adverse change in such Person's business, assets, liabilities, financial
condition, results of operations or business prospects.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect upon (a) such Person's business, assets, liabilities, financial
condition, results of operations or business prospects; (b) the rights and
remedies of the Lenders and the Agent under the Loan Documents, or the ability
of the Borrower or any Subsidiary to perform its obligations under the Loan
Documents to which it is a party, as applicable; or (c) the legality, validity
or enforceability of any Loan Documents. Unless otherwise set forth herein, any
reference to a "Material Adverse Effect" shall be a reference to the effect on
the Borrower and its Subsidiaries, taken as a whole.
"Material Subsidiary" means a Subsidiary that, as of the date of any
determination thereof, owns assets having a book value equal to or greater than
10% of the book value of the consolidated assets of the Borrower and its
Subsidiaries.
"Material Subsidiary Group" shall mean any group of Subsidiaries of
which, if combined, would own assets having a book value equal to or greater
than 20% of the book value of the consolidated assets of the Borrower and its
Subsidiaries.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 4001(a)(3) of ERISA to which contributions have been made by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"NationsBank" means NationsBank of Georgia, National Association, in its
individual capacity and not as Agent.
"Note" has the meaning set forth in Section 2.15.
"Notice of Borrowing" means a notice in the form of Exhibit A to be
delivered to the Agent pursuant to Section 2.02 evidencing the Borrower's
request for a Borrowing of Loans.
"Notice of Continuation" means a notice in the form of Exhibit B to be
delivered to the Agent pursuant to Section 2.11 evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"Notice of Conversion" means a notice in the form of Exhibit C to be
delivered to the Agent pursuant to Section 2.11 evidencing the Borrower's
request for the Conversion of a Loan from one Type to another Type.
"Obligations" means, individually and collectively: (a) the Loans and
the obligation of the Borrower to repay the same and the accrued interest
thereon in accordance with this Agreement; (b) all Reimbursement Obligations;
and (c) all other present and future indebtedness, liabilities, obligations,
covenants and duties of the Borrower and the other Loan Parties owing to the
Agent and/or the Lenders of every kind, nature and description, under or in
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respect of this Agreement or any of the other Loan Documents including, without
limitation, the Fees and indemnification obligations, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any promissory note.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Payment Date" means any date the Agent disburses funds under a Letter
of Credit to or on the order of a Beneficiary in response to a Drawing.
"Permitted Liens" means, as to any Person: (a) Liens securing taxes,
assessments and other charges or levies imposed by any Governmental Authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business which
are not required to be paid or discharged under Section 6.06; (b) Liens
consisting of deposits or pledges made, in the ordinary course of business, in
connection with, or to secure payment of, obligations under workmen's
compensation, unemployment insurance or similar Applicable Laws; (c) Liens
consisting of encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property, which do not
materially detract from the value of such property or impair the use thereof in
the business of such Person; (d) Existing Liens not required to be terminated
pursuant to Section 4.01; (e) Purchase Money Liens and Liens constituting
Capital Lease Obligations but only to the extent the Indebtedness secured by
such Liens is permitted pursuant to Section 8.02(d); and (f) Liens securing any
Hedging Obligations owing to a Lender.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Plan" means an employee benefit or pension plan maintained for
employees of the Borrower, any of the other Loan Parties or any Affiliate
thereof that is covered by Title IV of ERISA, or subject to minimum funding
standards under Section 412 of the Internal Revenue Code, including such plans
as may be established after the Agreement Date.
"Principal Office" means the main office of the Agent located at 600
Peachtree Street, 21st Floor, Atlanta, Georgia 30308, Attention: Jan J. Serafen,
or any other office which the Agent may designate as such in a written notice to
the Borrower and the Lenders.
"Purchase Money Lien" means a Lien on any item of equipment acquired
after the Agreement Date; provided, however, that: (a) such Lien shall attach
only to the equipment to be acquired; (b) the Indebtedness incurred in
connection with such acquisition shall not exceed the amount of the purchase
price of such item of equipment then being financed; (c) such Lien shall secure
only such Indebtedness; and (d) a description is furnished to the Agent of any
property so acquired, the purchase price of which is greater than $5,000,000.
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"Quarterly Dates" means the last day of each fiscal quarter of the
Borrower, the first of which shall be December 31, 1994. The Borrower agrees
that the fiscal quarters of the Borrower shall be set in a manner such that the
fiscal year of the Borrower shall be divided into four periods of relatively
equal length.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Agent for any Drawing
pursuant to Section 2.08.
"Renewed Letter of Credit" has the meaning set forth in Section 2.06(b)
hereof.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations.
"Requisite Lenders" means, as of any date, Lenders whose combined
Credit Percentages equal or exceed 66-2/3%.
"Restricted Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class; (b) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of the Borrower or any of its Subsidiaries now
or hereafter outstanding; (c) any prepayment of principal of, premium, if any,
or interest on, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Debt; and (d) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding.
"Revolving Commitment" means $600,000,000, as the same may be reduced
from time to time pursuant to the terms of this Agreement.
"Revolving Credit Facility" means the loan and letter of credit
facility described in Article II.
"Solvent" means, when used with respect to any Person, that (a) the
fair value and the fair salable value of its assets (excluding any Indebtedness
due from any Affiliate of such Person) are each in excess of the fair valuation
of its total liabilities (including all contingent liabilities); and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) that the Person has capital not unreasonably small to carry
on its business and all business in which it proposes to be engaged.
"Stated Amount" means the amount available to be drawn by a Beneficiary
under a Letter of Credit from time to time, as the Stated Amount of any such
Letter of Credit may be increased or reduced from time to time in accordance
with the terms of such Letter of Credit.
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"Statement of Funds Flow" has the meaning set forth in Section 4.01.
"Subordinated Debt" means Indebtedness of the Borrower or any of its
Subsidiaries that is expressly subordinated in right of payment and otherwise to
the Loans and the other Obligations in a manner satisfactory to the Requisite
Lenders.
"Subsidiary" means (i) a Person of which an aggregate of 50% or more of
the issued and outstanding capital stock of any class or classes having by the
terms thereof ordinary voting power to elect the directors (or other management
personnel) of such Person or 50% or more of other voting or equity interests is
owned of record, directly or beneficially, by another Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or more
Subsidiaries of such Person and (ii) any other Person whose financial statements
are consolidated with the Borrower in accordance with GAAP.
"Termination Date" means December 31, 1997, or such later date to which
such date may be extended in accordance with Section 2.16.
"Termination Event" means (a) a Reportable Event; (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA; (c) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment of
a trustee to administer any Plan; (d) the withdrawal of the Borrower, any
Subsidiary or any ERISA Related Party from a Plan during a plan year in which
such employer was a "substantial employer" as defined in ERISA Section
4001(a)(2); (e) the partial or complete withdrawal from a Multiemployer Plan
within the meaning of ERISA Section 4203 and 4205; or (f) an event that could
result in the Borrower, its Subsidiaries or any ERISA Related Party providing
security as required by Internal Revenue Code Section 401(a)(29).
"Transaction Costs" shall mean, with respect to a given transaction,
all brokerage and investment banking fees, fees and expenses of appraisers and
accountants, fees and disbursements of legal counsel and other out-of-pocket
costs and expenses incurred by Borrower or a Subsidiary (or required to be paid
by Borrower or a Subsidiary) in connection with such transaction.
"Type" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
Section 1.02. General. Unless otherwise indicated, all accounting
terms, ratios and measurements shall be interpreted or determined in accordance
with GAAP in effect as of the Agreement Date. References in this Agreement to
"Sections", "Articles", "Exhibits" and "Schedules" are to sections, articles,
exhibits and schedules herein and hereto unless otherwise indicated. References
in this Agreement to any document, instrument or agreement (a) shall include all
exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified or supplemented from time to time and
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in effect at any given time. Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. Unless explicitly set forth
to the contrary, a reference to "Subsidiary" means a Subsidiary of the Borrower
or a Subsidiary of such Subsidiary and a reference to an "Affiliate" means a
reference to an Affiliate of the Borrower. Unless otherwise indicated, all
references to time are references to Eastern Standard Time.
ARTICLE II
CREDIT FACILITY
Section 2.01. Revolving Facility. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties of the Borrower
set forth herein, during the period from the Effective Date to but excluding the
Termination Date, each Lender severally and not jointly agrees to make Loans to
the Borrower in an aggregate principal amount at any one time outstanding up to,
but not exceeding, the Revolving Commitment times such Lender's Credit
Percentage; provided, however, that any given Borrowing of Loans made pursuant
to this Section shall not exceed the Available Revolving Commitment at the time
of such Borrowing. Subject to the terms and conditions of this Agreement, during
the period from the Effective Date to the Termination Date, the Borrower may
borrow, repay and reborrow Loans hereunder.
Section 2.02. Borrowings Under Revolving Facility. Each Borrowing of
LIBOR Loans shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount. Each Borrowing of Base Rate
Loans shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount. The Borrower shall give the
Agent written notice pursuant to a Notice of Borrowing or telephonic notice of
each Borrowing. Any such telephonic notice shall include all information to be
specified in a written Notice of Borrowing and shall be promptly confirmed in
writing by the Borrower pursuant to a Notice of Borrowing sent to the Agent by
facsimile transmission on the same day of such telephonic notice. The Agent will
promptly transmit by facsimile transmission the Notice of Borrowing (or the
information contained in such Notice of Borrowing) to each Lender. The Notice of
Borrowing shall specify the aggregate principal amount of Loans to be borrowed
from the Lenders pursuant to the Notice of Borrowing, the Type of Loans, and the
proposed date such Loans are to be borrowed. Each Notice of Borrowing shall be
delivered to the Agent before 11:00 a.m. (a) in the case of LIBOR Loans, on the
date three LIBOR Business Days prior to the proposed date of such Borrowing and
(b) in the case of Base Rate Loans, on the date one Business Day prior to the
proposed date of such Borrowing. Each Notice of Borrowing or telephonic notice
of each Borrowing shall be irrevocable once given and binding on the Borrower.
Section 2.03. Disbursements of Loans.
(a) No later than 12:00 noon on the date specified in the Notice of
Borrowing, each Lender will make available for the account of its applicable
Lending Office to the Agent at the address of the Agent set forth on Annex I
attached hereto, in immediately available funds, the Loan to be made by such
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Lender using the wiring instructions for the Agent set forth on Annex I or as
otherwise directed by the Agent. With respect to Loans to be made after the
Effective Date, unless the Agent shall have been notified by any Lender prior to
the specified date of Borrowing that such Lender does not intend to make
available to the Agent the Loan to be made by such Lender on such date, the
Agent may assume that such Lender will make the proceeds of such Loan available
to the Agent on the date of the requested Borrowing as set forth in the Notice
of Borrowing and the Agent may, in reliance upon such assumption (but shall not
be obligated to), make available to the Borrower the amount of such Loan to be
provided by such Lender.
(b) Provided that the applicable conditions set forth in Article IV for
such Borrowing are fulfilled, the Agent will make the proceeds of such Borrowing
available to the Borrower at the account specified by the Borrower in such
Notice of Borrowing.
(c) If, with respect to Loans to be made after the Effective Date: (i)
a Lender (such Lender being hereinafter referred to as a "Defaulting Lender")
does not make the amount of such Lender's Loan available to the Agent; (ii) such
Lender has not notified the Agent that it will not make such amount available to
the Agent; and (iii) the Agent has nevertheless made available to the Borrower
the amount of the Loan to be provided by such Lender, the Agent shall be
entitled to recover such corresponding amount on demand from such Defaulting
Lender. If such Defaulting Lender does not pay such corresponding amount
immediately upon the Agent's demand, the Agent shall promptly notify the
Borrower and the Borrower shall promptly (but in no event later than one
Business Day after such demand) pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from such Defaulting Lender interest on
such corresponding amount for each day from the date such amount was made
available by the Agent to the Borrower to the date such amount is recovered by
the Agent at a rate per annum equal to the applicable Federal Funds Rate. The
Agent shall be entitled to recover from the Borrower the amount of interest
accruing on such amount of such Loan at the rate therefor in accordance with its
Type; provided, however, any amount paid by the Defaulting Lender pursuant to
the immediately preceding sentence shall reduce the amounts owed by the Borrower
under this sentence. The Agent shall also be entitled to recover from the
Borrower and such Defaulting Lender an amount equal to any costs (including
legal expenses) and losses incurred as a result of the failure of such
Defaulting Lender to provide such amount as provided in this Agreement. Nothing
herein shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights which the Borrower may have
against any Defaulting Lender, including, without limitation, the right of the
Borrower to seek reimbursement from any Defaulting Lender for any amounts paid
by the Borrower under this Section because of such Defaulting Lender's default.
If the Borrower and the Defaulting Lender fail to reimburse the Agent as
provided above, in addition to the rights the Agent may have under Applicable
Law or under this Agreement, the Agent shall be subrogated to the rights of such
Defaulting Lender under this Agreement to the extent of such failure and shall
thereafter (until such Defaulting Lender shall so reimburse the Agent) be
entitled to the percentage of voting rights of such Defaulting Lender under this
Agreement.
Section 2.04. Several Obligations. No Lender shall be responsible for
the failure of any other Lender to make a Loan to be made by such other Lender
hereunder and the failure of any Lender to make a Loan to be made by it
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hereunder shall not relieve the obligation of each other Lender to make the Loan
to be made by such other Lender.
Section 2.05. Repayment of Loans.
(a) The Borrower shall repay the entire outstanding principal amount
of, and all accrued but unpaid interest on, the Loans on the Termination Date.
(b) If at any time: (i) the aggregate principal amount of Loans
outstanding at such time plus (ii) the aggregate Stated Amount of all Letters of
Credit outstanding at such time plus (iii) the aggregate amount of all unpaid
Reimbursement Obligations outstanding at such time exceeds the Revolving
Commitment in effect at such time, the Borrower shall immediately pay to the
Agent for the respective accounts of the Lenders the amount of such excess. Such
payment shall be applied to pay all amounts of principal outstanding on the
Loans and any Reimbursement Obligations pro rata in accordance with the first
sentence of Section 3.05 and the remainder, if any, shall be deposited into the
Collateral Account for application to any Reimbursement Obligations. If the
Borrower is required to pay any outstanding LIBOR Loans by reason of this
Section prior to the end of the applicable Interest Period therefor, the
Borrower shall indemnify each Lender against the losses, costs and expenses
described in Section 2.12 incurred by such Lender.
Section 2.06. New and Existing Letters of Credit/Lenders'
Participation. (a) Subject to the terms and conditions of this Agreement, the
Agent, on behalf of the Lenders, agrees to issue and amend (including, without
limitation, to extend or renew) for the account of the Borrower for the period
from and including the Effective Date to, but excluding, the Termination Date
one or more standby letters of credit in such form and containing such terms as
may be requested from time to time by the Borrower and acceptable to the Agent
up to a maximum aggregate Stated Amount at any one time outstanding equal to the
L/C Commitment Amount; provided, however, that the initial Stated Amount of any
Letter of Credit issued pursuant to this Section shall not exceed the Available
Revolving Commitment at the time of such issuance.
(b) Prior to the Effective Date, NationsBank has issued the Existing
Letters of Credit for the account of the Borrower. Each of the parties hereto
agrees that in the event that the Borrower and NationsBank subsequently agree to
renew or extend an Existing Letter of Credit upon or in anticipation of the
expiration thereof (such renewed or extended Existing Letter of Credit referred
to herein as a "Renewed Letter of Credit"), and so long as (i) the Expiration
Date of such Renewed Letter of Credit does not extend beyond the then current
Termination Date and (ii) at the time of such renewal or extension, a Default or
Event of Default does not exist, such Renewed Letter of Credit shall be deemed
to have been issued by the Agent hereunder and shall be deemed to be a Letter of
Credit issued hereunder for all purposes hereof. All of the parties hereto agree
that in the event there is any inconsistency between the terms of the letter of
credit agreement or application or reimbursement agreement with respect to a
Renewed Letter of Credit and this Agreement including, without limitation, terms
relating to the timing of reimbursement, fees, standards of conduct and other
matters, the terms of this Agreement shall control. Unless otherwise set forth
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herein to the contrary, all Renewed Letters of Credit shall be Letters of Credit
hereunder and the L/C Commitment Amount shall be deemed to be utilized by the
Borrower to the extent of the Stated Amount of such Renewed Letter of Credit.
NationsBank shall give the Agent and the other Lenders prior written notice of
any proposed renewal or extension of any Existing Letter of Credit.
(c) At the time of issuance, the amount, terms and conditions of each
Letter of Credit, and of any drafts or acceptances thereunder, shall be subject
to approval by the Agent and the Borrower. The Expiration Date of all Letters of
Credit issued hereunder must be at least two Business Days prior to the
Termination Date. Any Letter of Credit containing an automatic renewal provision
shall also contain a provision pursuant to which, notwithstanding any other
provisions thereof, it shall have a final Expiration Date no later than one
Business Day prior to the Termination Date.
(d) Immediately upon the issuance (or deemed issuance) or amendment by
the Agent of any Letter of Credit in accordance with the procedures set forth in
this Section, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Agent, without recourse or
warranty, an undivided interest and participation to the extent of such Lender's
Credit Percentage of the liability of the Agent with respect to such Letter of
Credit (including, without limitation, all obligations of the Borrower with
respect thereto, other than amounts owing to the Agent consisting of Issuing
Bank Fees) and any security therefor or guaranty pertaining thereto.
Accordingly, each Lender severally agrees that it shall be unconditionally and
irrevocably liable, without regard to the occurrence of any Default or Event of
Default or any condition precedent whatsoever, to the extent of such Lender's
Credit Percentage, to reimburse the Agent on demand in immediately available
funds in Dollars for the amount of each Drawing paid by the Agent under each
Letter of Credit issued by the Agent to the extent such amount is not reimbursed
by the Borrower pursuant to Section 2.08; provided, however, that the Lenders
shall not be obligated to so reimburse the Agent in the event that the Agent's
honoring of such Drawing constitutes gross negligence or willful misconduct (as
determined by a court of competent jurisdiction). The failure of any Lender to
honor its obligations hereunder shall not relieve any other Lender of its duty
to honor its obligations hereunder.
(e) Each payment made by a Lender to the Agent pursuant to the
immediately preceding subsection (d) shall be treated as the purchase by such
Lender of a participating interest in the Borrower's Reimbursement Obligation
under Section 2.08(a) in an amount equal to such payment. Each Lender, so long
as it has made the payment required to be made by it pursuant to such
subsection, shall share in accordance with its Credit Percentage in any interest
which accrues pursuant to Section 2.08(a)(ii). All amounts recovered by the
Agent hereunder or under any other Loan Document and which are applied by the
Agent to the Reimbursement Obligations of the Borrower under Section 2.08 and
any letter of credit fee paid by the Borrower pursuant to the first sentence of
Section 3.08 shall be distributed by the Agent to the Lenders who have made the
payments required to be made by them pursuant to paragraph (d) above pro rata in
accordance with their respective Credit Percentages.
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(f) In addition to other remedies the Agent may have under Applicable
Law and under this Agreement, if and to the extent that any Lender shall fail to
make available to the Agent the amount required to be paid by such Lender
pursuant to the immediately preceding subsection (d), the Agent shall be
subrogated to the rights of such Lender under this Agreement to the extent of
such failure and shall thereafter (until such Lender shall make such amount
available to the Agent) be entitled to the percentage of voting rights of such
Lender under this Agreement. If any Lender fails to reimburse the Agent as
provided in such subsection, such unreimbursed amount shall bear interest from
the due date thereof until such amount is paid at the Federal Funds Rate, such
interest to be payable by such Lender upon demand therefor by the Agent.
Section 2.07. Method of Issuance of Letters of Credit.
(a) The Borrower shall give the Agent written notice (or telephonic
notice promptly confirmed in writing) at least five Business Days prior to the
requested Date of Issuance of a Letter of Credit (other than Existing Letters of
Credit for which no further notice shall be required), such notice to be in
substantially the form of Exhibit D (a "Letter of Credit Request"). The Borrower
shall also execute and deliver such customary letter of credit application forms
as requested from time to time by the Agent.
(b) Provided the Borrower has given the notice prescribed by the
immediately preceding subsection and subject to the other terms and conditions
of this Agreement, including the satisfaction of any applicable conditions
precedent set forth in Article IV, the Agent shall issue the requested Letter of
Credit on the requested Date of Issuance as set forth in the applicable Letter
of Credit Request on behalf of the Lenders for the benefit of the stipulated
Beneficiary and shall deliver the original of such Letter of Credit to the
Beneficiary at the address specified in the applicable Letter of Credit Request.
Upon the written request of the Borrower, the Agent shall deliver to the
Borrower a copy of each issued Letter of Credit within a reasonable time after
the Date of Issuance thereof.
(c) The Agent shall deliver to each Lender a copy of each Letter of
Credit issued hereunder and, upon the written request of a Lender, any other
information with respect to each Letter of Credit then outstanding or in
connection with any Drawing thereunder. Other than as set forth in this
subsection, the Agent shall have no duty to notify the Lenders regarding the
issuance or other matters regarding Letters of Credit issued hereunder. The
failure of the Agent to perform its requirements under this subsection shall not
relieve the Lenders' reimbursement obligations under Section 2.06(d).
Section 2.08. Letter of Credit Reimbursement.
(a) The Borrower hereby agrees to pay to the Agent:
(i) On each Payment Date, an amount equal to the amount paid by the Agent
under the applicable Letter of Credit; and
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(ii) If any Drawing shall be reimbursed to the Agent after
2:00 p.m. on the Payment Date, interest on any and all amounts required
to be paid pursuant to subsection (i) above from and after the due date
thereof until payment in full, payable on demand, at an annual rate of
interest equal to the Base Rate plus the Applicable Margin for Base
Rate Loans.
(b) The Borrower shall reimburse the Agent for each Drawing under any
Letter of Credit in the following manner:
(i) the Borrower shall immediately reimburse the Agent in accordance with
subsection (a) above; or
(ii) (A) if the Borrower has not reimbursed the Agent pursuant
to subsection (a) above and (B) the applicable conditions set forth in
Article IV have been fulfilled and (C) the Available Revolving
Commitment in effect at such time exceeds the amount of the Drawing to
be reimbursed, with the proceeds of a Loan; or
(iii) pursuant to Section 3.04, the Agent may debit any
deposit account of the Borrower maintained with the Agent and
appropriate and apply an amount of funds in such account equal to the
Reimbursement Obligations outstanding at such time.
(c) Unless the Borrower notifies the Agent to the contrary, the
Borrower shall be deemed to have requested that a Drawing be reimbursed with the
proceeds of a Loan in the amount of such Drawing. Upon any Drawing, the Agent
shall notify the Lenders if the Borrower has elected (or deemed to have elected)
to reimburse the Agent using the proceeds of Loans. Upon receipt of such notice
and if the applicable conditions set forth in subsection (b)(ii) above have been
satisfied, each Lender agrees to deliver to the Agent its pro rata share of the
amount of Loans necessary to reimburse the Agent for any payment made by the
Agent pursuant to such Drawing not later than one Business Day after receipt of
such notice. Unless the Borrower complies with the applicable notice
requirements as set forth in Section 2.02 regarding LIBOR Loans, any Loan used
to repay any Reimbursement Obligation shall initially be a Base Rate Loan.
Section 2.09. Nature of Agent's Duties/Unconditional Nature of
Reimbursement Obligation. In determining whether to honor any Drawing under any
Letter of Credit, the Agent shall be responsible only to determine that the
documents and certificates required to be delivered under such Letter of Credit
have been delivered and that they comply on their face with the requirements of
such Letter of Credit. The Borrower otherwise assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued by the Agent by, the
respective Beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, neither the Agent nor any of the Lenders shall be
responsible for: (a) the form, validity, sufficiency, accuracy, genuineness or
legal effects of any document submitted by any party in connection with the
application for and issuance of or any drawing honored under any Letter of
Credit even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit, or the rights or benefits thereunder or proceeds thereof,
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in whole or in part, which may prove to be invalid or ineffective for any
reason; (c) the failure of the Beneficiary of any Letter of Credit to comply
fully with conditions required in order to draw upon such Letter of Credit; (d)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telex, telecopy or otherwise; (e) errors in
interpretation of technical terms; (f) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any Letter
of Credit, or of the proceeds thereof; (g) the misapplication by the Beneficiary
of any Letter of Credit or the proceeds of any Drawing under such Letter of
Credit; and (h) any consequences arising from causes beyond the control of the
Agent or the Lenders. None of the above shall affect, impair or prevent the
vesting of any of the Agent's rights or powers hereunder. Any action taken or
omitted to be taken by the Agent under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create against the Agent any liability to the Borrower or
any Lender. In this connection, the obligation of the Borrower to reimburse the
Agent for any Drawing made under any Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including the following
circumstances: (i) any lack of validity or enforceability of any Letter of
Credit or any other agreement; (ii) the existence of any claim, set-off, defense
or other right which the Borrower or any of its Affiliates, the Agent or any
Lender may at any time have against a Beneficiary, the Agent, any Lender, or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between the Borrower or any of its Affiliates and the Beneficiary
for which the Letter of Credit was procured); (iii) any draft, demand,
certificate or any other document presented under any Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by the
Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; provided, however, that, in the case of any payment by the
Agent under any Letter of Credit, the Agent has not acted with gross negligence
or willful misconduct (as determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit complies on
its face with any applicable requirements for a demand for payment under such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
Section 2.10. Interest on Loans.
(a) Interest on LIBOR Loans. Subject to the provisions of Section 3.01,
interest on each LIBOR Loan shall accrue at an interest rate per annum during
the Interest Period for such Loan equal to the Adjusted LIBO Rate for the
Interest Period in effect for such LIBOR Loan plus the Applicable Margin. All
such accrued interest shall be payable (i) on the last day of each Interest
Period with respect thereto and, if such Interest Period is longer than three
months, at three-month intervals following the first day of such Interest
Period, (ii) on the date of Conversion of such LIBOR Loan (or a portion thereof)
to another Type of Loan and (iii) at maturity of such Loan (and after maturity
of such Loan (whether by acceleration or otherwise) upon demand). The Agent upon
determining the Adjusted LIBO Rate and the interest rate applicable to the Loans
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hereunder for any Interest Period shall promptly notify the Borrower by
telephone or in writing thereof via facsimile transmission. Each determination
by the Agent of an interest rate hereunder shall be conclusive and binding on
the Lenders and the Borrower for all purposes, absent manifest error.
(b) Interest on Base Rate Loans. Subject to the provisions of Section
3.01, interest on each Base Rate Loan shall accrue at an interest rate per annum
equal to the Base Rate plus the Applicable Margin. All such accrued interest
shall be payable monthly on the last day of each month (and after maturity
(whether by acceleration or otherwise) upon demand).
Section 2.11. Continuation and Conversion of Loans; Unavailability of
Certain Loans.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may on any LIBOR Business Day, with respect to any
LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR
Loan by selecting a new Interest Period for such LIBOR Loan. Each new Interest
Period selected under this Section for a Loan shall commence on the last day of
the immediately preceding Interest Period for such Loan. Each selection of a new
Interest Period shall be made by the Borrower's giving of a Notice of
Continuation not later than 12:00 noon on the third LIBOR Business Day prior to
the date of any such Continuation to the Agent. Promptly after receipt of a
Notice of Continuation, the Agent shall notify each Lender by telex or telecopy,
or other similar form of transmission of the proposed Continuation. Such notice
by the Borrower of a Continuation shall be by telephone or telecopy, confirmed
immediately in writing if by telephone, in the form of a Notice of Continuation,
specifying (a) the date of such Continuation, (b) the LIBOR Loan and portion
thereof subject to such Continuation and (c) the duration of the selected
Interest Period, all of which shall be specified in such manner as is necessary
to comply with all limitations on Loans outstanding hereunder. Upon receipt of a
Notice of Continuation, the Agent shall determine the Adjusted LIBO Rate and
promptly notify the Borrower and the Lenders by telephone (promptly confirmed in
writing by telecopier) or in writing by telecopier. Each Notice of Continuation
shall be irrevocable by and binding on the Borrower once given. If the Borrower
shall fail to select in a timely manner a new Interest Period for any LIBOR Loan
in accordance with this Section, such Loan will automatically, on the last day
of the current Interest Period therefore, Convert into a Base Rate Loan
notwithstanding failure of the Borrower to comply with Section 2.02.
(b) So long as no Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower's giving of
a Notice of Conversion to the Agent, Convert the entire amount of all or a
portion of a Loan of one Type into a Loan of another Type. Promptly after
receipt of a Notice of Conversion, the Agent shall notify each Lender by telex
or telecopy, or other similar form of transmission of the proposed Conversion.
Any Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only
on, the last day of an Interest Period for such LIBOR Loan. Each such Notice of
Conversion shall be given not later than 12:00 noon on the Business Day prior to
the date of any proposed Conversion into Base Rate Loans and on the third LIBOR
Business Day prior to the date of any proposed Conversion into LIBOR Loans.
Subject to the restrictions specified above, each such notice by the Borrower of
a Conversion shall be by telephone or telecopy, confirmed immediately in writing
if by telephone, in the form of a Notice of Continuation specifying (a) the
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requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the
portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is
to be Converted into and (e) if such Conversion is into a LIBOR Loan, the
requested duration of the Interest Period of such Loan. Each Notice of
Conversion shall be irrevocable by and binding on the Borrower once given. Each
Conversion from a Base Rate Loan to a LIBOR Loan shall be in an aggregate amount
for the Loans of all Lenders of not less than $5,000,000 or integral multiples
of $1,000,000 in excess of that amount. Upon receipt of a Notice of Conversion,
the Agent shall determine the Adjusted LIBO Rate or the Base Rate, as the case
may be, and promptly notify the Borrower and the Lenders by telephone (promptly
confirmed in writing by telecopier) or in writing by telecopier.
(c) Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted LIBO Rate for any Interest Period:
(i) the Agent reasonably determines (which determination shall
be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of LIBOR are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for LIBOR Loans as provided herein or is
otherwise unable to determine the Adjusted LIBO Rate; or
(ii) the Requisite Lenders reasonably determine (which
determination shall be conclusive) and notify the Agent that the
relevant rates of interest referred to in the definition of LIBOR upon
the basis of which the rate of interest for LIBOR Loans for such
Interest Period is to be determined are not likely adequately to cover
the cost to such Lenders of making or maintaining LIBOR Loans for such
Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Base Rate Loans into LIBOR Loans and the Borrower shall, on the last
day of each current Interest Period for each outstanding LIBOR Loan, either
prepay such Loan or Convert such Loan into a Base Rate Loan.
(d) Anything herein to the contrary notwithstanding, there may be no
more than eight different Interest Periods for LIBOR Loans outstanding at the
same time.
(e) If, after the Agreement Date, the adoption of any Applicable Law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Lender to make, maintain or fund LIBOR
Loans, such Lender shall forthwith give notice thereof to the Agent and the
Borrower. Before giving any notice pursuant to this subsection, such Lender
shall designate a different Lending Office for such Type of Loans if such
designation will avoid the need for giving such notice and will not be otherwise
materially disadvantageous to any such Lender (as determined in the sole
judgment of such Lender). Upon receipt of such notice, the Borrower shall either
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(i) repay in full the then outstanding principal amount of any of such Lender's
LIBOR Loans, together with accrued interest thereon, or (ii) Convert such
Lender's LIBOR Loans to Base Rate Loans, on either (A) the last day of the
current Interest Period applicable to such LIBOR Loan if such Lender may
lawfully continue to maintain and fund such LIBOR Loan to such day or (B)
immediately if such Lender may not lawfully continue to fund and maintain such
LIBOR Loan to such day.
Section 2.12. Compensation. The Borrower shall pay to the Agent for
account of each Lender, upon the request of such Lender through the Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost or expense that such Lender
determines is attributable to:
(a) any payment, mandatory or optional prepayment or
Conversion of a LIBOR Loan made by such Lender for any reason
(including, without limitation, acceleration) on a date other than the
last day of the Interest Period for such Loan;
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the applicable conditions
precedent specified in Article IV to be satisfied) to borrow a LIBOR
Loan from such Lender on the date for such borrowing specified in the
relevant Notice of Borrowing; or
(c) any failure by the Borrower for any reason to prepay a
LIBOR Loan from a Lender after the Borrower has previously notified
such Lender that the Borrower intends to so prepay such Loan.
Such compensation shall include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest that otherwise would have accrued
on the principal amount so paid, prepaid or Converted or not borrowed for the
period from the date of such payment, prepayment, Conversion or failure to
borrow to the last day of the then current Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan that would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Loan provided for herein plus such Lender's normal
administrative charges, if any, associated with such payment, prepayment,
Conversion or failure to borrow over (ii) the amount of interest that otherwise
would have accrued on such principal amount at a rate per annum equal to the
interest component of the amount such Lender would have bid in the London
interbank market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period (as
reasonably determined by such Lender). Any determination of the amount of such
loss, cost or expense shall be conclusive absent manifest error.
Section 2.13. Voluntary Reductions of the Revolving Commitment. The
Borrower shall have the right to terminate or reduce the amount of the Revolving
Commitment at any time and from time to time without penalty or premium upon not
less than five Business Days prior written notice to the Agent of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which in the case of any partial reduction
of the Revolving Commitment shall not be less than $10,000,000 and integral
multiples of $5,000,000 in excess of that amount) and shall be irrevocable once
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given and effective only upon receipt by the Agent; provided, however, that if
the Borrower seeks to reduce the Revolving Commitment below $300,000,000, then
the Revolving Commitment shall be reduced to zero and except as otherwise
provided herein, the provisions of this Agreement shall terminate. The Agent
will promptly transmit such notice to each Lender. The Revolving Commitment,
once reduced pursuant to this Section, shall not be increased. The Borrower
shall pay all interest and Fees on the Loans accrued to the date of such
reduction or termination of the Revolving Commitment to the Agent for the
account of the Lenders.
Section 2.14. Prepayments. The Borrower may voluntarily prepay any Loan
at any time; provided, however, that: (i) any prepayment of any LIBOR Loans
shall be in an aggregate principal amount of $5,000,000 and in integral
multiples of $1,000,000 in excess of that amount; (ii) any prepayment of any
Base Rate Loans shall be in principal amount of $5,000,000 and in integral
multiples of $1,000,000 in excess of that amount; and (iii) in the event the
Borrower prepays any LIBOR Loan prior to the end of the applicable Interest
Period therefor, the Borrower shall pay the Lenders any amounts due under
Section 2.12. Subject to the foregoing, the Borrower may prepay any Base Rate
Loan at any time without penalty or premium.
Section 2.15. Notes. The obligation of the Borrower to repay Loans to a
Lender shall also be evidenced by promissory notes (each a "Note"). Each Note
delivered to each Lender shall be payable to the order of such Lender, shall be
in the face amount equal to such Lender's Credit Percentage of the Revolving
Commitment as originally in effect, and shall be in substantially the form of
Exhibit E.
Section 2.16. Extensions of Termination Date. The Borrower may request
that the Lenders, at the Lenders' sole and absolute discretion, extend the
initial Termination Date for up to two successive additional periods of one year
each. The Borrower shall notify the Lenders of its initial request for an
extension by executing and delivering to the Agent at least 90 days but no more
than 120 days prior to the first anniversary date of the Effective Date (and, in
the case of a second extension request, at least 90 days but no more than 120
days prior to the second anniversary date of the Effective Date) a written
request in the form of Exhibit F (an "Extension Request"). The Agent shall
deliver a copy of an Extension Request to each Lender within two Business Days
of the Agent's receipt thereof. If the Lenders, in their sole and absolute
discretion, consent to the extension of the Termination Date requested in the
Extension Request, the Agent shall, at the written direction of all of the
Lenders, evidence such consent and the extension of the Termination Date by
delivering to the Borrower, within 60 days of receipt of an Extension Request, a
letter evidencing such extension. If the Agent does not deliver such letter in
accordance with the preceding sentence, such failure shall be deemed a denial of
the Borrower's Extension Request. All the Lenders must consent to the extension
of the Termination Date to effect such an extension under this Section 2.16. The
Borrower understands that this Section has been included in this Agreement for
the Borrower's convenience in requesting an extension of the Termination Date
and acknowledges that none of the Lenders has promised (either expressly or
impliedly), nor has any obligation or commitment whatsoever, to extend the
Termination Date at any time.
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ARTICLE III
OTHER LOAN AND PAYMENT PROVISIONS
Section 3.01. Interest Upon Event of Default. If an Event of Default
has occurred and is continuing, the Loans and all other Obligations shall bear
interest until paid in full at a rate per annum that is two percent in excess of
the rate of interest otherwise payable hereunder. If this Agreement or the other
Loan Documents do not specify an interest rate for a particular Obligation, such
Obligation shall, for purposes of this Section 3.01, be deemed to be a Base Rate
Loan.
Section 3.02. Computations. Unless otherwise expressly set forth
herein, any accrued interest on any Loan and any Fees due hereunder shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed.
Section 3.03. Usury. In no event shall the amount of interest due or
payable on the Loans exceed the maximum rate of interest allowed by Applicable
Law and, if any such payment is paid by the Borrower or received by any Lender,
then such excess sum shall be credited as a payment of principal, unless the
Borrower shall notify the respective Lender in writing that the Borrower elects
to have such excess sum returned to it forthwith. It is the express intent of
the parties hereto that the Borrower not pay and the Lenders not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by the Borrower under Applicable Law.
Section 3.04. Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Notes or any other Loan Document shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Agent at address set forth for the Agent on Annex I
attached hereto, not later than 2:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day) and shall be made
in accordance with the wiring instructions set forth for the Agent on Annex I
attached hereto or as otherwise directed by the Agent. Subject to Sections 3.05
and 3.06, the Agent, or any Lender for whose account any such payment is made,
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time from any special or general deposit account of the
Borrower with the Agent or such Lender, as the case may be (with notice to the
Borrower, the other Lenders and the Agent). The Borrower shall, at the time of
making each payment under this Agreement or any Note, specify to the Agent the
amounts payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or an Event of Default has
occurred and is continuing, the Agent may apply such payment to the Loans, any
Reimbursement Obligation or any other obligation of the Borrower under the Loan
Documents in accordance with the direction of the Requisite Lenders). Each
payment received by the Agent for the account of the Lenders under this
Agreement or any Note shall be paid promptly to such Lender, by wire transfer of
same day funds in accordance with the wiring instructions set forth for such
Lender on the Annex I attached hereto, for the account of such Lender at the
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applicable Lending Office of such Lender. In the event the Agent fails to pay
such amounts to the Lenders as provided in the previous sentence, the Agent
shall pay interest on such amount at a rate per annum equal to the Federal Funds
Rate from time to time in effect. If the due date of any payment under this
Agreement or any Note would otherwise fall on a day which is not a Business Day
such date shall be extended to the next succeeding Business Day and interest
shall be payable for the period of such extension. The Borrower agrees that all
of its payment obligations hereunder shall be absolute, unconditional and, for
the purposes of making payments hereunder, the Borrower hereby waives any right
to assert any setoff, counterclaim or cross-claim.
Section 3.05. Pro Rata Treatment. Unless set forth to the contrary
herein, (a) each Borrowing of Loans, (b) each payment by the Borrower with
respect to any Loan, (c) each other payment to be made by the Borrower or any
Loan Party hereunder or under any Loan Document, (d) each voluntary or mandatory
reduction of the Commitments pursuant to Section 2.13 and (e) any amounts
received with respect to the sale, disposition, foreclosure or other transfer of
any Collateral, shall be made by, or credited to the account of, the Lenders pro
rata in accordance with their respective Credit Percentages. Each payment of
interest on the Loans made by the Borrower shall be made for the account of the
Lenders pro rata in accordance with the amounts of interest due and payable to
the respective Lenders. The fees referred to in Section 3.09 and all Issuing
Bank Fees shall be for the account of only the Agent.
Section 3.06. Sharing of Payments, Etc. The Borrower agrees that, in
addition to (and without limitation of) any right of set-off, banker's lien or
counterclaim a Lender or the Agent may otherwise have, each Lender and the Agent
shall be entitled, at its option, to offset balances held by it for the account
of the Borrower at any of such Lender's (or the Agent's) offices, in Dollars or
in any other currency, against any principal of, or interest on, any of such
Lender's Loans hereunder (or other Obligations owing to such Lender or the Agent
hereunder) which is not paid when due (regardless of whether such balances are
then due to the Borrower), in which case such Lender shall promptly notify the
Borrower, all other Lenders and the Agent thereof; provided, however, such
Lender's failure to give such notice shall not affect the validity of such
offset. If a Lender shall obtain payment of any principal of, or interest on,
any Loan made by it to the Borrower under this Agreement, or shall obtain
payment on any other Obligation owing by the Borrower or a Loan Party through
the exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise or through voluntary prepayments directly to a Lender or
other payments made by the Borrower to a Lender not in accordance with the terms
of this Agreement and such payment, pursuant to Section 3.05, should be
distributed to the Lenders pro rata in accordance with their respective Credit
Percentages, such Lender shall promptly purchase from the other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Loans made by the other Lenders or other Obligations owed to
such other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders shall share the
benefit of such payment (net of any reasonable expenses which may be incurred by
such Lender in obtaining or preserving such benefit) pro rata in accordance with
their respective Credit Percentages. To such end, all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
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or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans or other Obligations owed to such other Lenders made by
other Lenders may exercise all rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
Section 3.07. Facility Fee. The Borrower agrees to pay to the Agent for
the account of each Lender a facility fee for the period from the Effective Date
through and including the Termination Date on the amount of the Revolving
Commitment from time to time in effect and regardless of whether and to the
extent the Revolving Commitment is utilized hereunder. The facility fee shall be
calculated on a percentage per annum basis using the percentage rates set forth
below corresponding to the Consolidated Funded Debt/EBITDA Ratio in effect at
such time:
Consolidated Funded Debt/EBITDA Ratio Facility Fee Percentage
Greater than 3.25 to 1.00 0.20%
Less than or equal to 3.25 to 1.00
but greater than 2.75 to 1.00 0.15%
Less than or equal to 2.75 to 1.00 0.10%
The facility fee shall be determined by the Agent on a quarterly basis
commencing with the fiscal quarter ending on December 31, 1994. The Consolidated
Funded Debt/EBITDA Ratio shall be determined by the Agent promptly after receipt
of the financial statements required to be delivered by the Borrower to the
Agent and the Lenders pursuant to Section 7.01 or 7.02, as applicable. Any
adjustment to the facility fee shall be effective as of the first day of the
fiscal quarter immediately following the fiscal quarter in which the quarterly
(or annual) financial statements are required to be delivered to the Agent and
the Lenders. Notwithstanding the foregoing, for the period from the Effective
Date through and including April 1, 1995, the facility fee shall equal 0.10% per
annum. Thereafter, the facility fee shall be adjusted from time to time as set
forth above. The facility fee hereunder shall be payable in arrears on (a) each
Quarterly Date, (b) the date of each reduction in the Revolving Commitment (but
only on the amount of the reduction), (c) on the Termination Date, (d) on the
date the Commitments are otherwise terminated or reduced to zero and (e)
thereafter from time to time on demand of the Agent and shall be calculated on
the basis of a year of 360 days and the actual number of days elapsed.
Section 3.08. Letter of Credit Fees. The Borrower agrees to pay to the
Agent for account of the Lenders a letter of credit fee at a rate per annum
equal to the Applicable Margin for LIBOR Loans from time to time in effect and
as adjusted hereby of the daily average Stated Amount of each Letter of Credit
for the period from and including the Date of Issuance of such Letter of Credit
to and including the date such Letter of Credit is drawn in full, expires or is
terminated. In addition, the Borrower shall pay to the Agent for its own account
and not the account of any Lender, a fronting fee in respect of each Letter of
Credit at a rate equal to one-eighth of one percent (0.125%) per annum on the
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daily average Stated Amount of such Letter of Credit for the period from and
including the Date of Issuance of such Letter of Credit to and including the
date such Letter of Credit is drawn in full, expires or is terminated. The fees
provided for in the immediately preceding two sentences shall be nonrefundable
and paid in arrears (a) on each Quarterly Date, (b) on the Termination Date, (c)
on the date the Commitments are otherwise terminated or reduced to zero and (d)
thereafter from time to time on demand of the Agent. The Borrower shall also pay
directly to the Agent from time to time on demand all commissions, charges,
costs and expenses in the amounts customarily charged by the Agent from time to
time in like circumstances with respect to the issuance of each Letter of
Credit, Drawings, amendments and other transactions relating thereto
(collectively, the "Issuing Bank Fees"). All Issuing Bank Fees shall be deemed
fully earned upon the issuance of a Letter of Credit and shall not be
refundable. Notwithstanding any term of any letter of credit application,
reimbursement agreement or other agreement entered into by the Borrower and
NationsBank in connection with any Existing Letter of Credit which term relates
to fees payable in connection with such Existing Letter of Credit, the terms of
this Section regarding letter of credit fees and fronting fees shall control
from and after the Agreement Date.
Section 3.09. Administrative and Arrangement Fees. The Borrower agrees
to pay (a) the administrative fees of the Agent and the arrangement fees of
NationsBanc Capital Markets, Inc., as arranger (the "Arranger"), as set forth in
a letter agreement (the "Fee Letter") by and among the Borrower, the Agent and
the Arranger.
Section 3.10. Increased Costs/Capital Adequacy. The Borrower agrees
that if: (a) after the Agreement Date, any Lender shall have determined that the
adoption of any Applicable Law or any change therein, or any change in the
interpretation or administration thereof by any court or any administrative or
governmental authority or central bank or comparable agency charged with
interpretation or administration thereof (or compliance by any Lender with any
request or directive of any such court, authority or central bank (whether or
not having the force of law)), shall either impose, affect, modify or deem
applicable any reserve, special deposit, capital maintenance or similar
requirement against any Loan or the participation of any Lender therein or
impose on the Agent or any Lender any other condition regarding any Loan or any
Lender's participation therein, or (b) after the Agreement Date, any Lender
shall have determined that the adoption of any Applicable Law regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any court or any administrative or governmental
authority or central bank or comparable agency charged with the interpretation
or administration thereof (or compliance by any Lender with any request or
directive regarding capital adequacy (whether or not having the force of law))
of any such authority, central bank or comparable agency, relating generically
to loans of the category applicable to the Loans, or (c) there shall occur any
change after the Agreement Date in the basis of taxation of payments to any
Lender or the Agent of any amount owing to such Lender or the Agent hereunder
(except for a change in the rate of taxation on the overall net income of the
Agent or any Lender or the branches or foreign Subsidiaries of the Agent or any
Lender), and the result of any event referred to in subsection (a), (b) or (c)
above shall be to increase the cost to such Lender or the Agent of making or
maintaining any Loan or to reduce the rate of return on capital with respect to
any Loan to a level below that which such Loan could have achieved but for such
adoption, change or compliance (and, with respect to capital adequacy, taking
into consideration such Lender's internal policies with respect thereto), then,
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upon demand by the Agent or any such Lender, as the case may be, the Borrower
shall immediately pay to the Agent or such Lender, as the case may be,
additional amounts which shall be sufficient to compensate the Agent or such
Lender for such increased cost, tax or reduced rate of return, together with
interest on such amount from the date fifteen days after the date the Borrower
receives the statement(s) referred to in the next sentence to the date the
Borrower pays such increased cost, tax or reduced rate of return in full at the
Base Rate. At the request of the Borrower, the Agent or any Lender requesting
indemnification pursuant to this Section shall deliver to the Borrower a
statement setting forth the basis for requesting such compensation and the
method for determining the amount thereof. Any such statement shall be
conclusive as to the amounts of increased cost in funding or maintaining any
Loan absent manifest error.
Section 3.11. Statements of Account. The Agent will account to the
Borrower quarterly with a statement of Loans, outstanding Letters of Credit,
accrued interest and Fees, charges and payments made pursuant to this Agreement
and the other Loan Documents, and such account rendered by the Agent shall be
deemed binding upon Borrower unless the Borrower notifies the Agent in writing
within fifteen days after the date each statement is delivered to Borrower that
the Borrower objects to the information, calculations or items therein contained
and identifies such objections. The failure of the Agent to deliver such a
statement of accounts shall not relieve or discharge the Borrower from its
obligations hereunder.
Section 3.12. Defaulting Lender's Status. Notwithstanding anything
contained herein to the contrary, but in addition to provisions regarding the
failure of a Lender to perform its obligations hereunder set forth elsewhere in
this Agreement, so long as any Lender shall be in default in its obligation to
fund a Loan or participate to the extent of such Lender's Credit Percentage of
any Reimbursement Obligation or shall have rejected its Commitment, then such
Lender shall not be entitled to receive any payments of principal of, or
interest on, its Commitment or the Loans or Reimbursement Obligations or its
share of any commitment or other fees payable hereunder, and for purposes of
voting or consenting to matters with respect to the Credit Documents, such
Lender shall be deemed not to be a "Lender" hereunder and such Lender's
Commitment shall be deemed to be zero ($0), unless and until (a) all other
Obligations have been paid in full, (b) such failure to fulfill its obligation
to fund is cured and such Lender shall have paid, as and to the extent provided
in this Agreement, to the applicable party, such amount then owing together with
interest on the amount of funds that such Lender failed to timely fund or (c)
the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable. No Commitment of any Lender shall be
increased or otherwise affected by any such failure or rejection by any Lender.
Any payments of principal or interest which would, but for this subsection, be
paid to any Lender, shall be paid to the Lenders who shall not be in default
under their respective Commitments and who shall not have rejected any
Commitment, for application to the Loans or to provide cash collateral in such
manner and order as shall be determined by the Agent.
Section 3.13. Agent's Reliance. Neither the Agent nor any Lender shall
incur any liability to the Borrower (nor shall the Agent incur any liability to
the Lenders) for acting upon any telephonic notice referred to in this Agreement
which the Agent believes in good faith to have been given by a person authorized
to deliver such notice or for otherwise acting in good faith hereunder.
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Section 3.14. Taxes. (a) Any and all payments by the Borrower
hereunder, under the Notes or under the Letters of Credit to or for the benefit
of any Lender or the Agent shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interests and all other liabilities with respect
thereto ("Taxes"), excluding, (i) in the case of each such Lender or the Agent,
taxes imposed on its net income (including, without limitation, any taxes
imposed on branch profits) and franchise taxes imposed on it by the jurisdiction
under the laws of which such Lender or the Agent (as the case may be) is
organized or any political subdivision thereof, (ii) in the case of each Lender,
taxes imposed on its net income (including, without limitation, any taxes
imposed on branch profits), and franchise taxes imposed on it, by the
jurisdiction of such Lender's applicable lending office or any political
subdivision thereof, (iii) in the case of each such Lender and the Agent, any
Taxes that are in effect and that would apply to a payment to such Lender or
Agent, as applicable, as of the Agreement Date, and (iv) if any Person acquires
any interest in this Agreement, any Note or Letter of Credit pursuant to the
provisions hereof from a Lender who was a party hereto on the Effective Date, or
a Foreign Lender or the Agent changes the office in which the Loan is made,
accounted for or booked (any such person, or such Foreign Lender or the Agent in
that event, being referred to as a "Tax Transferee"), any Taxes to the extent
that they are in effect and would apply to a payment to such Tax Transferee as
of the date of the acquisition of such interest or change in office, as the case
may be (all such nonexcluded Taxes being hereinafter referred to as "Covered
Taxes").
(b) In addition, the Borrower agrees to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that arise
at any time or from time to time (i) from any payment made under any and all
Loan Documents, (ii) from the transfer of the rights of the Lender under any
Loan Documents to any transferee other than any voluntary transfer of any such
rights by any Lender, or (iii) from the execution or delivery by the Borrower
of, or from the filing or recording or maintenance of, or otherwise with respect
to the exercise by the Agent or the Lenders of their rights under, any and all
Loan Documents (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender, the Agent, and any Tax
Transferee for the full amount of (i) Covered Taxes imposed on or with respect
to amounts payable hereunder, (ii) Other Taxes, and (iii) any Taxes other than
Covered Taxes imposed by any jurisdiction on amounts payable under this Section
paid by such Lender, the Agent or such Tax Transferee, as the case may be, and
any liability (including penalties, interest and reasonable expenses) arising
solely therefrom or with respect thereto. Payment of this indemnification shall
be made within 30 days from the date such Lender, the Agent or Tax Transferee
delivers a certificate to the Borrower certifying and setting forth in
reasonable detail the calculation thereof as to the amount and type of such
Taxes. Any such certificate submitted by the Lender, the Agent or the Tax
Transferee in good faith to the Borrower shall, absent manifest error, be final,
conclusive and binding on all parties.
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(d) Within 30 days after having received a receipt evidencing payment
of Covered Taxes or Other Taxes, the Borrower will furnish to the Agent the
original or a certified copy of such receipt and the Agent shall promptly
deliver copies of such receipt to the affected Lenders.
(e) If (i) a Tax Transferee that is organized under the laws of a
jurisdiction outside of the United States acquires an interest in this Agreement
or any Note or (ii) a Foreign Lender becomes a Lender hereunder or changes the
office through which Loans are made, accounted for or booked, the transferor, or
the Foreign Lender, as the case may be, shall deliver to the Borrower and the
Agent (i) two valid, duly completed copies of IRS Form 1001 or 4224 or successor
applicable form, as the case may be, and any other required form, certifying in
each case that such Tax Transferee or Foreign Lender, as the case may be, is
entitled to receive payments under this Agreement and the Notes payable to it
without deduction or withholding of United States federal income tax; and (ii) a
valid, duly completed IRS Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax. Each Tax Transferee or Foreign Lender that delivers to the Borrower and the
Agent a Form 1001 or 4224, and Form W-8 or W-9 and any other required form,
pursuant to the next preceding sentence, further undertakes to deliver two
further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner of required certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an exemption
from a required withholding of United States federal income tax or entitlement
to having such withholding imposed at the Reduced Rate or after the occurrence
of any event requiring a change in the most recent form previously delivered by
it to the Borrower and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Agent, certifying (i) in the
case of a Form 1001 or 224 that such Tax Transferee or Foreign Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless any change in
treaty, law or regulation or official interpretation thereof has occurred after
the effective date of such acquisition or change and prior to the date on which
any such delivery would otherwise be required that renders all such forms
inapplicable or that would prevent such Tax Transferee or Foreign Lender from
duly completing and delivering any such form with respect to it, and such Tax
Transferee or Foreign Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax or (ii) in the case of a Form W-8 or W-9, establishing
an exemption from United States backup withholding tax.
(f) If any Taxes for which the Borrower would be required to make
payments under this Section are imposed, the Lender or the Agent, as the case
may be, shall use its best efforts to avoid or reduce such Taxes by taking any
appropriate action (including, without limitation, assigning its rights
hereunder to a related entity or a different office) which would not be
otherwise disadvantageous to such Lender or the Agent, as the case may be, as
determined by such Lender and the Agent in their sole discretion.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section shall survive the payment in full of the Obligations.
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Section 3.15. Affected Lenders. If the Borrower is obligated to pay to
any Lender any amount under Sections 3.10 or 3.14, the Borrower may, if (i) no
Default or Event of Default then exists and (ii) Requisite Lenders have not made
a claim for indemnification under such Section(s), replace such Lender with
another lender acceptable to the Agent, and such Lender hereby agrees to be so
replaced subject to the following:
(a) The obligations of the Borrower hereunder to the Lender to be
replaced (including such increased or additional costs incurred from the date of
notice to the Borrower of such increase or additional costs through the date
such Lender is replaced hereunder) shall be paid in full to such Lender
concurrently with such replacement;
(b) The replacement Lender shall be a bank or other financial
institution that is not subject to the increased costs arising under such
section(s) which may have effectuated the Borrower's election to replace any
Lender hereunder, and each such replacement Lender shall execute and deliver to
the Agent such documentation satisfactory to the Agent pursuant to which such
replacement Lender is to become a party hereto, conforming to the provisions of
Section 11.06, with a Commitment equal to that of the Lender being replaced and
shall make Loans in the aggregate principal amount equal to the aggregate
outstanding principal amount of the Loans of the Lender being replaced;
(c) Upon such execution of such documents referred to in clause (b) and
repayment of the amounts referred to in clause (a), the replacement lender shall
be a "Lender" with a Commitment as specified hereinabove and the Lender being
replaced shall cease to be a "Lender" hereunder, except with respect to
indemnification provisions under this Credit Agreement, which shall survive as
to such replaced Lender;
(d) The Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this Section, but at no time shall the Agent be
obligated to initiate any such replacement; and
(e) Any Lender replaced under this Section shall be replaced at the
Borrower's sole cost and expenses and at no cost or expense to the Agent or any
of the Lenders.
Section 3.16. Change of Lending Office. Each Lender agrees that it will
use reasonable efforts to designate an alternate Lending Office with respect to
any of its Loans affected by the matters or circumstances described in Sections
3.10 and 3.14 to reduce the liability of Borrower or avoid the results provided
thereunder, so long as such designation is not disadvantageous to such Lender as
determined by such Lender in its sole discretion.
Section 3.17. Agreement Regarding Interest and Charges. The parties
hereto hereby agree and stipulate that the only charge imposed upon the Borrower
for the use of money in connection with this Agreement is and shall be the
interest described in Section 2.10. The parties hereto further agree and
stipulate that all agency fees, syndication fees, facility fees, letter of
credit fees, underwriting fees, default charges, late charges, funding or
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"breakage" charges, increased cost charges, attorneys' fees and reimbursement
for costs and expenses paid by the Agent or any Lender to third parties or for
damages incurred by the Agent or any Lender, are charges made to compensate the
Agent or any such Lender for underwriting or administrative services and costs
or losses performed or incurred, and to be performed or incurred, by the Agent
and the Lenders in connection with this Agreement and shall under no
circumstances be deemed to be charges for the use of money pursuant to Official
Code of Georgia Annotated Sections 7-4-2 and 7-4-18. All charges other than
charges for the use of money shall be fully earned and nonrefundable when due.
Section 3.18. Expiration or Maturity Date of Letters of Credit Past
Termination Date. If on the date (the "Facility Termination Date") this
Agreement and the Letter of Credit Facility are terminated prior to the
Expiration Date of any Letters of Credit outstanding hereunder (whether
voluntarily, by reason of the occurrence of an Event of Default or otherwise),
the Borrower shall, on the Facility Termination Date, deposit with the Agent an
amount of money equal to the Stated Amount of such Letter(s) of Credit in the
Collateral Account. If a Drawing pursuant to such Letter of Credit occurs on or
prior to the Expiration Date of such Letter of Credit but after the Facility
Termination Date, the Borrower authorizes the Agent to use the monies deposited
in the Collateral Account to make payment to the Beneficiary with respect to
such Drawing or the payee with respect to such presentment. If no Drawing occurs
on or prior to the Expiration Date of such Letter of Credit, the Agent shall
return to the Borrower the monies deposited in the Collateral Account with
respect to such outstanding Letter of Credit on or before the date thirty
Business Days after the Expiration Date with respect to the Letter of Credit.
Section 3.19. Collateral Account. The Collateral Account shall be in
the name of the Agent as a cash collateral account and the Agent shall have sole
dominion and control over, and sole access to, the Collateral Account. Neither
the Borrower nor any Person claiming on behalf of or through the Borrower shall
have any right to withdraw any of the funds held in the Collateral Account. The
Borrower agrees that it will not (a) sell or otherwise dispose of any
interest in the Collateral Account or any funds held therein, or (b) create
or permit to exist any Lien upon or with respect to the Collateral Account or
any funds held therein, except as provided in or contemplated by this Agreement.
The Agent shall exercise reasonable care in the custody and preservation of any
funds held in the Collateral Account and shall be deemed to have exercised such
care if such funds are accorded treatment substantially equivalent to that which
the Agent accords other funds deposited with the Agent, it being understood that
the Agent shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any funds held in the
Collateral Account. Subject to the right of the Agent to withdraw funds from the
Collateral Account as provided herein, the Agent may in its sole discretion and
without any obligation to do so whatsoever invest funds on deposit in the
Collateral Account, reinvest proceeds of any such investments which may mature
or be sold, and invest interest or other income received from any such
investments, in each case, in Cash Equivalents, as the Agent may select or in
such other investments as shall be agreed upon by the Agent and the Borrower.
Unless the Facility Termination Date has occurred by reason of the occurrence of
an Event of Default, the proceeds of such investments shall be the property of
the Borrower and the Agent shall account to the Borrower for any such
investments from time to time as agreed upon by the Borrower and the Agent.
However, if an Event of Default has occurred and is continuing and any
Obligations remaining outstanding, proceeds of investments shall be distributed
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to the Lenders pro rata in accordance with their respective Credit Percentages
at such times as the Agent shall reasonably designate. After payment in full of
all Obligations and/or the expiration of all Letters of Credit and the
distribution of monies contained therein to the Lenders as provided above, the
Agent shall deliver to the Borrower any monies remaining in the Collateral
Account.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Initial Loans and Letter of
Credit. This Agreement, the obligation of the Lenders to make any Loans to the
Borrower in accordance with the terms hereof and the obligation of the Agent to
issue any Letters of Credit in accordance with the terms hereof, are subject to
the condition precedent that the Borrower deliver to the Agent each of the
following, each of which shall be satisfactory in form and substance to the
Agent:
(a) Corporate Diligence
(i) Certified copies (certified by the respective Secretary or
Assistant Secretary of each Loan Party (each such Person shall be the
"Authenticating Person" with respect to such Loan Party)) of all
corporate or other necessary action taken by each Loan Party to
authorize the execution, delivery and performance of the Loan Documents
to which it is a party;
(ii)(A) With respect to each Loan Party, the articles of
incorporation (certified by the applicable Secretary of State) and
by-laws of such Person; (B) with respect to each Loan Party, a
certificate of existence or other good standing certificate issued by
the Secretary of State of the jurisdiction in which such Person was
formed and a certificate of qualification to transact business or other
comparable certificate issued by the Secretary of State (and any state
department of taxation, as applicable) of each state in which the
Borrower operates a plant or distribution facility; and (C)
certificates of incumbency and specimen signatures signed by the
appropriate Authenticating Person with respect to each of the officers
or other Persons of each Loan Party who are authorized to execute and
deliver the Loan Documents to which such Loan Party is a party;
(iii) An opinion of Bennie M. Laughter, the Vice President and General
Counsel of the Borrower, addressed to the Agent and the Lenders in substantially
the form of Exhibit G;
(iv) Copies of all consents, approvals, authorizations,
registrations or filings required to be made or obtained by each Loan
Party in connection with the execution and delivery of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby;
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(v) a certificate executed by the chief executive officer,
chief financial officer or treasurer of the Borrower, stating that: (a)
on such date, and after giving effect to the transactions contemplated
hereby, no Default or Event of Default has occurred and is continuing;
(b) no material adverse change in the financial condition or operations
of the business of the Borrower or any of its Subsidiaries or the
projected cash flow of Borrower and its Subsidiaries has occurred; (c)
the representations and warranties of the Loan Parties set forth herein
and in the other Loan Documents are true and correct in all material
respects on and as of such date with the same effect as though made on
and as of such date; and (d) on such date each Loan Party is in
compliance with all the terms and provisions set forth in this
Agreement on its part to be observed and performed.
(b) Supplemental Closing Documents.
(i) Notes executed by the Borrower, payable to the order of the Lenders and
complying with the terms of Section 2.15;
(ii) a disbursement letter executed by the Borrower in substantially the
form of Exhibit H authorizing the disbursement of the initial Loans;
(iii) the Fee Letter;
(iv) a payoff letter executed and delivered by each of the
following Persons with respect to the following Existing Consolidated
Funded Debt of the Borrower:
(1) all principal, interest and other amounts outstanding under an
unsecured line of credit established by NationsBank in favor of the Borrower;
(2) all principal, interest and other amounts outstanding under an
unsecured line of credit established by Trust Company Bank in favor of the
Borrower; and
(3) all principal, interest and other amounts outstanding under an
unsecured line of credit established by Wachovia Bank of Georgia, N.A. in favor
of the Borrower;
(v) a Statement of Funds Flow executed by the Borrower and the
Agent with respect to the flow of funds in connection with the initial
funding (the "Statement of Funds Flow");
(vi) (1) favorable UCC, tax, judgment and lien search reports
with respect to the Borrower, any appropriate Subsidiary and any
appropriate Loan Party in all necessary or appropriate jurisdictions
and under all legal and appropriate trade names indicating that there
are no Liens on any assets of such Person other than Permitted Liens;
and (2) a UCC-1 notice filing naming the Borrower as "Debtor" and the
Agent as "Secured Party" to be filed with the Clerk of the Superior
Court of Whitfield County, Georgia with respect to the negative pledge
set forth in Section 8.04;
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(c) Other Documents
(i) evidence that all Fees and other amounts due the Agent, the Arranger
and the Lenders hereunder and under the other Loan Documents have been paid; and
(ii) such other documents and instruments as the Agent or a Lender may
reasonably request.
Section 4.02. Conditions Precedent to All Loans and Letters of Credit.
The obligation of the Lenders to make Loans and of the Agent to issue Letters of
Credit is subject to the further condition precedent that, as of the date of
each such Loan or Date of Issuance of each such Letter of Credit and after
giving effect thereto: (a) no Default or Event of Default shall have occurred
and be continuing; (b) the representations and warranties made or deemed made by
the Borrower in this Agreement and the other Loan Documents to which it is a
party and by each other Loan Party in the Loan Documents to which it is a party,
shall be true and correct on and as of the date of the making of such Loan or
Date of Issuance of such Letter of Credit with the same force and effect as if
made on and as of such date except to the extent that (i) such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and (ii) except for changes in factual circumstances
specifically and expressly permitted hereunder; (c) no Material Adverse Change
with respect to the Borrower and its Subsidiaries, taken as a whole, shall have
occurred since the Effective Date; and (d) there is no pending or threatened
suit, cause of action or proceeding against any Loan Party that could reasonably
have a Material Adverse Effect on the Borrower or any of its Subsidiaries taken
as a whole. Each Credit Event shall constitute a certification by the Borrower
to the effect set forth in the preceding sentence (both as of the date of the
giving of notice relating to such Credit Event and, unless the Borrower
otherwise notifies the Agent prior to the date of Credit Event, as of the date
of such Credit Event).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties. In order to induce the
Agent and each Lender to enter into this Agreement, to make Loans and to issue
Letters of Credit, the Borrower represents and warrants to the Agent and each
Lender as follows:
(a) Organization; Power; Qualification. Each of the Loan Parties is a
corporation, duly organized, validly existing and in good standing under the
jurisdiction of its incorporation, has the power and authority to own or lease
its respective properties and to carry on its respective business as now being
and hereafter proposed to be conducted and is duly qualified and is in good
standing as a foreign corporation, and authorized to do business, in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized would have a Material Adverse Effect.
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(b) Ownership Structure; Subsidiaries. Schedule 5.01(b) correctly sets
forth the corporate structure and ownership interests of the Borrower and all of
its Affiliates including the correct legal name of the Borrower and each
Affiliate, and, in the case of Affiliates, the partners or shareholders, as
applicable, or other Persons holding equity interests in such Affiliates and
their percentage equity or voting interest in such Affiliates. As of the
Agreement Date, (i) the Borrower does not have any Material Subsidiaries and
(ii) no Material Subsidiary Group exists.
(c) Authorization. The Borrower and each other Loan Party has the right
and power, and has taken all necessary action to authorize it, to borrow
hereunder and to execute, deliver and perform this Agreement, the Notes and the
other Loan Documents to which it is a party in accordance with their respective
terms and to consummate the transactions contemplated hereby. This Agreement,
the Notes and each of the other Loan Documents to which the Borrower or other
Loan Party is a party have been duly executed and delivered by such Person and
each is a legal, valid and binding obligation of such Person enforceable against
such Person in accordance with its respective terms.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, etc. The execution, delivery and performance of this Agreement, the Notes
and the other Loan Documents to which the Borrower or any other Loan Party is a
party in accordance with their respective terms and the Borrowings hereunder do
not and will not, by the passage of time, the giving of notice, a determination
of materiality, the satisfaction of any condition, any combination of the
foregoing, or otherwise: (i) require any Governmental Approval or violate any
Applicable Law relating to the Borrower or any other Loan Party; (ii) conflict
with, result in a breach of or constitute a default under (A) the articles of
incorporation or the bylaws of the Borrower or the organizational documents of
any other Loan Party, or (B) any indenture, agreement or other instrument to
which the Borrower or any other Loan Party is a party or by which it or any of
its properties may be bound the violation of which could have a Material Adverse
Effect and, in any event, any agreement, indenture or instrument evidencing any
Consolidated Funded Debt; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any other Loan Party other than in favor
of the Agent for the benefit of the Lenders.
(e) Compliance with Law; Governmental Approvals. The Borrower, each
Subsidiary and each other Loan Party is in compliance with each Governmental
Approval applicable to it and in compliance with all other Applicable Law
relating to the Borrower, a Subsidiary or such Loan Party except for
noncompliances which, and Governmental Approvals the failure to possess which,
would not, singly or in the aggregate, cause a Default or Event of Default or
have a Material Adverse Effect.
(f) Titles to Properties. The Borrower, its Subsidiaries and the other
Loan Parties have good, marketable and legal title to, or a valid leasehold
interest in, its respective properties and assets including, but not limited to,
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those reflected on the consolidated balance sheet of the Borrower as at July 2,
1994, except those which have been disposed of by the Borrower subsequent to
such date in the ordinary course of business.
(g) Indebtedness and Guarantees. Schedule 1.01(a) is a complete and
correct listing of all (i) Existing Consolidated Funded Debt of the Borrower and
its Subsidiaries and the other Loan Parties, (ii) Guarantees of the Borrower and
its Subsidiaries and the other Loan Parties of any Indebtedness and (iii) all
letters of credit and acceptance facilities extended to the Borrower and/or any
Subsidiary or other Loan Parties. Schedule 1.01(b) describes all Existing
Letters of Credit. Except as set forth in Schedule 1.01(b), there are no letters
of credit outstanding under which the Borrower or its Subsidiaries is the
account party therefor. Schedule 1.01(c) sets forth all Liens on any property of
the Borrower and its Subsidiaries securing any Indebtedness. No default or event
of default, or event or condition which with the giving of notice, the lapse of
time, a determination of materiality, the satisfaction of any other condition or
any combination of the foregoing, would constitute such a default or event of
default, exists with respect to any such Indebtedness or Guaranty.
(h) Litigation. Except as set forth on Schedule 5.01(h), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting the
Borrower, any Subsidiary or any other Loan Party or any of its respective
property before or by any Governmental Authority which, if adversely determined,
could have a Material Adverse Effect, and there are no strikes, slow downs, work
stoppages or walkouts or other labor disputes in progress or threatened relating
to the Borrower, any Subsidiary or any other Loan Party.
(i) Taxes. All federal, state and other tax returns of the Borrower and
any Subsidiary or Loan Party required by Applicable Law to be filed have been
filed, and all federal, state and other taxes, assessments and other
governmental charges or levies upon the Borrower, any Subsidiary and each Loan
Party and its properties, income, profits and assets which are due and payable
have been paid, except any such nonpayment which is at the time permitted under
Section 6.06. None of the United States income tax returns of the Borrower, its
Subsidiaries or any Loan Party are under audit. All charges, accruals and
reserves on the books of the Borrower and each of its Subsidiaries in respect of
any taxes or other governmental charges are in accordance with GAAP.
(j) Financial Statements and Condition. The Borrower has heretofore
furnished to each of the Lenders the consolidated balance sheet of the Borrower
and its Subsidiaries as at July 2, 1994 and the related consolidated statements
of income, retained earnings and cash flow of the Borrower and its Subsidiaries
for the fiscal year ended on said date, with the opinion thereon of Arthur
Andersen & Co. All such financial statements are complete and correct and fairly
present the consolidated financial condition of the Borrower and its
Subsidiaries as at said dates and the consolidated results of their operations
for the fiscal year and twelve-month period ended on said dates (subject, in the
case of such financial statements for such twelve-month period, to normal
year-end audit adjustments), all in accordance with GAAP. None of the Borrower
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nor any of its Subsidiaries has on the Agreement Date any material contingent
liabilities, liabilities for taxes, unusual or long-term commitments or
unrealized or forward anticipated losses from any unfavorable commitments,
except as referred to or reflected or provided for in said balance sheets as at
said dates. Since July 2, 1994, no Material Adverse Change has occurred. Each of
the Borrower, the Loan Parties and the other Subsidiaries is Solvent.
(k) ERISA. Each Plan, and, to the knowledge of the Borrower, each
Multiemployer Plan, is in compliance in all respects with, and has been
administered in all respects in compliance with, the applicable provisions of
ERISA, the Internal Revenue Code and any other Applicable Law except where
failure to be so in compliance or to be so administered could not result in a
Material Adverse Effect, and, on and as of the Agreement Date, no event or
condition has occurred and is continuing as to which the Borrower would be under
an obligation to furnish a report to the Lenders under Section 7.05.
(l) Absence of Defaults. Neither the Borrower, any Subsidiary thereof
nor any Loan Party is in default under its articles of incorporation or its
bylaws, and no event has occurred, which has not been remedied, cured or waived:
(i) which constitutes a Default or an Event of Default; or (ii) which
constitutes, or which with the passage of time, the giving of notice, a
determination of materiality, the satisfaction of any condition, or any
combination of the foregoing, would constitute, a default or event of default by
the Borrower, any Subsidiary or any Loan Party under any agreement (other than
this Agreement) or judgment, decree or order to which the Borrower or any
Subsidiary or Loan Party is a party or by which the Borrower or any Subsidiary
or Loan Party or any of their respective properties may be bound where such
default would, individually or in the aggregate, have a Material Adverse Effect.
(m) Environmental Laws. Except as set forth on Schedule 5.01(m) hereof,
the Borrower, its Subsidiaries and each other Loan Party is in compliance with
all Environmental Laws, the failure with which to comply would have a Material
Adverse Effect. The Borrower is not aware of, and has not received notice of,
any past, present, or future events, conditions, circumstances, activities,
practices, incidents, actions, or plans which, with respect to the Borrower, its
Subsidiaries and each other Loan Party, may interfere with or prevent compliance
or continued compliance with Environmental Laws, or may give rise to any
common-law or legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study, or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic, or other Hazardous Material; and there is no civil, criminal, or
administrative action, suit, demand, claim, hearing, notice, or demand letter,
notice or violation, investigation, or proceeding pending or, to the Borrower's
knowledge, threatened, against the Borrower, its Subsidiaries and each other
Loan Party relating in any way to Environmental Laws.
(n) Use of Proceeds. All proceeds of the Loans and Letters of Credit will
be used only in accordance with Section 6.08.
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(o) Investment Company; Public Utility Holding Company. Neither the
Borrower nor any of the Subsidiaries or Loan Parties is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended, or (iii) subject
to any other law which purports to regulate or restrict its ability to borrow
money or to consummate the transactions contemplated by this Agreement or the
other Loan Documents or to perform its obligations hereunder or thereunder.
(p) Margin Stock. Neither the Company, any Subsidiary nor any Loan
Party is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying "margin stock" within the meaning of Regulations
G, U and X of the Board of Governors of the Federal Reserve System, and no part
of the proceeds of any extension of credit hereunder will be used to buy or
carry any such "margin stock."
(q) Affiliate Transactions. Except as set forth on Schedule 5.01(q) or
as permitted by Section 8.08, neither the Borrower nor any Subsidiary or Loan
Party is a party to or bound by any agreement or arrangement (whether oral or
written) to which any Affiliate of the Borrower or any Subsidiary is a party
except (i) in the ordinary course of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and (ii) upon fair and
reasonable terms no less favorable to the Borrower and such Subsidiary than it
could obtain in a comparable arm's-length transaction with an unaffiliated
Person. Neither the Borrower nor any Subsidiary is a party to any agreement or
arrangement which restricts or prohibits the payment of dividends or the
repayment of inter-company loans by a Subsidiary to the Borrower.
(r) Accuracy and Completeness of Information. All written information,
reports and other papers and data furnished to the Agent or any Lender by, on
behalf of, or at the direction of, the Borrower, any Subsidiary or any other
Loan Party were, at the time the same were so furnished, complete and correct in
all material respects, to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter, or, in the case of financial
statements, present fairly, in accordance with GAAP consistently applied
throughout the periods involved, the financial position of the Persons involved
as at the date thereof and the results of operations for such periods. No fact
is known to the Borrower which has had, or may in the future have (so far as the
Borrower can reasonably foresee), a Material Adverse Effect which has not been
set forth in the financial statements referred to in Section 5.01(j) or in such
information, reports or other papers or data or otherwise disclosed in writing
to the Agent and the Lenders prior to the Agreement Date. No document furnished
or written statement made to the Agent or any Lender in connection with the
negotiation, preparation or execution of this Agreement or any of the other Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of the Borrower, any Subsidiary or any other Loan Party or
omits or will omit to state a material fact necessary in order to make the
statements contained therein not misleading.
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Section 5.02. Survival of Representations and Warranties, Etc. All
statements contained in any certificate, financial statement or other instrument
delivered by or on behalf of the Borrower or any Loan Party to the Agent or any
Lender pursuant to or in connection with this Agreement or any of the other Loan
Documents (including any statement contained in any certificate, financial
statement or other instrument delivered by or on behalf of the Borrower prior to
the Agreement Date and delivered to the Agent or the Lender in connection with
closing the transactions contemplated hereby) shall constitute representations
and warranties made by the Borrower under this Agreement. All representations
and warranties made under this Agreement shall be deemed to be made at and as of
the Agreement Date, the Effective Date and at and as of the date of any Credit
Event, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date) and
except for changes in factual circumstances specifically permitted hereunder.
ARTICLE VI
AFFIRMATIVE COVENANTS
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall, and shall cause
each Subsidiary and the other Loan Parties to:
Section 6.01. Preservation of Existence and Similar Matters. Preserve
and maintain its respective existence, rights, franchises, licenses and
privileges in the jurisdiction of its formation and qualify and remain qualified
and authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization and where the failure to be so authorized and qualified would have
a Material Adverse Effect.
Section 6.02. Compliance with Applicable Law. Comply with all
Applicable Law, including the obtaining of all Governmental Approvals, if the
failure to comply with which would have a Material Adverse Effect.
Section 6.03. Maintenance of Property. In addition to, and not in
derogation of, the requirements of any of the other Loan Documents, (a) protect
and preserve all of its material properties, including, but not limited to,
copyrights, patents, trade names and trademarks, and maintain in good repair,
working order and condition all tangible properties, and (b) maintain all of its
properties used or useful in its business in good working order and condition,
ordinary wear and tear excepted.
Section 6.04. Conduct of Business. At all times carry on its respective
businesses in the same fields as engaged in on the Agreement Date and not enter
into any field of business not otherwise engaged in as of the Agreement Date or
otherwise reasonably related thereto.
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Section 6.05. Insurance. In addition to, and not in derogation of, the
requirements of any of the other Loan Documents, maintain insurance with
financially sound and reputable insurance companies against such risks and in
such amounts as is customarily maintained by similar businesses or as may be
required by Applicable Law.
Section 6.06. Payment of Taxes and Claims. Pay or discharge when due
(a) all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it, and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen and landlords
for labor, materials, supplies and rentals which, if unpaid, might become a Lien
on any properties of such Person; provided, however, that this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings which
operate to suspend the collection thereof and for which adequate reserves have
been established on the books of the Borrower or Subsidiary, as appropriate, in
accordance with GAAP.
Section 6.07. Visits and Inspections. Permit representatives or agents
of any Lender or the Agent, from time to time, as often as may be reasonably
requested to: (a) visit and inspect all properties of the Borrower or any
Material Subsidiary; (b) inspect and make extracts from their respective books
and records; and (c) discuss with its principal officers, and its independent
accountants, business, assets, liabilities, financial conditions, results of
operations and business prospects.
Section 6.08. Use of Proceeds/Letters of Credit. (a) Use the proceeds
of the initial Loans in accordance with the Statement of Funds Flow referred to
in Section 4.01; (b) use the proceeds of all subsequent Loans and all Letters of
Credit for general corporate purposes only; and (c) not use any part of such
proceeds to purchase or carry, or to reduce or retire or refinance any credit
incurred to purchase or carry, any "margin stock" within the meaning of
Regulations G, U and X of the Board of Governors of the Federal Reserve System,
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 6.09. Material Subsidiaries. Upon (a) the acquisition,
incorporation or other creation of a Material Subsidiary or (b) the existence of
a Material Subsidiary Group, the Borrower shall cause such Material Subsidiary
(or the Subsidiaries comprising the Material Subsidiary Group, as the case may
be) to execute and deliver in favor of the Agent for the benefit of the Lenders
within 10 Business Days of such acquisition, incorporation, creation or coming
into existence a Guaranty in the form of Exhibit I. The delivery of any such
Guaranty to the Agent shall be accompanied by an opinion of counsel to the
Borrower and such Material Subsidiary (or Subsidiaries, as the case may be) as
to matters regarding due authorization, execution and delivery and
enforceability of such Guaranty and to such other matters as the Agent or its
counsel shall reasonably request.
Section 6.10. Environmental Matters. Except as described in Schedule
5.01(m) hereof, comply in all respects with all Environmental Laws the failure
with which to comply would have a Material Adverse Effect. If the Borrower or
any of the Subsidiaries shall (a) receive notice that any violation of any
Environmental Law may have been committed or is about to be committed by the
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Borrower or any of the Subsidiaries, (b) receive notice that any administrative
or judicial complaint or order has been filed or is about to be filed against
the Borrower or any of the Subsidiaries alleging violations of any Environmental
Law or requiring the Borrower or any of the Subsidiaries to take any action in
connection with the release of Hazardous Materials or (c) receive any notice
from a Governmental Authority or private party alleging that the Borrower or any
of the Subsidiaries may be liable or responsible for costs associated with a
response to or cleanup of a release of a Hazardous Material or any damages
caused thereby, and such notices, individually or in the aggregate, could have a
Material Adverse Effect, then the Borrower shall provide the Agent and each
Lender with a copy of such notice within 10 Business Days after the receipt
thereof by the Borrower or any of the Subsidiaries. Within thirty days after the
Borrower learns of the enactment or promulgation of any Environmental Law which
could have a Material Adverse Effect, the Borrower shall provide the Agent and
each Lender with notice thereof. The Borrower shall, and shall cause its
Subsidiaries and the other Loan Parties to, promptly take all actions necessary
to prevent the imposition of any Liens on any of their respective properties
arising out of or related to any Environmental Laws.
ARTICLE VII
INFORMATION
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall furnish to each
Lender at its Lending Office (or to only the Agent if so provided below):
Section 7.01. Quarterly Financial Statements. As soon as available and
in any event within 45 days after the close of each of the first, second and
third fiscal quarters of the Borrower, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such period
and the related consolidated and consolidating statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for such period,
setting forth in each case in comparative form the figures for the corresponding
periods of the previous fiscal year, all of which shall be certified by the
chief financial officer or the treasurer of the Borrower, in his or her opinion,
to present fairly, in accordance with GAAP, the consolidated financial position
of the Borrower and its Subsidiaries as at the date thereof and the results of
operations for such period (subject to normal year-end audit adjustments).
Section 7.02. Year-End Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower, the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal year and the related consolidated and
consolidating statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for such fiscal year, setting forth in comparative
form the figures as at the end of and for the previous fiscal year, all of which
shall be certified by the chief financial officer or the treasurer of the
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Borrower, in his or her opinion, to present fairly, in accordance with GAAP, the
financial position of the Borrower as at the date thereof and the result of
operations for such period and by Arthur Andersen & Co. or another independent
certified public accountants of recognized national standing acceptable to the
Agent and the Requisite Lenders, whose certificate shall be in scope and
substance satisfactory to the Agent and the Requisite Lenders and who shall have
authorized the Borrower to deliver such financial statements and certification
thereof to the Agent and the Lenders pursuant to this Agreement.
Section 7.03. Compliance Certificate. At the time the financial
statements are furnished pursuant to Sections 7.01 and 7.02, in the case of the
Borrower's interim quarterly financial statements, a certificate executed by the
chief financial officer or the treasurer substantially in the form of Exhibit K
attached hereto, or in the case of the audited annual financial statements, a
certificate executed by the independent public accountants performing the audit
of such statements:
(a) setting forth as at the end of such quarterly accounting period or
fiscal year, as the case may be, the calculations required to establish whether
or not the Borrower, and when appropriate its Subsidiaries, were in compliance
with the covenants contained in Article VIII; and
(b) stating that, to the best of his or their knowledge, information
and belief, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred
and, in the case of the certificate executed by the chief financial officer or
the treasurer, whether it is continuing and the steps being taken by the
Borrower with respect to such event, condition or failure.
Section 7.04. Notice of Litigation and Other Matters. Prompt notice of:
(a) to the extent the Borrower is aware of the same, the commencement
of all proceedings and investigations by or before any Governmental Authority
and all actions and proceedings in any court or other tribunal or before any
arbitrator against or in any other way relating adversely to, or adversely
affecting, the Borrower, any Subsidiary or any other Loan Party or any of their
respective properties, assets or businesses which, if adversely determined or
resolved, would have a Material Adverse Effect;
(b) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower, any
Subsidiary or any other Loan Party which has had or may have Material Adverse
Effect;
(c) the occurrence of any Default or Event of Default;
(d) any order, judgment or decree in excess of $5,000,000 having been
entered against the Borrower, any of the Subsidiaries or any other Loan Party or
any of their respective properties or assets;
(e) the acquisition, incorporation or other creation of any Subsidiary and
the purpose therefor and the amount and nature of the assets to be owned
thereby;
(f) the proposed sale, transfer or other disposition of any material assets
of the Borrower or any Subsidiary to any Subsidiary, Affiliate or other Person;
or
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(g) any strikes, slow downs, work stoppages or walkouts or other labor
disputes in progress or threatened relating to the Borrower, any Subsidiary or
any other Loan Party.
Section 7.05. ERISA Reporting. The Borrower shall deliver to the Agent
and each Lender, at the Borrower's expense, the following information at the
times specified below:
(a) within ten Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief financial officer or the treasurer of
the Borrower describing such Termination Event and the action, if any, which the
Borrower or other such entities have taken, are taking or propose to take with
respect thereto, and when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor or PBGC with respect thereto;
(b) within ten Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate knows or has reason to know that a non-exempt prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Internal
Revenue Code) has occurred with respect to a Plan, a statement of the chief
financial officer of the Borrower describing such transaction and the action
which the Borrower or other such entities have taken, are taking or propose to
take with respect thereto, except where the liability resulting therefrom could
not reasonably exceed $1,000,000;
(c) within ten Business Days after the request by Agent therefor, after
the filing thereof with the Department of Labor, Internal Revenue Service or
PBGC, copies of each annual report (form 5500 series), including Schedule B
thereto, filed with respect to each Plan which is a defined benefit plan as
defined in ERISA ss.3(35);
(d) within ten Business Days after the request by Agent therefor, after
receipt by the Borrower, any Subsidiary or any ERISA Affiliate of each actuarial
report for any Plan which is a defined benefit plan as defined in ERISA ss.3(35)
or Multiemployer Plan and each annual report for any Multiemployer Plan, copies
of each such report;
(e) within ten Business Days upon the occurrence thereof, notification
of any increase in the benefits of any existing Plan (other than payroll
practices) or the establishment of any new Plan (other than payroll practices)
or the commencement of contributions to any Plan (other than payroll practices)
to which the Borrower, any Subsidiary or any ERISA Affiliate was not previously
contributing, except where the increased liability resulting therefrom could not
reasonably exceed $1,000,000;
(f) within ten Business Days after receipt by the Borrower, any
Subsidiary or any ERISA Affiliate of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(g) within ten Business Days after receipt by the Borrower, any
Subsidiary or any ERISA Affiliate of any unfavorable determination letter from
the Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Internal Revenue Code, copies of each such letter;
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(h) within ten Business Days after receipt by the Borrower, any
Subsidiary or any ERISA Affiliate of a notice regarding the imposition of
withdrawal liability under a Multiemployer Plan, copies of each such notice;
(i) within three Business Days after the Borrower, any Subsidiary or
any ERISA Affiliate fail to make a required installment payment in excess of
$100,000 or any other required payment under Section 412 of the Internal Revenue
Code (as calculated by the Plan actuary or as reflected in any Plan actuarial
report available before the due date for such payment) to a Plan on or before
the due date for such payment, a notification of such failure; and
(j) within three Business Days after the Borrower, any Subsidiary or
any ERISA Affiliate knows (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan, in each case
where liability resulting therefrom could reasonably be expected to exceed
$1,000,000, a written statement setting forth any such event or information.
For purposes of this Section 7.05, the Borrower, any Subsidiary and any
ERISA Affiliate shall be deemed to know all facts known by the administrator of
any Plan of which such entity is the plan sponsor.
The Borrower shall establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, Internal Revenue Code,
and all other Applicable Laws, and the regulations and interpretations
thereunder other than to the extent that Borrower is in good faith contesting by
appropriate proceedings the validity or implication of any such provision, law,
rule, regulation or interpretation.
Section 7.06. Copies of Other Reports.
(a) Promptly upon their becoming available, copies of all registration
statements and other periodic or special reports containing material information
or developments regarding the Borrower and its Subsidiaries which the Borrower
shall file with the Securities and Exchange Commission (or any Governmental
Authority substituted therefor) or any national securities exchange; and
(b) Promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed.
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Section 7.07. Other Information. From time to time and promptly upon
each request, such data, certificates, reports, statements, documents or further
information regarding the business, assets, liabilities, financial condition,
results of operations or business prospects of the Borrower, its Subsidiaries
and the other Loan Parties as any Lender or the Agent may reasonably request.
The rights of the Lenders and the Agent under this Section are in addition to
and not in limitation of their rights under any other provision of this
Agreement or any of the other Loan Documents.
ARTICLE VIII
NEGATIVE COVENANTS
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall not, directly or
indirectly:
Section 8.01. Financial Covenants.
(a) EBIT to Interest Ratio. Permit, as of the end of each fiscal quarter of
the Borrower, the Consolidated EBIT/Interest Ratio to be less than 4.00 to 1.00.
(b) Minimum Tangible Net Worth. Permit, as of the end of each fiscal
quarter of the Borrower, its Consolidated Tangible Net Worth to be less than the
sum of: (i) 90% of its Consolidated Tangible Net Worth as of July 2, 1994 plus
(ii) 50% of the cumulative Consolidated Net Income (Loss) of the Borrower earned
after July 2, 1994 plus (iii) the aggregate net proceeds received by the
Borrower and its Subsidiaries from any sale or issuance of any shares,
interests, warrants, participations or other equity instruments of the Borrower
or its Subsidiaries occurring after July 2, 1994 minus (iv) the aggregate amount
of all cash and non-cash consideration paid by the Borrower and its Subsidiaries
in connection with any redemption or retirement of any shares, interests,
warrants, participations or other equity instruments of the Borrower and its
Subsidiaries occurring after July 2, 1994; it being understood that (x) any
equity issuance net proceeds received by, or redemption or retirement
consideration paid to, a Subsidiary from the Borrower or vice-versa shall not be
included in determining the amounts described in items (iii) and (iv) above, (y)
for purposes of determining the amount of non-cash consideration paid by
Borrower and its Subsidiaries in connection with any redemption or retirement of
any equity instruments, the fair market value of such consideration shall be
used or, if such non-cash consideration is in the form of a note or other debt
security, the amount of non-cash consideration shall be deemed to be the
original principal amount of the note or debt security and (z) the ability of
the Borrower and its Subsidiaries to redeem or retire shares or other equity
instruments shall continue to be subject to Section 8.05 hereof.
(c) Funded Debt to Tangible Capitalization. Permit at all times during the
period this Agreement is in effect the ratio of: (i) its Consolidated Funded
Debt outstanding to (ii) its Consolidated Tangible Capitalization to be greater
than 0.60 to 1.00.
Section 8.02. Indebtedness. Create, assume or suffer to exist or be
created, or permit any Subsidiary to create, assume or suffer to exist or be
created, any Indebtedness other than the following:
(a) the Obligations;
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(b) Existing Consolidated Funded Debt other than Existing Consolidated
Funded Debt to be repaid with the proceeds of the initial Loans as identified in
the Statement of Funds Flow, and any extensions, renewals, replacements or
refinancings thereof; provided, however, that (i) the principal amount of any
Consolidated Funded Debt incurred by the Borrower, the purpose of which is to
replace or refinance Existing Consolidated Funded Debt, may not exceed the then
outstanding amount of the Existing Consolidated Funded Debt to be refinanced
without the prior written consent of the Requisite Lenders unless such
Consolidated Funded Debt would otherwise be permitted under paragraph (f) below
and (ii) the principal amount of any Consolidated Funded Debt incurred by a
Subsidiary, the purpose of which is to replace or refinance the Existing
Consolidated Funded Debt of such Subsidiary, may not exceed the then outstanding
amount of the Existing Consolidated Funded Debt to be replaced or refinanced
unless the Borrower or such Subsidiary shall give the Agent prior written notice
of such increase;
(c) trade payables incurred by the Borrower or any Subsidiary in the
ordinary course of business;
(d) Indebtedness secured by Purchase Money Liens and Indebtedness
constituting Capitalized Lease Obligations; provided, however, that the
aggregate principal amount of the Indebtedness described in this subsection at
any one time outstanding and owing by the Borrower and its Subsidiaries may not
exceed $50,000,000;
(e) Indebtedness owing to the Borrower by its Subsidiaries;
(f) Consolidated Funded Debt incurred by the Borrower after the
Effective Date that is not secured by any Lien up to an aggregate principal
amount at any one time outstanding equal to $10,000,000;
(g) Subordinated Indebtedness of the Borrower and its Subsidiaries;
(h) any Hedging Obligations;
(i) (i) Guaranties in existence as of the Agreement Date and disclosed
on Schedule 1.01(a) hereof and (ii) Guaranties by the Borrower of any of the
foregoing Indebtedness provided that such Guaranteed Indebtedness is permitted
under this Section 8.02; and
(j) Indebtedness in the form of the Existing Letters of Credit;
provided, however, that any renewal or extension of any Existing Letter of
Credit shall be subject to Section 2.06(b) hereof.
Section 8.03. Investments/Acquisitions. (a) Acquire or purchase, or
permit any Subsidiary to acquire or purchase, any Business Unit or (b) acquire,
make or purchase, or permit any Subsidiary to acquire, make or purchase, any
Investment or (c) permit any Investment of the Borrower or any Subsidiary to be
outstanding other than the following:
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(i) Investments in Subsidiaries (A) in existence on the
Agreement Date and disclosed on Schedule 5.01(b) and (B) created or
acquired after the Agreement Date so long as the Borrower complies with
Section 6.09 and, if the creation or acquisition of such Subsidiary is
in connection with the acquisition or purchase of assets or capital
stock of another Person, such transaction is permitted by subparagraph
(vi) below;
(ii) Investments (other than in Subsidiaries) in existence on the Agreement
Date in excess of $100,000 and set forth on Schedule 8.03(ii) attached hereto;
(iii) Investments in Cash Equivalents;
(iv) Indebtedness permitted under Section 8.02(e);
(v) Loans and advances to employees for moving, entertainment, travel and
other similar expenses in the ordinary course of business consistent with past
practices;
(vi) The Borrower, or any of its Subsidiaries, may acquire or
purchase all or a portion of the assets or properties of another Person
or any Business Unit of another Person and may acquire or purchase all
or a controlling interest of the capital stock of another Person so
long as the following conditions are satisfied: (A) that immediately
prior to, and immediately after, the consummation of such acquisition
or purchase, no Default or Event of Default has occurred and is
continuing; (B) the assets or Person so purchased or acquired relate
directly to a line or lines of business in which the Borrower is
currently engaged; and (C) if the Borrower creates a Subsidiary to
effect such acquisition or purchase, the Borrower and such Subsidiary
(if it becomes a Material Subsidiary) shall comply with the provisions
of Section 6.09 hereof; and
(vii) other Investments in Persons made by the Borrower and
the Subsidiaries from time to time; provided, however, that the
aggregate amount of all cash and non-cash consideration (determined on
a fair market value basis and net of all Transaction Costs) paid by the
Borrower and its Subsidiaries in such Investments shall not exceed
$50,000,000 in any fiscal year.
Section 8.04. Liens/Agreements Regarding Liens/Other Matters. (a)
Create, assume, incur or permit or suffer to exist or to be created, assumed or
incurred, or permit any Subsidiary to create, assume or suffer to exist or be
created, any Lien upon any of its properties whether now owned or hereafter
acquired, other than Permitted Liens;
(b) Enter into or assume any agreement (other than any Loan Document),
or permit any Subsidiary to enter into or assume any agreement (other than any
Loan Document), prohibiting the creation or assumption of any Lien upon its
properties, whether now owned or hereafter acquired; or
(c) Create or otherwise cause or suffer to exist or become effective,
or permit any Subsidiary to create or otherwise cause or suffer to exist or
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become effective, any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to: (i) pay dividends or make any other distribution
on any of such Subsidiary's capital stock owned by the Borrower or any
Subsidiary of the Borrower; (ii) pay any Indebtedness owed to the Borrower or
any other Subsidiary; (iii) make loans or advances to the Borrower or any other
Subsidiary; or (iv) transfer any of its property or assets to the Borrower or
any other Subsidiary.
Section 8.05. Restricted Payments. Declare or make, or permit any
Subsidiary to declare or make, any Restricted Payment; provided, however, that
(a) Subsidiaries may make Restricted Payments to the Borrower and (b) the
Borrower may make Restricted Payments in cash, subject to the satisfaction of
each of the following conditions on the date of such Restricted Payment after
giving effect thereto: (i) no Default or Event of Default shall have occurred
and be continuing; and (ii) the aggregate amount of Restricted Payments made
during the period commencing on July 3, 1994 through and including the last day
of the fiscal quarter most recently ended prior to the date of such Restricted
Payment shall not exceed 50% of the positive Consolidated Net Income (Loss), if
any, of the Borrower and its Subsidiaries for such period (treated for these
purposes as a single accounting period on a cumulative basis).
Section 8.06. Merger, Consolidation, Sales of Assets and Other
Arrangements. (a) Enter into, or permit any Subsidiary to enter into, any
transaction of merger or consolidation; (b) liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution) or permit any Subsidiary to do
any of the foregoing; or (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
part of its business or assets, or the capital stock of or other equity
interests in any of its Subsidiaries, whether now owned or hereafter acquired or
permit any Subsidiary to do any of the foregoing; provided, however, that:
(i) Subsidiaries of the Borrower may merge or consolidate with
other Subsidiaries of the Borrower; provided further, however, that if
the surviving Person of such merger or consolidation is a Material
Subsidiary, such Person shall execute a Guaranty as provided in Section
6.09;
(ii) a Subsidiary may sell, transfer or dispose of its assets to the
Borrower or another Subsidiary of the Borrower;
(iii) the Borrower or any Subsidiary may sell inventory in the ordinary
course of business;
(iv) the Borrower and its Subsidiaries may sell property in transactions
permitted under Section 8.07;
(v) the Borrower and its Subsidiaries may, during the period
this Agreement is in effect, sell, transfer or dispose of up to 20%
(determined on a consolidated basis) of the book value of their
respective assets (including the capital stock of any Subsidiary);
provided, however, that sales, transfers or dispositions of assets
already permitted by subparagraphs (ii), (iii) and (iv) shall not count
against such 20% test; and
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(vi) the Borrower may merge or consolidate with any other
corporation, provided that (A) the Borrower shall be the continuing or
surviving corporation; (B) immediately prior to such merger or
consolidation and immediately after such merger or consolidation and
after giving effect thereto, no Default or Event of Default is or would
be in existence; and (C) the line or lines business conducted by the
Person merging into the Borrower shall be similar to or consistent with
the line or lines of business conducted by the Borrower, as reasonably
determined by the Agent and the Requisite Lenders.
Section 8.07. Sale-Leasebacks. Enter into, or permit any Subsidiary to
enter into, any sale and leaseback transaction covering any fixed or capital
property, except for sale and leaseback transactions which collectively cover
property the aggregate fair market value of which, as determined for each item
of property as at the time such property became the subject of such a
transaction, does not exceed 15% of Consolidated Tangible Net Worth, as
determined on the date of the most recent sale and leaseback transaction.
Section 8.08. Transactions with Affiliates. Enter into, or permit any
Subsidiary to enter into, any transaction including, without limitation, the
purchase, sale, leasing or exchange of property, real or personal, or the
rendering of any service, with any Affiliate of the Borrower or with any
officer, director or employee of the Borrower or any Subsidiary, except (a) the
transactions and agreements described on Schedule 5.01(q) and any renewals,
replacements or extensions thereof, (b) that such Persons may render services to
the Borrower or its Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services and (c) in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries and upon fair
and reasonable terms no less favorable to the Borrower (or any Subsidiary) than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
Section 8.09. Operating Leases. Enter into or remain or become liable
upon, or permit any Subsidiary to enter into or remain or become liable upon,
any operating lease (other than intercompany leases between the Borrower and its
Subsidiaries) if the aggregate amount of all rents paid by the Borrower and its
Subsidiaries under all such leases would exceed $35,000,000 in any fiscal year.
Section 8.10. Plans. Neither Borrower nor any Subsidiary of Borrower shall:
(a) permit the occurrence of any Termination Event which would result in a
liability to any Loan Party or ERISA Affiliate in excess of $10,000,000;
(b) permit the present value of all benefit liabilities under all Plans
to exceed the current value of the assets of such Plans allocable to such
benefit liabilities by more than $10,000,000;
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(c) permit any accumulated funding deficiency in excess of $10,000,000
(as defined in Section 302 of ERISA and Section 412 of the Internal Revenue
Code) with respect to any Plan, whether or not waived;
(d) fail to make any contribution or payment to any Multiemployer Plan
which any Loan Party or ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of $10,000,000;
(e) engage, or permit any Loan Party or ERISA Affiliate to engage, in
any prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code for which a civil penalty pursuant to Section 502(i) of
ERISA or a tax pursuant to Section 4975 of the Internal Revenue Code in excess
of $10,000,000 is imposed;
(f) permit the establishment of any Plan providing post-retirement
welfare benefits or establish or amend any Plan which establishment or amendment
could result in liability to any Loan Party or ERISA Affiliate or increase the
obligation of any Loan Party or ERISA Affiliate to a Multiemployer Plan which
liability or increase, individually or together with all similar liabilities and
increases, is material to any Loan Party or ERISA Affiliate; or
(g) fail, or permit any Loan Party or ERISA Affiliate to fail, to
establish, maintain and operate each Plan in compliance in all material respects
with the provisions of ERISA, the Internal Revenue Code and all other applicable
laws and the regulations and interpretations thereof.
Section 8.11. Fiscal Year. Change its fiscal year from that in effect
as of the Agreement Date; it being understood that, as of the Agreement Date,
the fiscal year of the Borrower now ends on December 30 or 31 of each year.
Section 8.12. Subordinated Debt Prepayments/Amendments. Prepay any
principal of, or accrued interest on, any Subordinated Debt or otherwise make
any voluntary or optional payment with respect to any principal of, or accrued
interest on, any Subordinated Debt prior to the originally scheduled maturity
date thereof or otherwise redeem or acquire for value any Subordinated Debt or
permit any Subsidiary to do any of the foregoing. Further, the Borrower shall
not, or permit any Subsidiary to, amend or modify, or permit the amendment or
modification of, any agreement or instrument evidencing any Subordinated Debt
where such amendment or modification provides for the following or which has any
of the following effects: (a) increases the rate of interest accruing on such
Subordinated Debt; (b) increases the amount of any scheduled installment of
principal or interest, or shortens the date on which any such installment or
principal or interest becomes due; (c) shortens the final maturity date of such
Subordinated Debt; (d) increases the principal amount of such Subordinated Debt;
(e) amends any financial or other covenant contained in any document or
instrument evidencing any Subordinated Debt in a manner which is more onerous to
the Borrower or such Subsidiary or which requires the Borrower or such
Subsidiary to improve its financial performance; (f) provides for the payment of
additional fees or the increase in existing fees; or (g) otherwise would have a
Material Adverse Effect.
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ARTICLE IX
DEFAULT
Section 9.01. Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of Applicable Law or
pursuant to any judgment or order of any Governmental Authority:
(a) Default in Payment. (i) The Borrower shall fail to pay when due
(whether upon demand, at maturity, by reason of acceleration or otherwise) the
principal of any of the Loans or any Reimbursement Obligation, (ii) the Borrower
shall fail to pay when due any interest or any of the other Obligations owing by
the Borrower under this Agreement or any other Loan Document and such failure
shall continue for a period of five days or (iii) any other Loan Party shall
fail to pay when due any Obligation owing by such Loan Party under any Loan
Document to which it is a party and such failure shall continue for a period of
five days.
(b) Misrepresentations. Any statement, representation or warranty made
or deemed made by or on behalf of the Borrower or any other Loan Party under
this Agreement or under any other Loan Document, or any amendment hereto or
thereto, or in any other writing or statement at any time furnished or made or
deemed made by or on behalf of the Borrower or any other Loan Party to the Agent
or any Lender, shall at any time prove to have been incorrect or misleading in
any material respect when furnished or made.
(c) Default in Performance. (i) The Borrower shall fail to perform or
observe Section 6.08 hereof or any term, covenant, condition or agreement
contained in Article VIII or (ii) the Borrower or any Loan Party shall fail to
perform or observe any term, covenant, condition or agreement contained in this
Agreement or any other Loan Document to which it is a party and not otherwise
mentioned in this Section 9.01 and such failure shall continue for a period of
thirty days after the earlier of (x) the date upon which the Borrower or such
Loan Party obtains knowledge of such failure or (y) the date upon which the
Borrower has received written notice of such failure from the Agent sent at the
request of any Lender.
(d) Indebtedness Cross-Default. The occurrence of any event specified
in any agreement, note, indenture or other document or instrument evidencing or
relating to any Indebtedness (other than Indebtedness hereunder or under the
other Loan Documents) having a principal amount of $20,000,000 or more if the
effect of such event is to cause, or (with the giving of any notice or the lapse
of time or satisfaction of a condition or any combination of the foregoing)
would permit the holder or holders of such Indebtedness (or a trustee or agent
on behalf of such holder or holders) to cause, such Indebtedness to become due,
or to be prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise) or otherwise accelerated, prior to its stated maturity.
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(e) Voluntary Bankruptcy Proceeding. The Borrower, any Subsidiary or
any other Loan Party shall: (i) commence a voluntary case under the Bankruptcy
Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter
in effect); (ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; (iii) consent to, or fail to
contest in a timely and appropriate manner, any petition filed against it in an
involuntary case under such bankruptcy laws or other laws or consent to any
proceeding or action described in the immediately following subsection; (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign; (v) admit in writing its inability to pay its debts as they
become due; (vi) make a general assignment for the benefit of creditors; (vii)
make a conveyance fraudulent as to creditors under any Applicable Law; or (viii)
take any corporate or partnership action for the purpose of effecting any of the
foregoing.
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against the Borrower, any Subsidiary or any other Loan Party, in
any court of competent jurisdiction seeking: (i) relief under the Bankruptcy
Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter
in effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts;
or (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of such Person, or of all or any substantial part of the assets, domestic
or foreign, of such Person; and such case or other proceeding shall continue and
shall not be discharged or dismissed for a period of thirty days.
(g) Judgment. A final judgment or order for the payment of money in
excess of $10,000,000 in the aggregate (exclusive of judgment amounts to the
extent covered by insurance where the Borrower has submitted a claim and the
insurer has not contested liability in respect of such judgment) or in excess of
$25,000,000 in the aggregate (regardless of insurance coverage) or that has a
Material Adverse Effect shall be rendered by a one or more Governmental
Authorities having jurisdiction and such judgment or order shall continue for a
period of thirty days without being stayed or dismissed through appropriate
appellate proceedings.
(h) Attachment. A warrant or writ of attachment or execution or similar
process shall be issued against any property of the Borrower, a Subsidiary or
any Loan Party which exceeds, individually or together with all other such
warrants, writs and processes, $10,000,000 in amount and such warrant, writ or
process shall not be discharged, vacated, stayed or bonded for a period of 30
days; provided, however, that in the event a bond has been issued in favor of
the claimant or other Person obtaining such attachment or writ, the issuer of
such bond shall execute a waiver or subordination agreement in form and
substance satisfactory to the Agent pursuant to which the issuer of such bond
subordinates its right of reimbursement, contribution or subrogation to the
Obligations and waives or subordinates any Lien it may have on the assets of any
Loan Party.
(i) Loan Documents. An Event of Default (as defined therein) shall occur
under any of the other Loan Documents.
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(j) Change of Control/Change in Management. (i) If any Person (or two
or more Persons acting in concert) shall acquire "beneficial ownership" within
the meaning of Rule 13d-3 of the Securities and Exchange Act of 1934, as
amended, directly or indirectly, capital stock or securities of the Borrower
representing 20% or more of the aggregate voting power of all classes of capital
stock and securities of the Borrower entitled to vote for the election of
directors or (ii) during any twelve-month period (commencing both before and
after the Agreement Date), individuals who at the beginning of such period were
directors of the Borrower shall cease for any reason (other than death or mental
or physical disability) to constitute a majority of the board of directors of
the Borrower.
(k) Injunction. The Borrower or any of its Subsidiaries is enjoined,
restrained or in any way prevented by the order of any Governmental Authority
from conducting all or any material part of its business and such order
continues for more than thirty days.
(l) Default Under Hedging Obligations. The failure of the Borrower or
its Subsidiaries to pay or perform when due any Hedging Obligations and the
continuance of such failure for a period of ten days after receipt of a notice
of such failure from the Person to whom such Hedging Obligations are owed.
Section 9.02. Remedies. Upon the occurrence of an Event of Default the
following provisions shall apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default
specified in Sections 9.01(e) or 9.01(f), (A)(1) the principal of, and
all accrued interest on, the Loans and the Notes at the time
outstanding, (2) an amount equal to the Stated Amount of all Letters of
Credit outstanding as of the date of the occurrence of the Event of
Default and (3) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lenders
and the Agent under this Agreement or any of the other Loan Documents
shall become immediately and automatically due and payable by the
Borrower without presentment, demand, protest, or other notice of any
kind, all of which are expressly waived by the Borrower and (B) the
Commitments, the Revolving Credit Facility and the Letter of Credit
Facility shall immediately and automatically terminate.
(ii) Optional. If any other Event of Default shall have
occurred and be continuing, the Requisite Lenders may direct the Agent
to, and the Agent if so directed shall: (A) declare (1) the principal
of, and accrued interest on, the Loans and the Notes at the time
outstanding, (2) an amount equal to the Stated Amount of all Letters of
Credit outstanding as of the date of the occurrence of the Event of
Default and (3) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders and the Agent under
this Agreement, the Notes or any of the other Loan Documents to be
forthwith due and payable, whereupon the same shall immediately become
due and payable without presentment, demand, protest or other notice of
any kind, all of which are expressly waived by the Borrower and (B)
terminate the Commitments, the Revolving Credit Facility and the Letter
of Credit Facility.
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(b) Loan Documents. The Requisite Lenders may direct the Agent to, and,
subject to the terms hereof, the Agent if so directed shall, exercise any and
all of its rights under any and all of the other Loan Documents.
(c) Applicable Law. The Agent may, at the direction of the Requisite
Lenders, exercise all other rights and remedies it may have under any Applicable
Law.
(d) Appointment of Receiver. To the extent permitted by Applicable Law,
the Lenders shall be entitled to the appointment of a receiver for the assets
and properties of the Borrower and its Subsidiaries, without notice of any kind
whatsoever and without regard to the adequacy of any security for the
Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the Collateral and/or the business
operations of the Borrower and its Subsidiaries and to exercise such power as
the court shall confer upon such receiver.
(e) Cash Collateral. (i) In the case of the occurrence of an Event of
Default specified in Sections 9.01(e) or 9.01(f), the Borrower shall
automatically and without further notice or demand deposit into the Collateral
Account the amounts specified in Section 3.18 hereof and (ii) in the case of the
occurrence of any other Event of Default, the Requisite Lenders may direct the
Agent, and the Agent if so directed shall, require the Borrower to deposit into
the Collateral Account the amounts specified in Section 3.18.
Section 9.03. Rights Cumulative. The rights and remedies of the Agent
and the Lenders under this Agreement and each of the other Loan Documents shall
be cumulative and not exclusive of any rights or remedies which any of them may
otherwise have under Applicable Law. In exercising their respective rights and
remedies the Agent and the Lenders may be selective and no failure or delay by
the Agent or any of the Lenders in exercising any right shall operate as a
waiver of it, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other power or
right.
If at any time after acceleration of the maturity of the Loans, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Defaults (other than nonpayment of principal of and accrued interest
on the Loans and other Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived, then by written notice to the
Borrower, the Requisite Lenders may elect, in the sole discretion of such
Requisite Lenders, to rescind and annul the acceleration and its consequences;
but such action shall not affect any subsequent Default or Event of Default or
impair any right or remedy consequent thereon. The provisions of the preceding
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sentence are intended merely to bind the Lenders to a decision which may be made
at the election of the Requisite Lenders; they are not intended to benefit the
Borrower and do not give the Borrower the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are satisfied.
ARTICLE X
THE AGENT
Section 10.01. Authorization and Action. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on such Lender's behalf
and to exercise such powers under this Agreement and the other Loan Documents as
are specifically delegated to the Agent by the terms and thereof, together with
such powers as are reasonably incidental thereto. The power of attorney set
forth hereinabove shall be irrevocable and coupled with an interest. The
relationship between the Agent and the Lenders shall be that of principal and
agent only and nothing herein shall be construed to deem the Agent a trustee or
fiduciary for any Lender nor to impose on the Agent duties or obligations other
than those expressly provided for herein. At the request of a Lender, the Agent
will forward to each Lender copies or, where appropriate, originals of the
documents delivered to the Agent pursuant to this Agreement or the other Loan
Documents. The Agent will also furnish to any Lender, upon the request of such
Lender, a copy of any certificate or notice furnished to the Agent by the
Borrower, any Loan Party or any other Affiliate of the Borrower, pursuant to
this Agreement or any other Loan Document not already delivered to such Lender
pursuant to the terms of this Agreement or any such other Loan Document. As to
any matters not expressly provided for by the Loan Documents (including, without
limitation, enforcement or collection of any of the Obligations), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite
Lenders, and such instructions shall be binding upon all Lenders and all holders
of any of the Obligations; provided, however, that, notwithstanding anything in
this Agreement to the contrary, the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or any other Loan Document or Applicable Law. Not in limitation
of the foregoing, the Agent shall not exercise any right or remedy it or the
Lenders may have under any Loan Document upon the occurrence of a Default or an
Event of Default unless the Requisite Lenders have so directed the Agent to
exercise such right or remedy.
Section 10.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents, employees or counsel shall be liable for any action
taken or omitted to be taken by it or any of them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent: (a) may
treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Agent; (b) may consult with legal counsel (including
its own counsel or counsel for the Borrower or any Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender or any other Person and shall not be responsible to
any Lender or any other Person for any statements, warranties or representations
made by any Person in or in connection with this Agreement or any other Loan
Document; (d) shall not have any duty to ascertain or to inquire as to the
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performance or observance of any of the terms, covenants or conditions of any of
this Agreement or any other Loan Document or the satisfaction of any conditions
precedent under this Agreement or any Loan Document on the part of the Borrower
or other Persons or inspect the property, books or records of the Borrower or
any other Person; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document, any other instrument or document
furnished pursuant thereto or any Collateral covered thereby or the perfection
or priority of any Lien in favor of the Agent on behalf of the Lenders in any
such Collateral; and (f) shall incur no liability under or in respect of this
Agreement or any other Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telephone or
telecopy) believed by it to be genuine and signed, sent or given by the proper
party or parties.
Section 10.03. NationsBank as Lender. NationsBank, as a Lender, shall
have the same rights and powers under this Agreement and any other Loan Document
as any other Lender and may exercise the same as though it were not the Agent;
and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include NationsBank in each case in its individual capacity. NationsBank and its
Affiliates may each accept deposits from, maintain deposits or credit balances
for, invest in, lend money to, act as trustee under indentures of, serve as
financial advisor to, and generally engage in any kind of business with the
Borrower, any Loan Party or any other Affiliate thereof as if it were any other
bank and without any duty to account therefor to the other Lenders. Further, the
Agent and any Affiliate may accept fees and other consideration from the
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to the other Lenders.
Section 10.04. Lender Credit Decision, Etc. Each Lender expressly
acknowledges and agrees that neither the Agent nor any of its officers,
directors, employees, agents, counsel, attorneys-in-fact or other Affiliates has
made any representations or warranties as to the financial condition,
operations, creditworthiness, solvency or other information concerning the
business or affairs of the Borrower, any Loan Party, any Subsidiary or other
Person to such Lender and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
such representation or warranty by the Agent to any Lender. Each Lender
acknowledges that it has, independently and without reliance upon the Agent, any
other Lender or counsel to the Agent, or any of their respective officers,
directors, employees and agents, and based on the financial statements of the
Borrower, the Subsidiaries, the other Loan Parties or any other Affiliate
thereof, and inquiries of such Persons, its independent due diligence of the
business and affairs of the Borrower, the other Loan Parties, the Subsidiaries
and other Persons, its review of the Loan Documents, the legal opinions required
to be delivered to it hereunder, the advice of its own counsel and such other
documents and information as it has deemed appropriate, made its own credit and
legal analysis and decision to enter into this Agreement and the transaction
contemplated hereby. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent, any other Lender or counsel to the Agent or
any of their respective officers, directors, employees and agents, and based on
such review, advice, documents and information as it shall deem appropriate at
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the time, continue to make its own decisions in taking or not taking action
under the Loan Documents. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall have no duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, financial
and other condition or creditworthiness of the Borrower, any Loan Party or any
other Affiliate thereof which may come into possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or other
Affiliates.
Section 10.05. Indemnification. Each Lender agrees to indemnify the
Agent (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) pro rata in accordance with such Lender's
respective Credit Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the Agent's gross negligence or willful misconduct or if the
Agent fails to follow the written direction of the Requisite Lenders unless such
failure exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or Applicable Law. Without limiting the
generality of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including fees
of the counsel(s) of the Agent's own choosing) incurred by the Agent in
connection with the preparation, execution, administration, or enforcement of,
or legal advice with respect to the rights or responsibilities of the parties
under, the Loan Documents, any suit or action brought by the Agent to enforce
the terms of the Loan Documents and/or collect any Obligations, any "lender
liability" suit or claim brought against the Agent and/or the Lenders, and any
claim or suit brought against the Agent and/or the Lenders arising under any
Environmental Laws, to the extent that the Agent is not reimbursed for such
expenses by the Borrower. Such out-of-pocket expenses (including counsel fees)
shall be advanced by the Lenders on the request of the Agent notwithstanding any
claim or assertion that the Agent is not entitled to indemnification hereunder
upon receipt of an undertaking by the Agent that the Agent will reimburse the
Lenders if it is actually and finally determined by a court of competent
jurisdiction that the Agent is not so entitled to indemnification. The
agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder or under the other Loan Documents and the termination
of this Agreement.
Section 10.06. Successor Agent. The Agent may resign at any time as
Agent under the Loan Documents by giving 10 Business Days' prior written notice
thereof to the Lenders and the Borrower. In the event of a material breach of
its duties hereunder, the Agent may be removed as Agent under the Loan Documents
at any time by the Requisite Lenders and the Borrower. Upon any such resignation
or removal, the Requisite Lenders shall have the right, with the consent of the
Borrower, such consent not to be unreasonably withheld, to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and the Borrower, and shall have accepted such appointment, within
thirty days after the Agent's giving of notice of resignation or the Requisite
Lenders' removal of the Agent, then the resigning or removed Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a Lender, if
any Lender shall be willing to serve, and otherwise shall be a commercial bank
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having combined capital and unimpaired surplus in excess of $1,000,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor agent, such
successor agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the former Agent, and the former Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any Agent's resignation or removal hereunder as Agent, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. Unless otherwise provided herein, all notices,
requests and other communications provided for hereunder shall be in writing
(including without limitation, by telecopy) and shall be mailed, telecopied or
delivered as follows:
If to the Borrower:
Shaw Industries, Inc.
Post Office Drawer 2128
Dalton, Georgia 30722-2128
Attention: W. C. Lusk, Jr.
Telecopy Number: (706) 226-6654
Telephone Number: (706) 275-1004
with a copy to:
Shaw Industries, Inc.
Mail Drop 061-18
Post Office Drawer 2128
Dalton, Georgia 30722-2128
Telecopy Number: (706) 275-1442
Telephone Number: (706) 275-1018
If to the Agent:
NationsBank of Georgia, National Association
600 Peachtree Street
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Telecopy Number: (404) 607-6467
Telephone Number: (404) 607-5549
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with a copy to:
Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Richard W. Grice, Esq.
Telecopy number: (404) 881-7777
Telephone number: (404) 881-7576
If to a Lender, to such Lender's address or telecopy number, as
applicable, set forth on the then current Annex I attached hereto.
or as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices, requests and other communications shall be effective
(a) if mailed, when received; (b) if telecopied, when transmitted; or (c) if
hand delivered, when delivered. Notwithstanding the immediately preceding
sentence, all notices or communications to the Agent or any Lender under Article
II shall be effective only when actually received.
Section 11.02. Expenses. The Borrower will pay all reasonable present
and future expenses of the Agent in connection with the negotiation,
preparation, execution, delivery and administration (including out-of-pocket
costs and expenses incurred in connection with the assignment of Commitments
pursuant to Section 11.06) of this Agreement, the Notes and each of the other
Loan Documents, whenever the same shall be executed and delivered, including the
fees and disbursements of counsel retained by the Agent. Further, the Borrower
shall pay all future expenses of the Agent and each of the Lenders in connection
with: (a) the negotiation, preparation, execution and delivery of any waiver,
amendment or consent by the Agent or any Lender relating to this Agreement, the
Notes or any of the other Loan Documents; (b) any restructuring, refinancing or
"workout" of the transactions contemplated by this Agreement, the Notes and the
other Loan Documents, or any material amendment to the terms of this Agreement
or any other Loan Document, including the fees and disbursements of counsel to
the Agent or to any Lender; (c) consulting with one or more Persons engaged by
the Agent, including appraisers, accountants and lawyers, concerning or related
to the servicing of this Agreement or the nature, scope or value of any right or
remedy of the Agent or any of the Lenders hereunder, under the Notes or under
any of the other Loan Documents, including any review of factual matters in
connection therewith, which expenses shall include the fees and disbursements of
such Persons; (d) the collection or enforcement of the obligations of the
Borrower or any Loan Party under this Agreement, the Notes or any other Loan
Document including the reasonable fees and disbursements of counsel to the Agent
or to any Lender if such collection or enforcement is done by, through or with
the assistance of an attorney; (e) prosecuting or defending any claim in any way
arising out of, related to, or connected with this Agreement, the Notes or any
of the other Loan Documents, which expenses shall include the fees and
disbursements of counsel to the Agent or any Lender and of experts and other
consultants retained by the Agent or any Lender; (f) the exercise by the Agent
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or any Lender of any right or remedy granted to it under this Agreement, the
Notes or any of the other Loan Documents including the reasonable fees and
disbursements of counsel to the Agent or any Lender if such exercise is done by,
through or with the assistance of any attorney; and (g) to the extent not
already covered by any of the preceding subsections, any bankruptcy or other
proceeding of the type described in Sections 9.01(e) or 9.01(f), and the fees
and disbursements of counsel to the Agent and any Lender incurred in connection
with the representation of the Agent or such Lender in any matter relating to or
arising out of any such proceeding including, without limitation (i) any motion
for relief from any stay or similar order, (ii) the negotiation, preparation,
execution and delivery of any document relating to the Obligations and (iii) the
negotiation and preparation of any debtor-in-possession financing or any plan of
reorganization of the Borrower, whether proposed by the Borrower, the Lenders or
any other Person, and whether such fees and expenses are incurred prior to,
during or after the commencement of such proceeding or the confirmation or
conclusion of any such proceeding.
Section 11.03. Stamp, Intangible and Recording Taxes. The Borrower will
pay any and all stamp, intangible, registration, recordation and similar taxes,
fees or charges and shall indemnify the Agent and each Lender against any and
all liabilities with respect to or resulting from any delay in the payment or
omission to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery, performance
or enforcement of this Agreement, the Notes and any of the other Loan Documents
or the perfection of any rights or Liens hereunder or thereunder.
Section 11.04. Setoff. Subject to Section 3.06 and in addition to, and
not in limitation of, any rights now or hereafter granted under Applicable Law,
each Lender is hereby authorized by the Borrower, at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set-off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness at any time held or owing by such Lender or any
Affiliate of such Lender, to or for the credit or the account of the Borrower
against and on account of any of the Obligations, irrespective of whether or not
the Requisite Lenders shall have declared any or all of the Loans and all other
Obligations to be due and payable as permitted by Section 9.02, and although
such obligations shall be contingent or unmatured.
Section 11.05. Litigation/Jurisdiction/Other Matters/Waivers. EACH
PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG THE
BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND
COMPLEX ISSUES OF LAW AND FACT. ACCORDINGLY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE LENDERS, THE AGENT AND THE BORROWER HEREBY WAIVES
ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER, THE AGENT AND EACH LENDER EACH
HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL DISTRICT COURT
OF THE NORTHERN DISTRICT OF GEORGIA AND ANY STATE COURT LOCATED IN FULTON
COUNTY, GEORGIA FOR THE PURPOSE OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
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RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH PARTY HERETO WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH PROCEEDING IN ANY SUCH COURT OR THAT
SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO
PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT
BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR
THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH
FORUM IN ANY OTHER APPROPRIATE JURISDICTION. THE FOREGOING WAIVERS HAVE BEEN
MADE WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL
CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
Section 11.06. Assignability.
(a) The Borrower shall not have the right to assign this Agreement or
any interest therein or obligations hereunder except with the prior written
consent of the Agent and all of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.
(c) Each Lender may, with the consent of the Agent and the Borrower
(which consent may not be unreasonably withheld), assign to one or more
financial institutions all or a portion of its respective Commitment; provided,
however, (i) no such consent shall be required in the case of any assignment to
another Lender; (ii) any such partial assignment shall, unless the Borrower and
the Agent otherwise agree, be in an amount at least equal to $10,000,000; (iv)
each such assignment shall be effected by means of an Assignment and Assumption
Agreement substantially in the form of Exhibit J (an "Assignment Agreement");
and (v) the assigning Lender must retain at least 50% of its original
Commitment. Upon the effectiveness of the Assignment Agreement as provided
therein, from and after the date specified as the effective date in the
Assignment Agreement (the "Acceptance Date"), (x) the assignee thereunder shall
be deemed to be a party hereto, and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment Agreement, such
assignee shall have the rights and obligations of a "Lender" hereunder and (y)
the assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights it may have pursuant to Sections
11.02, 11.03 and 11.10 which will survive such assignment) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all of an assigning Lender's rights and obligations under
this Agreement, the Notes and the other Loan Documents, such Lender shall cease
to be a party hereto). Upon each such assignment the assigning Lender shall pay
the Agent a processing and assignment fee of $3,000.
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(d) The Agent shall maintain at the Principal Office a copy of each
Assignment Agreement delivered to and accepted by it and a register for the
recording of the names and addresses of the Lenders and the Commitments of each
Lender from time to time (the "Register"). The Agent shall give each Lender and
the Borrower notice of the assignment by any Lender of its rights as
contemplated by this Section. The Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register and copies of each Assignment Agreement
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice to the Agent.
(e) Upon its receipt of an Assignment Agreement executed by an
assigning Lender, together with each Note subject to such assignment (the
"Surrendered Note"), the Agent shall, if such Assignment Agreement has been
completed and the Agent receives the processing and recording fee described in
the immediately preceding subsection (c), (i) accept such Assignment Agreement,
(ii) record the information contained therein in the Register, (iii) give prompt
notice thereof to the Borrower and (iv) revise the information set forth on
Annex I to reflect the effect of such Assignment Agreement, and distribute a
copy of such revised Annex I to each Lender and the Borrower. Failure of the
Agent to so distribute a revised Annex I shall not relieve or modify the
obligations of the Borrower, the Loan Parties or the Lenders owing to the Agent
hereunder. Within five Business Days after its receipt of such notice, the
Borrower shall acknowledge such Assignment Agreement and shall execute and
deliver to the Agent in exchange for the Surrendered Note or Notes a new Note or
Notes to the order of the assignee in an amount equal to the Commitment or
Commitments assumed by it pursuant to such Assignment Agreement and, if the
assigning Lender has retained a Commitment or Commitments hereunder, a new Note
or Notes to the order of the assigning Lender in an amount equal to the
Commitment or Commitments retained by it hereunder. Such new Note or Notes shall
re-evidence the indebtedness outstanding under the old Note or Notes and shall
be in an aggregate principal amount equal to the aggregate principal amount of
such Surrendered Note or Surrendered Notes, shall be dated the Agreement Date
and shall otherwise be in substantially the form, of the Note or Notes subject
to such assignments. The assignment by a Lender of a Commitment or portion
thereof to another Person and the execution and delivery of a new Note or Notes
shall not constitute a novation of the indebtedness evidenced by the Surrendered
Note or Surrendered Notes and incurred in connection with such assigned
Commitment.
(f) Each Lender may sell participations (without the consent of the
Agent, the Borrower or any other Lender) to one or more parties (each a
"Participant") in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Loans owing to it and the Note or Notes held by it); provided,
however, that: (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent,
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, (v) such sale of a participation shall not be in an amount less than
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$10,000,000 (unless such sale is to a Participant that is an Affiliate of the
selling Lender), (vi) such selling Lender shall retain at least 50% of its
original Commitment, and (vii) in no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Loan Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (A) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Lender's
Commitment, (B) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement Obligations or any portion
of any fee hereunder payable to the Participant, (C) reduce the amount of any
such payment of principal, (D) reduce the rate at which interest is payable
thereon, or any fee hereunder payable to the Participant, to a level below the
rate at which the Participant is entitled to receive such interest or fee or (E)
alter the rights or obligations of the Borrower to prepay the related Loans. The
selling Lender shall notify the Agent and the Borrower of the sale of any
participation hereunder except when such sale is to a Participant that is an
Affiliate of the selling Lender.
(g) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the securities laws of the
United States of America or of any other jurisdiction.
(h) In connection with the efforts of any Lender to assign its rights
or obligations or to participate interests, such Lender may disclose any
information in its possession regarding the Borrower or any Loan Party.
(i) In addition to the other assignments and participations permitted
under the foregoing provisions of this Section, any Lender may assign and pledge
all or any portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Note shall be fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.
Section 11.07. Amendments. Except as otherwise expressly provided in
this Agreement, any consent or approval required or permitted by this Agreement
or in any Loan Document to be given by the Lenders may be given, and any term of
this Agreement or of any other Loan Document may be amended, and the performance
or observance by the Borrower or any Loan Party or Subsidiary of any terms of
this Agreement or such other Loan Document or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Requisite Lenders (and, in the case of an amendment to any Loan Document,
the written consent of the Borrower). Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing, and signed by all of the
Lenders, do any of the following: (i) increase the Commitments of the Lenders or
subject the Lenders to any additional obligations; (ii) reduce the principal of,
or interest rates that have accrued or that will be charged on the outstanding
principal amount of, any Loans or other Obligations; (iii) reduce the amount of
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any Fees payable hereunder; (iv) postpone any date fixed to any payment of any
principal of, interest on, or Fees with respect to, any Loans or any other
Obligations; (v) change the Credit Percentages (or any minimum requirement
necessary for the Lenders or Requisite Lenders to take action hereunder); or
(vi) amend this Section or amend the definitions of the terms used in this
Agreement or the other Loan Documents insofar as such definitions affect the
substance of this Section. Further, no amendment, waiver or consent unless in
writing and signed by the Agent, in addition to the Lenders required hereinabove
to take such action, shall affect the rights or duties of the Agent under this
Agreement or any of the other Loan Documents. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of any Lender or the Agent in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or in
any other Loan Document, no notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances. Notwithstanding any of the foregoing to the contrary, the consent
of the Borrower shall not be required for any amendment, modification or waiver
of the provisions of Article X (other than the provisions of Section 10.06). In
addition, the Borrower and the Lenders hereby authorize the Agent to modify this
Agreement by unilaterally amending or supplementing Annex I from time to time in
the manner requested by the Borrower, the Agent or any Lender in order to
reflect any assignments or transfers of the Commitments as provided for
hereunder; provided, however, that the Agent shall promptly deliver a copy of
any such modification to the Borrower and each Lender as requested by such
party.
Section 11.08. Nonliability of Agent and Lenders. The relationship
between the Borrower and the Lenders shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
Section 11.09. Information. Except as otherwise provided by Applicable
Law, the Agent and each Lender shall utilize all non-public information obtained
pursuant to the requirements of this Agreement which has been identified as
confidential or proprietary by the Borrower in accordance with customary
procedure of the Agent or such Lender, as the case may be, for handling
confidential information of this nature and in accordance with safe and sound
banking practices but in any event the Agent and the Lenders may make
disclosure: (a) to any of their respective Affiliates (provided such Affiliates
shall agree to keep such information confidential in accordance with the terms
of this Section); (b) as reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any Commitment or
participations therein as permitted hereunder; (c) as required by any
Governmental Authority or representative thereof or pursuant to legal process;
(d) to the Agent's or such Lender's independent auditors and other professional
advisors (provided they shall be notified of the confidential nature of the
information); and (e) after the happening and during the continuance of an Event
of Default, to any other Person, in connection with the exercise of the Lender's
rights hereunder or under any of the other Loan Documents.
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Section 11.10. Indemnification. (a) The Borrower shall and hereby
agrees to indemnify, defend and hold harmless the Agent, any Affiliate of the
Agent and each of the Lenders and their respective directors, officers,
shareholders, agents, employees and counsel (each referred to herein as an
"Indemnified Party") from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments or expenses of every kind and nature
(including, without limitation, amounts paid in settlement, court costs and the
fees and disbursements of counsel incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith) (the foregoing items referred to herein as "Claims and Expenses")
incurred by an Indemnified Party arising out of or by reason of any suit, cause
of action, claim, arbitration, investigation or settlement, consent decree or
other proceeding (the foregoing referred to herein as an "Indemnity Proceeding")
which arise out of, or are in any way related directly or indirectly to: (i)
this Agreement or any other Loan Document or the transactions contemplated
thereby; (ii) the making of any Loans or issuance of Letters of Credit
hereunder; (iii) any actual or proposed use by the Borrower of the proceeds of
the Loans or Letters of Credit; (iv) the Agent's or any Lender's entering into
this Agreement; (v) the fact that the Agent and the Lenders have established the
credit facility evidenced hereby in favor of the Borrower and the Subsidiaries;
(vi) the fact that the Agent and the Lenders are creditors of the Borrower and
have or are alleged to have information regarding the financial condition,
strategic plans or business operations of the Borrower and the Subsidiaries;
(vii) the fact that the Agent and the Lenders are material creditors of the
Borrower and the Subsidiaries and are alleged to influence directly or
indirectly the business decisions or affairs of the Borrower and the
Subsidiaries or their financial condition; (viii) the exercise of any right or
remedy the Agent or the Lenders may have under this Agreement or the other Loan
Documents including, but not limited to, the foreclosure upon, or seizure of,
any Collateral or the exercise of any other rights of a secured party; provided,
however, that the Borrower shall not be obligated to indemnify any Indemnified
Party for any acts or omissions of such Indemnified Party in connection with
matters described in this subparagraph (viii) that constitute gross negligence
or willful misconduct; (ix) any violation or non-compliance by the Borrower or
any Subsidiary of any Applicable Law (including any Environmental Law)
including, but not limited to, any Indemnity Proceeding commenced by the
Internal Revenue Service or state taxing authority or any Indemnity Proceeding
commenced by any Governmental Authority or other Person under any Environmental
Law including any Indemnity Proceeding commenced by a Governmental Authority or
other Person seeking remedial or other action to cause the Borrower or its
Subsidiaries (or its respective properties) (or the Agent and/or the Lenders as
successors to the Borrower) to be in compliance with such Environmental Laws.
(b) This indemnification shall apply to all Indemnity Proceedings
arising out of, or related to, the foregoing whether or not an Indemnified Party
is a named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all costs and expenses of any Indemnified Party in
connection with any deposition of any Indemnified Party or compliance with any
subpoena (including any subpoena requesting the production of documents). This
indemnification shall, among other things, apply to any Indemnity Proceeding
commenced by other creditors of the Borrower or any Subsidiary, any shareholder
of the Borrower or any Subsidiary (whether such shareholder(s) are prosecuting
such Indemnity Proceeding in their individual capacity or derivately on behalf
of the Borrower), any account debtor of the Borrower or any Subsidiary or by any
Governmental Authority.
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(c) This indemnification shall apply to any Indemnity Proceeding
arising during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.
(d) All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(e) An Indemnified Party may engage its own counsel and conduct its own
investigation and defense of, and may formulate its own strategy with respect
to, any Indemnified Proceeding covered by this Section and, as provided above,
all costs and expenses incurred by the Indemnified Party shall be reimbursed by
the Borrower; provided, however, that the Borrower shall not be liable for the
fees and disbursements of more than one separate firm for all Indemnified
Parties hereunder in connection with any one Indemnity Proceeding or separate
but substantially similar Indemnity Proceeding(s) in the same jurisdiction;
provided further, however, that if (i) the engagement of a single counsel would
present a conflict of interest which would prevent such counsel from effectively
defending such action on behalf of the Indemnified Parties or (ii) Indemnified
Party reasonably concludes that there may be legal defenses available to it that
are different from or in addition to those available to any other Indemnified
Party, then the Indemnified Parties or any one of them may employ separate
counsel to represent or defend them or it in any such action or proceeding and
the Borrower shall pay the fees and disbursements of such counsel. No action
taken by legal counsel chosen by an Indemnified Party in investigating or
defending against any such Indemnified Proceeding shall vitiate or in any way
impair the obligations and duties of the Borrower hereunder to indemnify and
hold harmless each such Indemnified Party; provided, however, that (i) if the
Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii)
the Borrower has provided evidence reasonably satisfactory to such Indemnified
Party that the Borrower has the financial wherewithal to reimburse such
Indemnified Party for any amount paid by such Indemnified Party with respect to
such Indemnified Proceeding, such Indemnified Party shall not settle or
compromise any such Indemnified Proceeding without the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed).
(f) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.
(g) The Borrower's obligations hereunder shall survive any termination
of this Agreement and the other Loan Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any other of
their obligations set forth in this Agreement.
70
<PAGE>
Section 11.11. Survival. Notwithstanding any termination of this
Agreement, or of the other Loan Documents, the indemnities to which the Agent
and the Lenders are entitled under the provisions of Sections 11.02, 11.03 and
11.10 and any other provision of this Agreement and the other Loan Documents,
the waivers of jury trial and submissions to jurisdiction contained in Section
11.05, shall continue in full force and effect and shall protect the Agent and
the Lenders against events arising after such termination as well as before.
Section 11.12. Titles and Captions. Titles and captions of Articles,
Sections, subsections and clauses in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
Section 11.13. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 11.15. Counterparts. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
Section 11.16. Obligations with Respect to Loan Parties. The
obligations of the Borrower to direct or prohibit the taking of certain actions
by the other Loan Parties as specified herein shall be absolute and not subject
to any defense the Borrower may have that the Borrower does not control such
Loan Parties.
Section 11.17. Independent Nature of Lenders' Rights. Nothing contained
in any Loan Document and no action taken by Agent or any Lender or the Borrower
or any Loan Party pursuant hereto or thereto shall be deemed to constitute
Lenders and/or the Agent and/or any Loan Party to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable at
any time hereunder to each Lender shall be a separate and independent debt, and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement and it shall not be necessary for any other Lender to be joined
as an additional party in any proceeding for such purpose.
Section 11.18. No Fiduciary Relationship. No provision in this
Agreement or in any of the other Loan Documents and no course of dealing between
the parties shall be deemed to create any fiduciary duty (a) by the Agent or any
Lender to the Borrower or any other Loan Party or (b) by the Agent to any
Lender.
71
<PAGE>
Section 11.19. Limitation of Liability. Neither the Agent nor any
Lender, nor any Affiliate, officer, director, employee, attorney, or agent of
the Agent or any Lender shall have any liability with respect to, and the
Borrower hereby waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by the Borrower in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
The Borrower hereby waives, releases, and agrees not to sue the Agent or any
Lender or any of the Agent's or any Lender's Affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or financed hereby.
Section 11.20. Entire Agreement. This Agreement, the Notes, and the
other Loan Documents referred to herein embody the final, entire agreement among
the parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
Section 11.21. Construction. The Agent, the Borrower and each Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the Agent, the
Borrower and each Lender.
[Signatures on Next Page]
72
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their authorized officers all as of the day and year
first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: William C. Lusk Jr.
Title: Senior Vice President
THE AGENT:
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Agent
By: Jan J. Serafen
Title: Vice President
THE LENDERS:
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION
By: Jan J. Serafen
Title: Vice President
TRUST COMPANY BANK
By: Laura J. Sowders
Title: Banking Officer
By: David W. Penter
Title: Vice President
73
<PAGE>
[Signature Page to NationsBank/Shaw Credit Agreement dated as of November
30, 1994
WACHOVIA BANK OF GEORGIA, N.A.
By: Stuart F. Bandurant
Title: Vice President
74
<PAGE>
ANNEX I TO CREDIT AGREEMENT
LIST OF LENDERS, COMMITMENTS, CREDIT
PERCENTAGES AND LENDING OFFICES
Agent:
NationsBank of Georgia, National Association
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Wiring Instructions for Disbursements and Payments of Loans:
NationsBank of Georgia, Atlanta
ABA #061000052
Corporate Credit Support
Account #10101366219970
Lenders:
NationsBank of Georgia, National Association
Lending Office (All Types of Loans): Initial Commitment Amount:
600 Peachtree Street, 21st Floor $300,000,000
Atlanta, Georgia 30308
Telecopier: (404) 607-6467 Initial Credit Percentage: 50%
Telephone: (404) 607-5549
Wiring Instructions: Same as above
<PAGE>
Wachovia Bank of Georgia, N.A.
Lending Office (All Types of Loans): Initial Commitment Amount:
191 Peachtree Street, 30th Floor $200,000,000
Atlanta, Georgia 30303
Telecopier: (404) 332-6920 Initial Credit Percentage: 33.33%
Telephone: (404) 332-6093
Wiring Instructions:
Wachovia Bank of Georgia
ABA #061000010
Account #18-800-621
Attention: Ramona Hix
404/332-6559
Trust Company Bank
Lending Office (All Types of Loans): Initial Commitment Amount:
Post Office Box 4418 $100,000,000
Mail Code 126
Atlanta, Georgia 30302 Initial Credit Percentage: 16.67%
Attention: Laura J. Sowders
Telecopier: (404) 588-8833
Telephone: (404) 588-7797
Wiring Instructions:
Trust Company Bank
ABA #061000104
Wire Clearing General
Account #8892170730
Attention: Freda Bethea, Ext. 8963
Reference: Shaw Industries
TOTAL COMMITMENTS $600,000,000
<PAGE>
AD942720.032
SCHEDULE 1.01(a)
Existing Consolidated Funded Debt
(To be Completed by Borrower)
<PAGE>
SCHEDULE 1.01(b) TO CREDIT AGREEMENT
<TABLE>
<CAPTION>
Existing Letters of Credit
L/C Number Date of Issuance Expiration Date Amount Beneficiary
---------- ---------------- --------------- ------ -----------
<S> <C> <C> <C> <C>
SA76569091 07/24/91 07/31/95 1,640,000 National Union Fire Insurance Company of Pittsburgh, PA.
SA80566092 07/16/92 07/01/95 250,000 Georgia Self Insurers Guaranty Trust Fund
SA81181092 09/02/92 07/01/95 3,900,000 National Union Fire Insurance Company of Pittsburgh, PA.
SA81715092 11/18/92 11/18/94 200,000 Insurance Company of North America
SA81792092 12/17/92 12/17/94 5,000 Three Notch Electric Membership Corporation
SA81793092 12/17/92 12/17/94 150,000 Volunteer Electric Cooperative
SA86224093 08/16/93 06/30/95 2,497,000 National Union Fire Insurance Company of Pittsburgh, PA.
SA86694093 12/21/93 08/13/96 7,633,297 Greatbrook Pty Limited
SA89459094 08/16/94 06/30/95 5,686,000 National Union Fire Insurance Company of Pittsburgh, PA.
TOTAL 21,961,297
</TABLE>
<PAGE>
AD942720.032
SCHEDULE 1.01(c) TO CREDIT AGREEMENT
Existing Liens
1. The Borrower has incurred purchase money liens on various items of
equipment in the ordinary course of business. However, the amount of
purchase money indebtedness secured by such liens does not exceed the
amount permitted by Section 8.02(d) of the Credit Agreement.
<PAGE>
SCHEDULE 5.01(b)
Ownership Structure
(To be Completed by Borrower)
<PAGE>
SCHEDULE 5.01(h)
Litigation
(To be Completed by Borrower)
<PAGE>
SCHEDULE 5.01(q) TO CREDIT AGREEMENT
Affiliate Transactions
None
<PAGE>
SCHEDULE 8.03(ii) TO CREDIT AGREEMENT
Existing Investments
None
<PAGE>
CREDIT AGREEMENT
Dated as of November 30, 1994
by and among
SHAW INDUSTRIES, INC., as Borrower,
the Lenders named herein
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS............................................... 1
Section 1.01. Definitions................................... 1
Section 1.02. General....................................... 15
ARTICLE II. CREDIT FACILITY.......................................... 16
Section 2.01. Revolving Facility............................ 16
Section 2.02. Borrowings Under Revolving Facility........... 16
Section 2.03. Disbursements of Loans........................ 16
Section 2.04. Several Obligations........................... 17
Section 2.05. Repayment of Loans............................ 18
Section 2.06. New and Existing Letters of Credit/Lenders'
Participation................................. 18
Section 2.07. Method of Issuance of Letters of Credit....... 20
Section 2.08. Letter of Credit Reimbursement................ 20
Section 2.09. Nature of Agent's Duties/Unconditional Nature of
Reimbursement Obligation...................... 21
Section 2.10. Interest on Loans............................. 22
Section 2.11. Continuation and Conversion of Loans;
Unavailability of Certain Loans............... 23
Section 2.12. Compensation.................................. 25
Section 2.13. Voluntary Reductions of the Revolving Commitment. 25
Section 2.14. Prepayments................................... 26
Section 2.15. Notes......................................... 26
Section 2.16. Extensions of Termination Date................ 26
ARTICLE III. OTHER LOAN AND PAYMENT PROVISIONS....................... 27
Section 3.01. Interest Upon Event of Default................ 27
Section 3.02. Computations.................................. 27
Section 3.03. Usury......................................... 27
Section 3.04. Payments...................................... 27
Section 3.05. Pro Rata Treatment............................ 28
Section 3.06. Sharing of Payments, Etc...................... 28
Section 3.07. Facility Fee.................................. 29
Section 3.08. Letter of Credit Fees......................... 29
Section 3.09. Administrative and Arrangement Fees........... 30
Section 3.10. Increased Costs/Capital Adequacy.............. 30
Section 3.11. Statements of Account......................... 31
Section 3.12. Defaulting Lender's Status.................... 31
Section 3.13. Agent's Reliance.............................. 31
Section 3.14. Taxes......................................... 32
Section 3.15. Affected Lenders.............................. 34
Section 3.16. Change of Lending Office...................... 34
Section 3.17. Agreement Regarding Interest and Charges...... 34
<PAGE>
Section 3.18. Expiration or Maturity Date of Letters of Credit
Past Termination Date......................... 35
Section 3.19. Collateral Account............................ 35
ARTICLE IV. CONDITIONS PRECEDENT..................................... 36
Section 4.01. Conditions Precedent to Initial Loans and Letter
of Credit..................................... 36
Section 4.02. Conditions Precedent to All Loans and Letters
of Credit..................................... 38
ARTICLE V. REPRESENTATIONS AND WARRANTIES............................ 38
Section 5.01. Representations and Warranties................ 38
Section 5.02. Survival of Representations and Warranties, Etc. 42
ARTICLE VI. AFFIRMATIVE COVENANTS.................................... 43
Section 6.01. Preservation of Existence and Similar Matters... 43
Section 6.02. Compliance with Applicable Law................ 43
Section 6.03. Maintenance of Property....................... 43
Section 6.04. Conduct of Business........................... 43
Section 6.05. Insurance..................................... 43
Section 6.06. Payment of Taxes and Claims................... 44
Section 6.07. Visits and Inspections........................ 44
Section 6.08. Use of Proceeds/Letters of Credit............. 44
Section 6.09. Material Subsidiaries......................... 44
Section 6.10. Environmental Matters......................... 44
ARTICLE VII. INFORMATION............................................. 45
Section 7.01. Quarterly Financial Statements................ 45
Section 7.02. Year-End Statements........................... 45
Section 7.03. Compliance Certificate........................ 46
Section 7.04. Notice of Litigation and Other Matters........ 46
Section 7.05. ERISA Reporting............................... 47
Section 7.06. Copies of Other Reports....................... 48
Section 7.07. Other Information............................. 48
ARTICLE VIII. NEGATIVE COVENANTS..................................... 49
Section 8.01. Financial Covenants........................... 49
Section 8.02. Indebtedness.................................. 49
Section 8.03. Investments/Acquisitions...................... 50
Section 8.04. Liens/Agreements Regarding Liens/Other matters. 51
Section 8.05. Restricted Payments............................ 52
Section 8.06. Merger, Consolidation, Sales of Assets and
Other Arrangements............................ 52
Section 8.07. Sale Leasebacks............................... 53
Section 8.08. Transactions with Affiliates.................. 53
Section 8.09. Operating Leases.............................. 53
Section 8.10. Plans......................................... 53
Section 8.11. Fiscal Year................................... 54
-ii-
<PAGE>
Section 8.12. Subordinated Debt Prepayments/Amendments...... 54
ARTICLE IX. DEFAULT.................................................. 55
Section 9.01. Events of Default............................. 55
Section 9.02. Remedies...................................... 57
Section 9.03. Rights Cumulative............................. 58
ARTICLE X. THE AGENT................................................. 59
Section 10.01. Authorization and Action..................... 59
Section 10.02. Agent's Reliance, Etc........................ 59
Section 10.03. NationsBank as Lender........................ 60
Section 10.04. Lender Credit Decision, Etc.................. 60
Section 10.05. Indemnification.............................. 61
Section 10.06. Successor Agent.............................. 61
ARTICLE 11. MISCELLANEOUS............................................ 62
Section 11.01. Notices...................................... 62
Section 11.02. Expenses..................................... 63
Section 11.03. Stamp, Intangible and Recording Taxes........ 64
Section 11.04. Setoff....................................... 64
Section 11.05. Litigation................................... 64
Section 11.06. Assignability................................ 65
Section 11.07. Amendments................................... 67
Section 11.08. Nonliability of Agent and Lenders............ 68
Section 11.09. Information.................................. 68
Section 11.10. Indemnification.............................. 69
Section 11.11. Survival..................................... 71
Section 11.12. Titles and Captions.......................... 71
Section 11.13. Severability of Provisions................... 71
Section 11.14. GOVERNING LAW................................ 71
Section 11.15. Counterparts................................. 71
Section 11.16. Obligations with Respect to Loan Parties..... 71
Section 11.17. Independent Nature of Lenders' Rights........ 71
Section 11.18. No Fiduciary Relationship.................... 71
Section 11.19. Limitation of Liability...................... 72
Section 11.20. Entire Agreement.............................. 72
Section 11.21. Construction.................................. 72
Annex I List of Lenders, Commitments, Credit Percentages and Lending Offices
Schedule 1.01(a) Existing Consolidated Funded Debt
Schedule 1.01(b) Existing Letters of Credit
Schedule 1.01(c) Existing Liens
Schedule 5.01(b) Ownership Structure
Schedule 5.01(h) Litigation
-iii-
<PAGE>
Schedule 5.01(m) Environmental Non-Compliance
Schedule 5.01(q) Affiliate Transactions
Schedule 8.03(ii) Existing Investments
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Continuation
Exhibit C Form of Notice of Conversion
Exhibit D Form of Letter of Credit Request
Exhibit E Form of Note
Exhibit F Form of Extension Request
Exhibit G Form of Opinion of Counsel to the Borrower and
the other Loan Parties
Exhibit H Form of Disbursement Letter
Exhibit I Form of Guaranty
Exhibit J Form of Assignment and Assumption Agreement
Exhibit K Form of Compliance Certificate
-iv-
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
___________, 199___
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
Pursuant to Section 2.02 of the Credit Agreement, the Borrower hereby
requests a Borrowing in an amount equal to $_____________ to the Borrower.
The Borrower hereby requests that the Loan to be made available by the
Lenders pursuant hereto shall be a ___________________ [Select either a LIBOR
Loan or Base Rate Loan]. [In the event the Borrower selects a LIBOR Loan:] [The
Borrower hereby requests that the initial Interest Period for such Loan be for a
duration of ______________.]
The Borrower requests that the Loan be made available to the Borrower
on __________, 199__.
The Agent is instructed to make the proceeds of such Loan available to
the Borrower at _____________________________________.
The Borrower hereby further certifies that (i) as of the date hereof,
(ii) as of the date of the requested Borrowing, and (iii) after giving effect to
the Loan requested hereby:
(a) no Event of Default or Default has occurred and is continuing;
(b) no Material Adverse Change with respect to the Borrower and its
Subsidiaries, taken as a whole, has occurred since the Effective Date;
A-1
<PAGE>
(c) the representations and warranties set forth in Article V
of the Credit Agreement remain true and correct on and as of the date hereof
except to the extent that either: (i) such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and (ii) an event or condition has occurred that would render such
representations or warranties untrue but that is specifically and expressly
permitted by the terms of the Credit Agreement;
(d) there is no pending or threatened suit, cause of action or
proceeding against the Borrower or any Subsidiary thereof that could reasonably
have a Material Adverse Effect on the Borrower and its Subsidiaries, taken as a
whole; and
(e) the use of the proceeds of such extension of credit shall
not violate any Applicable Law applicable to or binding upon the Borrower or
Section 6.08 of the Credit Agreement.
If notice of this Borrowing has been given previously by telephone,
then this notice should be considered a written confirmation of such telephone
notice as required by Section 2.02 of the Credit Agreement.
SHAW INDUSTRIES, INC.
By:_____________________________
Title:_______________________
A-2
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONTINUATION
______________, 199__
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
Pursuant to Section 2.11(a) of the Credit Agreement, the Borrower
hereby gives notice, irrevocably, that the Borrower hereby requests a
Continuation of a Borrowing under the Credit Agreement, and in that connection
sets forth below the information relating to such Continuation (the "Proposed
Continuation") as required by Section 2.11(a) of the Credit Agreement:
(i) The requested date of the Proposed Continuation is ____________, 199__.
(ii) The Type of Loans to be continued are LIBOR Loans.
(iii) The aggregate amount of the Loans subject to such Continuation is
$------------------------.
(iv) The duration of the selected Interest Period for the Loans which are
the subject of such Continuation is: --------------------------.
The Borrower hereby further certifies that (i) as of the date
hereof, (ii) as of the requested date of the Proposed Continuation, and (iii)
after giving effect to the Continuation requested hereby no Default or Event of
Default has occurred and is continuing.
B-1
<PAGE>
If notice of this Proposed Continuation has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.11(a) of the Credit Agreement.
SHAW INDUSTRIES, INC.
By:___________________________
Title:_____________________
B-2
<PAGE>
EXHIBIT C
FORM OF NOTICE OF CONVERSION
____________, 199___
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
Pursuant to Section 2.11(b) of the Credit Agreement, the Borrower
hereby gives you notice, irrevocably, that the Borrower hereby requests a
Conversion of Loans of one Type into Loans of another Type under the Credit
Agreement, and in that connection sets forth below the information relating to
such Conversion (the "Proposed Conversion") as required by Section 2.11(b) of
the Credit Agreement:
(i) The requested date of the Proposed Conversion is __________________
("the Conversion Date").
(ii) The Type of Loans to be Converted pursuant hereto are presently
___________________ [Select either a LIBOR Loan or Base Loan] in the principal
amount of $_________ outstanding as of the Conversion Date (the "Current
Loans").
(iii) The portion of the Current Loans to be converted on the Conversion
Date is $___________ (the "Conversion Amount").
(iv) The Conversion Amount is to be converted into a ___________________
[Select either a LIBOR Loan or Base Loan] (the "Converted Loan") on the
Conversion Date.
(v) [In the event the Borrower selects a LIBOR Loan:] [The Borrower
hereby requests that the Interest Period for such Converted Loan be for a
duration of ______________.]
C-1
<PAGE>
The Borrower hereby further certifies that (i) as of the date
hereof, (ii) as of the Conversion Date, and (iii) after giving effect to the
Conversion requested hereby no Default or Event of Default has occurred and is
continuing.
If notice of this Proposed Conversion has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.11(b) of the Credit Agreement.
SHAW INDUSTRIES, INC.
By:____________________________
Title:______________________
C-2
<PAGE>
EXHIBIT D
FORM OF LETTER OF CREDIT REQUEST
____________, 199___
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
Pursuant to Section 2.07 of the Credit Agreement, the Borrower hereby
requests that the Agent issue a Letter of Credit an amount equal to
$_____________ for the benefit of ___________________ (the "Beneficiary") for
the purpose of ____________________.
The Borrower requests that the Letter of Credit be made available to
the Beneficiary on __________, 199__.
The Borrower hereby further certifies that (i) as of the date hereof,
(ii) as of the date of the requested Letter of Credit, and (iii) after giving
effect to the Letter of Credit requested hereby:
(a) No Event of Default or Default has occurred and is continuing;
(b) No Material Adverse Change with respect to the Borrower and its
Subsidiaries, taken as a whole, has occurred since the Effective Date;
(c) The representations and warranties set forth in Article V
of the Credit Agreement remain true and correct on and as of the date hereof
except to the extent that either: (i) such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and (ii) an event or condition has occurred that would render such
D-1
<PAGE>
representations or warranties untrue but that is specifically and expressly
permitted by the terms of the Credit Agreement;
(d) There is no pending or threatened suit, cause of action or
proceeding against the Borrower or any Subsidiary thereof that could reasonably
have a Material Adverse Effect on the Borrower and its Subsidiaries, taken as a
whole; and
(e) The use of the proceeds of such extension of credit shall
not violate any Applicable Law applicable to or binding upon the Borrower or
Section 6.08 of the Credit Agreement.
If notice of this Borrowing has been given previously by telephone,
then this notice should be considered a written confirmation of such telephone
notice as required by Section 2.07 of the Credit Agreement.
SHAW INDUSTRIES, INC.
By:_____________________________
Title:_______________________
D-2
<PAGE>
EXHIBIT E
FORM OF NOTE
$________________ November __, 1994
FOR VALUE RECEIVED, the undersigned, SHAW INDUSTRIES, INC., a
corporation organized under the laws of the State of Georgia (the "Borrower"),
promises to pay to the order of ___________________ [Payee Lender] (the
"Lender") in c/o NationsBank of Georgia, National Association, as Agent, 600
Peachtree Street, 21st Floor, Atlanta, Georgia 30308, Attention: Jan J. Serafen,
in lawful money of the United States of America and in immediately available
funds, the principal amount of ________________ Dollars ($_____________), or
such lesser principal amount, as may then constitute the unpaid aggregate
principal amount of the Loans made by the Lender to the Borrower pursuant to the
Credit Agreement (as defined below) on the Termination Date.
The Borrower further agrees to pay interest at said office, in like
money, on the unpaid principal amount owing hereunder from time to time on the
dates and at the rates and at the times specified in Section 2.10 of the Credit
Agreement (or, if applicable, Section 3.01 of the Credit Agreement).
If any payment on this Note becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is one of the Notes referred to in that certain Credit
Agreement dated as of November __, 1994 (as it may be amended, modified,
restated or supplemented from time to time, the "Credit Agreement") among Shaw
Industries, Inc. (the "Borrower"), the Lenders named therein (the "Lenders") and
NationsBank of Georgia, National Association, as Agent (the "Agent"), and is
subject to, and entitled to, all provisions and benefits thereof (including all
indemnities contained therein) and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Capitalized terms used
herein and not defined herein shall have the respective meanings given to such
terms in the Credit Agreement. The Credit Agreement, among other things,
provides [after giving effect to the Assignment and Assumption Agreement
executed by the Lender and [name of assigning Lender] as of date hereof]1 for
the making of Loans by the Lender to Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. Dollar amount first above
mentioned.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement which have not been waived by the Agent at the
direction of the Requisite Lenders, the Agent shall, upon the written request of
1 To be used for replacement of Surrendered Notes.
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the Requisite Lenders, and by delivery of written notice to Borrower from the
Agent, take any and all of the following actions, without prejudice to the
rights of the Agent, the Lender or any holder of this Note to enforce its claims
against Borrower: (a) declare all Obligations (including all amounts outstanding
hereunder) to be immediately due and payable (except with respect to any Event
of Default set forth in Section 9.01(e) or (f) of the Credit Agreement, in which
case all Obligations due hereunder shall automatically become immediately due
and payable without the necessity of any notice or other demand) without
presentment, demand, protest or any other action or obligation of the Lender;
(b) immediately terminate the Revolving Credit Facility and the obligation of
the Lenders to make Loans under the Revolving Credit Facility (and, in the case
of an Event of Default set forth in Section 9.01(e) or 9.01(f) of the Credit
Agreement, such termination shall occur automatically).
The holder hereof shall be entitled to the benefits thereof and to the
other Loan Documents (to the extent and with the effect as therein provided)
[and re-evidences the indebtedness outstanding on the date hereof with respect
to the Revolving Loans made on the date hereof which indebtedness has been
assigned to the Lender pursuant to Section 11.06 of the Credit Agreement.]2
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
THE PROVISIONS OF SECTION 11.05 OF THE CREDIT AGREEMENT ARE HEREBY
EXPRESSLY INCORPORATED BY REFERENCE HEREIN.
Attest: SHAW INDUSTRIES, INC.
By:_______________________ By:_________________________
Title:_________________ Title:___________________
(CORPORATE SEAL)
2 To be used for replacement of Surrendered Notes.
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EXHIBIT F
FORM OF NOTICE OF EXTENSION REQUEST
____________, 1994
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
__, 1994 as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
Pursuant to Section 2.16 of the Credit Agreement, the Borrower hereby
requests that the Termination Date be extended from [December 31, 1997] to
[December 31, 199[8][9]]
The Borrower hereby certifies that, as of the date hereof, no Default
or Event of Default has occurred and is continuing.
The undersigned understands that all of the Lenders must consent, at
their sole discretion, to the above-request to extend the Termination Date.
SHAW INDUSTRIES, INC.
By:______________________________
Title:________________________
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AD942720032
EXHIBIT G
BORROWER'S COUNSEL OPINION
November __, 1994
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street
Atlanta, Georgia 30308
The financial institutions that have or may become Lenders under the below-
referenced Credit Agreement
Alston & Bird
Atlanta, Georgia
Ladies and Gentlemen:
I am the General Counsel of Shaw Industries, Inc., a Georgia
corporation (the "Borrower"), and have represented the Borrower in connection
with the execution and delivery of that certain Credit Agreement dated as of
November 30, 1994 (the "Credit Agreement") by and among the Borrower, the
Lenders named therein (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent"). All capitalized terms used but not defined
herein shall have the meanings set forth in the Credit Agreement.
In this capacity I have reviewed the following:
(a) the Credit Agreement, together with all exhibits thereto;
(b) the Notes issued by the Borrower to the Lenders on or about the date
hereof; and
(c) the other documents and instruments executed and delivered by the
Borrower pursuant to Section 4.01 of the Credit Agreement.
(The foregoing are referred to herein as the "Loan Documents".)
In addition to the foregoing, I have reviewed the articles of
incorporation and by-laws of the Borrower (the "Organizational Documents") and
have also examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, and other instruments, and
made such other investigations, as I have deemed necessary or advisable for the
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purposes of rendering this opinion. I also made such examinations of law as I
have deemed necessary to our rendering the opinions set forth herein. In my
examination of documents, I assumed the genuineness of all signatures on
documents presented to me as originals (other than the signatures of officers of
the Borrower), the conformity to originals of documents presented to me as
conformed or reproduced copies.
Based upon the foregoing, and subject to all of the qualifications and
assumptions set forth herein, I am of the opinion that:
1. The Borrower (i) is duly organized as a corporation, and is validly
existing and in good standing under the laws of the State of Georgia and (ii)
has the corporate power to execute, deliver and perform the Loan Documents, to
own and use its assets, and to conduct its business as presently conducted and
as proposed to be conducted immediately following the consummation of the
transactions contemplated by the Credit Agreement. The Borrower is qualified to
transact business as a foreign corporation in the states set forth on Exhibit A
attached hereto.
2. The execution and delivery by the Borrower of the Loan Documents,
and the performance by the Borrower of its obligations thereunder, have been
duly authorized by the Borrower. The Borrower has duly executed and delivered
the Loan Documents.
3. The execution and delivery by the Borrower of the Loan Documents do
not, and if the Borrower were now to perform its obligations under such Loan
Documents, such performance would not, result in any:
(a) violation of the Borrower's Organizational Documents;
(b) violation of any existing federal or Georgia state constitution,
statute, regulation, rule, order, or law to which the Borrower or any of its
Subsidiaries or its assets are subject;
(c) breach or violation of, or default under, any agreements,
instruments, indentures or other documents evidencing any
indebtedness for money borrowed or other material agreements
to which the Borrower is a party or by which the Borrower or
its assets is bound;
(d) creation or imposition of a contractual lien or security
interest in, on or against the assets of the Borrower under
any material written agreements to which the Borrower is a
party or by which the Borrower or their respective assets are
bound (other than liens and security interests in favor of the
Agent for the benefit of the Lenders); or
(e) violation of any judicial or administrative decree, writ,
judgment or order to which the Borrower or any of its
Subsidiaries or their respective assets are subject.
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5. The execution, delivery and performance by the Borrower of each Loan
Document, and the consummation of the transactions thereunder, do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal or Georgia Governmental Authority.
6. The Loan Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except that the foregoing opinion is qualified by the
effect of: (a) applicable bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws relating to or affecting the enforcement of
creditors' rights generally; (b) any statutes, rules or procedures and
applicable case law limiting the availability of, or proscribing procedural
requirements for the exercise of, creditors' remedies; and (c) the fact that
equitable remedies or relief (including, but not limited to, the remedy of
specific performance) are subject to the discretion of the court before which
any such remedies or relief may be sought.
7. Except as may be set forth on Schedule 5.01(h) of the Credit
Agreement, there are no judgments outstanding against the Borrower or any of its
Subsidiaries or affecting any of their respective assets, nor is there any
litigation or other proceeding against the Borrower or any of its Subsidiaries
or its assets pending or overtly threatened which is likely to have a Material
Adverse Effect on the Borrower and its Subsidiaries, taken as a whole.
8. The Borrower is not, or, after giving effect to any Loan will not
be, subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or to any federal or
state statute or regulation limiting its ability to incur indebtedness for
borrowed money.
9. Assuming that Borrower applies the proceeds of the Loans and as
provided in the Credit Agreement, the transactions contemplated by the Loan
Documents do not violate the provisions of Regulations G or X of the Federal
Reserve Board.
[Customary Qualifications/Assumptions/Limitations]
Very truly yours,
_______________________________________
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EXHIBIT H
FORM OF DISBURSEMENT LETTER
November 30, 1994
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named herein (the "Lenders") and NationsBank of Georgia, National Association,
as Agent (the "Agent").
This letter is given pursuant to Section 4.01(b)(ii) of the Credit
Agreement for the purpose, among other things, of requesting the initial Loans
thereunder (the "Initial Borrowing") and to provide disbursement instructions
for the Initial Borrowing.
The Borrower hereby directs the Bank to disburse the proceeds of the
Initial Borrowing to the following accounts:
To: NationsBank of Georgia, N.A., ABA __________________, Notify:
________________, A/C#_________________, $____________, to retire certain
indebtedness owing thereto.
To: Trust Company Bank, ABA __________________, Notify: ________________,
A/C#_________________, $____________, to retire certain indebtedness owing
thereto.
To: Wachovia Bank of Georgia, N.A., ABA __________________, Notify:
________________, A/C#_________________, $____________, to retire certain
indebtedness owing thereto.
H-1
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To: Alston & Bird, Special Account #1, Account No. 034-53-339, NationsBank
of Georgia, National Association, 600 Peachtree Street, Atlanta, Georgia 30308,
ABA No. 061-000052, Notify: Joan Gilbert at (404) 881-7501, Reference:
15359/75330, $_____________ for costs and expenses associated with the Credit
Agreement.
To: The Borrower, $________________ for general corporate purposes.
The Borrower elects that the Initial Borrowing shall be a [Base Rate Loan.]
[LIBOR Loan.] [If a LIBOR Loan - The initial Interest Period for the Initial
Borrowing shall be [1], [2], [3], [6] months.]
Terms used herein and not defined herein have their respective defined
meanings as set forth in the Credit Agreement.
SHAW INDUSTRIES, INC.
By:_____________________________
Title:_______________________
H-2
<PAGE>
I-11
EXHIBIT I
FORM OF GUARANTY
THIS GUARANTY dated as of ______________, 1994 executed and delivered
by ______________________________ (the "Guarantor") in favor of NationsBank of
Georgia, National Association, as Agent (the "Agent") for the Lenders under
Credit Agreement (as hereinafter defined) (the "Lenders"; the Lenders and the
Agent being collectively referred to herein as the "Guaranteed Parties") and in
favor of such Lenders.
WHEREAS, pursuant to that certain Credit Agreement dated as of November
30, 1994 (as the same may be amended, modified, supplemented or extended from
time to time, the "Credit Agreement"; terms used herein and not defined herein
have their respective defined meanings as set forth in the Credit Agreement) by
and among Shaw Industries, Inc. (the "Borrower"), the Lenders named therein and
the Agent, the Lenders have made available to the Borrower certain financial
accommodations on the terms and conditions set forth in the Credit Agreement;
WHEREAS, the Guarantor is a Material Subsidiary of the Borrower and is
required, pursuant to Section 6.09 of the Credit Agreement, to execute and
deliver this Guaranty;
WHEREAS, as a Material Subsidiary of the Borrower, the Guarantor has
and will benefit from the financial accommodations provided by the Agent and the
Lenders to the Borrower under the Credit Agreement as such financial
accommodations will enable the Borrower to provide the Guarantor with sufficient
capital to operate the Guarantor's operations; and
WHEREAS, the Guarantor is therefore willing to guarantee the payment in
full of the principal of, and interest on, all Guaranteed Obligations (as
defined below) owing by the Borrower to the Agent and the other Guaranteed
Parties under the Credit Agreement and otherwise.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Guarantor, the Guarantor
agrees as follows:
Section 1. Guaranty. The Guarantor hereby, irrevocably and
unconditionally, guarantees the due and punctual payment and performance when
due, whether at stated maturity, by acceleration or otherwise, of the following
(the following collectively referred to as the "Guaranteed Obligations"): (a)
all Obligations (as defined in the Credit Agreement); and (b) any and all
extensions, renewals, modifications, amendments or substitutions of the
foregoing.
I-1
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Section 2. Guaranty of Payment and Not of Collection. This Guaranty is
a guaranty of payment, and not of collection, and a debt of the Guarantor for
its own account. Accordingly, the Guaranteed Parties shall not be obligated or
required before enforcing this Guaranty against the Guarantor: (a) to pursue any
right or remedy any Guaranteed Party may have against the Borrower, any Loan
Party or any other guarantor of the Guaranteed Obligations or commence any suit
or other proceeding against the Borrower, any Loan Party or any other guarantor
of the Guaranteed Obligations in any court or other tribunal; (b) to make any
claim in a liquidation or bankruptcy of the Borrower, any Loan Party or any
other guarantor of the Guaranteed Obligations; or (c) to make demand of the
Borrower or any other guarantor of the Guaranteed Obligations or to enforce or
seek to enforce or realize upon any collateral security held by the Agent or any
Lender which may secure any of the Guaranteed Obligations. In this connection,
the Guarantor hereby waives the right of the Guarantor to require any holder of
the Guaranteed Obligations to take action against the Borrower as provided in
Official Code of Georgia Annotated ss.10-7-24.
Section 3. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
documents evidencing the same, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Guaranteed Party with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation,
the following (whether or not the Guarantor consents thereto or has notice
thereof):
(a) (i) any change in the amount, interest rate or due date or other
term of any Guaranteed Obligations, or (ii) any change in the time, place or
manner of payment of all or any portion of the Guaranteed Obligations, or (iii)
any amendment or waiver of, or consent to the departure from or other indulgence
with respect to, the Credit Agreement, any Loan Document, or any other document
or instrument evidencing any Guaranteed Obligations, or (iv) any waiver,
renewal, extension, addition, or supplement to, or deletion from, or any other
action or inaction under or in respect of, the Credit Agreement, the other Loan
Documents, or any other documents, instruments or agreements relating to the
Guaranteed Obligations or any other instrument or agreement referred to therein
or evidencing any Guaranteed Obligations or any assignment or transfer of any of
the foregoing;
(b) any lack of validity or enforceability of the Credit Agreement, the
other Loan Documents, or any other document, instrument or agreement referred to
therein or evidencing any Guaranteed Obligations or any assignment or transfer
of any of the foregoing;
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<PAGE>
(c) any furnishing to the Guaranteed Parties of any additional security for
the Guaranteed Obligations, or any sale, exchange, release or surrender of, or
realization on, any collateral security for the Guaranteed Obligations;
(d) any settlement or compromise of any of the Guaranteed Obligations,
any security therefor, or any liability of any other party with respect to the
Guaranteed Obligations, or any subordination of the payment of the Guaranteed
Obligations to the payment of any other liability of the Borrower;
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Guarantor or the Borrower or any other Loan Party or any other Person, or any
action taken with respect to this Guaranty by any trustee or receiver, or by any
court, in any such proceeding;
(f) any nonperfection of any security interest or lien on any collateral
securing any of the Guaranteed Obligations;
(g) any application of sums paid by the Borrower or any other Person
with respect to the liabilities of the Borrower to the Guaranteed Parties,
regardless of what liabilities of the Borrower remain unpaid;
(h) any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof;
(i) any act or failure to act by any Guaranteed Party which may
adversely affect the Guarantor's subrogation rights, if any, against the
Borrower to recover payments made under this Guaranty; or
(k) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Guarantor.
Section 4. Action with Respect to Guaranteed Obligations. The Agent or
any other Guaranteed Party may, at any time and from time to time, without the
consent of, or notice to, the Guarantor, and without discharging the Guarantor
from its obligations hereunder take any and all actions described in Section 3
above and may otherwise: (a) amend, modify, alter or supplement the terms of any
of the Guaranteed Obligations, including, but not limited to, extending or
shortening the time of payment of any of the Guaranteed Obligations or
increasing, decreasing or otherwise changing the interest rate or fees that may
accrue on any of the Guaranteed Obligations; (b) amend, modify, alter or
supplement the Credit Agreement or any other Loan Document or any other document
evidencing any Guaranteed Obligations; (c) sell, exchange, release or otherwise
deal with all, or any part, of any Collateral; (d) release any Person liable in
any manner for the payment or collection of the Guaranteed Obligations; (e)
exercise, or refrain from exercising, any rights against the Borrower or any
other Person (including, without limitation, any other guarantor of the
Guaranteed Obligations); and (f) apply any sum, by whomsoever paid or however
realized, to the Guaranteed Obligations in such order as such Guaranteed Party
shall elect.
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Section 5. Waiver. The Guarantor, to the fullest extent permitted by
law, hereby waives notice of acceptance hereof or any presentment, demand,
protest or notice of any kind, and any other act or thing, or omission or delay
to do any other act or thing, which in any manner or to any extent might vary
the risk of the Guarantor or which otherwise might operate to discharge the
Guarantor from its obligations hereunder.
Section 6. Inability to Accelerate Loan. If any Guaranteed Party or the
holder of any of the Guaranteed Obligations is prevented under Applicable Law or
otherwise from demanding or accelerating payment thereof by reason of any
automatic stay or otherwise, the Guaranteed Party or such holder shall be
entitled to receive from the Guarantor, upon demand therefor, the sums which
otherwise would have been due had such demand or acceleration occurred.
Section 7. Reinstatement of Guaranteed Obligations. If claim is ever
made upon any Guaranteed Party for repayment or recovery of any amount or
amounts received in payment or on account of any of the Guaranteed Obligations,
and any Guaranteed Party repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over the Guaranteed Party or any of its property, or (b) any
settlement or compromise of any such claim effected by the Guaranteed Party with
any such claimant (including the Borrower or a trustee in bankruptcy for the
Borrower), then, and in such event, the Guarantor agrees that any such judgment,
decree, order, settlement or compromise shall be binding on it, notwithstanding
any revocation hereof or the cancellation of the Credit Agreement, the other
Loan Documents, or any other instrument evidencing any liability of the
Borrower, and the Guarantor shall be and remain liable to the Guaranteed Party
for the amounts so repaid or recovered to the same extent as if such amount had
never originally been paid to the Guaranteed Party.
Section 8. Waiver of Subrogation. The Guarantor hereby forever waives
and releases any and all claims or causes of action the Guarantor may have
against the Borrower or any other Loan Party or any other Person arising by
reason of any payment by the Guarantor to any other Guaranteed Party pursuant to
this Guaranty, whether such claim or cause of action arises by way of any
common-law right of subrogation, by way of any other applicable law or statutes,
or by way of any written or oral agreement between the Guarantor and the
Borrower or Loan Party or Person. This waiver of subrogation is for the benefit
of the Borrower and the Guaranteed Parties and the foregoing waiver may not be
revoked by the Guarantor without the prior, written consent of the Agent and the
Requisite Lenders on behalf of the other Guaranteed Parties.
Section 9. Payments Free and Clear. All sums payable by the Guarantor
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
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<PAGE>
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any governmental agency or authority, wherever located, or any
statute, rule or regulation promulgated thereby), and in the event that the
Guarantor is required by such applicable law or by such governmental agency or
authority to make any such deduction or withholding, the Guarantor shall pay to
the Guaranteed Parties such additional amount as will result in the receipt by
the Agent on behalf of the Guaranteed Parties of the full amount payable
hereunder had such deduction or withholding not occurred or been required.
Section 10. Set-off. The Guarantor authorizes the Agent and the other
Guaranteed Parties at any time and from time to time, without notice to the
Guarantor, which notice the Guarantor hereby expressly waives, to set off and
apply any and all deposits (whether general or special, time or demand,
provisional or final, including any negotiable or non-negotiable certificate of
deposit now or hereafter issued by the Agent or the other Guaranteed Parties to
the Guarantor) or other indebtedness owing by such Agent or Guaranteed Party to
the Guarantor, to the then outstanding Guaranteed Obligations then due and
payable. The Agent or any other Guaranteed Party may exercise this right of
setoff whether or not such Agent or Guaranteed Party has made demand for, or
accelerated, any Guaranteed Obligations. The rights of the Agent and the other
Guaranteed Parties under this Section are in addition to, and not in limitation
or substitution of, other rights and remedies (including, but not limited to,
other rights of set-off) that the Agent and the other Guaranteed Parties may
have.
Section 11. Subordination Of the Borrower's Obligations To the
Guarantors. As an independent covenant, the Guarantor hereby expressly covenants
and agrees for the benefit of the Guaranteed Parties that all obligations and
liabilities owing by the Borrower to the Guarantor of whatsoever description
including, without limitation, all intercompany receivables owing to the
Guarantor from the Borrower ("Junior Claims") shall be subordinate and junior in
right of payment to all obligations of the Borrower to the Agent and other
Guaranteed Parties under the terms of the Credit Agreement and the other Loan
Documents ("Senior Claims").
If an Event of Default shall occur, then, unless and until such Event
of Default shall have been cured, waived, or shall have ceased to exist, no
direct or indirect payment (in cash, property, securities by setoff or
otherwise) shall be made by the Borrower to the Guarantor on account of or in
any manner in respect of any Junior Claim and the Guarantor shall not receive or
accept any such direct or indirect payment.
In the event of a Proceeding (as hereinafter defined), all Senior
Claims shall first be paid in full before any direct or indirect payment or
distribution (in cash, property, securities by setoff or otherwise) shall be
made to any Guarantor on account of or in any manner in respect of any Junior
Claim. For the purposes of the previous sentence, "Proceeding" means the
Borrower or the Guarantor shall commence a voluntary case concerning itself
under the Bankruptcy Code of 1978, as amended (the "Bankruptcy Code") or any
other applicable bankruptcy laws; or any involuntary case is commenced against
the Borrower or the Guarantor; or a custodian (as defined in the Bankruptcy Code
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or any other applicable bankruptcy laws) is appointed for, or takes charge of,
all or any substantial part of the property of the Borrower or the Guarantor, or
the Borrower or the Guarantor commences any other proceedings under any
reorganization arrangement, adjustment of debt, relief of debtor, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or the Guarantor, or any such
proceeding is commenced against the Borrower or the Guarantor, or the Borrower
or the Guarantor is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
the Guarantor suffers any appointment of any custodian or the like for it or any
substantial part of its property; or the Borrower or the Guarantor makes a
general assignment for the benefit of creditors; or the Borrower or the
Guarantor shall fail to pay, or shall state that it is unable to pay, or shall
be unable to pay, its debts generally as they become due; or the Borrower or the
Guarantor shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or the Borrower or the Guarantor shall
by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action shall be taken by
the Borrower or the Guarantor for the purpose of effecting any of the foregoing.
In the event any direct or indirect payment or distribution is made to
the Guarantor in contravention of this Section 11, such payment or distribution
shall be deemed received in trust for the benefit of the Agent and other
Guaranteed Parties and shall be immediately paid over to the Agent for
application against the Guaranteed Obligations in accordance with the terms of
the Credit Agreement.
The Guarantor agrees to execute such additional documents as the Agent
may reasonably request to evidence the subordination provided for in this
Section 11.
Section 12. Automatic Acceleration in Certain Events. Upon the
occurrence of an Event of Default specified in Section 9.01(e) or 9.01(f) of the
Credit Agreement, all Guaranteed Obligations shall automatically become
immediately due and payable by the Guarantor, without notice or other action on
the part of the Agent or other Guaranteed Parties, and regardless of whether
payment of the Guaranteed Obligations by the Borrower has then been accelerated.
In addition, if any event of the Events of Default described in Section 9.01(e)
or 9.01(f) of the Credit Agreement should occur with respect to the Guarantor,
then the Guaranteed Obligations shall automatically become immediately due and
payable by the Guarantor, without notice or other action on the part of the
Agent or other Guaranteed Parties, and regardless of whether payment of the
Guaranteed Obligations by the Borrower has then been accelerated.
Section 13. Savings Clause. (a) It is the intent of the Guarantor and the
Guaranteed Parties that the Guarantor's maximum liability hereunder shall be,
but not in excess of:
(i) in a Proceeding commenced by or against the Guarantor
under the Bankruptcy Code on or within one year from the date on which
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any of the Guaranteed Obligations are incurred, the maximum amount
which would not otherwise cause the Guaranteed Obligations (or any
other obligations of the Guarantor to the Guaranteed Parties) to be
avoidable or unenforceable against the Guarantor under (A) Section 548
of the Bankruptcy Code or (B) any state fraudulent transfer or
fraudulent conveyance act or statute applied in such case or proceeding
by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a Proceeding commenced by or against the Guarantor
under the Bankruptcy Code subsequent to one year from the date on which
any of the Guaranteed Obligations are incurred, the maximum amount
which would not otherwise cause the Guaranteed Obligations (or any
other obligations of the Guarantor to the Guaranteed Parties) to be
avoidable or unenforceable against the Guarantor under any state
fraudulent transfer or fraudulent conveyance act or statute applied in
any such case or proceeding by virtue of Section 544 of the Bankruptcy
Code; or
(iii) in a Proceeding commenced by or against the Guarantor
under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation
or similar debtor relief laws), the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other obligations of
the Guarantor to the Guaranteed Parties) to be avoidable or
unenforceable against the Guarantor under such law, statute or
regulation including, without limitation, any state fraudulent transfer
or fraudulent conveyance act or statute applied in any such case or
proceeding.
(The substantive laws under which the possible avoidance or unenforceability of
the Guaranteed Obligations (or any other obligations of the Guarantor to the
Guaranteed Parties) shall be determined in any such case or proceeding shall
hereinafter be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 13(a), but only to the extent that
the Guaranteed Obligations would otherwise be subject to avoidance under the
Avoidance Provisions if the Guarantor is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for the Guaranteed
Obligations, or if the Guaranteed Obligations would render the Guarantor
insolvent, or leave the Guarantor with an unreasonably small capital to conduct
its business, or cause the Guarantor to have incurred debts (or to have intended
to have incurred debts) beyond its ability to pay such debts as they mature, in
each case as of the time any of the Guaranteed Obligations are deemed to have
been incurred under the Avoidance Provisions, the maximum Guaranteed Obligations
for which the Guarantor shall be liable hereunder shall be reduced to that
amount which, after giving effect thereto, would not cause the Guaranteed
Obligations (or any other obligations of the Guarantor to the Guaranteed
Parties), as so reduced, to be subject to avoidance under the Avoidance
Provisions.
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(c) This Section 13 shall be applicable only in connection with a
Proceeding brought by or against the Guarantor and is intended solely to
preserve the rights of the Guaranteed Parties hereunder to the maximum extent
that would not cause the Guaranteed Obligations of the Guarantor to be subject
to avoidance under the Avoidance Provisions in connection with any such
Proceeding. Neither the Guarantor nor any other Person shall have any right or
claim under this Section 13 as against the Guaranteed Parties that would not
otherwise be available to the Guarantor or such other Person outside of any
Proceeding.
Section 14. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
the Guarantor assumes and incurs hereunder, and agrees that none of the
Guaranteed Parties will have any duty to advise the Guarantor of information
known to it or any of them regarding such circumstances or risks.
Section 15. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 16. JURISDICTION/JURY TRIAL WAIVER/OTHER MATTERS. (a) EACH OF
THE GUARANTEED PARTIES AND THE GUARANTOR ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTY OR THE RELATIONSHIP OF THE
GUARANTOR AND THE GUARANTEED PARTIES ESTABLISHED HEREBY, WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY
LAW, EACH OF THE GUARANTOR AND THE GUARANTEED PARTIES HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST THE GUARANTOR ARISING OUT OF THIS GUARANTY
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE GUARANTOR AND
ANY GUARANTEED PARTY OF ANY KIND OR NATURE.
(b) EACH OF THE GUARANTOR AND THE GUARANTEED PARTIES AGREES THAT THE
FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA OR ANY STATE COURT LOCATED IN
FULTON COUNTY, GEORGIA SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN THE GUARANTOR AND ANY GUARANTEED PARTY PERTAINING DIRECTLY
OR INDIRECTLY TO THIS GUARANTY OR TO ANY MATTER ARISING HEREFROM. THE GUARANTOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURT. THE GUARANTOR AND THE GUARANTEED PARTIES
WAIVE ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.
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(c) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED
TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY OTHER GUARANTEED
PARTY OR THE ENFORCEMENT BY THE AGENT OR ANY OTHER GUARANTEED PARTY OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
(d) THE GUARANTOR AGREES THAT ALL OF ITS PAYMENT OBLIGATIONS HEREUNDER
SHALL BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS
HEREUNDER, THE GUARANTOR HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF,
COUNTERCLAIM OR CROSS-CLAIM.
(e) THE GUARANTOR ACKNOWLEDGES THAT ALL OF THE WAIVERS IN THIS SECTION
HAVE BEEN MADE WILLINGLY, WITH THE ADVICE OF LEGAL COUNSEL AND WITH A FULL
UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
Section 17. Loan Accounts. The Agent on behalf of the other Guaranteed
Parties may maintain books and accounts setting forth the amounts of principal,
interest and other sums paid and payable with respect to the Guaranteed
Obligations, and in the case of any dispute relating to any Guaranteed
Obligation, the entries in such account shall be binding upon the Guarantor as
to the outstanding amount of such Guaranteed Obligations and the amounts paid
and payable with respect thereto absent manifest error. The failure of the Agent
to maintain such books and accounts shall not in any way relieve or discharge
the Guarantor of any of its obligations hereunder.
Section 18. Waiver of Remedies. No delay or failure on the part of the
Agent or any other Guaranteed Party in the exercise of any right or remedy it
may have against the Guarantor hereunder or otherwise shall operate as a waiver
thereof, and no single or partial exercise by the Lender of any such right or
remedy shall preclude other or further exercise thereof or the exercise of any
other such right or remedy.
Section 19. Successors and Assigns. Each reference herein to the Agent
or any other Guaranteed Party shall be deemed to include the Agent's and such
other Guaranteed Party's successors and assigns (including, but not limited to,
any holder of the Guaranteed Obligations) in whose favor the provisions of this
Guaranty also shall inure, and each reference herein to the Guarantor shall be
deemed to include the Guarantor's executors, administrators, successors and
assigns, upon whom this Guaranty also shall be binding. The Agent and any other
Guaranteed Party may assign, transfer or sell any Guaranteed Obligation, or
grant or sell participation in any Guaranteed Obligations, pursuant to the terms
of the Loan Documents, to any Person or entity without the consent of, or notice
to, the Guarantor and without releasing, discharging or modifying the
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Guarantor's obligations hereunder. The Guarantor hereby consents to the delivery
by the Agent or any other Guaranteed Party to any assignee, transferee or
participant of any financial or other information regarding the Borrower or the
Guarantor. The Guarantor may not assign or transfer its obligations hereunder to
any Person or entity.
Section 20. Survival of Agreement. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Guaranty
and the Credit Agreement, the making of the Loans and the execution and delivery
of the other Loan Documents.
Section 21. Amendments. This Guaranty may not be amended except in writing
signed by the Agent and the Guarantor.
Section 22. Payments/Expenses. All payments made by the Guarantor
pursuant to this Guaranty shall be made in the lawful currency of the United
States of America, in immediately available funds to the Principal Office of the
Agent, not later than 11:00 a.m., Atlanta time, on the date one Business Day
after demand therefor. The Guarantor shall pay, on demand, all costs and
expenses incurred by the Guaranteed Parties in the collection and enforcement of
this Guaranty including the reasonable fees and disbursements of counsel to the
Guaranteed Parties if collection and/or enforcement is sought by or through an
attorney.
Section 23. Notices. All notices, demands or other communications to
the Guarantor hereunder shall be in writing and shall be mailed or hand
delivered or sent via facsimile transmission to the address for the Guarantor
set forth below its signature hereto. All such notices, demands and
communications shall be deemed received by the Guarantor (a) if personally
delivered or by messenger or overnight courier or delivered via facsimile
transmission, on the date of delivery thereof or (b) if through the United
States mail, on the earlier of (i) the date three days after the posting thereof
and (ii) the date of actual receipt by the Guarantor.
Section 24. Severability. In case any provision of this Guaranty shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 25. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
Section 26. Review of Credit Agreement/Loan Documents. The Guarantor
acknowledges that, prior to the execution and delivery of this Guaranty, the
Guarantor has had the opportunity to review and ask questions regarding the
Credit Agreement and the other Loan Documents referred to therein and to discuss
the same and this Guaranty with its counsel.
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IN WITNESS WHEREOF, the Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.
[GUARANTOR]
By:_____________________________
Title:_______________________
Address for Notices:
___________________________________
___________________________________
Attention:___________________________
Telephone Number:____________________
Telecopy Number:_____________________
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EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of _________, 199__
(the "Agreement") by and among _________________________ (the "Assignor"),
_____________ (the "Assignee"), SHAW INDUSTRIES, INC., as the borrower under the
Credit Agreement hereinafter defined (the "Borrower") and NATIONSBANK OF
GEORGIA, NATIONAL ASSOCIATION, as the Agent under the Credit Agreement
hereinafter defined (the "Agent").
WHEREAS, the Assignor is a Lender under that certain Credit Agreement
dated as of November 30, 1994 (as it may be amended, modified, restated or
supplemented from time to time, the "Credit Agreement"; capitalized terms used
herein, and not otherwise defined herein, shall have their respective defined
meanings as set forth in the Credit Agreement) among the Borrower, the Lenders
named therein and the Agent;
WHEREAS, the Assignor desires to assign a portion of the Assignor's
Commitment under the Credit Agreement, all on the terms and conditions set forth
herein;
WHEREAS, the Borrower and the Agent consent to such assignment on the
terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
Section 1. Assignment. Subject to the terms and conditions of this
Agreement and in consideration of the payment to be made by the Assignee to the
Assignor pursuant to Section 2 of this Agreement, effective as of the later of:
(a) ____________, 199_ or (b) the date by which the conditions to the
effectiveness of this Agreement have been satisfied as set forth in Section 10
hereof (the "Effective Date"), the Assignor hereby irrevocably sells, transfers
and assigns to the Assignee, without recourse, a $______ interest in and to all
the Assignor's rights and obligations under the Loan Documents (the "Assigned
Commitment") including all voting rights of the Assignor associated with such
amount of Assigned Commitment, all rights to receive all commitment and other
fees with respect to such Assigned Commitment and other rights of the Assignor
under the Credit Agreement with respect to such amount of the Assigned
Commitment, all as if the Assignee were an original Lender under and signatory
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to the Credit Agreement having a Commitment equal to the Assigned Commitment.
The Assignee, subject to the terms and conditions hereof, hereby assumes all
obligations of the Assignor with respect to the Assigned Commitment as if the
Assignee were an original Lender under and signatory to the Credit Agreement
having a Commitment equal to the Assigned Commitment, which obligations shall
include, but shall not be limited to, the obligation of the Assignor to make
Loans to the Borrower with respect to the Assigned Commitment and to indemnify
the Agent as provided therein (the foregoing enumerated obligations, together
with all other obligations more particularly set forth in the Credit Agreement,
shall be referred to hereinafter, collectively, as the "Assigned Obligations").
The Assignor shall have no further duties or obligations with respect to, and
shall have no further interest in, the Assigned Obligations or the Assigned
Commitment.
Section 2. Payments by Assignee. In consideration of the assignment
made pursuant to Section 1 of this Agreement, the Assignee agrees to pay to the
Assignor on the Effective Date hereof, the sum of $_________ [principal amount
of Loans assigned, interest accrued as of Effective Date, fees, expenses] in
immediately available funds.
Section 3. Payments by Assignor. The Assignor shall pay on the Effective
Date hereof to the Agent a processing and recordation fee of $3,000.
Section 4. Representations and Warranties of Assignor. The Assignor
hereby represents and warrants to the Assignee that (i) as of the Effective Date
(a) the Assignor is a Lender under the Credit Agreement having a Commitment
under the Credit Agreement immediately prior to the Effective Date, equal to
$_________ and that the Assignor is not in default of its obligations under the
Credit Agreement; and (b) the outstanding balance of its Loans (without
reduction by any assignments thereof which have not yet become effective) is
$_______; and (ii) it is the legal and beneficial owner of the interest being
assigned by it hereunder and such interest is free and clear of any adverse
claim created by the Assignor.
Section 5. Representations, Warranties and Agreements of Assignee. The
Assignee (a) represents and warrants that it is legally authorized to enter into
this Agreement; (b) it is an "accredited investor" (as such term is used in
Regulation D of the Securities Act of 1933, as amended); (c) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant thereto and such other documents
and information (including without limitation the Loan Documents) as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Agreement; (d) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof together with such powers as are
reasonably incidental thereto; (e) agrees that it will become a party to the
Credit Agreement and the other Loan Documents to which the other Lenders are a
party on the Effective Date hereof and will perform in accordance therewith all
of the obligations which are required to be performed by it as a Lender.
The portion of the Commitment assigned by the Assignor to the Assignee
hereunder shall be without recourse to the Assignor. The Assignee acknowledges
and agrees that, except as set forth in Section 4 above, the Assignor is making
no representations or warranties with respect to, and the Assignee hereby
releases and discharges the Assignor for any responsibility or liability for:
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(i) the present or future solvency or financial condition of the Borrower, (ii)
any representations, warranties, statements or information made or furnished by
the Borrower in connection with the Credit Agreement or otherwise, (iii) the
validity, efficacy, sufficiency, or enforceability of the Credit Agreement or
any document or instrument executed in connection therewith, or the
collectibility of the Assigned Obligations, (iv) the perfection, priority or
validity of any lien, security interest or pledge with respect to any Collateral
at any time securing the obligations of the Borrower under the Credit Agreement
or the Assigned Obligations under the Notes or the Credit Agreement and (v) the
performance or failure to perform by the Borrower of any obligation under the
Credit Agreement or any document or instrument executed in connection therewith.
Further, the Assignee acknowledges that it has, independently and
without reliance upon the Agent, or on any Affiliate or Subsidiary thereof, or
any other Lender, and based on the financial statements supplied by the Borrower
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to become a Lender under the Credit Agreement.
The undersigned also acknowledges that it will, independently and without
reliance upon the Agent or any Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any Revolving Note or pursuant to any other obligation. The Agent shall have no
duty or responsibility, either initially or on a continuing basis, to provide
the Assignee with any credit or other information with respect to the Borrower
or to notify the undersigned of any Event of Default except as provided in the
Credit Agreement. The undersigned has not relied on the Agent as to any legal or
factual matter in connection therewith or in connection with the transactions
contemplated thereunder.
Section 6. Recording and Acknowledgment by the Agent. Following the
execution of this Agreement, the Assignor will deliver to the Agent (i) a duly
executed copy of this Agreement for acknowledgment and recording by the Agent
and (ii) the Assignor's Notes. The Agent shall cause the Borrower to, and the
Borrower shall, exchange such Notes for new notes as provided in Section
11.06(e) of the Credit Agreement. Upon such acknowledgment and recording, from
and after the Effective Date hereof, the Agent shall make all payments in
respect of the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
for periods prior to the Effective Date hereof directly between themselves.
Section 7. Agreements of the Borrower. The Borrower hereby agrees that
the Assignee shall be a Lender under the Credit Agreement having a Commitment
equal to the Assigned Commitment. The Borrower agrees that the Assignee shall
have all of the rights and remedies of a Lender under the Credit Agreement as if
the Assignee were an original Lender under and signatory to the Credit
Agreement, including, but not limited to, the right of a Lender to receive
payments of principal and interest with respect to the Assigned Obligations, if
any, and to the Loans made by the Lenders after the date hereof and to receive
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the commitment and other fees payable to the Lenders as provided in the Credit
Agreement. Further, the Assignee shall be entitled to the indemnification
provisions from the Borrower in favor of the Lenders as provided in the Credit
Agreement. The Borrower further agrees, upon the execution and delivery of this
Agreement, to execute in favor of the Assignee a promissory note in
substantially the form of Exhibit E to the Credit Agreement in an initial amount
equal to the Assigned Commitment. Further, the Borrower agrees that, upon the
execution and delivery of this Agreement, the Borrower shall owe the Assigned
Obligations to the Assignee as if the Assignee were the Lender originally making
such Revolving Loans and entering into such other obligations.
Section 8. Addresses. The Assignee specifies as its address for notices and
its Lending Office for all Loans, the offices set forth ---------
below:
Notice Address:
Telephone No.:
Telecopy No.:
[Domestic Lending Office:
Telephone No. :
Telecopy No.:
Eurodollar Lending Office:
Telephone No.:
Telecopy No.: ]
Section 9. Payment Instructions. All payments to be made to the
Assignee under the Credit Agreement shall be made as provided in the Credit
Agreement at its _______ office for the account of ___________, account number
_____________, ABA number ___________, Attention: _________, reference number:
_________. All payments to be made to the Assignee under this Agreement by the
Assignor shall be made by wire transfer of immediately available funds to the
Assignee at its ___________ office for the account of ___________, account
number _____________, ABA number ___________, Attention: _____________,
reference number:__________.
Section 10. Effectiveness of Assignment. This Agreement, and the
assignment and assumption contemplated herein, shall not be effective until the
later of: (a) the Effective Date and (b) the date by which all of the following
have occurred: (i) this Agreement is signed by each of the Assignor, the
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Assignee, the Borrower and the Agent and (ii) the payment to the Assignor of the
amounts owing by the Assignee pursuant to paragraph 2 hereof and (iii) the
performance by the Assignor of its obligations under Section 3 of this
Agreement. Upon recording and acknowledgment of this Agreement by the Agent,
from and after the Effective Date hereof, (i) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Agreement, have the
rights and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Agreement, relinquish its rights and be released
from its obligations under the Credit Agreement; provided, however, that if the
Assignor does not assign its entire interest under the Loan Documents, it shall
remain a Lender entitled to all of the benefits and subject to all of the
obligations thereunder with respect to its Commitment.
Section 11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 12. Counterparts. This Agreement may be executed in any number of
counterparts each of which, when taken together, shall constitute one and the
same agreement.
Section 13. Headings. Section headings have been inserted herein for
convenience only and shall not be construed to be a part hereof.
Section 14. Amendments; Waivers. This Agreement may not be amended,
changed, waived or modified except by a writing executed by the Assignee and the
Assignor.
Section 15. Entire Agreement. This Agreement embodies the entire
agreement between the Assignor and the Assignee with respect to the subject
matter hereof and supersedes all other prior arrangements and understandings
relating to the subject matter hereof.
Section 16. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Assignor and the Assignee and their respective
successors and permitted assigns, except that neither party may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the other party.
[Signatures on Following Pages]
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[Signature Page to Assignment and Assumption Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment and Assumption Agreement as of the date and year first written above.
THE ASSIGNOR:
[NAME OF ASSIGNOR]
By:_______________________
Title:_________________
THE ASSIGNEE:
[NAME OF ASSIGNEE]
By:_______________________
Title:_________________
Agreed and Consented to this
___ day of ________, 1994
THE BORROWER:
SHAW INDUSTRIES, INC.
By:____________________________
Title:________________________
[Signatures Continued on Following Page]
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[Signature Page to Assignment and Assumption Agreement]
Accepted this ___ day of ________, 19__
THE AGENT:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as Agent
By:_____________________________
Title:_________________________
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EXHIBIT K
FORM OF COMPLIANCE CERTIFICATE
For the quarter ending _________, 199_
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, 21st Floor
Atlanta, Georgia 30308
Attention: Jan J. Serafen
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of November
30, 1994 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders
named therein and NationsBank of Georgia, National Association, as Agent (the
"Agent").
Pursuant to Section 7.03 of the Credit Agreement, the undersigned
hereby certifies to the Agent as follows:
(1) The undersigned is the [Treasurer/Chief Financial Officer/independent
public accountant] of the Borrower.
(2) The undersigned has examined the books and records of the Borrower
and has conducted such other examinations and investigations as are reasonably
necessary to provide this Compliance Certificate.
(3) The Borrower is in compliance with Article VII and VIII of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing [for Compliance Certificate delivered by Treasurer or Chief Financial
Officer only].
The undersigned hereby further certifies to the Agent that the
following financial information of the Borrower is true and correct as of the
date hereof:
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I. EBIT to Interest Ratio (ss.8.01(a))1
A. Consolidated EBIT for Four-Quarter Period:
Consolidated Net Income (Loss) $_________________
plus, to the extent deducted in
determining Consolidated Net Income
(Loss):
+ Consolidated Interest Expense $_________________
+ taxes $_________________
Consolidated EBIT: $_________________
B. Consolidated Interest Expense for
Four-Quarter Period: $_________________
C.EBIT to Interest Ratio (A divided by B): _________:________
minimum ratio required: 4.00 to 1.00
II.Minimum Tangible Net Worth (ss.8.01(b))
A. Consolidated Tangible Net Worth as of July $_________________
2, 1994:
B.90% of Item A: $_________________
C.Cumulative Consolidated Net Income $_________________
(Loss) since July 2, 1994:
D.50% of Item C $_________________
E.Sum of Item B plus Item D: $_________________
F.Consolidated Net Worth:
Consolidated Tangible Net Worth minus $_________________
intangibles
Consolidated Tangible Net Worth: $_________________
G. Test - Item F must be greater than Item E: ____yes ____no
III. Funded Debt to Tangible Capitalization
(ss.8.01(c))
A. Consolidated Funded Debt Outstanding: $_________________
1 Section references contained herein are references to the section of the
Credit Agreement requesting the respective financial data.
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B.Consolidated Tangible Capitalization:
Consolidated Funded Debt: $_________________
plus
Consolidated Tangible Net Worth $_________________
Consolidated Tangible Capitalization $_________________
C. Consolidated Funded Debt to Capitalization _________:________
Ratio (A divided by B):
minimum ratio required: 0.60 to 1.00
IV.Indebtedness (ss.8.02)
A. Outstanding Capital Leases/Purchase Money $_________________
Debt:
maximum allowed: $35,000,000
B. Consolidated Funded Debt of Borrower and $_________________
other than Credit Agreement:
maximum allowed: $10,000,000
V. Restricted Payments (ss.8.05)
A. Cumulative Consolidated Net Income since $_________________
___________, 1994:
B.50% of Item A: $_________________
C.Aggregate amount of dividends, stock $_________________
redmptions, other payments since ______________, 1994:
D.Test - Item C must be less than or equal to Item B: ____yes ____no
VI. Year-end Certificate only - Operating Leases
(ss.8.09)
Aggregate amount of all rents paid under $_________________
operating leases during fiscal year:
maximum allowed: $35,000,000
VII. Year-end Certificate only - Investments
(ss.8.03(vii))
Aggregate amount of all non-acquisition $_________________
related investments during fiscal year:
maximum allowed: $50,000,000
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
the date first above written.
By:__________________________
Title:____________________
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<PAGE>
SHAW INDUSTRIES, INC. EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1994 JANUARY 1, 1994 AND DECEMBER 26 1992
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
PRIMARY:
Weighted average common shares outstanding 141,432 142,946 129,742
Additional shares assuming exercise of stock options 1,051 1,977 2,680
Average common shares outstanding, as adjusted 142,483 144,923 132,422
Net income $127,026 $117,636 $78,695
Primary earnings per common share $0.89 $0.81 $0.59
FULLY DILUTED:
Weighted average common shares outstanding 141,432 142,946 129,742
Additional shares assuming exercise of stock options 1,058 2,371 2,854
Average common shares outstanding, as adjusted 142,490 145,317 132,596
Net income $127,026 $117,636 $78,695
Fully diluted earnings per common share $0.89 $0.81 $0.59
</TABLE>
Note: Adjusted for two-for-one stock splits effected in the form of a stock
dividend in December, 1993 and March, 1992.
<PAGE>
EXHIBIT 13
Stock Information
High and low stock prices and cash dividends paid by fiscal quarter
(after giving effect to two-for-one stock splits effected in the form of
stock dividends in December 1993 and March 1992)
<TABLE>
<CAPTION>
1994 1993 1992 Dividends Paid
High Low High Low High Low 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter 25 17 7/8 19 3/4 14 7/8 14 3/8 8 1/2 5.50 4.50 3.75
2nd Quarter 25 1/2 15 3/4 19 7/8 14 1/8 14 9 7/8 5.50 4.50 3.75
3rd Quarter 17 7/8 13 7/8 24 5/8 16 14 10 1/4 5.50 4.50 3.75
4th Quarter 15 3/4 12 7/8 25 1/2 20 1/8 15 1/2 10 1/4 5.50 4.50 3.75
Total 22.00 18.00 15.00
</TABLE>
On March 1, 1995, there were 4,449 holders of record of the Company's
common stock.
1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Financial Condition, Liquidity and Capital Resources
The Company's business, as well as the United States carpet industry in
general, is cyclical in nature and is significantly affected by general economic
conditions. The level of carpet sales tends to reflect fluctuations in consumer
spending for durable goods and, to a lesser extent, fluctuations in interest
rates and new housing starts. The Company's financial condition and results of
operations reflect the continuing stability of the domestic economy and the
recovering global economy. Of the 12.6 percent increase in 1994 net sales over
1993, domestic growth represented 5 percent. The domestic operations experienced
increases in sales volume; however, these were partially offset by lower sales
prices resulting from increased price competition. The Company's recent
international acquisitions contributed the remaining sales growth in 1994.
The Company's business activity for 1994 reflected the conditions experienced by
the remainder of the industry.
During 1994, working capital increased $179.9 million and cash and cash
equivalents increased $1.6 million. The principal source of cash was provided by
operating activities of $88.6 million, principally net income of $127.0 million
adjusted for depreciation and amortization of $84.9 million. Cash from operating
activities was used in part to fund increases in inventories and receivables.
Financing activities provided cash of $80.3 million. Additional long-term
borrowings of $389.1 million exceeded purchases of common stock of $110.4
million, debt repayments and the payment of cash dividends. Investing activities
consisted of cash used for purchases of property, plant and equipment of $158.9
million excluding business acquisitions. The Company's liquidity remains strong.
Effective use of capital and the Company's ability to generate excess cash flows
from operations has enabled it to invest in technologies which reduce
production costs and generate margins that exceed industry averages and has
enabled the Company to be a preeminent force in the carpet industry. During
1994, accounts receivable and inventories increased by 13.8 percent and 12.4
percent, respectively. These increases are primarily attributable to the
increase in sales and to international acquisitions. The allowance for doubtful
accounts and discounts increased primarily as a result of increased sales and
increased allowances for cash discounts. Accounts payable decreased primarily as
a result of the timing of purchases.
During 1994, the Company elected to prepay notes payable with interest
rates of 9.48 percent to 10.49 percent. An extraordinary charge of $3.4 million
(net of income tax benefit of $2.2 million) was incurred as a result of this
early extinguishment. The Company replaced this debt with borrowings under an
amended revolving credit agreement at LIBOR-based rates providing for
substantial future interest savings (the LIBOR rate was 6 percent at December
31, 1994). The revolving credit agreements in place at December 31, 1994 provide
for borrowings of up to $698.5 million of which $99.1 million was available at
year end. Long-term debt, including current maturities, totaled $653.0
million at December 31, 1994 compared to $389.4 million at January 1, 1994 and
increased primarily as a result of investing activities and stock purchases.
Capital expenditures (excluding acquisitions) for incremental additions and
modifications to plant and equipment necessary to maintain the facilities in a
modern state-of-the-art condition were $158.9 million for 1994. Management
anticipates capital expenditures and capitalized lease obligations of
approximately $90 million during 1995 to maintain its facilities and to expand
and upgrade its manufacturing and distribution equipment to meet anticipated
increases in sales volume and to improve efficiency. These expenditures will be
funded through cash flow from operations and, if appropriate, through additional
sources of long-term capital. The Company believes it could expand its lines of
credit and long-term bank facilities, if necessary.
2
<PAGE>
Beginning in early 1993 and continuing in 1994, the Company has expanded
its operations through acquisitions in Australia, the United Kingdom and
Mexico. In 1994 and 1993, international operations accounted for approximately
10.4 percent and 3.9 percent of the Company's net sales, respectively. Goodwill
recorded as a result of the acquisitions totals a cumulative amount of $67.5
million. As a result of its foreign acquisitions, the Company has limited
exposure to fluctuations in foreign currency exchange rates on its intercompany
payables and on certain other U.S. dollar denominated net liabilities of its
foreign subsidiaries. The Company may employ foreign exchange contracts when, in
the normal course of business, they are determined to effectively manage and
reduce such exposure. As of December 31, 1994, the Company had a foreign
currency exchange contract with which it had hedged approximately $14.1 million
of US dollar denominated net liabilities of a foreign subsidiary. Foreign
currency exchange rate fluctuation gains and losses were not material in 1994
and 1993.
Inflation
The Company's manufacturing costs and operating expenses are affected by
price changes. The costs of fiber and other raw materials decreased in 1992 and
1993 from the levels experienced in 1991, and in 1994 increased slightly from
the levels experienced in 1993. The Company has historically mitigated
inflationary effects by passing price changes along to its customers and by
continually developing and implementing more cost-effective manufacturing and
other operational procedures. The Company's ability to mitigate the effects of
price changes will depend on market factors.
Results of Operations - 1994 Compared to 1993
Net sales increased $312,245,000, or 12.6 percent, to $2,788,527,000 in
1994, primarily as a result of an increase in the volume of shipments offset in
part by lower sales prices caused by increased competition. Results for 1994
included incremental sales of $163,523,000 attributable to international
acquisitions. The results of the acquired operations did not have a material
effect on the Company's net income in 1994. Gross profit margins as a percentage
of net sales increased .9 percent to 21.6 percent for 1994 from 20.7 percent for
1993 as increases in the efficiency relationship of volume and fixed costs
outweighed higher raw material costs. Selling, general and administrative
expenses increased $64,399,000 or 21.3 percent in 1994 compared to 1993, and
increased .9 percent to 13.1 percent of net sales. With the continuing
aggressive efforts to increase sales in an increasingly competitive sales
environment, this increase in selling, general and administrative expenses as a
percentage of net sales occurred with no one category of expense responsible for
a significant portion of the increase. Interest expense, net, increased
$5,915,000 to $30,022,000 as a result of additional borrowings and remained
level at 1.0 percent of net sales. The effective income tax rate was 37.7
percent in 1994 compared to 38.0 percent in 1993.
Results of Operations - 1993 Compared to 1992
Net sales increased $440,320,000, or 21.6 percent, to $2,476,282,000 in
1993, primarily as a result of an increase in sales volume. Results for 1993
included incremental sales of $97,347,000 attributable to acquisitions. Gross
profit margins as a percentage of net sales increased 1.3 percent to 20.7
percent for 1993 compared to 19.4 percent for 1992 principally as a result of an
increase in the efficiency relationship of volume and fixed costs. Selling,
general and administrative expenses increased $61,598,000 or 25.6% in 1993
compared to 1992, and increased .4% to 12.2% of net sales primarily as a result
of increased sales efforts. Interest expense, net, decreased $1,976,000 to
$24,107,000 in 1993 compared to 1992 due principally to a decrease in interest
rates. The effective income tax rate was 38.0 percent in 1993 compared to 38.5
percent in 1992 due to reduced effective state tax rates.
3
<PAGE>
Ten Year Financial Review
(Dollars in 000s except share data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 2,788,527 $ 2,476,282 $ 2,035,962 $ 1,618,923 $ 1,658,771 $ 1,266,142 $ 1,120,163
Cost of Sales 2,187,439 1,963,206 1,641,404 1,341,312 1,348,808 1,017,084 905,305
Selling, General and Administrative
Expenses 366,189 301,790 240,192 188,363 179,381 138,708 126,500
Interest Expense, Net 30,022 24,107 26,083 30,973 35,026 20,828 23,776
Other Expenses (Income) (5,673) (2,530) 324 (74) (483) (640) (145)
Income Before Income Taxes, Minority
Interest and Extraordinary Item 210,550 189,709 127,959 58,349 96,039 90,162 64,727
As a Percentage of Net Sales 7.6% 7.7% 6.3% 3.6% 5.8% 7.1% 5.8%
Effective Tax Rate 37.7% 38.0% 38.5% 38.3% 38.0% 38.4% 37.8%
Income Before
Extraordinary Item 130,389 117,636 78,695 35,985 59,515 55,567 40,285
Extraordinary Item (3,363) - - - - - -
Net Income 127,026 117,636 78,695 35,985 59,515 55,567 40,285
As a Percentage of Net Sales 4.6% 4.8% 3.9% 2.2% 3.6% 4.4% 3.6%
As a Percentage of Average
Total Assets 8.1% 8.8% 7.7% 4.5% 8.0% 9.4% 8.1%
As a Percentage of Average
Invested Capital 10.7% 12.1% 10.5% 6.2% 11.1% 12.7% 10.7%
As a Percentage of Average
Shareholders' Investment 17.7% 17.5% 16.1% 12.8% 29.1% 29.4% 25.4%
Earnings Per Share:
Primary and Fully Diluted 0.89 0.81 0.59 0.32 0.5 0.46 0.33
Cash Dividends Per Share 0.22 0.18 0.15 0.125 0.125 0.1 0.083
Property Additions (including acquisitions) 187,045 174,635 191,830 48,230 116,739 144,308 30,362
Depreciation and Amortization 84,898 82,416 67,414 62,075 60,734 38,600 41,866
Weighted Average Shares Outstanding:
Primary 142,483,289 144,922,740 132,422,293 113,018,088 118,909,198 120,135,363 123,830,721
Fully Diluted 142,489,938 145,317,217 132,596,479 113,220,148 118,909,198 120,135,363 123,830,721
At Year-End:
Working Capital 617,338 437,445 448,089 290,305 260,644 224,443 199,458
Current Ratio 3.0 2.2 2.6 2.5 2.4 2.3 3.0
Property, Plant and Equipment, Net 656,178 551,873 453,276 344,182 341,266 293,030 192,194
Total Assets 1,697,378 1,454,266 1,223,439 816,874 790,935 690,202 496,374
Total Long-Term Debt 612,061 317,914 281,742 235,424 376,499 292,763 205,775
Shareholders' Investment 713,025 723,830 619,977 358,643 201,667 207,434 170,309
Total Invested Capital* 1,325,086 1,041,744 901,719 594,067 576,166 500,197 376,084
Shareholders' Investment Per Share 5.20 $ 5.04 $ 4.38 $ 2.89 $ 1.87 $ 1.73 $ 1.39
</TABLE>
4
<PAGE>
Ten Year Financial Review Cont.
1987 1986 1985
Net Sales $ 753,378 $ 624,453 $ 528,480
Cost of Sales 613,002 498,616 425,221
Selling, General and Administrative
Expenses 81,134 69,305 55,947
Interest Expense, Net 11,305 5,641 5,071
Other Expenses (Income) (172) (525) (87)
Income Before Income Taxes, Minority
Interest and Extraordinary Item 48,109 51,416 42,328
As a Percentage of Net Sales 6.4% 8.2% 8.0%
Effective Tax Rate 42.5% 47.1% 44.3%
Income Before
Extraordinary Item 27,666 27,191 23,567
Extraordinary Item - - -
Net Income 27,666 27,191 23,567
As a Percentage of Net Sales 3.7% 4.4% 4.5%
As a Percentage of Average
Total Assets 6.7% 9.6% 9.8%
As a Percentage of Average
Invested Capital 8.9% 12.7% 13.6%
As a Percentage of Average
Shareholders' Investment 19.0% 19.7% 19.2%
Earnings Per Share:
Primary and Fully Diluted 0.21 0.2 0.17
Cash Dividends Per Share 0.078 0.044 0.038
Property Additions (including acquisitions) 114,882 45,991 20,346
Depreciation and Amortization 27,361 21,796 18,091
Weighted Average Shares Outstanding:
Primary 131,969,354 136,233,599 136,344,384
Fully Diluted 131,969,354 136,233,599 136,344,384
At Year-End:
Working Capital 194,754 149,916 100,045
Current Ratio 2.8 3.3 2.9
Property, Plant and Equipment, Net 193,237 107,384 87,343
Total Assets 500,609 325,263 241,117
Total Long-Term Debt 228,203 103,298 49,353
Shareholders' Investment 147,139 144,158 132,145
Total Invested Capital* 375,342 247,456 181,498
Shareholders' Investment Per Share 1.09 $ 1.09 $ 0.97
*The sum of shareholders' investment and long-term debt.
NOTE: All share data have been adjusted for two-for-one stock splits
effected in the form of stock dividends in December 1993, March 1992, May 1989
and May 1986.
5
<PAGE>
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and January 1, 1994 1994 1993
ASSETS
Current Assets:
Cash and cash equivalents $ 34,365,000 32,739,000
Accounts receivable, less allowance for doubtful
accounts and discounts of $17,925,000 in 1994 and
$13,051,000 in 1993 350,128,000 307,786,000
Inventories -
Raw materials 236,579,000 205,100,000
Work-in-process 22,902,000 26,890,000
Finished goods 238,670,000 211,373,000
498,151,000 443,363,000
Prepaid expenses 39,585,000 26,445,000
Total current assets 922,229,000 810,333,000
Property, Plant and Equipment, at cost:
Land and land improvements 29,329,000 24,777,000
Buildings and leasehold improvements 258,119,000 220,212,000
Machinery and equipment 842,975,000 709,061,000
Construction in progress 44,336,000 41,837,000
1,174,759,000 995,887,000
Less - Accumulated depreciation 518,581,000 444,014,000
656,178,000 551,873,000
Goodwill 106,960,000 89,759,000
Other Assets 12,011,000 2,301,000
$ 1,697,378,000 $ 1,454,266,000
6
<PAGE>
1994 1993
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ - $ 20,000,000
Current maturities of long-term debt 40,898,000 71,521,000
Accounts payable 150,023,000 164,359,000
Accrued liabilities 113,970,000 117,008,000
Total current liabilities 304,891,000 372,888,000
Long-Term Debt, less current maturities 612,061,000 317,914,000
Deferred Income Taxes 45,972,000 29,437,000
Other Liabilities 12,179,000 10,197,000
Minority Interest In Consolidated Subsidiary 9,250,000 -
Commitments and Contingencies
Shareholders' Investment:
Preferred stock; 250,000 shares authorized, no shares issued
Common stock, no par, $1.11 stated value, authorized
500,000,000 shares; issued and outstanding: 137,017,402 shares at
December 31, 1994 and 143,522,462 shares
at January 1, 1994 152,090,000 159,311,000
Paid-in capital 118,635,000 217,348,000
Foreign currency translation adjustment (1,815,000) (594,000)
Retained earnings 444,115,000 348,234,000
713,025,000 724,299,000
Less - Unearned compensation - 469,000
713,025,000 723,830,000
$ 1,697,378,000 $ 1,454,266,000
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For Years Ended December 31, 1994, January 1, 1994
and December 26, 1992 1994 1993* 1992
<S> <C> <C> <C>
Net Sales 2,788,527,000 $2,476,282,000 $2,035,962,000
Costs and Expenses:
Cost of sales 2,187,439,000 1,963,206,000 1,641,404,000
Selling, general and administrative 366,189,000 301,790,000 240,192,000
2,553,628,000 2,264,996,000 1,881,596,000
Operating Income 234,899,000 211,286,000 154,366,000
Other Expenses (Income):
Interest expense 30,403,000 25,525,000 26,259,000
Interest income (381,000) (1,418,000) (176,000)
Interest, net 30,022,000 24,107,000 26,083,000
Miscellaneous, net (5,673,000) (2,530,000) 324,000
24,349,000 21,577,000 26,407,000
Income Before Income Taxes, Minority Interest
and Extraordinary Item 210,550,000 189,709,000 127,959,000
Provision for Income Taxes 79,410,000 72,073,000 49,264,000
Income Before Minority Interest
and Extraordinary Item 131,140,000 117,636,000 78,695,000
Minority Interest in
Consolidated Subsidiary (751,000) -- --
Income Before Extraordinary
Item 130,389,000 117,636,000 78,695,000
Extraordinary Loss on Early Extinguishment of Debt
(net of income tax benefit of $2,150,000) (3,363,000) - -
Net Income $ 127,026,000 $ 117,636,000 $ 78,695,000
Earnings Per Common Share :
Primary and Fully Diluted Basis-
Income Before Extraordinary
Item $ 0.91 $ 0.81 $ 0.59
Extraordinary Item (0.02) - -
Net Income $ 0.89 $ 0.81 $ 0.59
Weighted Average Shares Outstanding:
Primary 142,483,289 144,922,740 132,422,293
Fully Diluted 142,489,938 145,317,217 132,596,479
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
*Fifty-three week period.
8
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
For Years Ended December 31,1994, January 1, 1994, and December 26, 1992
Common Stock Paid-In Equity Adjustmen Retained Unearned
Shares Amount Capital From Translation Earnings Compensation
<S> <C> <C> <C> <C> <C> <C>
Balance, December 28, 1991 30,987,300 $ 34,396,000 $ 130,452,000 $ $ 196,989,000 $ (2,065,000)
Net income - - - - 78,695,000 -
Issuance of stock in a
public offering 4,471,500 4,964,000 120,251,000 - - -
Issuance of two-for-one
stock split 30,987,300 34,396,000 (34,396,000) - - -
Issuance of stock in
merger 2,873,550 3,190,000 66,495,000 - - -
Amortization of unearned
compensation - - - - - 798,000
Exercise of stock options 1,435,198 1,592,000 3,901,000 - - -
Cash dividends paid
($.15 per share) - - - - (19,355,000) -
Balance, December 26, 1992 70,754,848 $ 78,538,000 $ 286,703,000 $ - $ 256,329,000 $ (1,267,000)
Net income - - - - 117,636,000 -
Issuance of stock in
acquisition 142,147 157,000 6,288,000 - - -
Issuance of two-for-one
stock split 71,754,831 79,648,000 (79,648,000)
Exercise of stock options 970,636 1,079,000 3,898,000
Purchase and retirement - - -
of common stock (100,000) (111,000) (3,282,000)
Foreign currency translation
adjustment - - - (594,000) - -
Tax benefit on
disqualified dispositions
of stock options - - 3,389,000 - - -
Amortization of unearned
compensation - - - - - 798,000
Cash dividends paid
($.18 per share) - - - - (25,731,000) -
Balance, January 1, 1994 143,522,462 $ 159,311,000 $ 217,348,000 $ (594,000)$ 348,234,000 $ (469,000)
Net income - - - - 127,026,000 -
Purchase and retirement
of common stock (7,173,300) (7,962,000) (102,427,000) - - -
Exercise of discounted
stock options 102,840 114,000 (475,000) - - -
Exercise of stock options 565,400 627,000 814,000 - - -
Foreign currency translation
adjustment - - - (1,221,000) - -
Tax benefit on
disqualified dispositions
of stock options - - 3,375,000 - - -
Amortization of unearned
compensation - - - - - 469,000
Cash dividends paid
($.22 per share) - - - - (31,145,000) -
Balance, December 31, 1994 137,017,402 $ 152,090,000 $ 118,635,000 $ (1,815,000)$ 444,115,000 $ 0
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For Years Ended December 31, 1994, January 1, 1994 and 1994 1993* 1992
December 26, 1992
<S> <C> <C> <C>
Operating Activities:
Net Income $ 127,026,000 $ 117,636,000 $ 78,695,000
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization 84,898,000 82,416,000 67,414,000
Stock option compensation expense 469,000 798,000 798,000
Provision for doubtful accounts 12,747,000 12,987,000 5,747,000
Extraordinary loss on early extinguishment of debt 3,363,000 - -
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (44,132,000) (24,846,000) (75,759,000)
Inventories (45,664,000) (18,306,000) 21,015,000
Accounts payable (16,341,000) 8,376,000 (21,242,000)
Accrued liabilities (9,769,000) 18,846,000 4,035,000
Deferred income taxes (1,457,000) 1,717,000 (2,042,000)
Other, net (22,512,000) (16,537,000) (8,651,000)
Total Adjustments (38,398,000) 65,451,000 (8,685,000)
Net Cash Provided by Operating Activities 88,628,000 183,087,000 70,010,000
Investing Activities:
Additions to property, plant and equipment (158,905,000) (97,709,000) (42,578,000)
Business assets acquired , net (8,386,000) (72,908,000) (93,706,000)
Net Cash Used In Investing Activities (167,291,000) (170,617,000) (136,284,000)
Financing Activities:
Borrowings from revolving credit agreements 389,143,000 5,000,000 45,000,000
Repayment of revolving credit agreement - - (120,000,000)
Repayment from long-term debt - 45,000,000 65,562,000
Repayment of long-term debt (142,887,000) (68,627,000) -
Net borrowings (payments) on short-term notes payable (20,000,000) (40,000,000) 46,050,000
Cash paid to retire debt (5,513,000) - -
Purchase and retirement of common stock (110,389,000) (3,393,000) -
Exercise of stock options 1,080,000 4,977,000 5,493,000
Dividends paid (31,145,000) (25,731,000) (19,355,000)
Net proceeds from sale of common stock - - 125,215,000
Net Cash Provided by (Used in)
Financing Activities 80,289,000 (82,774,000) 147,965,000
Net Increase (Decrease) in Cash 1,626,000 (70,304,000) 81,691,000
Cash at the Beginning of Year 32,739,000 103,043,000 21,352,000
Cash at End of Year $ 34,365,000 $ 32,739,000 $ 103,043,000
Supplemental disclosures of cash flow information:
Cash paid during the year for -
Interest $ 31,451,000 $ 28,712,000 $ 25,301,000
Income taxes $ 64,308,000 $ 79,826,000 $ 48,012,000
Non-cash capital lease obligations $ 1,667,000 $ 2,896,000 $ 2,298,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
*Fifty-three week period.
10
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
December 31, 1994, January 1, 1994 and December 26, 1992
Note 1 Summary of Accounting Policies
The consolidated financial statements include the accounts of Shaw
Industries, Inc. and subsidiaries (the "Company"). All significant intercompany
balances and transactions are eliminated in consolidation. The Company's fiscal
year end has been changed to the Saturday closest to December 31 effective in
December 1994. The restated years ended January 1, 1994 and December 26, 1992
have been presented for comparison with the new 1994 fiscal year. The results of
operations for 1994 and 1992 are based on a 52-week year. For 1993, results of
operations are based on a 53-week year.
Revenues are recognized when goods are shipped.
Inventories are stated at the lower of cost or market. Cost includes
materials, direct and indirect labor and factory overhead. Market with respect
to raw materials is replacement cost and for work-in-process and finished goods
is net realizable value. The Company primarily uses the last-in, first-out
(LIFO) method of valuing its inventories in order to more properly match current
costs against current revenues, thereby reducing the effects of inflation on
earnings. If LIFO inventories were valued at current costs, the inventory
amounts would have been $5,598,000 and $8,061,000 lower than those reported at
December 31, 1994 and January 1, 1994, respectively.
Property, plant and equipment is recorded at cost. Renewals and betterments
are capitalized; maintenance and repairs are charged to expenses as incurred.
The cost and accumulated depreciation of property retired or otherwise disposed
of are removed from the accounts and any gains or losses thereon are included in
income. For financial reporting purposes, depreciation is computed using the
straight-line method over the estimated useful lives of the assets. The Company
changed the estimated useful lives used to compute depreciation for buildings
and certain machinery and equipment added on or after January 2, 1994. The
useful lives for buildings were changed from a range of 15 to 35 years to a
range of 15 to 39 years, while the useful lives for certain machinery and
equipment were extended from a range of 5 to 7 years to a range of 5 to 14
years. These changes were made to better reflect the estimated periods during
which such assets will remain in service. Leasehold improvements are amortized
over the terms of the leases. Costs in excess of the fair value of net assets of
businesses acquired are recorded as goodwill and are amortized using the
straight-line method over a period not to exceed 40 years. The recoverability of
goodwill is periodically reviewed by management based on current and anticipated
conditions. Accumulated amortization was $3,692,000 and $1,491,000 at December
31, 1994 and January 1, 1994, respectively.
Accrued liabilities include $21,149,000 and $17,329,000 for workers'
compensation claims and $22,328,000 and $22,513,000 for returns and allowances
at December 31, 1994 and January 1, 1994, respectively.
The Company's Retirement Savings Plan provides, among other things, for
voluntary contributions by employees not to exceed 15 percent of their gross
salaries and wages and a 50 percent matching contribution by the Company. During
1994, 1993 and 1992, the Company contributed $8,936,000, $9,229,000 and
$6,102,000, respectively, under the plan.
The Company has a Deferred Compensation Plan for key personnel. The plan
provides, among other things, for certain deferred compensation to become
payable on the employee's death, retirement or total disability as set
forth in the plan. During 1994, 1993 and 1992, the Company provided $2,564,000,
$2,122,000, and $1,785,000, respectively, under the plan. These amounts
have been recorded as other liabilities in the accompanying balance sheets.
Earnings Per Share have been computed based upon the weighted average
shares and dilutive common stock equivalents outstanding during the year. All
earnings per share and shareholders' investment amounts have been adjusted for
the two-for-one stock splits effected in the form of stock dividends in December
1993 and March 1992.
11
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 2 Indebtedness
Long-term debt presented in the accompanying consolidated balance sheets at
December 31, 1994 and January 1, 1994 consisted of the following (000's
omitted):
1994 1993
Revolving credit agreement at LIBOR based rate, due 1997 $524,000 $175,000
Revolving loan facility at LIBOR based rate, due 1996 50,473 38,402
Revolving loan facility at LIBOR based rate, due 1997 28,072 -
9.48% term notes payable - 87,500
9.31% term notes payable - 8,000
10.49% term notes payable - 17,000
Other 40,997 47,693
Capitalized lease obligations (Note 5) 9,417 15,840
652,959 389,435
Less - current maturities (40,898) (71,521)
$612,061 $317,914
The Company elected to exercise its option to prepay the 9.48 percent, 9.31
percent and 10.49 percent term notes payable at June 30, 1994. An extraordinary
charge of $3,363,000 (net of income tax benefit of $2,150,000) was incurred as a
result of the early extinguishment of the notes payable.
The domestic revolving credit agreement was amended during 1994 to provide
for borrowings of up to $620,000,000, of which $96,000,000 was unused at year
end. The increased availability was used to repay the term notes payable
and other short-term borrowings and to finance the purchase of $110,389,000 of
the Company's common stock. The LIBOR rate at December 31, 1994 was 6 percent.
The Company has revolving loan facilities through which its foreign
subsidiaries obtain funds necessary for operations. The repayment of these
revolving loan facilities is guaranteed by the Company. The amended domestic
revolving credit agreement contains, among other provisions, certain
restrictions as to the creation of debt or assumption of liens, payment of cash
dividends, acquisitions of the Company's stock and limitations as to new
indebtedness and lease obligations. In addition, the agreement requires that
certain financial ratios be maintained. The revolving loan facilities have
covenants that are no more restrictive than those of the domestic revolving
credit agreement. At December 31, 1994, the Company was in compliance with the
terms of these agreements.
The aggregate annual maturities of long-term debt, including the
capitalized lease obligations, as of December 31, 1994 are as follows: 1995 -
$40,898,000: 1996 - $55,930,000: 1997 - $554,376,000: 1998 - $562,000: 1999 -
$77,000: 2000 and thereafter - $1,116,000.
The following is presented with respect to amounts outstanding under
revolving credit agreements in 1994 and 1993 (000s omitted):
1994 1993
Revolving Credit-
Available at year-end $698,544 $235,013
Unused at year-end $ 99,119 $ 10,917
12
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 3 Shareholders' Investment
Under the Company's 1992 and 1987 Incentive Stock Option Plans, six million
and eight million shares of common stock, respectively, are reserved for
issuance at a price no less than the market value on the date granted. These
options are exercisable over five to ten years.
The Company's 1989 Discounted Stock Option Plan provided for the issuance
of up to 880,000 shares of common stock to key employees. Options for 880,000
shares were granted to three officers at $.25 per share and all 880,000 had been
exercised at December 31, 1994. The difference between the option price and
market price at the date of grant was amortized over the option period resulting
in compensation expense of $469,000 in 1994 and $798,000 in 1993 and 1992. The
following is a summary of stock option information for the 1987 and 1992
Incentive Stock Option Plans:
1994 1993
Options outstanding, beginning of year 3,142,900 5,052,600
Options granted 325,000 -
Options exercised (565,400) (1,808,100)
Options canceled (73,600) (101,600)
Options outstanding, end of year 2,828,900 3,142,900
Option price range per share 2.07 - $17.02 $2.07 - $11.98
Options exercisable, end of year 200,700 766,100
Options available for grant 6,215,800 6,467,200
During March 1989, the Company adopted a Shareholder Rights Plan and
pursuant thereto declared a dividend of one Right for each outstanding share of
common stock. When exercisable, each Right will entitle its holder to buy one
one-hundredth of a share of Series A Participating Preferred Stock at a price of
$12.50 per share (the "Purchase Price"). If a person or group acquires or makes
a tender or exchange offer to acquire 20% or more of the Company's common stock
without the consent of the Company (an "Acquiring Shareholder"), the Rights will
become exercisable and each Right will entitle the holder, other than the
Acquiring Shareholder , to receive, upon payment of the Purchase Price, in lieu
of preferred stock, a number of shares of common stock of the Company having a
market value equal to twice the Purchase Price. The Rights may be redeemed by
the Company under certain circumstances at a price of $.01 per Right. The Rights
have no voting power and, until exercised, no dilutive effect on net income per
common share. If not previously redeemed, the Rights will expire in April 1999.
The Company has designated 200,000 shares, of the 250,000 shares of preferred
stock authorized, as Series A Participating Preferred Stock for issuance upon
exercise of the Rights. In December 1992, 4,471,500 shares of the Company's
common stock were issued in a public offering. Net proceeds from the sale of the
common stock of $125,215,000 were used to reduce short-term notes payable of
$120,000,000 incurred to finance an acquisition , and the balance of the
proceeds was used for working capital. The Company's board of directors has
approved a stock repurchase plan whereby the Company's management is authorized
to repurchase up to 14,654,048 shares of the Company's common stock. As of
December 31, 1994 a cumulative total of 7,273,300 shares of the Company's common
stock had been purchased and retired at an aggregate cost of $113,782,000.
13
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 4 Income Taxes
In 1993, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred tax
assets and liabilities are determined based on the difference between the
financial accounting and tax accounting basis of assets and liabilities.
Deferred tax assets or liabilities at the end of each period are determined
using the currently enacted tax rate expected to apply to taxable income in the
periods in which the deferred tax asset or liability is expected to be realized.
There was no cumulative effect resulting from the adoption.
The provision for income taxes consisted of the following (000s omitted):
1994 1993 1992
Current:
Federal $59,254 $61,142 $41,472
State 10,656 11,032 7,703
Foreign 2,558 - -
72,468 72,174 49,175
Deferred 6,942 (101) 89
$79,410 $72,073 $49,264
The differences between the Federal statutory income tax rate and the
Company's effective tax rate were as follows:
1994 1993 1992
Federal statutory rate 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit 3.9 3.8 4.0
Other, net (1.2) (.8) .5
37.7% 38.0% 38.5%
Components of the net deferred income tax liability at December 31, 1994
and January 1, 1994 are shown below (000s omitted):
1994 1993
Deferred income tax assets:
Accrued advertising expenses not currently
deductible $ 3,587 $ 4,157
Allowance for cash discounts and bad debts 6,291 4,585
Employee benefit accruals not currently deductible 16,491 15,521
Reserve for returns and allowances 9,211 8,759
Foreign net operating loss carryfowards 3,657 1,038
Other 3,291 -
42,528 34,060
Deferred income tax liabilities:
Book basis of inventory over tax basis (13,274) (17,266)
Sample costs (7,362) -
Book basis of property, plant and equipment over
tax basis (50,229) (39,749)
Other (3,812) (171)
(74,677) (57,186)
$(32,149) $(23,126)
14
<PAGE>
-Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 5 Commitments and Contingencies
From time to time the Company is subject to claims and suits arising in the
course of its business. The Company is a defendant in certain litigation
alleging personal injury resulting from personal exposure to volatile organic
compounds found in carpet produced by the Company. The complaints seek
injunctive relief and unspecified money damages on all claims. The Company has
denied any liability. The Company believes that it has meritorious defenses and
that the litigation will not have a material adverse effect on the Company's
financial condition or results of operations. The Company will vigorously defend
this suit. In June 1994, the Company and several other carpet manufacturers
received a grand jury subpoena from the Antitrust Division of the United States
Department of Justice relating to an investigation of the industry. The Company
believes that once this investigation is completed, it will not have a material
adverse effect on the Company's financial condition or results of operations.
The Company has entered into several capitalized leases for machinery and
equipment, including computer equipment, at a cost of $53,663,000 at December
31, 1994 and $51,966,000 at January 1, 1994. These assets are amortized on a
straight-line basis over the lease terms and amortization is included in
depreciation expense. Accumulated amortization of capital lease cost was
$34,777,000 and $25,772,000 at December 31, 1994 and January 1, 1994,
respectively. The related obligations are included in long-term debt (Note 2).
The Company also leases warehouses and showroom space, customer service centers
and certain equipment under operating leases.
At December 31, 1994, future minimum lease payments for all capital and
operating leases exceeding one year were as follows (000s omitted):
Total
Capital Operating Future
Leases Leases Payments
1995 $ 5,632 $ 22,656 $28,288
1996 3,138 13,302 16,440
1997 1,385 9,879 11,264
1998 541 5,430 5,971
1999 30 2,851 2,881
2000 and thereafter - 3,461 3,461
Total Payments 10,726 $57,579 $68,305
Less: amount representing interest 1,309
Present value of capitalized lease payments with a
weighted average interest rate of 8.25% $9,417
Rental payments under noncancelable operating leases were $30,389,000,
$27,486,000 and $21,153,000 in 1994, 1993 and 1992, respectively.
15
<PAGE>
Note 6 Financial Instruments
The carrying amount and fair value of the Company's financial instruments
are as follows (ooos omitted):
December 31, 1994 January 1, 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Debt:
Revolving credit agreements $602,545 $602,545 $213,402 $213,402
Term notes payable - - 112,500 119,706
Other obligations 50,414 50,414 63,533 63,533
Foreign currency exchange
contract - (4,390) - -
REVOLVING CREDIT AGREEMENTS The carrying values of the revolving credit
agreements approximate their fair values due to the floating market interest
rates charged on those agreements.
TERM NOTES PAYABLE The fair value of term notes payable outstanding at
January 1, 1994 was determined based on borrowing rates then available to the
Company for debt facilities with similar terms and maturities.
OTHER OBLIGATIONS The carrying values of other obligations approximate
their fair values due to the interest rates charged on those agreements: either
floating market rates or fixed rates which approximated market rates
available at December 31, 1994 and January 1, 1994.
FOREIGN CURRENCY EXCHANGE CONTRACT The Company may employ foreign currency
exchange contracts when, in the normal course of business, they are determined
to effectively manage and reduce foreign currency exchange rate fluctuation
risk. As of December 31, 1994, the Company had one contract outstanding to
purchase Mexican pesos at the spot rate on the contract date through which it
had effectively hedged approximately $14,100,000 of US dollar denominated net
liabilities of its Mexican joint venture. The market value gain resulting from
the contract offset the exchange rate loss at December 31, 1994. The contract
expired in January 1995 at which time the counter party fully performed under
the terms of the contract.
16
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries, Inc.
Note 7 Acquisitions
On May 29, 1992, the Company acquired Salem Carpet Mills, Inc. ("Salem") in
accordance with the terms of a merger agreement announced on February 9, 1992.
The aggregate value of the Company's common stock exchanged for the Salem common
stock was $69,685,000. The holders of approximately 3% of Salem's common shares
elected to receive cash totaling approximately $2,100,000.
The acquisition has been accounted for as a purchase transaction, and
accordingly, the results of operations of Salem have been included in the
accompanying financial statements since May 30, 1992. The purchase price was
allocated to assets and liabilities based on their estimated fair value as of
the date of the acquisition. The excess of the consideration paid over the
estimated fair value of net assets acquired of $38,843,000 has been recorded as
goodwill and is being amortized on the straight-line basis over 40 years. The
fair value of assets acquired and liabilities assumed was $158,833,000 and
$125,860,000, respectively. The following table summarizes on a pro forma basis
the consolidated results of operations as though Salem had been acquired on
December 29, 1991 (000s except per share data):
Unaudited
Year Ended
Dec. 26, 1992
Net Sales $ 2,208,657
Net Income $ 78,637
Earnings Per Common Share - Primary and Fully Diluted $ .58
On September 25, 1992, the Company acquired the polypropylene carpet fiber
manufacturing facilities of Amoco Fabrics and Fibers Company ("Amoco Fibers")
located in Andalusia, Alabama, and Bainbridge, Georgia, and inventories for
approximately $91,606,0000 in cash. The Company is now producing polypropylene
carpet fiber at these facilities for both its own use and for sale to other
manufacturers. The acquisition has been accounted for as a purchase transaction,
and accordingly, the results of operations of Amoco Fibers have been included in
the Company's financial statements since September 26, 1992.
On March 31, 1993, the Company acquired all of the outstanding stock of
Kosset Carpets, Ltd., Bradford, England for approximately $19,043,000 in cash.
The acquisition has been accounted for as a purchase transaction, and
accordingly, the results of operations of Kosset have been included in the
accompanying financial statements since April 1, 1993.
On July 12, 1993, the Company formed a joint venture through which it
acquired an interest in Capital Carpet Industries, Pty., Ltd., Melbourne,
Victoria, Australia, and Invicta Group Industries, Pty., Ltd., Braybrook,
Victoria, Australia (together, "CCI"), enabling the Company to participate in a
government-supported rationalization of the Australian carpet industry. On
November 4, 1993, the Company acquired the remaining interest in the joint
venture. Until November 4, 1993, the investment was accounted for using the
equity method, and accordingly, the Company included its share of CCI's income
in other income. Subsequent to November 4, 1993, the results of operations of
CCI are included in the accompanying financial statements.
On September 10, 1993, the Company acquired Abingdon Carpets, Gwent, Wales.
Abingdon is a British producer of medium-priced tufted carpets and carpet yarns.
The acquisition has been accounted for as a purchase transaction, and
accordingly, the results of operations of Abingdon are included in the
accompanying financial statements since September 10, 1993.
On May 31, 1994, the Company entered into an agreement to form a joint
venture with Grupo Industrial Alfa, S.A. de C.V. of Monterrey, Mexico, for the
manufacture, distribution and marketing of carpets, rugs and related products in
Mexico and South America. The Company acquired a 51 percent interest in
Terza, S.A. de C.V., and accordingly, the subsidiary is included in
consolidation at December 31, 1994 and the results of operations of Terza are
included in the accompanying financial statements since May 31, 1994.
17
<PAGE>
Notes to Consolidated Financial Statements
Note 8 - Information about the Company's Foreign Operations
The following information is presented regarding the Company's foreign
operations for the years ended December 31, 1994 and January 1, 1994. The
Company had no foreign operations for 1992 (000s omitted).
<TABLE>
<CAPTION>
1994
Adjustments
and
Domestic Foreign Eliminations Consolidated
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $2,498,090 $290,437 $ -- $2,788,527
Operating profit $ 228,168 $ 6,731 $ -- $ 234,899
Interest expense (30,022)
Miscellaneous income, net 5,673
Income before income taxes $ 210,550
Identifiable assets $1,439,260 $340,790 $(82,672) $1,697,378
1993
Adjustments
and
Domestic Foreign Eliminations Consolidated
Sales to unaffiliated customers $2,379,045 $ 97,237 $ -- $2,476,282
Operating profit $ 207,373 $ 3,913 $ -- $ 211,286
Interest expense, net (24,107)
Miscellaneous income, net 2,530
Income before income taxes $ 189,709
Identifiable assets $1,316,863 $247,322 $(109,919) $1,454,266
</TABLE>
Sales and transfers between geographic areas and export sales are not
material. Operating profit is total revenue less operating expenses. In
computing operating profit, none of the following items have been added or
deducted: net interest expense, net miscellaneous income, income taxes or the
extraordinary item related to early extinguishment of debt.
Identifiable assets are those assets of the Company that are identified
with the operations in each geographic area, including goodwill.
18
<PAGE>
Notes to Consolidated Financial Statements Shaw Industries,Inc
Note 9 Quarterly Financial Data (Unaudited)
Summarized quarterly financial data for 1994, 1993 and 1992 is as follows
(000's except per share amounts):
<TABLE>
<CAPTION>
1994 Quarters
First Second Third Fourth
<S> <C> <C> <C> <C>
Net Sales $ 620,126 $ 722,219 $ 734,100 $ 712,082
Gross Profit 126,198 165,926 156,880 152,084
Net Income 25,325 40,479 * 33,162 28,060
Earnings Per Share - Primary and Fully Diluted 0.17 0.28 * 0.24 0.20
1993 Quarters
First Second Third Fourth
***
Net Sales $ 519,318 $ 669,275 $ 649,516 $ 638,173
Gross Profit 100,507 145,574 137,301 129,694
Net Income 16,596 37,672 34,096 29,272
Earnings Per Share - Primary and Fully Diluted** 0.12 0.26 0.24 0.20
1992 Quarters
First Second Third Fourth
Net Sales $ 403,948 $ 499,797 $ 546,822 $ 585,395
Gross Profit 69,934 101,021 108,714 114,889
Net Income 8,891 23,449 21,815 24,540
Earnings Per Share - Primary and Fully Diluted 0.07 0.18 0.16 0.18
</TABLE>
*The second quarter net income and per share amounts include the effect of
an extraordinary loss on early extinguishment of debt of $3,363,000, or
$.02 per share, net of applicable tax benefit.
**The sum of the 1993 quarterly net earnings per share amounts are
different from the annual net earnings per share amounts because of
differences in the weighted average number of common shares outstanding used in
the quarterly and annual computations.
***Fourteen week period.
Note 10 - Subsequent Events
On January 9, 1995, the Company announced that it had acquired through its
wholly owned subsidiary, Carpets International (U.K.) Plc, substantially all of
the operating assets of the Carpets Division of Coats Viyella Plc for
approximately $29.4 million.
19
<PAGE>
To The Shareholders of Shaw Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Shaw
Industries, Inc. (a Georgia corporation) and subsidiaries as of December 31,
1994 and January 1, 1994 and the related consolidated statements of income,
shareholders' investment, and cash flows for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Shaw Industries, Inc., and
subsidiaries as of December 31, 1994 and January 1, 1994 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 8, 1995
20
EXHIBIT 21
The only subsidiaries of the Registrant are Shaw Transport, Inc., a
Georgia corporation; Shaw Financial Services, Inc., a Georgia corporation;
Shaw Leasing, Inc., a Tennessee Corporation; Carpets International, PLC., a
United Kingdom corporation; Capital Carpet Industries, Pty., Ltd., an Australian
corporation; and Terza, S.A. de C.V., a Mexican corporation.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included and incorporated by reference in this Form 10-K into the
Company's previously filed Registration Statement File No. 33-45089.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Shaw Industries, Inc. and subsidiaries as of
December 31, 1994 and the related consolidated statements of income,
shareholders' investment and cash flows for the year ended December 31, 1994,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<CASH> 34,365,000
<SECURITIES> 0
<RECEIVABLES> 368,053,000
<ALLOWANCES> (17,925,000)
<INVENTORY> 498,151,000
<CURRENT-ASSETS> 922,229,000
<PP&E> 1,174,759,000
<DEPRECIATION> 518,581,000
<TOTAL-ASSETS> 1,697,378,000
<CURRENT-LIABILITIES> 304,891,000
<BONDS> 612,061,000
<COMMON> 152,090,000
0
0
<OTHER-SE> 560,935,000
<TOTAL-LIABILITY-AND-EQUITY> 1,697,378,000
<SALES> 2,788,527,000
<TOTAL-REVENUES> 2,788,527,000
<CGS> 2,187,439,000
<TOTAL-COSTS> 2,187,439,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,747,000
<INTEREST-EXPENSE> 30,403,000
<INCOME-PRETAX> 210,550,000
<INCOME-TAX> 79,410,000
<INCOME-CONTINUING> 130,389,000
<DISCONTINUED> 0
<EXTRAORDINARY> (3,363,000)
<CHANGES> 0
<NET-INCOME> 127,026,000
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
